Shares of 3D printing pioneer Stratasys (SSYS -1.62%) leapt off the page last Tuesday, soaring 10% in response to what at first glance looked to be an impressive "earnings beat."

Analysts had forecast that the 3D-printing company would book $145 million in sales for first-quarter 2023, and lose $0.06 per share. Instead, reports, Stratasys delivered a positive earnings surprise -- two surprises, in fact. Sales came in ahead of expectations at $149.4 million, and instead of losing money for the quarter, Stratasys earned a surprise profit of $0.02 per share.

Stratasys by the numbers

So... good news, right? Well, not entirely. As it turns out, Stratasys's Q1 news wasn't quite as good as it seemed.

Start with sales. On the one hand, yes, Stratasys booked more sales than Wall Street had forecast for it. However, Q1 2023 sales actually declined 8.6% in comparison to Q1 2022. Indeed, even accounting for divested businesses (which logically could no longer produce sales), Stratasys's revenues declined 2.6% year over year.

CEO Dr. Yoav Zeif noted that "utilization of our systems is growing, resulting in our highest ever quarter for recurring revenues from both consumables and customer service." Indeed, consumables revenues were up 7.8% in the quarter -- but by the same token, this highlights how much relatively worse the number must be for sales of 3D printers.

Speaking of worse, let's take a closer look at profits. Stratasys says its non-GAAP net income was $0.02 per share. Again, on the one hand, that's a lot better than the $0.06 per share loss that analysts expected. However, when calculated according to generally accepted accounting principles (GAAP), Stratasys was forced to admit that it actually lost money -- $0.33 per share, in fact. This was worse than last year's Q1 loss of $0.32 per share, despite Stratasys issuing more shares, growing its share count by 3%, and thereby spreading its losses out among more shares outstanding.

Not to put too fine a point on it, but without all those extra shares, the company's loss would have been even bigger.

Dark clouds, silver linings, and a darker forecast

Admittedly, not all of Stratasys's news was bad. Cash from operations deteriorated in Q1 2023 (versus Q1 2022) to negative $17.9 million. But management forecast a return to not just positive cash flow, but positive free cash flow... in 2024.

Furthermore, management said it expects its revenues to grow strongly over the next three years -- indeed, to top $1 billion in 2026. It's worth pointing out, however, that no one on Wall Street seems to buy this. Although most analyst forecasts don't stretch past 2025, the consensus of analysts polled by S&P Global Market Intelligence is that, in 2025, revenues will top out around $766 million -- after growing barely 10% in the two preceding years. Stratasys's suggestion that its sales will enjoy a sudden, 30% jump between 2025 and 2026 therefore sounds a bit optimistic.

Meanwhile, in laying out its forecast for the rest of 2023, it appears Stratasys still has a tough near-term row to hoe. Sales are trending toward a range of $630 million to $670 million this year -- so $650 million at the midpoint. This would equal zero growth over 2022, and potentially even a small decrease in sales.

Factor in gross profit margins of no more than 49%, and operating costs of $290 million to $300 million. And while there's the potential for Stratasys to earn perhaps a small operating profit this year, on the bottom line management is still forecasting a net loss of anywhere from $0.83 to $1.12 per share this year. That suggests a best-case scenario in which Stratasys loses nearly twice this year what it lost last year -- and potentially loses one-and-a-half times as much as it lost last year.

All things considered, it really looks to me like Stratasys's best days lie behind it, and the company is now headed in the wrong direction. Investors are therefore best advised to take advantage of Stratasys's 10% stock price bump post-earnings -- and get out while the getting is good.