Stratasys beats Q2 2021 guidance to send shares soaring 15%

Shares in 3D printer manufacturer Stratasys (SSYS) have risen more than 15% after the company comprehensively beat its own revenue guidance during Q2 2021. 

Over the course of Q2 2021, Stratasys’ financials reveal that it generated $147 million in revenue, 25% more than the $118 million it reported in Q2 2020. The company has largely been able to outperform the “mid-teen” growth guidance it issued at the end of Q1, due to a faster-than expected-recovery within its European business, which saw its consumable income jump 39% compared to Q2 2020. 

While Stratasys’ Q2 2021 results represent its third straight quarter of revenue growth, the firm fell 10% short of the $163 million it managed to bring in during the pre-COVID period of Q2 2019, yet despite this, its shares have become a hot property since its numbers were published, suggesting that investors have been impressed by its quarterly performance nonetheless.

“The second quarter continued to show accelerated growth for our company,” said Yoav Zeif, CEO of Stratasys on the firm’s earnings call. “Our business momentum and customer manufacturing operations are nearing full recovery from the pandemic, as evidenced by both our consumables and services revenue, which returned to near-2019 levels.” 

“The 3D printing industry is moving towards providing full-scale digital manufacturing platforms at mass-production levels. Stratasys is at the forefront of this shift.”

Someone using Stratasys' DentaJet J5 3D printer to produce dental parts
Zeif has praised the reception of Stratasys’ DentaJet J5 3D printer for helping boost the firm’s Systems sales. Image via Stratasys.

Stratasys’ Q2 2021 results 

Revenue at Stratasys is reported across main two segments: Products and Services, with the former including income generated from the sales of its 3D printers and materials, and the latter covering any revenue yielded by its on-demand manufacturing and consultancy offerings.

During Q2 2021, the firm’s Products division was its fastest-growing, bringing in $100 million, an increase of 35% compared to Q2 2020, but this remains 9% short of the $110 million it raised in Q2 2019. According to Stratasys’ CFO Lilach Payorski, the segment’s growth was primarily driven by a surge in demand for its consumables, which “almost returned to pre-COVID-19 income levels.” 

The division’s strong performance was also boosted by a high level of demand for the RPS machines the company acquired in February 2021, as well as its new J5 MediJet 3D printer, which has proven popular with medical clientele, and on the firm’s earnings call, Payorski suggested that the result “demonstrates its end-market recovery is well-underway.” 

Finally, Stratasys’ Services segment generated $47 million in Q2 2021, which is 7% more than the $44 million it reported in the same period of last year, but 11% less than it raised during Q2 2019. The business’ comparatively poor showing was blamed by the firm on pandemic-related disruption, particularly the relatively slow recovery seen within the wider aerospace sector, one of its key markets. 

Stratasys Revenue ($) Q2 2020Q2 2021Difference (%) Q2 2019Q2 2021Difference (%) 
Products 74m 100m+35110m100m-9
Services 44m47m+753m47m-11
Total 118m147m+25163m147m-10

Assessing Stratasys’ hectic Q2

Stratasys went on the offensive during Q2 2021, launching several new machines, materials, technologies and partnerships that will each have contributed to its quarterly revenue. On the software front, the firm expanded its GrabCAD Software Partner Program, adding Teton Simulation, in a move that has since allowed its users to access the SmartSlice program. 

In addition to building on its offering, Stratasys has begun monetizing certain areas of its software portfolio, such as GrabCAD Shop, which it now intends to charge an annual license fee for, in exchange for access to third party apps. Similarly, the company’s Customer Hub e-store, which has been built to streamline the client part ordering experience, has so far received more than $25 million worth of orders. 

With regards to new materials, Stratasys launched its VeroUltra line towards the start of the period, polymers which are designed to simulate the appearance of natural fabrics or woods, that will have generated revenue for the firm. Likewise, the company released an ABS-based carbon fiber for use with its F123 Series 3D printers during Q2, which Zeif has described as having had an “excellent market reaction.”

Machine-wise, Stratasys’ packed launch schedule also saw it release the J35 Pro, J55 Prime, Origin One, H350, and F770 FDM 3D printers, in the course of Q2, but on the firm’s call, Zeif reserved special praise for its previously-unveiled DentaJet J5 and MediJet J5 systems, saying that they’re “already performing very well in the market.”

“These systems collectively expand our reach into healthcare as the utilization of 3D printing in the medical and dental communities accelerates,” explained Zeif on the company’s earnings call. “Given the range of products we’re bringing to market, we view healthcare as a key component of our portfolio moving forwards.” 

“Mass-customization is a key benefit of 3D printing, so it’s ideal for providing personalized healthcare.”

Stratasys F770 3D printer installed at Sub-Zero. Photo via Stratasys.
Stratasys launched five new 3D printers during Q2 2021, and is now preparing further product releases for H2 2021. Image via Stratasys.

A continuous growth outlook 

Looking to Q3 2021, Stratasys expects to report revenue growth of 17-18% compared to Q3 2020, which would constitute earnings of $150-151 million, with sequential quarterly gains projected for Q4. However, despite the firm’s continually-recovering demand, it anticipates that the cost of raw materials and its planned product launches will lead its FY 2021 cash expenditure to be around $24-30 million. 

Similarly, as Stratasys’ staff begin to return to full-time employment post-COVID, its operating expenses are set to be $30 million higher than they were in FY 2020, yet Zeif maintained on the firm’s earnings call that it remains committed to “continuing to invest… to further enhance its leadership position and drive future profitability.”

“The second quarter was an exciting one for Stratasys, as we saw growth across all our platforms accelerate,” concluded Zeif. “We expect that our existing market-leading offering, and our new platforms that will begin to ship in Q4, will provide incremental growth that should contribute to revenue, cash flow and earnings in the coming years.”

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Featured image shows someone using Stratasys’ DentaJet J5 3D printer to produce dental parts. Image via Stratasys.