Stratasys(SSYS)2024-05-30 00:39Financial Data and Key Metrics - Consolidated revenue for Q1 2024 was $144.1 million, down 3.5% YoY, but relatively flat excluding divestitures [17] - Product revenue was $99.2 million, down 0.9% YoY excluding divestitures, with system revenue declining 17.8% and consumables revenue growing 9.6% to $66.3 million [17][18] - Service revenue was $44.9 million, up 1.8% YoY excluding divestitures, with customer support revenue up 3.3% [18] - GAAP gross margin improved to 44.4% from 43.8% YoY, while non-GAAP gross margin increased to 48.6% from 47.3% [19] - GAAP operating loss was $24.5 million, compared to a loss of $16.8 million YoY, while non-GAAP operating loss was $1.2 million, compared to income of $1.5 million YoY [20] - GAAP net loss was $26 million, or $0.37 per diluted share, compared to a net loss of $22.2 million, or $0.33 per diluted share YoY [20] - Adjusted EBITDA was $4.1 million, down from $7 million YoY, with $7.3 million generated from operating cash flow and $4.3 million in free cash flow [21] Business Line Performance - Consumables revenue reached a record high of $66.3 million, reflecting strong system utilization and customer reliance on 3D printing for manufacturing applications [9][18] - The F3300, a new industrial 3D printing system, has seen growing sales momentum with key customers like Toyota, BAE Systems, Sikorsky, and Nissan [11][12] - The company introduced new SAF HighDef printing capabilities with the H350 version 1.5, expanding manufacturing applications [12] Market Performance - The company maintained stability in a challenging macroeconomic environment, with flat YoY revenue excluding divestitures and increased market share over the past three years [9][39] - The F3300 pipeline is strong, with accelerating interest and engagement levels, and orders surpassing expectations in the first half of 2024 [12] Strategy and Industry Competition - The company is focused on driving innovation in additive manufacturing, with investments in technology, sales channels, and partnerships to support long-term industry leadership [15] - The F3300 is positioned as a disruptive technology in the high-end, large-part FDM market, offering double the speed and throughput at half the cost [53] - The company is leveraging its ESG leadership and sustainability initiatives to support customer decarbonization and supply chain optimization [13][14] Management Commentary on Operating Environment and Future Outlook - Management highlighted the resilience of the business model despite constrained capital spending across the industry, with strong consumables performance and system utilization [9][10] - The company expects the challenging macroeconomic environment to persist in 2024, with delayed purchases and longer sales cycles, but anticipates sequential revenue growth in the second half of the year [22][23] - Full-year 2024 guidance includes revenue of $630 million to $645 million, gross margins of 49% to 49.5%, and adjusted EBITDA of $40 million to $45 million [23][24] Other Key Information - The company promoted Amir Kleiner to COO, strengthening the connection between customer success and operations [13] - Stratasys published its second ESG and sustainability report, emphasizing its commitment to environmental impact, employee health, diversity, and governance [13][14] - The company is conducting a strategic review to maximize shareholder value, with updates to be provided when appropriate [16] Q&A Session Summary Question: Q2 seasonality and F3300 revenue impact [27] - Q2 revenue is expected to show slight improvement sequentially, with F3300 revenue becoming more significant in the second half of the year [28][30] Question: Long-term deferred revenue trends [31] - No specific trend in long-term deferred revenue, with fluctuations due to contract mix [32] Question: Strategic review update [33] - The company is making progress on the strategic review but cannot share details until it culminates [34] Question: Sales cycle and market visibility [37] - Sales cycles are stabilizing, with no significant improvement yet, but the company is leveraging new products like the F3300 to drive engagement [38] Question: Covestro's contribution to consumables growth [40] - Covestro contributed $4 million to $5 million per quarter, with overall consumables growth driven by higher system utilization [41][42] Question: F3300 consumables usage [47] - The F3300 is designed for high-performance materials and high utilization, targeting manufacturing applications with large parts [48] Question: F3300 order performance and mid-market opportunities [50][52] - F3300 orders have surpassed expectations, with strong interest from blue-chip customers and traction in the mid-market for manufacturing applications [51][53] Question: Customer engagement trends [55] - Customer engagement has become more specific, focusing on application requirements and the value of additive manufacturing [56][57] Question: Key focus areas for the second half of 2024 [58] - The industry should focus on delivering real value through reliable machines, materials, and software, with Stratasys well-positioned to lead [59][60] Question: System shipment trends [61] - System shipments are a mix of replacements, fleet expansions, and new customers, with a strong install base supporting sales even in tough times [62] Question: Outlook assumptions on customer CapEx [63] - The outlook assumes no significant change in customer CapEx patterns, based on current visibility [64]