Stratasys(US:SSYS)2023-05-16 15:55Financial Data and Key Metrics Changes - Consolidated revenue for Q1 2023 was $149.4 million, down 2.6% compared to Q1 2022 when adjusted for divestitures and at constant currency, and down 8.6% compared to unadjusted revenues [23] - GAAP gross margin was 43.8% for the quarter, compared to 42.6% for the same period last year, while non-GAAP gross margin was 47.3%, flat compared to the same period last year [25] - GAAP net loss for the quarter was $22.2 million or $0.33 per diluted share, compared to a net loss of $20.9 million or $0.32 per diluted share for the same period last year [27] Business Line Data and Key Metrics Changes - Product revenue declined by 10.7% to $101 million compared to the same period last year, with system revenue down 25.8% to $40.5 million [23][24] - Consumables revenue rose by 3.3% to $60.5 million, marking a record level for Stratasys, indicating strong utilization rates of sold systems [24] - Services revenue was $48.4 million, down 3.9% compared to the same period last year, but customer service revenue reached its highest ever [24] Market Data and Key Metrics Changes - The ongoing macroeconomic challenges are causing longer sales cycles and occasional order deferrals, impacting OEM revenue which was relatively flat compared to the first quarter of last year [10] - The manufacturing trend of on-shoring and de-globalization is creating growth opportunities for Stratasys, particularly in manufacturing applications [11] Company Strategy and Development Direction - The company aims to surpass $1 billion in revenue by 2026 with substantial profitability, focusing on new technologies and expanding its customer reach [9][31] - Stratasys is committed to enhancing shareholder value and executing its growth strategy despite unsolicited acquisition proposals from Nano Dimension [7][8] - The company is expanding its software capabilities, introducing GrabCAD Print Pro to enhance productivity and integrate into Industry 4.0 infrastructure [18][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth potential despite a challenging macro backdrop, noting strong engagement with customers and a balanced sales cycle [48] - The outlook for 2023 includes revenue guidance raised to between $630 million to $670 million, with expectations for improved growth in the second half of the year [29] - Management anticipates achieving non-GAAP gross margins above 50% starting in 2024, driven by increased manufacturing revenue and the acquisition of Covestro [31][66] Other Important Information - The company ended the quarter with $288 million in cash and equivalents, supporting growth through organic investments and acquisitions [13] - Stratasys has introduced new products in the dental sector, including the TrueDent solution, which is expected to disrupt the market and generate significant revenue [14][54] Q&A Session Summary Question: Can you provide more specifics on the billion-dollar target? - Management emphasized a structured long-term planning approach and confidence in achieving the target based on established growth drivers and new technologies [35][36] Question: What are the main drivers for consumables revenue growth? - The main drivers include increased utilization rates and a shift towards manufacturing applications, particularly in the dental sector [39] Question: What is the status of the Covestro acquisition? - The acquisition closed in early April, with no contribution to Q1 revenues, but expected to have a full impact starting Q2 [43] Question: How is the demand landscape evolving? - Management noted high levels of engagement and improved top-of-funnel demand, leading to confidence in the second half of the year [48] Question: What are the expectations for operating expenses throughout the year? - Operating expenses are expected to remain tight, with a slight increase due to the Covestro acquisition, but overall efficiency is maintained [50] Question: How does the company plan to penetrate the dental market? - The strategy includes a multi-channel approach, focusing on building confidence with dental labs and working with dental equipment distributors [58]