Shares of Stratasys (SSYS -0.20%) gained 12.7% on Tuesday, following the 3D printing company's release of its first-quarter 2022 results on the prior afternoon.
No doubt, the stock got a brisk tailwind from overall market dynamics, as the S&P 500 and tech-heavy Nasdaq Composite rose 2% and 2.2%, respectively, on Tuesday. Moreover, shares of rival 3D Systems popped 6.6% on no news.
However, a sizable portion of Stratasys stock's surge is attributable to the company's first-quarter revenue and earnings coming in higher than the Wall Street consensus estimates. Investors were also probably at least satisfied that management slightly increased the midpoint of its full-year 2022 revenue guidance and reiterated its 2022 earnings outlook.
Image source: Getty Images.
Stratasys' key numbers
| Metric | Q1 2022 | Q1 2021 | Change |
|---|---|---|---|
| Revenue | $163.4 million | $134.2 million | 22% |
| GAAP operating income | ($19.6 million) | ($18.4 million) | Loss widened 6.5% |
| Adjusted operating income | $2.0 million | ($2.6 million) | Result flipped to positive from negative |
| GAAP net income | ($20.9 million) | ($18.9 million) | Loss widened 11% |
| Adjusted net income | $1.2 million | ($3.8 million) | Result flipped to positive from negative |
| GAAP earnings per share (EPS) | ($0.32) | ($0.32) | -- |
| Adjusted EPS | $0.02 | ($0.06) | Result flipped to positive from negative |
Data source: Stratasys. GAAP = generally accepted accounting principles.
Investors should focus on the adjusted numbers, as they exclude one-time items.
Wall Street was looking for an adjusted loss per share of $0.04 on revenue of $157.6 million, as outlined in my earnings preview. So, the company surpassed both expectations. It also topped its own revenue guidance, which was for year-over-year growth in the high-teens percentage range. It did not provide an earnings outlook.
GAAP gross margin was 42.6%, up from 41.4% in the year-ago period. Adjusted gross margin landed at 47.3%, up from 46.7%.
The company used cash of $16.1 million running its operations during the quarter, compared with generating cash of $22.8 million in the year-ago period. It attributed the decline to higher inventory purchasing and an increase in accounts receivable. It ended the quarter with $475.6 million in cash and cash equivalents.
For context, in the fourth quarter of 2021, Stratasys' revenue jumped 17% to $167 million, beating the $165 million Wall Street had expected.
Segment results driven by 3D printer sales
| Segment | Q1 2022 Revenue | Change (YOY) |
|---|---|---|
| Product | $113.1 million | 25% |
| Service | $50.4 million | 15% |
| Total | $163.4 million | 22% |
Data source: Stratasys. YOY = year over year.
Within the product segment, 3D printer ("system") revenue jumped 37% year over year, and consumables (print materials) revenue grew 16%.
"Our strong start to the year, with our highest first-quarter revenue total in six years, was anchored by 22% revenue growth that included improved contributions from all our technologies. Importantly, systems was the main driver, up 36.7% for its strongest first quarter in five years, and 16.4% higher than the same period in pre-COVID 2019," CEO Yoav Zeif said in the earnings release.
Guidance
For the second quarter, management guided for year-over-year revenue growth in the low to mid-teen percentage range.
For full-year 2022, the company now expects revenue in the range of $685 million to $695 million, representing annual growth of about 13% to 15%. This range represents a tightening of the prior range of $680 million to $695 million, with the midpoint now $2.5 million higher.
Management reaffirmed its prior 2022 adjusted earnings guidance of $0.14 per share to $0.19 per share. In 2021, it posted an adjusted loss of $0.07 per share.
Encouraging revenue growth
Stratasys' first-quarter revenue growth was solid. Its robust sales of 3D printers is a particularly encouraging sign because 3D printer sales drive sales of print materials, which have higher profit margins. That said, investors shouldn't get carried away. The company was barely profitable from an adjusted standpoint and remains unprofitable from a GAAP basis. Moreover, it used -- rather than generated -- cash running its operations during the quarter.
