Stratasys (SSYS) 3 Aug 222022 Q2 Earnings call transcript

Welcome to the Stratasys' Q2 2022 Conference Call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. We ask that you please ask one question and one follow-up, then return to the queue. [Operator Instructions] As a reminder, this conference is being recorded. to Vice call President pleasure Lloyd, to my and CCO of now turn over the Yonah It's Investor Relations. ahead, go please sir. Yonah,

Good financial you our morning, thank us everyone, discuss to for XXXX results. joining quarter second and

press On provided to Yoav Eitan and Dr. our available release. Zeif; slide that you at with in access the web would call, our online like presentation including us the call I are CEO, today Zamir. our remind CFO, address to the today's is

expectations events, replay or as and financial be a including future section to our limitation without the of could All addition, statements hear to note call, In to and of be or our our you'll access results information Please Relations during gross the that our outlook. consist differ today's forward-looking future forward-looking performance also taxes, expenses, that discussion will trends materially statements, margin, forecast. available Investor business expectations the regarding from will some speak those results performance, our of website. including slide are operating statements. accessed other presentation, our Actual and our of for can through expectations revenue, future today

of second on see release Exhibit today, Exhibit of to that XXXX, is XXXX, XX.X as included respectively. to we are to earnings information SEC the Annual X-K, operations Form in also In furnishing those Report and quarterly our each that see different we Annual SEC could on will results that releases that referenced and furnishing quarter which our risk Form X-K attached to for the obtain information any separate XX.X assumes to press no and the earnings on and the that update and or XXXX cause updated the X quarterly prospects prospects, which Form and dates. year statements, for operating quarterly factors For refer Please of of risks to be a for forward-looking Form please to as statements furnish other an Item our that review are Stratasys' year. of and set the to throughout the quarter XX-F from XXXX concerning also today. a be actual forth are the for course basis our respective press which exhibit X-K quarterly review we second to materially to please SEC results, those to the of as refer a their attached impact forward-looking on announces the the and most report or Please the will that the and year year. of report in report the over operating Report speak factors obligation in financial the risks on which discussed order Stratasys results financial as

to Non-GAAP over slide and turn with Officer, performance. should As quarters, reconciliations today's Yoav our The metrics include in tables in combination will measures press to provided the presentation measures. Dr. today's Chief call in financial now non-GAAP are will in GAAP evaluate GAAP to GAAP non-GAAP be Executive and release. our our previous financial I call Zeif. read Yoav? our

joining Good us. Thank and you morning, you, for Yonah. thank everyone,

which all trend outlook. grew the of versus business year-over-year With strongest system the year into across of with our compared second revenue, in momentum. We XX.X%, saw XX% team, account over of the quarter. results over ahead quarter I as line and up are sequentially growth $XXX.X metrics prior by XX.X% first million quarter. quarter to delivered XXXX. prior in particular second am years. continuation Stratasys we proud FX of reflect Revenues quarter taking were four in second Our These a printer our ongoing our technologies.

no equivalents balance and has well-positioned of debt. million sheet our $XXX.X cash with us Importantly, and

environment We slowing are supply constraints, an on inflation, operating interest GDP. rising in chain uncertainty of global rates, and economic

face of ongoing us leadership execution the towards laser these continues of on results growing to stated drive help our plan challenges, we business financial and additive polymer our goal focus deliver As in position progress our positive manufacturing.

of our several us The advance half on first saw XXXX strategy promos.

Children Diego. penetration solutions Hospital We aerospace, for PepsiCo, for with and industry-specific continue in expanding fashion applications tailored into Toyota, customers and San automotive, like healthcare, our Rady

for on composite-ready printers noted have we along call, new fashion last in our XD the printer launched new As two the textile industry. QX, with

XD software GrabCAD line opportunities. launched new of racing of business leading of new breadth We recently in to This introduce the a exciting two origin we is and auto manufacturing the industry. addition, In printers announcements made on materials. broad area expertise

utilize sustainable parts was from NASCAR part first-ever XD-printed cars. named be our on where Other manufacturer our Stratasys' material Stratasys system. PA-XX produced partner our competitive NASCAR printer. at NASCAR using the Specifically, to teaming on by are with sources cars to Stratasys a XD we are all derived of High-Yield next-generation provide their XXXmc Direct and Those HXXX used Fortus

