OPERATING AND FINANCIAL REVIEW AND PROSPECTS.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and the related notes included as Exhibit 99.1 to the Report of Foreign Private Issuer on Form 6-K to which this Operating and Financial Review and Prospects is attached, or the Form 6-K. The discussion below contains forward-looking statements (within the meaning of the United States federal securities laws) that are based upon our current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties, including those identified in “Forward-Looking Statements and Factors that May Affect Future Results of Operations”, below, as well in the “Risk Factors” in Item 3.D of our Annual Report on Form 20-F for the year ended December 31, 2022, filed with the Securities and Exchange Commission, or SEC, on March 3, 2023, or our 2022 Annual Report, as updated by the “Risk Factors” section below.
Overview of Business and Trend Information
Business Performance in Macro-Economic Environment
- further actions taken by central banks in Europe and the U.S. to increase interest rates as a means to reduce inflation even more, which may worsen credit/financing conditions for our customers who purchase our products; and
- potential contraction of economic activities and recessionary conditions that could arise as a result of interest rate increases and a decrease in consumer demand;
Summary of Financial Results
Results of Operations
Comparison of Three Months Ended June 30, 2023 to Three Months Ended June 30, 2022
The following table sets forth certain statement of operations data for the periods indicated:
Three Months Ended June 30, | |||||||||||||||
2023 | 2022 | ||||||||||||||
U.S. $ in thousands | % of Revenues | U.S. $ in thousands | % of Revenues | ||||||||||||
Revenues | $ | 159,751 | 100.0 | % | $ | 166,603 | 100.0 | % | |||||||
Cost of revenues | 93,529 | 58.5 | % | 99,210 | 59.5 | % | |||||||||
Gross profit | 66,222 | 41.5 | % | 67,393 | 40.5 | % | |||||||||
Research and development, net | 24,305 | 15.2 | % | 24,346 | 14.6 | % | |||||||||
Selling, general and administrative | 75,576 | 47.3 | % | 66,592 | 40.0 | % | |||||||||
Operating loss | (33,659 | ) | (21.1 | )% | (23,545 | ) | (14.1 | )% | |||||||
Financial income (expenses), net | 687 | 0.4 | % | (1,170 | ) | (0.7 | )% | ||||||||
Loss before income taxes | (32,972 | ) | (20.6 | )% | (24,715 | ) | (14.8 | )% | |||||||
Income tax benefit (expenses) | (725 | ) | (0.5 | )% | 429 | 0.3 | % | ||||||||
Share in losses of associated companies | (4,918 | ) | (3.1 | )% | (99 | ) | (0.1 | )% | |||||||
Net loss | (38,615 | ) | (24.2 | )% | (24,385 | ) | (14.6 | )% |
Discussion of Results of Operations
Revenues
Our products and services revenues in the three months ended June 30, 2023 and 2022, as well as the percentage change reflected thereby, were as follows:
Three Months Ended June 30, | |||||||||||||||
2023 | 2022 | % Change | |||||||||||||
U.S. $ in thousands | |||||||||||||||
Products | $ | 109,112 | $ | 115,721 | (5.7 | )% | |||||||||
Services | 50,639 | 50,882 | (0.5 | )% | |||||||||||
Total Revenues | $ | 159,751 | $ | 166,603 | (4.1 | )% |
Services Revenues
Revenues by Region
Revenues and the percentage of revenues by region for the three months ended June 30, 2023 and 2022, as well as the percentage change in revenues in each such region reflected thereby, were as follows:
Three Months Ended June 30, | ||||||||||||||||||||
2023 | 2022 | % Change | ||||||||||||||||||
U.S.$ in thousands | % of Revenues | U.S.$ in thousands | % of Revenues | |||||||||||||||||
