Stratasys Q1 2019 financial results flat as CEO search continues

Leading 3D printer OEM Stratasys has announced financial results for the first quarter of 2019.

The results show flat revenue, with Stratasys reporting $155.3 million against a comparative figure of $153.8 million. Speaking with investors and analysts, Elan Jaglom, Interim Chief Executive Officer of Stratasys, stated that while he was satisfied with financial performance macroeconomic conditions meant, “Overall revenue was unfavorably impacted relative to the corresponding previous year period by unfavorable changes in foreign exchange rates.”

Lilach Payorski, CFO at Stratasys, gave further details, “Our total revenue grew 5%, and hardware actually grew 7% if you take other FX [foreign exchange], consumable 5% and services grew 2% and the customer support grew 4.5%. So, the foreign exchange impacts our results significantly this quarter.”

Stratasys Q1 2019 financial results. Image via Stratasys.
Stratasys Q1 2019 financial results. Image via Stratasys.

Revenue consistency  

Revenue at Stratasys is divided across systems, consumables, customer support, products and services. The company’s product revenue in the first quarter stood at $105.1 million, which also remains flat when compared to Q1 2018. Similarly, gross profit remains stable at $76.5 million from $75.7 million.

Responding to an analyst query about a dip in revenue from customer support Payorski said the business unit will return to a more typical growth rate moving forward. So we do not view this decline in gross margin of customer support to be the trend going forward.”

Stratasys Q1 2019 financial revenue results. Image via Stratasys.

Cutting costs with R&D

Demand for high-end 3D printing systems such as the F123 platform and the Fortus 380mc Carbon Fiber Edition, contributed to cash flow from operating activities of $4.6 million, a decrease from the $27.1 million in Q1 2018. However, the period ended with $367.8 million in cash and cash equivalents, a decrease on the comparative figure of $393.2 million.

Payorski continued,Non-GAAP operating expenses decreased by 3% to $73.9 million for the first quarter as compared to the same period last year, driven by a continued focus on administrative cost controls, R&D project timing and the impact of divestments.”

Overall, the R&D level for this quarter was reported to be lower than previous figures.

Stratasys Q1 2019 balance sheet summary. Image via Stratasys.
Stratasys Q1 2019 balance sheet summary. Image via Stratasys.

Is Stratasys preparing for an acquisition?

Earlier this year, EOS acquired Vulcan Labs, the Texas-based powder bed fusion R&D startup from Stratasys. Some may be wondering why Stratasys would sell technology to a major competitor. Could the lengthy search for a CEO, the ongoing focus on trimming expenses coupled with lower R&D investment point toward preparing the company for acquisition or a merger?

Addressing one element of the above, Jaglom explained why the company’s search for a new CEO is taking longer than expected. “Our industry does not have a wide pool of established leaders to choose from so we’re looking outside the additive industry which adds complexity to our search.”

However, new products do still continue to launch. The first quarter of 2019 saw several announcements including the F120 3D printer, and Stratasys’ first Stereolithography system, the V650 Flex.

The V650 Flex. Photo via Stratasys
The V650 Flex. Photo via Stratasys.

Stratasys 2019 forecast and guidance

Nevertheless, the company’s full-year guidance for 2019 has projected revenue at the end of this fiscal year to be between $670 to $700 million. This would be a significant increase from the full year revenue reported in 2018 of $663.2 million. In addition, GAAP net loss of $22 million to $12 million, or $0.40 to $0.22 per diluted share, is projected.

The projected revenue is in part expected from the acceleration of adoption in Stratasys’ production systems. According to David Reis, Vice Chairman of the Board at Stratasys, “this first quarter reflects the continuation of the trends observed in last year with strong hardware and consumer growth in its largest market – the U.S.”

Full details of Stratasys’ first quarter 2019 financial results are available here.

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Featured image shows Stratasys and MakerBot 3D printed parts. Photo by Michael Petch.