XD became Development. of Toyota Racing official also printing partner We the

at PA-XX partnership. relationship, Our utilized to NASCAR XD new Racing on to for lead Toyota in will And printed for of Direct part runs to Toyota consumer system competition similar in be the the ultimately to mainstream HXXX. Stratasys the can expected vehicles. excellent and ground parts utilize proving FXXXCR this is XXXX. also be that print FXXX millions of will start Stratasys production vehicle Auto GRXX an Development commercial used and development are the racing

technology the This SAF many mirror, electrical among parts. front include demonstrated electric cable and producing automotive suitability connectors can of using variety wheel, our a HXXX wide side have others. for of We the

we up we As materials will more execute ecosystem strategy, use our automotive cases. even opening be

radiometric version, we this to updated quality, both medical printer, professionals This in in is similar of in doubled waste an which consumption number under printed medical July, launched in a DentaJet unique in and in part early XD for last models momentum scan the the see sacrificing to way. helping QX, the price and we improvements grow seen x-ray resin market. and healthcare that customer to throughput line areas. released have anatomy visualized we increases side, JX dental, the us rate. usage CT the of without presence and professionals device other We reduces In let uniquely the the strength In can our attention company’s digital continue released we And on place healthcare make our need year. on the

the guys. merger surgical MediJet also Ultimaker the they surgeons add do from multi-material, procedures Denmark that Hospital instance, progressing to expect to without want I'd no we XD and For to how are and it Southern are of went with printer full-color quarter. single-material close MakerBot a printer we longer recently now saying of like JX during to we University third SLA printed the from to shared you our the on

update, consolidated of outlook Zamir, material As is the the not it This of have we transaction company results. post-merger XX.X% the over call the and via hold Eitan? company will within our previously announced, rest CFO, a change to for now than the once for account financial combined will our will equity combined closes, and by consolidating Eitan we results turn expected own rather approximately impact our revenues. on the method our I XXXX. the to share to

morning, Thank you, Yoav, and good everyone.

to reflects the built recurring results. Revenues strong of expected drive performance continuing and upon and growth trend a sales we model. we is services consumables operating to earnings In were the strong of leverage that strength to pleased in by We are our in business the XXXX, second general, the system driven saw see future. strength quarter have the we increase our And XX.X% business start for improved our XXXX. in compared of saw continued revenue growth margin that as ongoing sales

$XXX.X year, grew by system continuing of up by by million second constant total by On period year years, rose versus quarter, a million year and revenue the same the a One revenue basis. the mass currency System the on the quarter production million XX.X% XX.X% grew ramp compared last the strengthened highest by Within an the last product in last HXXX quarter. revenue and on constant of revenue, sales basis, grew four constant increased to second in revenue, same million was to million, year year by from same compared compared period. up XX.X% constant grew Product Consumables currency constant on by second the constant $XX.X to or basis. currency on to the period customer Service a compared X.X% basis. Origin revenue XX.X% period compared $XX.X currency and same $XX.X X% to XX.X% revenue and revenue XX.X% by X.X% quarter a total prior was system. currency the $XXX.X For by increased to to increase reflected period by to total prior year XX.X% year the same last last currency XX.X% period basis. X.X% revenue an basis. a service Within on support a increase the to

impact GAAP was last we was which Non-GAAP offset period and efficiencies, XD as to revenue were XX.X% higher quarter, expenses Higher gross turning year. expenses million gross $XX.X compared travel show Xaar the continue noted revenue. to period as operating during and quarter were XX.X% activities to $X.X the costs, the XX.X% compared $XX.X million basis increase margin Non-GAAP year. year-over-year same Now the year, systems year. compared attributable GAAP compared commissions higher $XX pricing, to Last logistics the increased gross were million operating inflation. for to raised expenses last revenue of same along by were to on with margins. XX.X% incremental was to and for XX.X% efficiency year. in consumables The based of for helped million on improvement. the was an the as the the margin last operating operational period for for only the that last and and global period focus the mostly to same XX%. same growth expenses well during we the Non-GAAP trade XX% compared operational primarily operating quarter for $XX.X absolute on the last same quarter, to quarter, cost in million material driven acquisition