Americas* | $ | 102,195 | 64.0 | % | $ | 107,225 | 64.4 | % | (4.7 | )% | ||||||||||
EMEA | 36,884 | 23.1 | % | 35,212 | 21.1 | % | 4.7 | % | ||||||||||||
Asia Pacific | 20,672 | 12.9 | % | 24,166 | 14.5 | % | (14.5 | )% | ||||||||||||
$ | 159,751 | 100.0 | % | $ | 166,603 | 100.0 | % | (4.1 | )% |
* Represent the United States, Canada and Latin America
Gross Profit
Gross profit from our products and services, as well as the percentage change reflected thereby, was as follows:
Three Months Ended June 30, | ||||||||||||
2023 | 2022 | |||||||||||
U.S. $ in thousands | Change in % | |||||||||||
Gross profit attributable to: | ||||||||||||
Products | $ | 51,536 | $ | 54,589 | (5.6 | )% | ||||||
Services | 14,686 | 12,804 | 14.7 | % | ||||||||
$ | 66,222 | $ | 67,393 | (1.7 | )% |
Gross profit as a percentage of revenues from our products and services was as follows:
Three Months Ended June 30, | ||||||||
2023 | 2022 | |||||||
Gross profit as a percentage of revenues from: | ||||||||
Products | 47.2 | % | 47.2 | % | ||||
Services | 29.0 | % | 25.2 | % | ||||
Total gross margin | 41.5 | % | 40.5 | % |
Operating Expenses
The amount of each type of operating expense for the three months ended June 30, 2023 and 2022, as well as the percentage change reflected thereby, and total operating expenses as a percentage of our total revenues in each such quarter, were as follows:
Three Months Ended June 30, | ||||||||||||
2023 | 2022 | % Change | ||||||||||
U.S. $ in thousands | ||||||||||||
Research and development, net | $ | 24,305 | $ | 24,346 | (0.2 | )% | ||||||
Selling, general and administrative | 75,576 | 66,592 | 13.5 | % | ||||||||
99,881 | 90,938 | 9.8 | % | |||||||||
Percentage of revenues | 62.5 | % | 54.6 | % |
Operating Loss
Operating loss and operating loss as a percentage of our total revenues were as follows:
Three Months Ended June 30, | |||||||||
2023 | 2022 | ||||||||
U.S. $ in thousands | |||||||||
Operating loss | $ | (33,659 | ) | $ | (23,545 | ) | |||
Percentage of revenues | (21.1 | )% | (14.1 | )% |
Financial Income (Expenses), net
Income Taxes
Income tax benefit (expenses) and income tax benefit (expenses) as a percentage of net loss before taxes, as well as the percentage change in each, year over year, reflected thereby, were as follows:
Three Months Ended June 30, | ||||||||
2023 | 2022 | |||||||
U.S. $ in thousands | ||||||||
Income tax benefit (expenses) | $ | (725 | ) | $ | 429 | |||
As a percentage of loss before income taxes | (2.2 | )% | 1.7 | % |
We had an effective tax rate of 2.2% for the three-month period ended June 30, 2023, compared to an effective tax rate of 1.7% for the three-month period ended June 30, 2022. Our effective tax rate in the second quarter of 2023 was primarily impacted by the geographic mix of foreign taxable earnings and losses, as well as our valuation allowance.
Share in Losses of Associated Companies
Net Loss and Net Loss Per Share
Net loss, and net loss per share were as follows:
Three Months Ended June 30, | ||||||||
2023 | 2022 | |||||||
U.S. $ in thousands | ||||||||
Net loss | $ | (38,615 | ) | $ | (24,385 | ) | ||
Percentage of revenues | (24.2 | )% | (14.6 | )% | ||||
Basic and diluted net loss per share | $ | (0.56 | ) | $ | (0.37 | ) |
Net loss per share was $0.56 for the three months ended June 30, 2023 as compared to net loss per share of $0.37 for the three months ended June 30, 2022. The weighted average fully diluted share count was 68.6 million during the three months ended June 30, 2023, compared to 66.6 million during the three months ended June 30, 2022.
