Stratasys recently reported third quarter financial results. The latest numbers do not differ from what the company has experienced over the last 10 quarters: declining revenue, pressure on margin, no real innovation and a reduction of investment to preserve cash.
|Non GAAP Margin (%)||52.5||54|
|Non GAAP EBIT||8.1||6.3|
|Cash flow from operations||4.6||-3|
|Cash at end of period||303||240|
After several years of significant growth until 2014, the company is suffering from wider and stronger competition. Stratasys is facing a difficult moment where it should reinvent itself but it lacks the energy and the strength to do it. Founders and pioneers have left the company in the hands of managers. The company has lost its magic.
In a fast growing 3D printing market led by innovation, Stratasys has clearly decided since 2016 to prioritize the reduction of costs and to maximize the cash position. As of end of September 2017, net cash was at $280M, a $40M increase in 12 months.
I believe that this positions well the company to redeploy itself via acquisitions. With this strategy the company will not only acquire fast growing and innovative businesses, it will bring disruption and new talents to the table, talents willing to conquer the world again.
This strategy should happen sooner than later, at a moment when larger players such as Google, GE and HP are investing significant sums to build large 3D printing players. Sizewise, I believe that Stratasys could target companies with valuation up to $100M, with minimum access to shares issuance. The transformation via acquisitions will take a couple of years to impact significantly the P/L. But the confirmation of this new strategy could reassure the investors that Stratasys future is bright again.
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