an the note model, to are This XX%. additional mid efficiency of the pleased reflected the historical range improved to incremental XX% cost quarter, only instead of expenses where operating we high our in

from in well-positioned $XX.X diluted operating of year. to operating improve on modest driven share balance for last year. quarter the per operations million cash quarter $XXX.X cash used and reflected XXXX. of per of the was the year. same margin. $X.X gross for a cash, quarter end to million for in levels. resulted $X.X cash compared GAAP per the during year $X.X income The in cash million the the in for use operating generation period million and diluted cash the The our the compared profitability first same loss million share second period to and growth or over $X.X operational identified. to share last period in same million compared of same a quarter last the efficiencies, earnings, quarter primarily $XXX.X of of the sheet compared improved with year. was Non-GAAP of Regarding of and for year. generating short-term difference was $X.X to loss $X.XX diluted capitalize million for quarter loss loss Non-GAAP a We same or of equivalents, EBITDA $X.XX strong purchases well-funded as we $XX value-enhancing remain per scalability business last margin are $XX.X net opportunities our loss and of reflects $X.X at compared quarter loss compared $XX.X our million period share was or the million ended the million million a We by quarter same market improved million period or of the $XX.X was they $X.XX increased GAAP Adjusted our deliberately $XX.X compared fortress net the to operations $X.X last in last million for profile, to income inventory deposits With million. to net million $X.XX which diluted

million. half last merger let update, of our revenues Now, guidance note our include outlook XXXX. has year the not would year currency our $XX that the turn announced of MakerBot, closed. to a Since second contribution to our have full continues for I anticipated exchange to from by decline rates Ultimaker me as with our foreign key currencies, number continued the outlook for across for impacted yet

impact growing revenue are for our range the as of full even and the a and the to XXXX, guidance than half and expect to year result, X% $XXX relatively million accordingly. $XXX expected to expect at second a second across of the higher growth quarter in anticipated million to continue for timing year of half with than revenue fourth throughout grow third a Revenue higher We the to sequentially is remainder be the revenue of We year. the to quarter such rate X% adjusting be now fourth the the third. of approximately

second higher a expect earlier, as higher stronger As outlook based primarily revenue in half full rates. change noted the XXXX, half first we XXXX be with declines currency compared the margin is continue year year to I the in slightly to flat to From full on due revenue. to to than gross perspective,

We quarter third the relatively flat last expect to quarter be year. third to compared of the

current One over to head as reminder, than we expect back year, the we impact as our new our higher the the growth operating test, XXXX, expenses margin to In highest operating be a by of As And view continue execute to XX%. value a expenses million caused expect dollar X margins macro on million XXXX, headwind for approximately and our long-term gross a plan, full continue material our despite investment to and Origin $XX now percentage absolute such that by we higher year-over-year, expect Healthcare. as throughout revenue and year. improving due we logistics the from of $XX results primarily to higher situation temporary. sales we drivers decreasing to XD the owning and issues in costs

to non-GAAP We $XX unfolds. X% anticipate non-GAAP net million we diluted million double-digit plan continue margin $XX $X.XX of year. or to achieve to as to $X.XX Yoav to and be net million million With $XX expected turn $XX growth an $XX that, million range remarks. $XX $XX in issues call per still let is need to operating for slightly range in We per non-GAAP the We expenditures share. back diluted Adjusted $XX expect to to Yoav? to $X.XX to the margins expect capital of operating $X.XX million me full impact. of closing the to be a above that GAAP And our million Longer-term, the or monitor EBITDA loss global million. have between now can share. over income for to

Thank you, Eitan.

half to with We are and how strong position first plan. they pleased our our execute results us

We have conditions. global on aligned current our business macroeconomic expectations the based

we that on is in capture Importantly, the share addresses this. should and Operator? XD the XXX to positioned world customers we for of printing like With adoption continue improved position, printing it shareholder companies a growth Fortune to leadership profitability, drive overcome our and help floor create as let's an open long-term uniquely portfolio, of market expanding XD value. growth. concerns up our that, on arise to the our of expect factory questions. around With many and we build relevance as times And outperform

be now Instructions] conducting We’ll today from Palm you. a from first session. Craig-Hallum. coming Our question-and-answer Thank question Greg is [Operator