Results of Operations
Comparison of Six Months Ended June 30, 2023 to Six Months Ended June 30, 2022
The following table sets forth certain statement of operations data for the periods indicated:
Six Months Ended June 30, | |||||||||||||||
2023 | 2022 | ||||||||||||||
U.S. $ in thousands | % of Revenues | U.S. $ in thousands | % of Revenues | ||||||||||||
Revenues | $ | 309,128 | 100.0 | % | $ | 330,032 | 100.0 | % | |||||||
Cost of revenues | 177,511 | 57.4 | % | 192,962 | 58.5 | % | |||||||||
Gross profit | 131,617 | 42.6 | % | 137,070 | 41.5 | % | |||||||||
Research and development, net | 45,780 | 14.8 | % | 48,344 | 14.6 | % | |||||||||
Selling, general and administrative | 136,293 | 44.1 | % | 131,855 | 40.0 | % | |||||||||
Operating loss | (50,456 | ) | (16.3 | )% | (43,129 | ) | (13.1 | )% | |||||||
Financial income(expenses), net | 1,460 | 0.5 | % | (2,532 | ) | (0.8 | )% | ||||||||
Loss before income taxes | (48,996 | ) | (15.8 | )% | (45,661 | ) | (13.8 | )% | |||||||
Income tax benefit(expenses) | (4,500 | ) | (1.5 | )% | 502 | 0.2 | % | ||||||||
Share in losses of associated companies | (7,343 | ) | (2.4 | )% | (174 | ) | (0.1 | )% | |||||||
Net loss | (60,839 | ) | (19.7 | )% | (45,333 | ) | (13.7 | )% |
Discussion of Results of Operations
Revenues
Our products and services revenues in the six months ended June 30, 2023 and 2022, as well as the percentage change reflected thereby, were as follows:
Six Months Ended June 30, | ||||||||||||
2023 | 2022 | % Change | ||||||||||
U.S. $ in thousands | ||||||||||||
Products | $ | 210,083 | $ | 228,794 | (8.2 | )% | ||||||
Services | 99,045 | 101,238 | (2.2 | )% | ||||||||
Total Revenues | $ | 309,128 | $ | 330,032 | (6.3 | )% |
Products Revenues
Services Revenues
Revenues by Region
Revenues and the percentage of revenues by region for the six months ended June 30, 2023 and 2022, as well as the percentage change in revenues in each such region reflected thereby, were as follows:
Six Months Ended June 30, | ||||||||||||||||||||
2023 | 2022 | % Change | ||||||||||||||||||
U.S.$ in thousands | % of Revenues | U.S.$ in thousands | % of Revenues | |||||||||||||||||
Americas* | $ | 192,275 | 62.2 | % | $ | 205,792 | 62.4 | % | (6.6 | )% | ||||||||||
EMEA | 74,764 | 24.2 | % | 75,267 | 22.8 | % | (0.7 | )% | ||||||||||||
Asia Pacific | 42,089 | 13.6 | % | 48,973 | 14.8 | % | (14.1 | )% | ||||||||||||
$ | 309,128 | 100.0 | % | $ | 330,032 | 100.0 | % | (6.3 | )% |
* Consists of the United States, Canada and Latin America
Gross Profit
Gross profit from our products and services, as well as the percentage change reflected thereby, were as follows:
Six Months Ended June 30, | ||||||||||||
2023 | 2022 | |||||||||||
U.S. $ in thousands | Change in % | |||||||||||
Gross profit attributable to: | ||||||||||||
Products | $ | 101,394 | $ | 108,289 | (6.4 | ) % | ||||||
Services | 30,223 | 28,781 | 5.0 | % | ||||||||
$ | 131,617 | $ | 137,070 | (4.0 | ) % |
Gross profit as a percentage of revenues from our products and services was as follows:
Six Months Ended June 30, | ||||||||
2023 | 2022 | |||||||
Gross profit as a percentage of revenues from: | ||||||||
Products | 48.3 | % | 47.3 | % | ||||
Services | 30.5 | % | 28.4 | % | ||||
Total gross margin | 42.6 | % | 41.5 | % |
Operating Expenses
The amount of each type of operating expense for the six months ended June 30, 2023 and 2022, as well as the percentage change from period to period reflected thereby, and total operating expenses as a percentage of our total revenues in each such six month period, were as follows:
Six Months Ended June 30, | ||||||||||||
2023 | 2022 | % Change | ||||||||||
U.S. $ in thousands | ||||||||||||
Research and development, net | $ | 45,780 | $ | 48,344 | (5.3 | )% | ||||||
Selling, general and administrative | 136,293 | 131,855 | 3.4 | % | ||||||||
