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Date

Thursday, May 7, 2026 at 8:30 a.m. ET

Call participants

  • Chief Executive Officer — Dr. Yoav Zeif
  • Chief Financial Officer — Eitan Zamir
  • Vice President, Investor Relations — Yonah Lloyd

Takeaways

  • Consolidated Revenue -- $132.7 million, down 2.4% year over year, reflecting persistent capital discipline among customers.
  • Product Revenue -- $88.8 million, consisting of $28.8 million from systems and $60 million from consumables, each down from prior-year levels.
  • Services Revenue -- $43.9 million, with Stratasys Direct growing 23% organically after divestments from the same quarter in 2025, driven by defense sector demand.
  • GAAP Gross Margin -- 41.7%, a decline versus 44.3% in the comparable period, primarily due to $2.4 million in incremental tariff costs and lower revenue.
  • Non-GAAP Gross Margin -- 46.3%, down from 48.3%, with a 180 bps impact from tariffs explicitly identified as a margin headwind.
  • GAAP Operating Expenses -- $81.9 million, up from $72.6 million, largely due to higher professional fees and a $3.1 million negative effect from Israeli shekel appreciation.
  • Non-GAAP Operating Expenses -- $64.6 million, increased from $62.6 million, primarily due to currency headwinds.
  • GAAP Operating Loss -- $26.5 million, compared to a loss of $12.4 million, highlighting increased operating costs and margin pressure.
  • Non-GAAP Operating Loss -- $3.2 million, versus operating income of $3 million a year earlier, indicating a reversal in profitability.
  • Adjusted EBITDA -- $2 million, down from $8.2 million, with FX and tariff pressures cited as primary drivers of the decline.
  • GAAP Net Loss -- $23.8 million, or $0.28 per diluted share, increased from $13.1 million, or $0.18 per share.
  • Non-GAAP Net Loss -- $1.3 million, or $0.01 per diluted share, versus non-GAAP net income of $2.9 million, or $0.04 per share previously.
  • Operating Cash Flow -- $2.4 million, demonstrating continued positive cash generation despite lower revenue.
  • Cash Balance -- $237.8 million in cash, cash equivalents, and short-term deposits, with no debt on the balance sheet, maintaining financial flexibility for ongoing investments.
  • Full Year Revenue Guidance -- Management reiterated a $565 million to $575 million range, with expected sequential growth through the year and consumables revenue projected to rise over 2025.
  • Defense Sector Positioning -- Stratasys Direct was selected for the U.S. Department of War's Joint Additive Manufacturing Acceptability IV pilot parts program, supporting expanded U.S. defense additive spending.
  • Dental Regulatory Milestone -- TrueDent Resin received CE Class IIa certification in Europe, enabling entry into new restorative dental segments with an addressable market projected at $2.45 billion by 2028.
  • Materials and Software Innovations -- ULTEM 1010 resin for F3300 enables aerospace-grade, high-temperature parts, while the TUF1 PolyJet material and adaptive modeling enhancements in GrabCAD Print Pro expand application offerings.
  • Strategic Outlook -- Management emphasized a strategic focus on high-requirement applications in manufacturing and defense, targeting both organic growth and acquisitions aligned to "high value in high requirement applications."

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Risks

  • GAAP and Non-GAAP Margins -- Both declined year over year, with management citing "the 180 bps impact of $2.4 million of year over year incremental tariff expense as well as from lower revenue" as primary drivers.
  • Operating Income and Profitability -- The shift from operating income to operating loss on a non-GAAP basis and deepened GAAP operating loss was linked to higher professional fees and foreign exchange pressures from the Israeli shekel.
  • System Revenue Contraction -- System revenue fell to $28.8 million from $31.2 million, with management stating "printer purchasing time lines remained extended as customers exercise capital discipline amid ongoing global uncertainty."
  • Year over year Net Loss Deterioration -- GAAP net loss increased to $23.8 million as tariff and currency effects, coupled with lower revenue, outpaced cost improvements.

