Stratasys (NASDAQ:SSYS) reported second-quarter 2019 results before the market opened on Wednesday, July 31. 

It was the first of the two leading 3D printing companies to report, with rival 3D Systems scheduled to release its results after the market closes on Wednesday, Aug. 7.

Stratasys' revenue slipped 4.1% year over year, which management largely attributed to "significant economic weakness in Europe," chairman of the board and interim CEO Elan Jaglom said on the earnings call. On the positive side, bottom-line results under generally accepted accounting principles (GAAP) flipped from negative to positive, and earnings per share (EPS) adjusted for one-time items increased 6.7%.

The market's reaction was relatively muted, with shares edging down 1.8% on Wednesday. 

Stratasys' results: The raw numbers


Q2 2019

Q2 2018



$163.2 million

$170.2 million


GAAP operating income

$0.8 million

($1.9 million)


Adjusted operating income

$9.1 million

$10.6 million


GAAP net income

$1.2 million

($3.6 million)


Adjusted net income

$8.5 million

$8.1 million


GAAP earnings per share (EPS)




Adjusted EPS


$0.15 6.7%

Data source: Stratasys.

Underlying revenue wasn't as weak as suggested by the reported number. "After adjusting for the sales of our divested entities during 2018, total revenue decreased 2% for the quarter and decreased 1% after also adjusting for [the impact of foreign exchange]," CFO Lilach Payorski said on the earnings call.

GAAP gross margin was 49.7%, up from 49.1% in the year-ago period and also higher than 49.2% in the first quarter. Adjusted gross margin came in at 52.5%, unchanged from the second quarter of 2018, but higher than last quarter's 52%.

Stratasys used $3.8 million in cash from operations during the quarter and ended the period with $366.3 million in cash and cash equivalents.

For some context (though investors shouldn't give too much weight to Wall Street's near-term estimates), analysts were looking for adjusted EPS of $0.15 on revenue of $168.7 million. So Stratasys slightly exceeded the profit expectation, but fell short of the top-line consensus. 

Close-up of a 3D printer with a blue surface printing a white plastic object.

Image source: Getty Images.

Segment results 


Q2 2019 Revenue

Year-Over-Year Change


$110.3 million



$52.8 million



$163.2 million


Data source: Stratasys. 

Within products, 3D printer revenue dropped 10% year over year and consumables (print materials) revenue fell 4%. Within services, customer support revenue, which mainly includes revenue from service contracts, rose 2%. (Stratasys provides whole-number percentages only.)

Excluding divested entities and the impact of foreign exchange, product revenue slipped 3% year over year, while revenue from sales of 3D printers and consumables declined 6% and 1%, respectively. 

For some context, last quarter, 3D printer revenue inched up 1% year over year. Sales of 3D printers are central to the company's razor-blade-like business model in that they drive sales of the high-profit-margin print materials and service contracts.

What management had to say

Here's what Jaglom had to say in the earnings release:

Our second quarter results reflect continued strong performance in the Americas, where we saw revenue growth across systems, consumables, and services, which was offset mainly by significant economic weakness in Europe that we believe is impacting capital investments and general spending in the automotive and industrial machinery markets in that region, as well as by the adverse impact of foreign exchange rates in Europe and Asia Pacific.

We believe that we are well positioned to return to growth in Europe when macro conditions improve, and our new products and platforms are launched and adopted in the market. Additionally, despite relatively flat revenue growth after excluding divestments, we are pleased that our emphasis on operational efficiency delivered earnings and profitability while we continue to invest in new products and strengthen our R&D efforts to expand our addressable markets.

Stratasys has been without a permanent CEO since June 2018. The CEO search process is ongoing. 

Looking ahead

Stratasys turned in a lackluster quarter, which management attributed primarily to tough macroeconomic conditions in Europe. That said, there were bright spots, most notably that the company's Americas region, its largest geographic market, continued to show broad-based growth across segments and that both GAAP and adjusted earnings improved thanks to continued focus on controlling expenses.

Management reiterated its previously issued full-year 2019 guidance for revenue and adjusted earnings and raised its outlook for GAAP earnings as follows:

  • Revenue of $670 million to $700 million, representing growth of 1% to 5.5% year over year 
  • GAAP net loss of $0.31 to $0.05 per share, up from prior guidance of a net loss of $0.40 to $0.22 per share
  • Adjusted EPS of $0.55 to $0.70 per share, representing growth of about 6% to 35%

Management continues to expect revenue growth to accelerate beginning in 2020, driven by sales of products being launched this year and next year.

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