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Stratasys(SSYS) - 2024 Q1 - Earnings Call Transcript
SSYSStratasys(SSYS)2024-05-30 00:39
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Financial Data and Key Metrics - Consolidated revenue for Q1 2024 was 144.1million,down3.5144.1 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 66.3million[17][18]−Servicerevenuewas66.3 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 24.5million,comparedtoalossof24.5 million, compared to a loss of 16.8 million YoY, while non-GAAP operating loss was 1.2million,comparedtoincomeof1.2 million, compared to income of 1.5 million YoY [20] - GAAP net loss was 26million,or26 million, or 0.37 per diluted share, compared to a net loss of 22.2million,or22.2 million, or 0.33 per diluted share YoY [20] - Adjusted EBITDA was 4.1million,downfrom4.1 million, down from 7 million YoY, with 7.3milliongeneratedfromoperatingcashflowand7.3 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 66.3million,reflectingstrongsystemutilizationandcustomerrelianceon3Dprintingformanufacturingapplications[9][18]−TheF3300,anewindustrial3Dprintingsystem,hasseengrowingsalesmomentumwithkeycustomerslikeToyota,BAESystems,Sikorsky,andNissan[11][12]−ThecompanyintroducednewSAFHighDefprintingcapabilitieswiththeH350version1.5,expandingmanufacturingapplications[12]MarketPerformance−Thecompanymaintainedstabilityinachallengingmacroeconomicenvironment,withflatYoYrevenueexcludingdivestituresandincreasedmarketshareoverthepastthreeyears[9][39]−TheF3300pipelineisstrong,withacceleratinginterestandengagementlevels,andorderssurpassingexpectationsinthefirsthalfof2024[12]StrategyandIndustryCompetition−Thecompanyisfocusedondrivinginnovationinadditivemanufacturing,withinvestmentsintechnology,saleschannels,andpartnershipstosupportlong−termindustryleadership[15]−TheF3300ispositionedasadisruptivetechnologyinthehigh−end,large−partFDMmarket,offeringdoublethespeedandthroughputathalfthecost[53]−ThecompanyisleveragingitsESGleadershipandsustainabilityinitiativestosupportcustomerdecarbonizationandsupplychainoptimization[13][14]ManagementCommentaryonOperatingEnvironmentandFutureOutlook−Managementhighlightedtheresilienceofthebusinessmodeldespiteconstrainedcapitalspendingacrosstheindustry,withstrongconsumablesperformanceandsystemutilization[9][10]−Thecompanyexpectsthechallengingmacroeconomicenvironmenttopersistin2024,withdelayedpurchasesandlongersalescycles,butanticipatessequentialrevenuegrowthinthesecondhalfoftheyear[22][23]−Full−year2024guidanceincludesrevenueof66.3 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 645million,grossmarginsof49645 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]