Summary

Stratasys (SSYS +0.58%) delivered fiscal first quarter ended March 31, 2026 results marked by a soft revenue environment and margin pressure but highlighted rapid growth in its defense and dental verticals. The company maintained positive operating cash flow despite non-GAAP losses and reaffirmed its revenue guidance for the full year, signaling confidence in a sequential growth trajectory supported by strong pipelines in aerospace, defense, and dental markets. Management underscored the company's established position in U.S. defense additive manufacturing and a regulatory breakthrough in dental, while signaling plans to leverage a debt-free balance sheet for selective inorganic growth aligned with high-value, high-requirement applications.

  • Management stated that "Stratasys Direct delivered over 10% sequential growth and 23% organically after divestments when compared to the first quarter of 2025," identifying defense as the key demand engine.
  • The company emphasized recurring revenue from consumables and customer support as stabilizing factors amid delayed customer capital spending.
  • Dr. Yoav Zeif described the company's defense manufacturing as "production scale additive manufacturing at operational tempo for the most demanding customers in the world," highlighting certified quality systems and thousands of systems deployed.
  • The company reported TrueDent's CE Class IIa classification enables sales into broader European dental applications, removing adoption barriers and supporting a strategy to become "the largest player in Europe."
  • Management cited adaptive software features and new material launches as incremental drivers expanding application coverage and efficiency for customers in high-reliability segments.

Industry glossary

  • AS9100: Aerospace industry standard for quality management systems, required for certified suppliers.
  • ITAR: International Traffic in Arms Regulations, U.S. government requirements controlling the export of defense-related technology.
  • PolyJet: A 3D printing technology by Stratasys that enables multi-material, high-resolution additive manufacturing, often used in dental and medical applications.
  • FDM (Fused Deposition Modeling): Stratasys' proprietary 3D printing process for building parts layer by layer using thermoplastic materials, suited for industrial applications.
  • GrabCAD: Stratasys’ suite of software tools and community platform supporting additive manufacturing workflows, printing operations, and design sharing.
  • DLP (Digital Light Processing): Additive manufacturing method using projected light to cure resin layer by layer, referenced for high-precision industrial production.
  • CE Class IIa: European medical device regulatory category, indicating a higher safety and efficacy bar compared to Class I, necessary for permanent dental restorations.

Full Conference Call Transcript

Yonah Lloyd: Good morning, everyone, and thank you for joining us to discuss our 2026 first quarter financial results. On the call with us today are our CEO, Dr. Yoav Zeif; and our CFO, Eitan Zamir. I would like to remind you that access to today's call, including the slide presentation, is available online at the web address provided in our press release. In addition, a replay of today's call, including access to the slide presentation, will also be available and can be accessed through the Investor Relations section of our website.

Please note that some of the information provided during our discussion today will consist of forward-looking statements, including, without limitation, those regarding our expectations as to our future revenue, gross margin, operating expenses, taxes and other future financial performance and our expectations for our business outlook. All statements that speak to future performance, events, expectations or results are forward-looking statements. Actual results or trends could differ materially from our forecast. For risks that could cause actual results to be materially different from those set forth in forward-looking statements, please refer to the risk factors discussed or referenced in Stratasys' annual report on Form 20-F for the 2025 year.

Please also refer to that annual report, along with our reports filed with or furnished to the SEC throughout 2026 for additional operational and financial details. Reports on Form 6-K that are furnished to the SEC on a quarterly basis and throughout the year, provide updated current information regarding the company's operating results and material developments concerning our company. Stratasys assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates. As in previous quarters, today's call will include GAAP and non-GAAP financial measures. The non-GAAP financial measures should be read in combination with our GAAP metrics to evaluate our performance.

Non-GAAP to GAAP reconciliations are provided in tables in our slide presentation and today's press release. I will now turn the call over to our Chief Executive Officer, Dr. Yoav Zeif. Yoav?

Yoav Zeif: Thank you, Yonah. Good morning, everyone, and thank you for joining us. Our first quarter results reflect the continued resilience of our operating model in a measured spending environment. Recurring revenue streams from consumables and customer support continues to provide stability, while printer purchasing time lines remained extended as customers exercise capital discipline amid ongoing global uncertainty. Meanwhile, we remain focused on executing our strategy to grow as we deepen our penetration into manufacturing.

