STRATASYS LTD. Q2 FY2025 earnings call

Key Sections:

• Second quarter results aligned with expectations with slight revenue growth due to recurring revenue streams. Customers remain engaged despite macroeconomic uncertainty.
• Launched the North American Stratasys Tooling Center in Michigan to help manufacturers validate and scale additive manufacturing applications. Collaborated with General Motors and Toyota to demonstrate transformative power of additive manufacturing in automotive production. In medical, 3D printing was critical in preoperative planning, e.g., Brisbane's Herston Biofabrication Institute case. Commercially launched P3 Silicone 25A material. Software progress includes integrating fixture-making software into GrabCAD PrintPro and launching a dedicated software customer success management team in Q3.

Consolidated revenue for the second quarter was $138.1 million, slightly higher than the second quarter last year. Product revenue was $94.8 million, with system revenue at $30.6 million and consumables revenue at $64.2 million. Service revenue was $43.3 million. GAAP gross margin was 43.1% compared to 43.8% in the prior year, while non-GAAP gross margin was 47.7% versus 49% in the same period last year. The revenue contribution of product segments: system revenue was approximately 22.2% of total revenue ($30.6M / $138.1M), consumables revenue was about 46.5% ($64.2M / $138.1M), and service revenue was around 31.4% ($43.3M / $138.1M).

Forward-Looking Statements:

• Adjusted 2025 revenue to range between $550 million to $560 million.
• Non-GAAP gross margins expected to be 46.7% to 47%.
• Full year non-GAAP operating margins expected 1.5% to 2%, adjusted EPS $0.13 to $0.16, adjusted EBITDA $30 million to $32 million.
• Q4 adjusted EBITDA expected to be 8% or higher due to cost mitigation efforts.

Risks:

• Actual results could differ materially from forward-looking statements due to risks discussed in Stratasys' 2024 Form 20-F annual report, including risk factors related to operational and financial developments.

Q: Tyler Hutin asked about revenue guidance delays and specific verticals/regions seeing slowdowns.

A: Yoav Zeif stated there is no slowdown, just delays in large production application deals which may move into 2026 but are not canceled.

Q: Greg Palm asked about gross margin impact and new cost reduction effort.

A: Yoav Zeif mentioned magnitude related to gap between new and old guidance. Eitan Zamir said gross margin impacted by sales mix changes, inventory level reduction ($30M decrease) and tariffs. Cost mitigation targets non-essential costs like travel.

Q: James Andrew Ricchiuti asked about Nexa asset purchase and plans.

A: Yoav Zeif said Nexa acquisition provided IP portfolio and R&D know-how to strengthen positions in aerospace/defense and other use cases.

Q: Troy Jensen asked about deals slipping related to F3300 and automotive.

A: Yoav Zeif said no connection between deal slips and F3300; F3300 is a promoter of being considered for deals. Eitan Zamir added more F3300 in 2025 vs 2024.

Q: Alek Valero asked about additional partnerships with vehicle OEMs due to GM/Toyota momentum.

A: Yoav Zeif said proven use cases with GM and Toyota create momentum to replicate and expand to other OEMs, emphasizing standardized workflows and value proposition of speed and cost savings in production applications.