$ | 182,073 | $ | 180,199 | 1.0 | % | |||||||
Percentage of revenues | 58.9 | % | 54.6 | % |
Operating expenses were $182.1 million in the six months ended June 30, 2023, compared to operating expenses of $180.2 million in the six months ended June 30, 2022. The increase in operating expenses was primarily driven by costs related to prospective and potential mergers and acquisitions, defense against hostile tender offer, proxy contest and related professional fees in an aggregate amount of $13.3 million and recent acquisitions related costs of $4.4 million, partially offset by the impact of divestiture of MakerBot of $10.0 million and unfavorable exchange rate costs in a total amount of $4.4 million.
Operating Loss
Operating loss and operating loss as a percentage of our total revenues were as follows:
Six Months Ended June 30, | |||||||||
2023 | 2022 | ||||||||
U.S. $ in thousands | |||||||||
Operating loss | $ | (50,456 | ) | $ | (43,129 | ) | |||
Percentage of revenues | (16.3 | )% | (13.1 | )% |
Operating loss amounted to $50.5 million for the six months ended June 30, 2023, compared to an operating loss of $43.1 million for the six months ended June 30, 2022. Our operating loss increased both on an absolute basis, and as a percentage of our revenues in the first half of 2023 compared to the first half of 2022, for the reasons described in the discussion of the above line items.
Financial Expenses (Income), net
Financial income, net, which was primarily comprised of foreign currencies effects, interest income and interest expenses, was $1.5 million for the six months ended June 30, 2023, compared to $2.5 million of financial expenses, net for the six months ended June 30, 2022.
Income Taxes
Income tax benefit (expenses) and income tax benefit (expenses) as a percentage of net loss before taxes, as well as the percentage change in each period over period, reflected thereby, were as follows:
Six Months Ended June 30, | ||||||||||
2023 | 2022 | |||||||||
U.S. $ in thousands | ||||||||||
Income tax benefit(expenses) | $ | (4,500 | ) | $ | 502 | |||||
As a percent of loss before income taxes | (9.2 | )% | 1.1 | % |
Share in Losses of Associated Companies
Share in losses of associated companies reflects our proportionate share of the losses of unconsolidated entities accounted for by using the equity method of accounting. During the six months ended June 30, 2023, the loss from our proportionate share of the earnings of our equity method investments was $7.3 million, compared to a loss of $0.2 million in the six months ended June 30, 2022 as a result of our divestiture of MakerBot and investment in Ultimaker.
Net Loss and Net Loss Per Share
Net loss (on an absolute basis and as a percentage of revenues), and net loss per share were as follows:
Six Months Ended June 30, | ||||||||
2023 | 2022 | |||||||
U.S. $ in thousands | ||||||||
Net loss | $ | (60,839 | ) | $ | (45,333 | ) | ||
Percentage of revenues | (19.7 | )% | (13.7 | )% | ||||
Basic and diluted net loss per share | $ | (0.89 | ) | $ | (0.69 | ) |
The following non-GAAP data, which excludes certain items as described below, are non-GAAP financial measures. Our management believes that these non-GAAP financial measures are useful information for investors and shareholders of our company in gauging our results of operations (i) on an ongoing basis after excluding mergers, acquisitions and restructuring-related charges or gains, legal provisions and (ii) excluding non-cash items such as stock-based compensation expenses, acquired intangible assets amortization, including intangible assets amortization related to equity method investments, impairment of long-lived assets and goodwill, revaluation of our investments and the corresponding tax effect of those items.