On a sequential basis, compared to the fourth quarter of 2025, consumables and services both grew slightly, and Stratasys Direct delivered over 10% sequential growth and 23% organically after divestments when compared to the first quarter of 2025, reinforcing the trajectory of our production parts business as was the case for the full year 2025. The top 3 parts customers were again all U.S.-based drone-related companies. But note that Stratasys Direct produces and use parts across a wide variety of industrial applications using Stratasys printers almost exclusively, demonstrating the versatility of our technologies and the view into its potential future benefits. At the same time, we continue to make meaningful strategic progress.

Innovation, customer engagement and market development remain the foundation of our long-term growth strategy, one that centers on secular megatrends of supply chain protection and operational efficiency, reshaping global manufacturing. Nowhere are these megatrends more pronounced than in aerospace and defense, where mission-critical performance requirements, supply chain resilience mandates and expanding U.S. Department of War investment in advanced digital manufacturing are creating a strong structural demand environment. To that point, we believe Stratasys is uniquely positioned to win. In a tariff-sensitive environment, in particular, our platform's ability to enable local, rapid and cost-effective production is a genuine competitive advantage, one we continue to highlight in customer conversations and one we expect will accelerate adoption over time.

Turning to new technology developments and customer activity. In aerospace and defense, we continue to demonstrate the depth and durability of our position this quarter. As a reminder, Stratasys has deployed thousands of systems across aerospace and defense production environments worldwide. We serve as a program of record for the U.S. Air Force and NAVAIR. Our technology is embedded across active platform from C-17 microvanes that save an estimated $14 million annually in Air Force fuel costs to certified flight-ready parts produced for the world's leading aircraft manufacturer. Stratasys Direct, our parts manufacturing division, ships over 100,000 parts annually to the defense industry and operates under certified quality systems, including AS9100, ISO 9001 CMMC compliance and ITAR requirements.

This is not prototype stage or pilot stage engagement. This is production scale additive manufacturing at operational tempo for the most demanding customers in the world. Against that backdrop, our selection in the first quarter for the U.S. Department of War's Joint Additive Manufacturing Acceptability IV pilot parts program is a meaningful endorsement. Gamma 4 is a multimillion-dollar initiative to accelerate the qualification and deployment of 3D printed parts across military platforms and Stratasys Direct was selected on the basis of its proven production role across thousands of active military systems.

The program positions us to extend our share of U.S. defense additive spending, a budget which surged 83% for fiscal year 2026 and continues to flow into qualification and deployment for the Department of War. More broadly, our customer engagement across leading aerospace contractors and OEMs remains substantive with use cases advancing through qualification pipelines from production tooling to certified flight-ready components. These cycles are long, but the outcomes generate durable recurring demand, anchored in certification and workflow integration, exactly the kind of revenue profile that strengthens our business over time. And we are seeing continued momentum in high reliability aerospace applications with thousands of parts in orbit, leveraging our materials.

In fact, on the recent Artemis II moon mission, hundreds of components produced with Stratasys Antero materials on our FDM system were flown, highlighting the maturity and scalability of additive manufacturing in space systems. This is a strong validation of the high-performance applications of our materials and our position in mission-critical environments, reinforcing the growing role of additive in next-generation space and defense platforms. In Dental, we reached an important regulatory milestone. TrueDent Resin received CE Class IIa medical device certification, making TrueDent the first polychromatic monolithic 3D printed denture solution. Certified at this classification in Europe, a segment projected at $2.45 billion by 2028.

This upgrade from the prior CE Class I designation extends TruDent's indications to include long-term intraoral removables and crowns and bridges, broadening the range of restorative cases dental laboratories can address through a single integrated digital workflow. CE Class II is a regulatory classification. Clinicians and laboratories routinely expect for restorative dental materials. Achieving it removes a meaningful adoption barrier strengthens biocompatibility and safety confidence for clinicians and patients and positions Stratasys to deepen penetration across European dental labs and clinics as digital denture production scales.

