Leading 3D printer OEM Stratasys has announced financial results for the first quarter of 2020.
The results show a total revenue of $132.9 million for Q1 2020. This figure represents a 14.4 percent decline compared to revenue generated by the company for the same period in 2019, which was $155.3 million.
Stratasys explains that the reduction in revenue was driven primarily by the adverse effects of the COVID-19 pandemic. The health crisis had an impact on the company’s customers throughout the industries into which Stratasys sells its products and services. Speaking with investors and analysts during an earnings call, Yoav Zeif, Chief Executive Officer of Stratasys comments: “The decline in Q1 sales [is] clearly due to a meaningful portion of our customer base being effectively shut down on purchasing and consumption perspective. As a reminder, our revenue gains tend to be backend loaded, with a significant portion of business coming in the final few weeks of the quarter. ”
Further commenting on Stratasys’ position to deal with the current pandemic, Zeif states: “We are well-prepared to manage the downturn with a strong balance sheet and focus on cost control and cash generation. We have over $325 million in cash and equivalents and no debt. Our engagement level with our customers remains high and the demand for our systems is strong.”
Stratasys financial results
Revenue at Stratasys is reported across two segments: Products and Services. Each year, the Products division, which comprises 3D printers and materials, accounts for the largest share of overall revenue. The Services segment, on the other hand, relates to the company’s on-demand manufacturing and consultancy offerings.
|Revenue $ thousands||Q1 2020||Q1 2019||Variance $ thousands||%|
In Q1 2020, Stratasys Products generated $83.2 million in revenue, compared to $105.1 million for Q1 2019, representing a 20.9 percent decrease. Within the Products segment, revenue generated by 3D printer sales declined 39.5 percent in Q1 2020 compared to the same period last year. Consumables revenue also decreased by 5.8 percent compared to Q1 2019.
Revenue generated by Stratasys’ Services segment was reported at $49.7 million for Q1 2020, a 0.9 percent decrease compared to Q1 2019, where revenue for the segment came in at $50.2 million.
The decline in revenue has been largely attributed by Stratasys to the effect of the COViD-19 pandemic on its key customer markets. The company explains that most of its sales for Q1 arrive in the final weeks of the quarter, around the time the global impact of the pandemic was starting to be felt. Detailing the impact of the health crisis during the earnings call, Zeif comments: “With our customers shutting down, we are being impacted mainly in aerospace and automotive. Some of our leading dental customers [have also shut down], and of course, education, which is one of our main verticals.”
In the first quarter of 2020, Stratasys unveiled two new systems in its PolyJet range of colour 3D printers. In February, the company launched the Stratasys J826, a system aimed at enterprises with mid-volume modeling requirements across sectors ranging from consumer goods and electronics, automotive and educational institutions.
Two weeks ago, at the end of April, Stratasys also unveiled its new J55 PolyJet 3D printer, geared towards professional designers and engineers. According to Stratasys, the J55 is a smaller but equally capable counterpart to the company’s J8 series.
Commenting on the launch of the system in the wake of the pandemic, Zeif explains that the launch of the J55 will be delayed: “We had originally planned to launch new products in the back half of this year, primarily in Q4. Due to the current situation, it is clear that the return on investment of marketing, trade shows, travel and other expenses needed to launch would be severely limited in a temperate spending environment. In order to maximise the impact and to avoid any potential supply chain issues. We believe it makes much more sense to wait and in the first half of 2021.”
Dealing with the effects of the COVID-19 pandemic
In order to deal with the impacts of the COVID-19 pandemic, Stratasys has outlined a number of measures it has taken during the earnings call, mainly revolving around employee safety, preserving liquidity, maintaining business continuity and mitigating costs. Lilach Payorski, CFO at Stratasys, explained some of the cost control measures that the company took: “First of all travel, we will see some cost control on that. Working from home, which has impacted our overall maintenance cost, a non-essential hiring freeze, effectively a 20 percent salary reduction for all our employees and executives.”
Zeif also discusses the advantages of 3D printing that has been demonstrated by the community’s response to help combat the COVID-19 virus: “It’s clear that this crisis has helped generate significant awareness that 3D printing is becoming essential for accelerating and improving design, speeding up time to market and production, and creating less dependent and more resilient global supply chains, including localized digital inventory and distributed manufacturing.”
On an outlook for the rest of the year, Zeif explains in the call that, as the U.S. and other markets are still effectively closed, there is too much uncertainty to provide a reasonable estimate of the full-year financial impact related to COVID-19. The company has thus withdrawn its financial guidance for 2020. Foreseeing a full quarter of COVID-19 impacts, Zeif states: “We currently expect a sequential revenue decline of 5 to 10 percent.”
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Featured image shows part 3D printed on the J55. Photo via Stratasys.