Off 9% in the wake of the company's Q2 earnings report, shares of Stratasys (Nasdaq: SSYS ) continued to belie their name, dropping another percentage point or so Thursday to make for an even 10% drop. For those of us who have been waiting for a price drop, this news couldn't be better.
As you've probably heard by now, the leading name in 3-D printing reported pretty nice Q2 results Wednesday morning. Revenues rose 22% to $30.1 million. Profits were up nearly three times their Q2 2009 levels at $0.11 per diluted share. Perhaps most important for the company's razor-and-blade business model, Stratasys made good progress getting the "razors" out there to the "blade"-buying public. Unit shipments of 3-D printers increased 54% year over year to a record 682 systems. Revenues on 3-D systems increased 56%.
So not only was this far ahead of the companywide sales numbers. It's also proof positive that customers are no longer cowering in fear of the recession at the low end of Stratasys' product line, but moving up and paying at mid-range price points (and even a little bit better). And of course, the more systems out there, the better the prospects of growing consumable 3-D "ink" sales in the future.
Speaking of the future, Stratasys management had nothing but good things to say about its alliance with Hewlett-Packard (NYSE: HPQ ) -- the one that's supposedly going to quintuple Strata-sales over the next five years. Not only is the relationship working out, but in fact shipments of the new line of HP Designjet 3-D printers seem to have "exceeded the original Q2 forecast," and Stratasys confirms that "sell-through to end users has been strong." No word on precisely whom H-P is selling to, but Stratasys itself mentioned how Lockheed Martin (NYSE: LMT ) is making use of one of its printers to facilitate "price development" -- a key Pentagon concern these days, and one that echoes the Autodesk (Nasdaq: ADSK ) turbo-prop testimonial we discussed a few months back. Of course, a system like Stratasys' only encourages further use of 3-D modeling software, so you can expect continued support from Autodesk.
Why so shy, Stratasys?
Of course, the single most important number at Stratasys -- the free cash flowing from all this good news -- remains something of a mystery. Management didn't include a cash flow statement in its press release, was frustratingly vague about the number in its post-earnings conference call (not that the analysts seemed to notice), and hasn't yet seen fit to publish anything about its earnings with the Securities and Exchange Commission.
But when the news finally does come out, I suspect it will be good. Even as revenues soared 22%, Stratasys somehow managed to reduce both its accounts receivable number and its inventories in comparison with the year-ago quarter. I cannot help but think this means good news for the company's cash flow.
Knock on wood.
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