Importantly, the transition to Class IIa requires no change to print setting formulation workflow or shelf life on our J5 DentaJet platform, making this a frictionless expansion of our commercial reach in regulated European regions. We believe we are building the commercial and regulatory foundation for meaningful growth in this vertical. On the material and software side, we continue to invest in expanding what our installed base can do. ULTEM 1010 resin is now available as filament for the F3300 printer, enabling the production of aerospace-grade high-temperature parts with the lowest coefficient of thermal expansion in FDM portfolio.

Optimized for composite tooling applications, ULTEM 1010 on the F3300 allows manufacturers to produce precision fixtures and tools that maintain reliability in demanding environments and to do so faster at lower cost per part relative to prior configurations. And on our PolyJet systems, we recently expanded TUF1 to be available on the J3 and J5 series. TUF1 is an advanced material engineered for strong, durable functional prototyping as well as end-use parts. Materials extensions like these are designed to further drive consumable attach rate and deepen application coverage. On the software side, measurement-based warped adaptive modeling has been integrated into GrabCAD Print Pro, using measure dimension data to automatically correct warping on the Origin P3 platform.

For complex parts like electrical connectors, precision jigs and industrial fixtures, this eliminates the iterative correction cycle that have historically added time and cost, and it delivers a meaningfully better experience for customers scaling production on our DLP platforms. With that, I will turn the call to Eitan to review our financials. Eitan?

Eitan Zamir: Thank you, Yoav, and good morning, everyone. Our first quarter results reflect continued execution against the operational priorities we established at the start of the year. In an environment where customers remain deliberate on capital spending, we maintained adjusted EBITDA profitability and generated positive operating cash flow, outcomes that reflect both the structural improvement embedded in our cost model and the stability of our recurring revenue base. Let me get into the details. First quarter consolidated revenue was $132.7 million, down approximately 2.4% year-over-year. Product revenue in the first quarter was $88.8 million compared to $93.8 million in the same period last year.

Within product revenue, system revenue was $28.8 million compared to $31.2 million in the same period last year. Consumables revenue was $60 million compared to $62.6 million in the same period last year. Service revenue, which includes Stratasys Direct was $43.9 million compared to $42.2 million in the same period last year, driven by 23% organic growth after divestments in Stratasys Direct as compared to the first quarter of 2025. Within service revenue, customer support revenue was $29.7 million compared to $30 million in the same period last year. Now turning to gross margins. GAAP gross margin was 41.7% for the quarter compared to 44.3% for the same period last year.

Non-GAAP gross margin was 46.3% for the quarter compared to 48.3% in the same period last year. The change was primarily due to the 180 bps impact of $2.4 million of year-over-year incremental tariff expense as well as from lower revenue. While we typically do not reference sequential margin improvement, we believe that despite the reduction in revenue from fourth quarter, margins were sequentially flat, marking a positive mix efficiency. GAAP operating expenses were $81.9 million compared to $72.6 million during the same period last year.

The rise in expenses was primarily due to an increase in professional fees and the impact of foreign currency exchange due to the significant appreciation of the new Israeli shekel relative to the U.S. dollar. Non-GAAP operating expenses were $64.6 million compared to $62.6 million during the same period last year. The increase was primarily due to the impact of foreign currency exchange rates given the increased strength of the shekel against the dollar of approximately $3.1 million. Regarding our consolidated earnings. GAAP operating loss for the quarter was $26.5 million compared to a loss of $12.4 million for the same period last year.

Non-GAAP operating loss for the quarter was $3.2 million compared to operating income of $3 million for the same period last year. Adjusted EBITDA was $2 million for the quarter compared to $8.2 million in the same period last year. The change in both was primarily due to the impact of approximately $5.3 million of FX and tariff pressures. GAAP net loss for the quarter was $23.8 million or $0.28 per diluted share compared to a net loss of $13.1 million or $0.18 per diluted share for the same period last year.

Non-GAAP net loss for the quarter was $1.3 million or $0.01 per diluted share compared to a net income of $2.9 million or $0.04 per diluted share in the same period last year. From a cash flow perspective, we generated $2.4 million in operating cash flow in the first quarter, reflecting working capital discipline and the structural cost improvements we've embedded over the past several quarters. This builds on the $15.1 million in operating cash flow we delivered for the full year of 2025, and we remain confident in our ability to expand cash generation as revenue scales through the year. We ended the quarter with $237.8 million in cash, cash equivalents and short-term deposits.