Reconciliation of GAAP to Non-GAAP Results of Operations
The following tables present the GAAP measures, the corresponding non-GAAP amounts and the related non-GAAP adjustments for the applicable periods:
Three Months Ended June 30, | ||||||||||||||||||||||||||
2023 | Non-GAAP | 2023 | 2022 | Non-GAAP | 2022 | |||||||||||||||||||||
GAAP | Adjustments | Non-GAAP | GAAP | Adjustments | Non-GAAP | |||||||||||||||||||||
U.S. dollars and shares in thousands (except per share amounts) | ||||||||||||||||||||||||||
Gross profit (1) | $66,222 | $11,283 | $77,505 | $67,393 | $11,914 | $79,307 | ||||||||||||||||||||
Operating income (loss) (1,2) | (33,659 | ) | 38,666 | 5,007 | (23,545 | ) | 25,479 | 1,934 | ||||||||||||||||||
Net income (loss) (1,2,3) | (38,615 | ) | 41,148 | 2,533 | (24,385 | ) | 25,560 | 1,175 | ||||||||||||||||||
Net income (loss) per diluted share (4) | $ | (0.56 | ) | $ | 0.60 | $ | 0.04 | $ | (0.37 | ) | $ | 0.39 | $ | 0.02 | ||||||||||||
(1) | Acquired intangible assets amortization expense | 5,014 | 6,954 | |||||||||||||||||||||||
Non-cash stock-based compensation expense | 999 | 1,080 | ||||||||||||||||||||||||
Restructuring and other related costs | 3,378 | 15 | ||||||||||||||||||||||||
Impairment charges and write off | 1,892 | 3,865 | ||||||||||||||||||||||||
11,283 | 11,914 | |||||||||||||||||||||||||
(2) | Acquired intangible assets amortization expense | 2,686 | 2,218 | |||||||||||||||||||||||
Non-cash stock-based compensation expense | 7,024 | 7,751 | ||||||||||||||||||||||||
Restructuring and other related costs | 2,468 | - | ||||||||||||||||||||||||
Revaluation of investments | - | 1,255 | ||||||||||||||||||||||||
Contingent consideration | 347 | 596 | ||||||||||||||||||||||||
Legal, consulting and other expenses | 14,858 | 1,745 | ||||||||||||||||||||||||
27,383 | 13,565 | |||||||||||||||||||||||||
38,666 | 25,479 | |||||||||||||||||||||||||
(3) | Corresponding tax effect | 213 | 81 | |||||||||||||||||||||||
Finance expenses | 175 | - | ||||||||||||||||||||||||
Equity method related amortization and other | 2,094 | - | ||||||||||||||||||||||||
$41,148 | $25,560 | |||||||||||||||||||||||||
(4 | ) | Weighted average number of ordinary shares outstanding- Diluted | 68,648 | 69,272 | 66,568 | 67,070 |
Six Months Ended June 30, | ||||||||||||||||||||||||
2023 | Non-GAAP | 2023 | 2022 | Non-GAAP | 2022 | |||||||||||||||||||
GAAP | Adjustments | Non-GAAP | GAAP | Adjustments | Non-GAAP | |||||||||||||||||||
U.S. dollars and shares in thousands (except per share amounts) | ||||||||||||||||||||||||
Gross profit (1) | $ | 131,617 | $ | 16,582 | $ | 148,199 | $ | 137,070 | $ | 19,603 | $ | 156,673 | ||||||||||||
Operating income (loss) (1,2) | (50,456 | ) | 56,981 | 6,525 | (43,129 | ) | 47,086 | 3,957 | ||||||||||||||||
Net income (loss) (1,2,3) | (60,839 | ) | 64,454 | 3,615 | (45,333 | ) | 47,718 | 2,385 | ||||||||||||||||
Net income (loss) per diluted share (4) | $ | (0.89 | ) | $ | 0.95 | $ | 0.05 | $ | (0.69 | ) | $ | 0.73 | $ | 0.04 | ||||||||||
(1) | Acquired intangible assets amortization expense | 9,015 | 13,920 | |||||||||||||||||||||
Non-cash stock-based compensation expense | 1,931 | 1,980 | ||||||||||||||||||||||
Restructuring and other related costs | 3,744 | (162 | ) | |||||||||||||||||||||
Impairment charges and write off | 1,892 | 3,865 | ||||||||||||||||||||||
16,582 | 19,603 | |||||||||||||||||||||||
(2) | Acquired intangible assets amortization expense | 4,880 | 4,443 | |||||||||||||||||||||
Non-cash stock-based compensation expense | 14,332 | 15,384 | ||||||||||||||||||||||
Restructuring and other related costs | 4,266 | 555 | ||||||||||||||||||||||
Revaluation of investments | 580 | 2,316 | ||||||||||||||||||||||
Contingent consideration | 612 | 803 | ||||||||||||||||||||||
Legal, consulting and other expenses | 15,729 | 3,982 | ||||||||||||||||||||||
40,399 | 27,483 | |||||||||||||||||||||||
