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Stratasys Earnings: More Red Ink, but a 41% Jump in 3D Printer Sales Is a Good Sign

By Beth McKenna - May 5, 2021 at 9:37PM

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The 3D printing company now has more than a half-billion dollars in cash, which makes it ready to pounce on attractive acquisition targets.

Shares of Stratasys (SSYS 0.99%) fell 4.2% Wednesday, following the 3D printing company's release of its first-quarter 2021 results before the market open.  

We can probably attribute a good portion of the stock's decline to market dynamics in general. Stocks in the technology realm -- especially those of companies that aren't profitable -- were under pressure Wednesday, driven by renewed concerns that inflation could increase and push up U.S. interest rates. 

For some context, shares of Stratasys' rival 3D Systems dropped 2.6% Wednesday. (3D Systems is scheduled to report its Q1 results Monday, May 10. Here's what to watch in 3D Systems' report.)

An industrial 3D printer producing a red plastic object.

Image source: Getty Images.

Stratasys' key numbers

Metric

Q1 2021

Q1 2020

Change

Revenue

$134.2 million

$132.9 million

1%

GAAP operating income

($18.4 million)

($19.9 million)

N/A. Loss narrowed 8%

Adjusted operating income

($2.6 million)

($8.4 million)

N/A. Loss narrowed 69%

GAAP net income

($18.9 million)

($21.7 million)

N/A. Loss narrowed 13%

Adjusted net income

($3.8 million)

($10.6 million)

N/A. Loss narrowed 64%

GAAP earnings per share (EPS)

($0.32)

($0.40)

N/A. Loss narrowed 20%

Adjusted EPS

($0.06)

($0.19) N/A. Loss narrowed 68%

Data source: Stratasys. GAAP = generally accepted accounting principles.

For some additional context on revenue performance, last quarter (fourth-quarter 2020), the company's revenue was $142.4 million. So, sequentially, revenue declined nearly 6%. That said, Stratasys' business generally has slight seasonality, with Q4 usually the strongest quarter.

Wall Street was looking for Stratasys to post an adjusted loss per share of $0.06 on revenue of $132.3 million. So the company edged by the top-line expectation and hit the bottom-line estimate on the bull's-eye.

GAAP gross margin was 41.4%, down from 45% in the year-ago period. Adjusted gross margin landed at 46.7%, down from 48.4%.

The company generated $22.8 million of cash from operations during the quarter, up from $11.3 million in the year-ago period. Thanks in part to a capital raise of $230 million, it ended the quarter with $530.4 million in cash and cash equivalents. 

With more than a half-billion dollars in liquid funds and no debt, Stratasys' balance sheet is robust.

Segment results: Jump in 3D printer sales a good sign  

Segment

Q1 2021 Revenue

Change (YOY)

Product

$90.3 million

8.6%

Service

$43.9 million

(12%)

Total

$134.2 million

1%

Data source: Stratasys. YOY = year over year.

Within the product segment, 3D printer ("system") revenue jumped 41% year over year and consumables (print materials) revenue fell 8%.

The 41% year-over-year surge in 3D printer revenue is a good sign. Sales of systems are generally a leading indicator of sorts. Assuming these systems are well utilized, investors can usually expect that growth in print materials will soon follow. This is important because print materials sport high profit margins.

What management had to say

Here's part of what CEO Yoav Zeif had to say in the earnings release:

I am pleased with our performance in the first quarter that drove 41% growth in system revenues. Thanks to our team's dedication and successful execution, Stratasys delivered solid results and is well-positioned at the forefront of our industry, as end markets continue to recover [from the COVID-19 pandemic] and 3D printing industry growth accelerates. [...]

With a fortress balance sheet and multiple growth opportunities in front of us, we are poised to build incremental value for our shareholders.

Expounding on Zeif's mention of the company's end markets continuing to recover, the pandemic caused the temporary closures of many companies in the industrial sector, which is a key vertical for Stratasys.

Second-quarter guidance

For the second quarter of 2021, management guided for revenue to grow in the mid-teens percentages year over year. That was in line with Wall Street's expectations, as going into the report, analysts were modeling for Q2 revenue growth of about 15% year over year.

A mixed bag of a report

In short, Stratasys' report was a mixed bag. The company's Q1 results on both the top and bottom lines were far from inspiring. But its 3D printer sales performance, ability to churn out cash from operations, and huge cash position are encouraging.

Beth McKenna has no position in any of the stocks mentioned. The Motley Fool recommends 3D Systems. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Stratasys Ltd. Stock Quote
Stratasys Ltd.
SSYS
$19.32 (0.99%) $0.19
3D Systems Corporation Stock Quote
3D Systems Corporation
DDD
$12.23 (0.95%) $0.12

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