Our balance sheet remains strong and debt-free, providing the financial flexibility to continue investing in technology, market development and inorganic opportunities to drive further growth. Regarding our outlook for 2026, our first quarter performance is consistent with the framework we established at the start of the year, and we are reiterating the full year guidance we provided on our last call. Revenues are expected to range between $565 million to $575 million, growing sequentially each quarter through the year, and we expect 2026 consumable revenue to increase over 2025. Please refer to the press release or slide presentation for further details. With that, let me turn the call back over to Yoav for closing remarks. Yoav?

Yoav Zeif: Thank you, Eitan. Coming out of the first quarter, our customer engagement continues to increase, and our deal pipeline for 2026 and beyond continues to build, especially in defense. The strategic progress we shared today reinforces the trajectory we plan for tomorrow. Our solutions for the defense industry are no longer just emerging, but are established, certified and operating at scale across active military platforms. We have increased access to multibillion-dollar regulated European dental vertical.

With a product already proven and deployable without workflow disruption, supported by positive operating cash flow and a debt-free balance sheet, we have built multiple opportunities to generate profitable growth, both through inorganic and organic opportunities, focusing on our position in high requirement use cases as we capitalize on the increased demand for additive manufacturing solutions. With that, let's open it up for questions. Operator?

Operator: [Operator Instructions] Our first questions come from the line of Greg Palm with Craig-Hallum.

Jackson Schroeder: This is Jackson Schroeder on for Greg Palm. I wanted to start on this defense opportunity, everyone obviously seeing the top line budget request. Curious if you could really talk on opportunities, particularly outside of drones with what's happening in Iran ammunitions replenishment. There's a lot of opportunities here as well as the JAMA IV program. So I just want to get some more color on that.

Yoav Zeif: Thank you, Jackson, for the question. So let me take a step back and talk a little bit about aerospace and defense because this is, to be honest, a leading vertical today with a very promising pipeline. So when we are looking at aerospace and defense, what we are experiencing is part of what's going on in the industry. Practically, aerospace and defense, this industry is going through transformation globally, by the way, not only in the U.S. And the transformation is both in terms of the increased budget, like numbers that we haven't seen in the past and also new solutions like drones, but also ammunitions, missiles and others.

So we see it across the board, not only in drones. And we have, for example, parts in missiles, which are a very strong growing area in defense. And no doubt that additive manufacturing AM is playing and probably will play a major role in this transformation because we deliver things that no other advanced manufacturing methodology can. We are more agile. We are in the front where you need to produce, we are versatile. We secure the supply chain, and we can deliver lightweight geometries that no other manufacturing methodology can. You put all this together and Stratasys is in the best position to benefit from this transformation because we worked on this for years.

We have relationship with the Department of War now. Used to be Department of Defense. We have relationship with the large OEMs. Practically all the leaders in defense are sitting in our customer advisory board, and they are having an impact on our R&D as well. So they know what we are developing for them. On top of it, we have relationship with key bodies that are adopting additive like NAVAIR, like the U.S. Air Force and others. So we are talking here about very strong position that is also supported by our Stratasys Direct. Stratasys Direct grew 23% year-over-year, led by drones, but also other applications. So we are in munition, we are in sustainment.

Sustainment is major for us, major for us. Because you take, for example, [ VCC ] it needs to fly for the next 20 years. It will be 100 years old, almost 100 years old airplane. We are there. We're already part of sustainment program of the U.S. But when you look at Stratasys Direct, our SDM unit, this is the best indicator that you can have for demand for OEMs for machine solutions in the future because the parts business is practically indicating what the customers will adopt internally in the future. First thing that they are doing, they are ordering parts.