56,981 | 47,086 | |||||||||||||||||||||||
(3) | Corresponding tax effect | 3,251 | - | |||||||||||||||||||||
Finance expenses | $ | 638 | $ | 226 | ||||||||||||||||||||
Equity method related amortization and other | $ | 3,584 | $ | 406 | ||||||||||||||||||||
$ | 64,454 | $ | 47,718 | |||||||||||||||||||||
(4) | Weighted average number of ordinary shares outstanding- Diluted | 68,107 | 68,683 | 66,151 | 67,071 |
Liquidity and Capital Resources
A summary of our statements of cash flows is as follows:
Six Months Ended June 30, | |||||||
2023 | 2022 | ||||||
U.S $ in thousands | |||||||
Net loss | $ | (60,839 | ) | $ | (45,333 | ) | |
Depreciation and amortization | 24,343 | 29,924 | |||||
Impairment of other long-lived assets | 919 | 3,865 | |||||
Stock-based compensation | 16,263 | 17,364 | |||||
Foreign currency transactions loss | 1,967 | 10,318 | |||||
Other non-cash items, net | 10,633 | 2,658 | |||||
Change in working capital and other items | (34,453 | ) | (57,705 | ) | |||
Net cash used in operating activities | (41,167 | ) | (38,909 | ) | |||
Net cash provided by investing activities | 36,628 | 63,172 | |||||
Net cash used in financing activities | (682 | ) | (864 | ) | |||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (824 | ) | (7,413 | ) | |||
Net change in cash, cash equivalents and restricted cash | (6,045 | ) | 15,986 | ||||
Cash, cash equivalents and restricted cash, beginning of period | 150,686 | 243,293 | |||||
Cash, cash equivalents and restricted cash, end of period | 144,641 | 259,279 |
Cash used in operating activities
Cash flows from investing activities
Cash used in financing activities
Capital resources and capital expenditures
Critical Accounting Estimates
Forward-Looking Statements and Factors That May Affect Future Results of Operations
•
the extent of our success at introducing new or improved products and solutions that gain market share;
•
the extent of growth of the 3D printing market generally;
•
the global macro-economic environment, including headwinds caused by inflation, rising interest rates, changing currency exchange rates and potential recessionary conditions;
•
changes in our overall strategy, including as related to any restructuring activities and our capital expenditures;
•
the impact of shifts in prices or margins of the products that we sell or services we provide;
•
the impact of competition and new technologies;
•
the ultimate outcome of the prospective transaction between Stratasys and Desktop Metal, including the possibility that Stratasys shareholders or Desktop Metal stockholders will reject the proposed transaction;
•
the effect of the announcement of the prospective transaction on our ability to operate our business and retain and hire key personnel and to maintain favorable business relationships;
•
the timing of the prospective merger with Desktop Metal;
•
the occurrence of any event, change or other circumstance that could give rise to the termination of the prospective merger with Desktop Metal;
•
the extent to which the parties are able to satisfy closing conditions to the completion of the prospective merger between Stratasys and Desktop Metal;
•
the impact of unsolicited non-binding indicative proposals by 3D Systems to acquire our company and whether any such proposal is ultimately determined by our board of directors to be a “Superior Proposal” under our merger agreement with Desktop Metal;
•
impairments of goodwill or other intangible assets in respect of companies that we acquire;
•
the extent of our success at efficiently and successfully integrating the operations of various companies that we have acquired or may acquire;
•
the degree of our success at locating and acquiring additional value-enhancing, inorganic technology that furthers our business plan to lead in the realm of polymers;
•
