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3D printer OEM Stratasys (SSYS) has announced that its revenue rose 2.0% during Q3 2022 despite facing continued macroeconomic headwinds.
Stratasys brought in $162.2 million during Q3 2022, a marginal improvement on the $159.0 million it generated in Q3 2021, but a 3.1% decline against Q2 2022. The firm credits its annual revenue growth to strong demand for its 3D printers, but admits that prolonged sales cycles and delays in acquiring consumables impacted its quarterly numbers.
“We delivered our highest third quarter revenue in seven years. This was driven by 18.9% growth in our systems, excluding divestitures and on a constant currency basis,” said Dr. Yoav Zeif, CEO of Stratasys. “We have now achieved five consecutive quarters of positive earnings, demonstrating our unique ability to generate profitable growth even while navigating a challenging global economic backdrop.”
Stratasys’ Q3 2022 financials
In Q3 2022, Products remained Stratasys’ largest revenue generator, bringing in $112.1 million, a 2.9% rise on the $108.9 million it turned over in Q3 2021. On the firm’s earnings call, Zeif said this growth was driven by demand for its systems, which jumped 18.9% over the same period, when adjusted for divestitures and exchange rate changes.
In particular, the Stratasys CEO highlighted the contribution of its SaaS, P3, and Neo offerings, which more than doubled its addressable market and “opened up new use cases and opportunities to replace traditional manufacturing.” Zeif added that the company’s core FDM portfolio also delivered solid growth during Q3 2022, and committed to “expanding and improving” its product lineup in this area.
By contrast, revenue generated by the consumables part of Stratasys’ Products division fell 1.4% year-on-year, bringing in $55.8 million. While this business grew 3.4% over the same period, if measured without the impact of divestitures and on a constant currency basis, it did suffer from a wider slowdown. Line-by-line, demand for Stratasys’ P3 materials are said to have been hit especially hard by this.
Stratasys’ other segment, Services, turned over revenue of $50.1 million, which was flat against Q3 2021 and 1.6% down against Q2 2022. Zeif later explained that in line with the company’s business model, its material and service sales are lagging behind those of its hardware. As Stratasys continues expanding its user base, he said this will also drive higher demand for other parts of its offering.
Portfolio expansion continues in Q3
During Q3, Zeif said Stratasys “laid the foundations for further growth” via the launch of new products that will “drive its industry leadership for the long term.” This was particularly the case in the firm’s material business. In an update on Stratasys’ acquisition of Covestro’s 3D printing polymers division, Zeif explained how it would “accelerate next generation material development,” once completed in Q1 2023.
Over the quarter, Stratasys also validated 13 more FDM polymers, including those developed by the likes of Victrex and Kimya. While some of these included new color variants, Zeif explained how with materials like the ULTEM 9085 thermoplastic, this has allowed for the production of more parts with customer-facing applications in the rail, aerospace and automotive industries.
For its Origin One 3D printer, Stratasys introduced two new validated industrial materials over Q3, including P3 Stretch 475 and another from Henkel’s Loctite range. The latter is already said to have found applications in the 3D printing of end-use door seals. The firm also launched P3 Deflect 120 with Evonik, a temperature-resistant material with potential in the creation of manufacturing molds.
Elsewhere, the company’s investment activities haven’t slowed down either. Stratasys agreed to buy 3D printing software developer Riven in the opening weeks of Q4, and it poured $10 million into medtech startup Axial3D’s recent funding round. Having done so, the firm is now working with Axial3D on a joint offering, designed to lower the barriers to entering 3D printing for hospitals in many key markets.
Guidance revised for FY 2022
Due to current headwinds, including global supply chain costs, rising interest rates, currency risks and inflation, Stratasys has revised its FY 2022 forecast to between $648 million and $652 million. This takes into account the $17 million impact of Stratasys’ MakerBot divestiture, and the $13 million in revenue the firm expects to miss out on, as clients delay purchases amid macroeconomic uncertainty.
However, during Q3, Stratasys spent $18.4 million on its operating activities, reflecting an investment in inventories to allow it to better deal with supply chain issues. As the firm’s install base continues to grow, Zeif says its wider consumable portfolio will also pay dividends, not only in broadening the application of its technologies, but boosting its profitability.
“We are excited about the significant expansion of our materials portfolio across multiple technologies, which we believe will drive higher-margin consumables sales in the coming years,” added Zeif. “In addition, as part of our growth strategy we will keep selectively adding and incubating complementary new technology-driven businesses that we expect will spur incremental growth in the future.”
“Stratasys is ideally positioned to provide the necessary solutions to catalyze our customers’ ongoing transformation from prototyping to additive manufacturing at scale.”
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Featured image shows an engineer using Stratasys’ DentaJet J5 3D printer. Photo via Stratasys.