So we see it across the board, back to your question, across different applications, drones are leading because this is kind of the best example of the transformation of this industry. And you can see it also in the numbers. If I remember right, the U.S. Department of War is asking for 2027 for $1.5 trillion budget, which is almost 45% increase year-over-year. $75 billion out of it is for advanced digital manufacturing and additive will have a major part here. So we are excited about it. We are working with everybody and also the pipeline. We have more confidence in our pipeline in aerospace and defense.

Jackson Schroeder: That's really exciting. And should we think about this as like Stratasys being the real indicator driver of that? Or should we look at like with these drone customers? Will this kind of transition into like big system sales? Could that also happen to the government? How should we be thinking about that?

Yoav Zeif: Absolutely both. Stratasys Direct is an indicator because every day, we are delivering parts for drones, large parts, small parts. By the way, in large parts, we have huge advantage because of our reliable FDM solution, industrial FDM solution, the F900 and the F3300 with unique materials that only Stratasys has. So probably in every large UAV, you will see Stratasys ULTEM parts. But not only there, it's also relationship with the Department of War and large appropriations that are targeting sustainment and also renew of the depots. And I'll give you an example of shipyards. U.S. builds less ships, battle ships since World War II than China in the last year. That's what I heard in the Pentagon.

What does it mean? It means that there is a lot to catch up. And if you want to catch up and fast, additive is a solution. We are experiencing the same thing also in Europe. Germany and Japan mainly, they need to catch up and the quickest way to catch up is additive manufacturing.

Operator: Our next questions come from the line of Trevor Sahr with William Blair.

Trevor Sahr: This is Trevor on for Brian. I wanted to stick with A&D, if we can here. I'm trying to square your opportunity with some of your largest A&D customers on production versus prototyping. It would be helpful to hear any kind of detail you could give or examples. You don't have to name a customer, obviously, but how should we think about your development with some of these largest customers and where you are in your business with them on a production versus prototyping standpoint?

Yoav Zeif: Great question, Trevor. Currently, we are focusing all the way on manufacturing. And the main areas are this drone transition or drone dominance, one of them. The other one is the sustainment, and the third one is everything which relate to maritime and catching up on the ability to be there with renewed fleets, I would say. The main indication, as I said, it's going both in different direction, but the main indication now is Stratasys Direct. We shipped over 100,000 production parts annually. And we have never seen it before in defense, this level of demand. And we are working in different layers or different routes to the market. One is through the government.

We are very strong with the U.S. government, but also with other governments globally because we have the reputation, and we see there large programs that are being built and allocation and assignment of budgets. Majority of this demand is production part, not prototypes. We also see demand for tooling because when you need to refresh or renew a depot, you need many tools, same with shipyards. And the fastest way to have tools is to print it. Tooling is also a major thing in defense now because you need to put all those new lines of production, and there is nothing faster than additive manufacturing to equip those lines with tools. So this is another area.

And one more, probably I can talk about it for hours, but I want to shed light on the fact that this is not only a U.S. phenomenon. This is a global phenomenon. It's the strongest demand we see in the U.S. and also the innovation, but it's definitely a global phenomena that we see more budget, more programs that are being now established, and we will see the demand over the next quarter, but also years from now. We have a strong lines of solutions that can really match those requirements and the high requirement and the demand.

Trevor Sahr: That's great. I wanted to switch back over to Dental. You gave some great detail there on the European market and that you project it to be $2.45 billion by 2028. I'm just trying to get a sense of what your specific opportunity is in the European 3D printed venture market. And maybe if you could give any kind of indication of where you expect your share might be within that market by 2028.

Yoav Zeif: So the dental market is one of the leading industries in adopting additive manufacturing because of the ability to personalize and in a very quick way. Traditionally, the dental market is labor-intensive. And we are bringing here solution that solves 2 major issues in dental, the lack of professional labor. And the second one, we are dramatically as an industry, as an additive manufacturing industry, we are dramatically reducing the chair time for the doctor, for the clinic, for the dentist. And there is nothing more valuable for a dentist than his chair time. And our dentures, and we call it removables, we are focusing on removables. It's for restorative dental, so dentures, but also night guards.