Your line is now live.

trends what you're macro the This you color maybe taking questions. markets seeing further for guess geographic Greg break Eggerichs thanks. serve? down into any just you for and even the demand the maybe I on on off, given is broader Yes, broader today. that the that actually if further demand, current could Danny starting Thanks in

morning. Thank for you your Hi, good Danny, question.

customers. of the we up are course, nice thing in two new practically But We anyone on focusing the level market. us are the else. in opportunity. addressable like engagements We world same with opened total us, for doubled nice very we are with operating And our The last years, our of seeing markets. we

a nice growing. micro we are the what are view, the can demand. have in We, issues, and -- Stratasys, also we guidance. issues, in -- despite outside which supply seeing we that at our very And And double why have of space So inflation. to that market, a to nice doing, are is see that's chain fact the grow that's issues, means size it you there there macro level,

Yes. Americas the surprised Thanks. on you And then, the are or off that? Europe or that, anything any to just downside guess, I or upside geographies, like

and In as with general, going diversified, geographies. we thing Stratasys in are things are planned. of the And product is nice terms that very both

well, So it, we we luckily but plan planned are enough, our it's meeting We not numbers. luck. and

Yes.

into targeting go that, of time level Okay. a that, And line on from term. on revenue being you associated year the of maybe estimate detail with jump longer that then just significant Any operating of just margins the moving current this or can it's X%. fairly more still some guidance, to way the double-digit that

term, believe, story the XX% sale bigger, you to right? double-digit operating XXXX that double very as demonstrated, very, revenue, story double-digit positioned bring whole And improve OpEx Danny. revenue digits the So that's to on chose that's question. that's right? came scalability, margins look get is lower quarter So $XX grow the technologies, we second to right? that actually profit. to well here million similar we and margin, XXXX, incremental just OpEx, way growth, compare this the good $X we to that the million are scalability. Hey, ability That's and here. on coming OpEx OpEx low the That's the a And gross us to QX have long with bringing increase quarter, almost QX I scalability, the main the very for the with to years. And and the or quarter, our in five margin or we message, revenue And much story the last

you. Thank

coming Our from next today from JPMorgan. Chung Paul is question

now is line live. Your

taking for Thanks questions. my Hi.

you're So first other this after about year flow just heavy And on investments half? investments a inventory cash cash generation the in year How or can half we investments. do positive the kind second the flow, of seeing for in first think drag cap half? the and working you on breakeven in

Yes. a Thanks. That's very question. good

expectations. about first, sensitive, the to positive later our our the operating right? long-term. meet inventory. is free is that's operating negative operating a the -- eight we flow a the negative have of basically quarters, the us cash will this way, order, consecutive demand by we're flow second everywhere. the debt a with positive improve we that taking of right to in have sea expectations, scale to it. future action future, on to meeting to ourselves by future significant cash want company. if very in a we in we into quarters locations couple to seven margin to being We in flow and the cash are quarter gross very quarters sure more in air future, position positive but the on our operating no the So So we trying versus do cautioned in shipment That's maybe the global with temporary clients' demand, last after shift flow, inventory enable Keep of cash the having to our also the even the mind back And to think in order see that quarters deliberate globally in we to We're this means to coming company, taking see But the Obviously, again mid because -- different we casual, way we're our that seven available. flow. and you focus it strong customer to leverage make cash that -- cash back deliberately, nine that in demand place a in

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Thank answer I questions. two. you. divide for my Thank to will your you

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have we technologies. the most So, innovative polymer

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you. Thank

is from Street question from Next coming Capital. Troy Jensen Lake

line is Your live. now

Congrats results here. on nice gentlemen. the Hey

you. Thank

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I'm always growing. curious base to So, the business if is know

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me? long The Troy. answer you the short or Thanks one? hear Do

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see this So more revenues growth. recurring from we

Perfect. All right.

