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3D printer OEM Stratasys (NASDAQ: SYSS) has announced its financial results for the second quarter of 2024.
Stratasys’ revenue for Q2 2024 stood at $138 million, marking a 13.6% decrease from the $159.8 million reported in the same quarter of 2023. This also represents a 4.2% decline compared to the first quarter of 2024, where revenue was $144.1 million.
Stratasys reported facing headwinds from weakened customer capital expenditure, which has affected hardware sales. Despite these challenges, the company managed to improve its gross margin to 43.8%, a 2.3 percentage point increase from 41.5% in Q2 2023. This improvement was a result of a higher mix of consumables and a focus on cost-control measures.
Dr. Yoav Zeif, Stratasys’ Chief Executive Officer, stated, “For the Company to maintain its industry leadership, we continuously evaluate and assess our business model to ensure we are optimally aligned with evolving market conditions. We are confident that our efforts will enable our customers to more effectively address their biggest manufacturing challenges, which should lead to increased adoption of our additive technologies. This realignment is critical to ensure that we can achieve our objectives to deliver sustained profitability and cash flow, while remaining ready to capture opportunities when the spending cycle improves, positioning Stratasys to deliver outsized shareholder value.”
Revenue breakdown and business conditions
Stratasys reports revenue through two segments. The company’s product segment, which includes system and consumable sales, generated $93.6 million in revenue, a 14.2% decline from $109.1 million in Q2 2023.
System revenue was particularly impacted, falling 40% year-over-year to $29 million, primarily due to extended sales cycles. Consumables, however, showed resilience with a 6.3% increase in revenue year-over-year to $64.6 million, although it saw a slight 2.6% decline quarter-over-quarter.
Stratasys noted that the strong performance of consumables indicates robust use of its installed systems.
Additionally, service revenue, which includes Stratasys Direct, amounted to $44.4 million, down 12.2% from $50.6 million in Q2 2023 and a marginal decrease of 0.9% from Q1 2024. Excluding divestitures, service revenue fell by 2.4%, with customer support revenue declining by 3.8% compared to the Q2 2023.
| Revenue $ thousands | Q2 2024 | Q2 2023 | Variance $ thousands | % |
| Products | 93,594 | 109,112 | -15,518 | -14.2% |
| Services | 44,447 | 50,639 | -6,192 | -12.2% |
| Total revenue | 138,041 | 159,751 | -21,710 | -13.6% |
In response to these financial challenges, Stratasys has initiated a series of restructuring actions aimed at maximizing shareholder value and aligning its operations with current market conditions.
These actions include a planned 15% reduction in headcount by the end of the year, which is expected to generate $40 million in annual cost savings and contribute to an 8% EBITDA margin by the first quarter of 2025.
Stratasys has also focused on key sectors where AM offers significant advantages. The company’s collaboration with AM Craft aims to enhance the design and 3D printing of EASA-certified aircraft sustainment parts, addressing logistical and cost challenges in the aviation sector.
During the second quarter, the company launched the H350 version 1.5 3D printer, introducing new SAF High-Definition printing capabilities that cater to high-volume manufacturing sectors like automotive and medical. Along with the newly introduced SAF Polypropylene material, this updated version is designed to provide high-quality, cost-effective solutions for industrial applications.
Additionally, Stratasys also launched the J5 Digital Anatomy 3D Printer during RAPID + TCT 2024, targeting the medical field to improve patient outcomes through enhanced surgical planning. This printer allows hospitals, medical device manufacturers, and research institutions to produce high-fidelity anatomical models that can streamline operations and accelerate product development.
Guidance for FY 2024
Looking ahead, Stratasys has revised its 2024 financial guidance in response to ongoing global inflation, high interest rates, and supply chain disruptions. The company now expects annual revenue between $570 million and $580 million, with third-quarter revenue slightly higher than the second quarter.
The company projects a non-GAAP gross margin of 48.7% to 49.0%, with operating expenses ranging from $276 million to $278 million. Non-GAAP operating margin is expected to be 0.5% to 1.0%.
Stratasys forecasts a GAAP net loss of $106 million to $91 million, or $1.50 to $1.29 per diluted share, including one-time costs related to its strategic alternatives process. On a non-GAAP basis, net income is expected to be $1 million to $4 million, or $0.01 to $0.05 per share.
Adjusted EBITDA is projected at $24 million to $27 million, with capital expenditures of $20 million to $25 million. The guidance excludes significant costs like share-based compensation, amortization, and reorganization expenses.
This revised outlook highlights Stratasys’ approach to navigating the challenging economic landscape while positioning itself for potential growth opportunities in the future.
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Featured image shows the Stratasys Booth. Photo by 3D Printing Industry.