We are focusing there with our PolyJet technology. It's the only multi-material technology for dentists or for dental. But what does it mean multi-material? It means that we can deliver parts that no other technologies can. And we are already established because in the U.S., our dentures are already -- we are already working with the leading players like Affordable and Glidewell, and we plan to grow and to be the largest player in Europe because we have the first-mover advantage. We are the first player with polychromatic dentures that received the Class IIa. Great position to be in.

And it's also opening up for us new applications like partial dentures and crown and bridges, and we will see growth there.

Operator: Our next questions come from the line of Alek Valero with Loop Capital Markets.

Alek Valero: Yes, just kind of on that same point on TrueDent. So you projected the European segment at $2.45 billion by 2028. I wanted to ask, how does -- did this certification come sooner than you were expecting? And what is the likelihood that we could see more certifications down the road? And how would that expand your TrueDent opportunity? And additionally, a clarification question. Is the $2.45 billion in addition to the American market?

Yoav Zeif: So the $2.45 billion is analyst projection in the European market. When we look at our TrueDent, it will definitely get into new applications that we were not there in the past, like, as I said, partial dentures and crown and bridges. And we have the first mover advantage there. In the U.S. it's a bigger opportunity. It's almost $5 billion when you look at removables. It's only the beginning. We are improving the material. We're improving the machines. We're improving the solution. We are improving the workflow. We are the first mover, but we are not laying back and said, okay, this is it. We are building the foundation, and we are building the best offering for restorative dental.

And once we have this foundation, I have no doubt that we will experience exceptional growth.

Alek Valero: Just a quick follow-up. Two quarters ago, you mentioned a large tech company that bought some F3300s. Any update there? And any color on what potential applications they could be using these -- your products for?

Yoav Zeif: Unfortunately, we cannot share. But I want to do something just to share one perspective, which I think is important because it's kind of connecting all the questions today. And I want to state it very clearly. We are progressing according to our growth plan. This is a plan that we shared with you last quarter. It's true that Q1 is always is the softer one and H1 are softer than H2, but H2 is definitely defense driven. So we are maintaining our guidance. We are on plan. And when I'm saying on plan, this will be the first year for 3 years now, that we will grow.

So our transition plan from prototyping to manufacturing that we also shared with you in the past, will generate growth this year. Our transition is working.

Operator: Our next questions come from the line of Kieran McCabe with Cantor Fitzgerald.

Kieran McCabe: It's Kieran on for Troy Jensen. You mentioned that customer engagement continues to be strong or increasing, but customers are maintaining capital discipline. Can we read any insight into the Stratasys Direct organic growth that may be a precursor to an inflection in system sales in the future at all?

Yoav Zeif: Hi Kieran, thanks for the question. As we mentioned earlier, STM, the parts business is an indicator to the behavior of the OEMs that follow. When we print parts, the cycle is very quick. We see the growth relatively quick. We demonstrated in Q1, 23% growth organically, as you mentioned. And that's part of the confidence we have in the ability to -- with a strong pipeline that we see for the second half to grow also on the hardware and OEM business. And we start to see it already in Q2. In Q2 this year, we expect to see similar revenue to Q2 2025 levels.

Kieran McCabe: And my follow-up is that you have a strong balance sheet, no debt, cash on hand. You talked about some inorganic -- taking advantage of inorganic opportunities. Kind of can you provide any color maybe where you see some areas you want to add to or areas of interest on the inorganic side?

Yoav Zeif: No doubt that we are aiming to leverage our balance sheet to capture inorganic opportunities to strengthen our position in what we define as high requirement use cases because this is our strategy. Our strategy is to deliver and capture high value in high requirement applications. We don't want to be in prototyping, in basic prototyping. We don't want to compete with solutions that deliver no value. They deliver value, but it's race to the bottom. We are focusing on the high end, on the high requirement applications, and there are plenty of inorganic opportunities to capture in those areas. And this is our direction. It's completely aligned with our strategy, and we are going to capture those opportunities.

Operator: We've reached the end of our question-and-answer session. I'd now like to hand the call back over to Dr. Yoav Zeif for any closing comments.

Yoav Zeif: Thank you for joining us. We look forward to updating you again next quarter.

Operator: Ladies and gentlemen, thank you so much. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time and enjoy the rest of your day.