Stratasys Reports Disappointing Q1 Financials

As exciting as the 3D printing/additive manufacturing (AM) space has been the past several, especially the last couple, its unbridled enthusiasm and expectations couldn’t be expected to go on forever, and they’re not. Stratasys reported less than anticipated financials for Q1 2015.

All was not doom and gloom for Stratasys, however, as the financials also include the following:

• Announced that Stratasys AM technologies were selected by Airbus for producing 3D printed flight parts for use in the first-of-type A350 XWB aircraft.
• Announced organizational changes, including the creation of the Stratasys Strategic Consulting Division to help support customer development.
• Completed the organizational integration of Solid Concepts, Harvest Technologies and RedEye Services to form Stratasys Direct Manufacturing (SDM).
• Initiated a reorganization within MakerBot. This involved a sizable layoff of MakerBot employees and the closing of MakerBot retail stores. This reorganization was done to make MakerBot a better “fit” within Stratasys.
• The company sold 7,536 3D printing and additive manufacturing systems during the quarter.

Stratasys Presents a 3D Printed Aircraft Interior at EuroMold 2014

Fred Fischer, Director of PolyJet and FDM Applications at Stratasys, presents an aircraft interior 3D printed using a unique combination additive manufacturing technologies. The presentation was filmed at Stratasys’ aerospace-themed booth at EuroMold 2014 in Frankfurt.

Unfortunately, these bright spots were overshadowed by the realities of the company’s finances for the quarter and guidance for the future. These general negatives included:

• Revenue was down for the first quarter, and partially owing to the strong dollar compared to the same quarter last year.
• GAAP net loss for the first quarter was $216.3 million, or ($4.24) per share, compared to GAAP net income of $4.1 million, or $0.08 per diluted share, for the same period last year.
• Non-GAAP net income for the first quarter was $2.0 million, or $0.04 per diluted share, compared to non-GAAP net income of $20.6 million, or $0.40 per diluted share, reported for the same period last year.
• Guidance for the remainder of the year generally echoed the results of Q1. Interestingly, though, projected Non-GAAP net income is expected to be derived disproportionately from the second half of fiscal 2015, driven by the projected timing of revenue and operating expenses. I don’t know exactly what this means, except that things should be looking up for Stratasys during the second half of the year.

The financial announcement didn’t go unnoticed by investors as the Stratasys stock price today (13:00 Mountain time, May 11, 2015) stands at just under $36/share; down from a 52-week high of $130.83.

Nonetheless, David Reis, chief executive officer of Stratasys remained optimistic by saying, “We continue to see significant long-term opportunity in the 3D printing and additive manufacturing market.” Also, the company invested a net amount of $24.4 million in R&D projects (Non-GAAP basis) during the first quarter, representing 14.1% of revenues. That’s a good sign.

Hopefully, these latest financial results are only a temporary setback, but Stratasys is hardly alone in the current 3D printing abyss. Major competitor, 3D Systems, is delaying updating its 2015 financial guidance because of financial concerns. There are also rumblings that 3D Systems may be an acquisition target somewhere down the road. When that might happen and who the suitor might be remain speculative, but might be attractive because of how low 3D printing valuations have become. Without mentioning any names, I’d say the greatest probability of a 3D Systems acquisition would be from a major customer for reinforcing its industrial business, and not necessarily a 3D printing competitor.

This is not to say that the industry won’t make a comeback, it certainly will, but to the same level of excitement and expectations, that remains to be seen. I’m hoping (I’m sure as are many stockholders) that reality starts replacing hype, and hopes of short-term windfall profits are replaced with a more rational and patient outlook at Stratasys (and competitors) as a calculated risk investment and not a guarantee of overnight and continuous riches.

Tags: 3D Systems, Airbus, Stratasys

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