the potential adverse impact that recent global interruptions and delays involving freight carriers and other third parties have been and may continue to have on our supply chain and distribution network, and, consequently, our ability to successfully sell both our existing and newly-launched 3D printing products;
•
the potential adverse effects that inflation, and actions taken to reduce inflation, such as increased interest rates, are having or may have on the macro-economic environment, and the degree of our resilience (and that of our customers and suppliers) to those effects, which may have significant consequences for our operations, financial position and cash flows;
•
global market, political and economic conditions, and in the countries in which we operate in particular;
•
government regulations and approvals;
•
litigation and regulatory proceedings;
•
infringement of our intellectual property rights by others (including for replication and sale of consumables for use in our systems), or infringement of others’ intellectual property rights by us;
•
potential cyber attacks against, or other breaches to, our information technologies systems;
• the extent of our success at maintaining our liquidity and financing our operations and capital needs;
•
impact of tax regulations on our results of operations and financial conditions;
•
those factors referred to in Item 3.D, “Key Information - Risk Factors”, Item 4, “Information on the Company”, and Item 5, “Operating and Financial Review and Prospects” in our 2022 Annual Report, as supplemented herein, as well as in other portions of the 2022 Annual Report Readers are urged to carefully review and consider the various disclosures made throughout the Form 6-K, our 2022 Annual Report, and in our other reports filed with or furnished to the SEC, which are designed to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
LEGAL PROCEEDINGS
RISK FACTORS
- the time and resources committed by our management team to matters relating to the merger (including integration planning) could otherwise have been devoted to our existing business and the pursuit of other opportunities that may have been beneficial to Stratasys;
- the market prices of our ordinary shares could decline to the extent that the current market price reflects a market assumption that the merger will be completed;
- we may face renewed hostile takeover pressure from Nano Dimension, whether via (i) a new tender offer that is similar to the recently-expired hostile Nano tender offer pursuant to which Nano Dimension sought to increase its holdings of Stratasys ordinary shares to approximately 46-51% of our outstanding ordinary shares, (ii) an additional attempt to take control of our board of directors, whether by proposing to remove current Stratasys directors and replace them with Nano’s own nominees, or otherwise, or (iii) any other means, and may face protracted litigation in relation to such tactics of Nano Dimension;
- we could face hostile takeover pressure from any other third party, including other competitors in the 3D printing industry or other outside players, which could distract us from our focus on our business strategies;
- we may experience negative reactions from our suppliers, customers, distribution channels, business partners, industry contacts and other third parties, which in turn could affect our marketing and sales operations or our ability to compete for new business or obtain renewals in the marketplace more broadly;
- we could experience negative reactions from market analysts, institutional shareholder groups, significant shareholders or others that could have an adverse impact on the trading price of our ordinary shares;
- we may experience negative reactions from employees; or
- we and/or our management teams could be subject to litigation related to any failure to complete the merger or any enforcement proceeding commenced against us to perform our obligations under the merger agreement.