3D printer OEM Stratasys (NASDAQ: SSYS) has published its financial accounts for the fourth quarter and full year ending December 31, 2019.
The company’s full year revenue was reported at $636.1 million, with a net loss of $11.1 million. Comparative figures for 2018 were $663.2 million and a loss of $11.2 million respectively. The revenue results come in below the financial guidance of between $640 million to $655 million, updated by Stratasys in Q3 2019
Fourth quarter revenue was reported at $160.2 million for 2019, compared to $177.1 million for the same period in 2018. Stratasys used $3.4 million of cash from operations during the fourth quarter as compared to $18.7 million of cash generated in the fourth quarter last year. The company ended the period with $321.8 million in cash, cash equivalents and short-term deposits, compared to $393.2 million for the end of 2018.
The decline in revenue, particularly within the company’s Products division, was attributed by Stratasys CFO Lilach Payorski to regional weaknesses in Europe and Asia, as well as declines in legacy product lines. However, this is expected to be offset by new the company’s new products for 2020: “The decrease in the period was driven primarily by regional weakness in Europe and Asia, coupled with some decline in materials associated with our legacy platforms, which we believe will be offset over time by strong growth in materials demand that will come from our new products, as well as from systems that we have placed over the last few years.”
“Our system revenue was negatively impacted primarily by continued macroeconomic weakness in Europe and Asia, as well as declines in certain legacy product lines that we expect will be more than offset by our new product introductions.”
Stratasys Products and Services
Stratasys’ revenue is reported within two divisions: Products and Services. Each year, the Products division, which comprises 3D printers and materials, accounts for the largest share of overall revenue. In Q4 2019, Stratasys Products generated $109 million in revenue, compared to $124.5 million for Q4 2018, representing a 12.5 percent decrease. For the full year, Products reported $430.7 million in 2019, compared to $456.5 million in 2018, a decrease of 5.6 percent.
Within the Products revenue, consumables revenue for Q4 2019 decreased by 2.9 percent compared to the same period last year. Revenue generated from 3D printers in Q4 2019 decreased 20.6 percent compared to the same period last year, whereas for the full year it declined by 10.8 percent.
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Stratasys’ Services division relates to the company’s on demand manufacturing and consultancy offerings. For the full year 2019, Services reported a revenue of $205.3 million, where in 2018 it was $206.7 million. For Q4 2019, Services generated $51.2 million in revenue, 2.6 percent less than the Q4 2018 figure, which was $52.6 million.
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For the fiscal year ending December 31, 2020, Stratasys has provided a revenue guidance of $620 million to $680 million. The long range of the guidance has been issued due to ongoing global industrial macroeconomic issues, and the uncertainty around the potential impact of the coronavirus.
Commenting on what’s next for the company, Yoav Zeif, Chief Executive Officer of Stratasys, explains: “Starting in the back half of this year we expect to introduce our next phase of growth with a notable step-change in our portfolio as we begin to launch a series of new products for both manufacturing and design prototyping solutions. I am extremely optimistic regarding the outlook of the business, and I believe that there is tremendous potential to drive significant near-term and long-term value for all of our stakeholders.”
What’s next for Stratasys?
Stratasys released a number of products throughout 2019, which were expected to drive and accelerate growth as the company entered 2020. The company launched two 3D printers at last year’s AMUG conference, which included the F120 system, the latest addition to its F123 series of 3D printers. Stratasys also announced its entry into SLA with the launch of the V650 3D printer as well. Then, towards the back end of 2019, the company released two more 3D printers. It launched a version of its J750 3D printer dedicated to the medical industry, made for use by healthcare professionals. In the same month, Stratasys also released the successor to the J750 – the J850 PolyJet 3D printer, an upgrade on the previous system, equipped with full-color 3D printing capabilities.
Explaining why these product releases weren’t as impactful as Stratasys would have hoped, Yonah Lloyd, Vice President of Investor Relations, stated: “So certainly there was an impact of the more global macroeconomic situation in being able to more successfully execute on the 2019 products […] and sometimes launch timings get pushed out to make sure that we’re putting the best product out into the market.”
When questioned on the weakness of Q4 2019 during the call, Payorski explained that “[Stratasys] experienced a significant weakness in Europe and as well as Asia. And specifically in those key verticals that we operate maybe the auto and parts business, there are several indicators of a wider difference. For example, the European industry in general is struggling with 12 straight months of contraction in manufacturing.” Lloyd also added that the company expects a return to growth: “We’re well positioned to return to growth when macro conditions improve. A reminder that we have a very high level of engagement and interest across all sectors. The products provide exceptional value. These are going to be critical products to the automotive industry going forward, general manufacturing going forward.”
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Featured image shows Pantone color palette for Stratasys PolyJet printers. Image via Stratasys.