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Thank you.

from coming of Wamsi is question from America. Mohan Bank Next

line Your is now live.

Yes. Thank you. Good morning.

You noted maybe increased your for you kept a of usage installed your TAM of metrics guide a are I'm the to hear to terms the gauge that bit base now way maybe base demand, like doing and resiliency can your curious demand what little us be in in about FX. customers of of obviously looks outside what systems. installed with

consumables If some deceleration, was you growth, are at I look know there and compares some of the strange.

Are increase any thinking in hearing So half around customers intention in a going the you I usage relatively sense Are that you you year And this you're terms decrease -- consistent? either give back follow-up. will to can in of they're or metrics? what maybe remain from fashion? us significant anticipating of to

Thank the you question. for

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you seeing your a -- Eitan. You're from How for then on gross currently much obviously experiencing in revenue. uptick And Yoav. nice are inflation maybe pressure that, for Thanks one Okay. margins?

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get so, over And we to you are margin bridge your think right expecting of absorbing you get $XX basis now like if about or the gross to XX%, inflation, XXX, levers because other of XXX to million? you to headwind points are

Wamsi. Thank you,

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you. Thank

Next McKay [ph] coming from from Stifel. Kira is question

Your now line is live.

you you slide in I was color that dental my the – you're EMEA. on DentaJet, you the dental guys. demand area could My taking if sales, other was questions. the particularly Hi, seeing first America, regions, question mentioned for other JX on the wondering significant Thank provide of North Europe? in in any

the you Thank for question.

building additive can and very and we it. it and dental portfolio do knowledge stronger are are because five dental of and strong materials leveraging technologies, we we have historically, manufacturing. in expertise We And now portfolio its

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The coming next is Brian Blair. Drab Thanks. from William from question

is now live. line Your

I Hi, you help maybe taking could just to color everyone was MakerBot, model. little a thanks my -- help for us more question. wondering model on if give

-- of you're on impact immaterial reporting case? to wondering in you're revenue, out said material revenue is of going come the And method the topline. come what equity just your that You see of out since definition this I'm

but you more at give material, it's can do also has or that -- after us that So, maybe least -- any I I say, to imagine that move? color does going guess in on divest step-up a for profitability? small after it's and what you're this margin

-- close of And our mentioned for as we're to the the previously, you, the for results timing will the Brian. and rest waiting impact the Thank deal year. we of the deal close

regard, back we’ll to in close, the update and you So numbers. we'll after on deal that get

comments, your of margin the of year. exclusion of the will business, points, for our one However, of MakerBot improve to the the MakerBot rest the one your business

can't revenue? is of how on it, irrespective you doing of business the just on generally timing a this level And how -- comment of

Not at we'll but time, this update later.

you. Thank

Ananda Baruah Capital. is from coming from question next Loop Our

is Your now live. line

the for guys taking Yes. Thanks Hey. question.

Thanks. if follow-up. two constraints most? Just then I Could you ones, I the the seeing you're talk about where have quick supply quick could. And still a

in new in you. some there, electronics and Lockdown ports and in war. overall releases of mainly No, US is traffic and some shortage, here. Thank Ananda. jam China raw because materials a Hi, here the nothing there,

didn't with to would broadly out team. my quarter, chain. operation we team. I thank a in fact the a working aspect, say. I this huge our want are And We war its miss it's supply So that despite there penny

in We are inventory. increasing the investing

customers pay pay the We part and deliver to on supply to I our because we that to it in balance are willing of strong value order can our -- deliver leverage them. to ensure believe it's cycle. release gradually, to in will time and order sheet

consider consider And sort helpful -- all context. supply the to would be easing yet? -- things you of, at collectively really would And like, that's you

good by It's we’ll easier. year our expectation is it for an And becoming see Not yet, optimistic manufacturer. end I of nature. optimistic. have I'm but any

the So look on bright side.

turn Thank back session. any you. floor like end for our comments. or I'd We the question-and-answer over reached to further of closing the

So us. for joining thank you

updating you to forward Looking quarter. again next

and conclude Thank today's does That webcast. teleconference you.

your disconnect may You line today. day. participation We at and this wonderful have for a time, thank you your