SSYS

• Core Strategic Progress

  • The company is executing on a strategic shift from prototyping to production-scale additive manufacturing, with record Q2 consumables sales indicating high system utilization and growing recurring revenue from manufacturing applications.
  • Aerospace and Defense (A&D) is the company's largest segment, growing 17% YoY in Q2 2026, with Stratasys estimated as the leading polymer additive manufacturing provider for the sector. Growth is driven by structural long-term demand for supply chain resiliency and localized production, including expanding multi-system orders for F900 systems across the U.S. Air Force sustainment enterprise for qualified flight-worthy parts.
  • Stratasys Direct, the company's production parts division, delivered strong quarterly growth fueled by demand from defense customers for drone production, munitions manufacturing, and next-generation platform applications.

• Key Customer Wins

  • Secured a multi-year, multi-million dollar agreement with on-demand manufacturer QuickPulse for 12 additional NEO 800 plus systems, with expansion into QuickPulse's European facilities, for production parts across A&D, advanced mobility, and energy.
  • Awarded a $7.8 million two-year program through the 2026 America Makes OIB Modernization Challenge to advance in-situation monitoring capabilities for F900 and future F3300 platforms, strengthening positioning in defense industrial base production.
  • Gained adoption of industrial additive solutions from automation leader FANUC at the request of a major automotive OEM, supporting global standardized production tooling and replacement parts. Secured an order for 12 F900 systems from Chinese automotive OEM FAW Group, for production of interior end-use parts.

• Acquisition and Infrastructure Updates

  • Pending $42.5 million cash acquisition of Markforged, on track to close later in 2026. Markforged generated ~$70 million in 2025 revenue, and brings leading continuous carbon fiber technology, complementary software, aligned use cases, and an expanded reseller network that will augment Stratasys' A&D and industrial production offerings. Management expects positive EBITDA contribution within the first year post-close.
  • Opened the new 200,000 square foot Americas Regional Corporate Headquarters (ARCH) in Minnetonka, Minnesota, consolidating engineering, R&D, Stratasys Direct, and customer collaboration capabilities to support projected growth in production-scale additive manufacturing.

• Financial Operational Discipline

  • GAAP operating expenses were $71.7 million, down from $76.1 million YoY, reflecting continued disciplined cost management. Non-GAAP operating expenses held steady at 47.1% of revenue, flat vs 46.9% YoY.

• Management reaffirms all full-year 2026 guidance except for operating cash flow.
• The company continues to expect sequential revenue growth across all four quarters of 2026, supported by a robust business pipeline and strong customer engagement.
• Full-year 2026 operating cash flow is no longer expected to be positive, though management projects positive operating cash flow for the second half of 2026 following atypically high cash usage in Q2 driven by non-routine IP legal expenses.
• The company's debt-free balance sheet and healthy cash position provide sufficient financial flexibility for both organic and inorganic growth investments.

Consolidated total revenue for Q2 2026 was $137.6 million, up 3.7% sequentially from Q1 2026 and flat year-over-year vs Q2 2025. Segment performance: 1. Systems: Revenue of $26.4 million, contributing 19.2% of total consolidated revenue, down from $30.6 million year-over-year. 2. Consumables: Quarterly record revenue of $66.3 million, contributing 48.2% of total consolidated revenue, up from $64.2 million year-over-year, driven by increased manufacturing material sales aligned with the company's production-focused strategy. 3. Services (including Stratasys Direct parts production): Revenue of $44.9 million, contributing 32.6% of total consolidated revenue. Stratasys Direct delivered 12.1% year-over-year revenue growth for the quarter. Gross margins: GAAP gross margin was 42.3% (43.1% YoY); non-GAAP gross margin was 47.2% (47.7% YoY), with the YoY decline driven by adverse exchange rate impacts from the strong Israeli shekel, partially offset by higher consumables margins.

• Forward-looking statements regarding future financial and operational performance are subject to material risks that could cause actual results to differ materially from forecasts, with detailed risk factors available in Stratasys' 2025 Form 20-F and ongoing SEC filings.
• The strong Israeli shekel, in which many of the company's expenses are denominated, created a $2.9 million adverse impact on Q2 2026 non-GAAP operating results and EBITDA, pressuring margins.
• Large strategic production deals have long sales cycles that can create quarterly revenue variability.

Q: How does Markforged's continuous carbon fiber capability fit into Stratasys' A&D strategy, especially amid growing demand for metal additive parts, and what are the plans for Markforged's existing $70 million revenue business? / A: The acquisition of Markforged rests on five core strategic pillars: leading continuous carbon fiber technology, fully aligned use cases focused on A&D and industrial tooling, complementary go-to-market networks that expand access to small and medium businesses, complementary software capabilities for simulation and distributed manufacturing, and top engineering talent. Continuous carbon fiber is a strong, lighter, lower-cost replacement for metal that requires less post-processing, and Stratasys has already received multiple new A&D customer requests for this capability since announcing the deal. Management expects the combined business to unlock significant synergies and deliver positive EBITDA within the first year post-close.

Q: What is the current outlook and progress for Stratasys' dental business? / A: Stratasys is developing a highly innovative removable dental solution that has already received FDA and European regulatory approval for its first version. The company has hired leading dental industry talent and is already engaged with top U.S. dental customers including Clydewell and Affordable Dentures. Management calls the dental segment a large, underappreciated long-term opportunity and will share further updates as progress continues.

Q: System sales have declined year-over-year and sequentially despite broader improvements in the manufacturing environment. When does management expect system sales to inflect upward? / A: Stratasys remains on track to hit its full-year guidance of sequential quarterly revenue growth. The current pattern of slower system sales reflects the company's shift toward manufacturing, which centers on large, multi-unit deals that are not evenly distributed quarter-to-quarter. Management confirms a robust pipeline of large system deals and expects a notable uptick in system sales in the second half of 2026.