Earnings call transcript Q4 2022

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Operator

Hello and welcome to the Stratasys' Q4 2022 Conference Call and Webcast. [Operator Instructions]. A question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded.

to Officer call Investor and pleasure Lloyd, to Relations. my Communications Chief Vice now turn over the Yonah It's President of Please sir. go ahead

Yonah Lloyd

to quarter everyone, our morning, and you joining Good thank XXXX full-year and us fourth financial results. for discuss

in are to us and Eitan the press available presentation today's our would call, call I Dr. remind to online CFO, CEO, web is today including the Yoav our at address On you Zamir. like with Zeif; our that provided the release. access slide

as In replay the our today's from expenses, can operating and those statements, forward-looking expectations, Actual trends including slide today information investor website. forward-looking statements. our call, regarding presentation materially through taxes, our limitation, could the without will outlook. results financial to and including of our relations or results you accessed forecast. discussion addition, our are will available performance, Please hear business expectations speak of consist All a some our future and access expectations note section of gross of future that future performance will differ revenue, to margin, also our for be that or to other the events, be statements during

the referenced the could or For U.S. time year in forward-looking those and set Stratasys' later statements, will today be report actual forth XXXX cause be risks discussed year materially which annual that Form SEC. in risk for the please to results different with for XX-F factors filed from the refer XXXX on to

are press the quarter to to is as the XXXX. today. XXXX review financial our of XXXX, we and Form earnings Please SEC furnishing XX.X for Please for fourth also refer and announces operating Exhibit on also that the see that to X-K and which report attached release our prospects

forward-looking Stratasys dates. speak information, of assumes update obligation which or to their no statements any as respective

to measures financial our non-GAAP evaluate GAAP quarters, metrics non-GAAP measures. combination slide with our in GAAP in are call GAAP release. financial will tables today's The should provided previous today's performance. be press include reconciliations in to Non-GAAP and and read As presentation our in

turn to the Zeif, Executive Chief Yoav? Yoav call now will I our Officer, over Dr.

Yoav Zeif

Good joining and you for Thank thank you, us. everyone morning Yonah.

this continues the Our and Stratasys resilience our our challenging diversity the for results and and profitable fiscal of we business, today. quarter the of environment demonstrate perform encouraging the of our overall against well as entire economy offerings health that broader industry the

Importantly, of consecutive adjusted our we an on quarter profitability sixth deliver basis.

provider focused solutions. of is manufacturing strategy Our on polymer the innovator and based leading additive being

a have unique acquired diverse both of global and set We broad, organic technology go-to-market and offerings capabilities.

the financial overall believe will on build our today partnerships We results. adoption future drive to the increased profitable execute come. effectively growth for to operations and sustained laser and that years to their managing We in expect ultimately remain have we focused our

Our full-year model. our business power results great provide clarity of into potential the

the course generated basis, this line a year. into that and accelerated versus top of overcoming XXXX September MakerBot, on the divestment inflationary other past over the and we constant XX.X% We growth account X.X% grew currency of pressures of taking

in efficiencies Our gross our as despite cost was technologies for major year, many strengthen and margin these new will team coming focus ramp as the offset pressures, years. increases for gross a our the the help we price slightly headwinds operational expect margin higher continue,

accretive were demonstrating came that through at through manufacturing acquisition also investment transition no continues For to our in prototyping revenues well to XX.X% $X.XX includes uncover. are and undergoing ongoing XXXX. to of as our growth strong Furthermore, we particularly organic at with quarter scale stability This in pleased once our provide we support the total optionality the today. a ended times adjusted as we sheet EPS challenging full-year able I'm again to from opportunities debt. XXXX, our that balance in revenues deliver from manufacturing customers

challenges to around impacting resulted decisions customers our order quarter impacting our the of with reduced and see with potential printing results in face of production that quarters. such customers these results in challenges in headwinds, capital business and that pressures the while causing apparent benefits are parts, we and and XD technologies sales the efficiency, half time defers to even concerns our the all better more to about faster around This their best service by times last are were the as recession still cycles strong headwinds remains customers. purchasing in spoke this, spending our market continuing logistic near-term our second engagement of improved the occasional longer We costs, continue in still impact behavior. eight inflationary today are XXXX become There performing like and our

both should increased It of revenue with XXXX, support XX% the recurring not is that XXXX, worthy that which exhausted. supplies installed at XXXX positively in excluding fact as the This currency. driving X.X% initial hardware XXXX of impact long-term customers are sales consumables construct is meaningfully in margin reflects up base consumables MakerBot and growth utilization, our up over and higher

was XXXX execution year a and of focused both investment.

which coming in company AI of used We MRI cloud and consistently we ourselves scans enables the the customer years. segment invested scale. healthcare Over models. anatomic that software for production CT platform printing create We driven XD AxialXD, invested course to to an and for year, cloud-based acquired easily helps in at provider and quickly position accurate a growth Riven, AI

to expected with right forces in additive immediately our and This plan engage large by move company. quarter joined stake form sales move commercial second Covestro new We to through MakerBot was printing includes to and to a minority opportunities customer acquisition our leading they XD close Ultimaker manufacturing margin as their in highlighted materials the accretive journey. unlock desktop their our announced to AM

Stratasys generate for as our bureaus service FDM coming and years. announced along license for Origin Stratasys material high materials, for FDM These open validated to first We the are in third-party materials opportunities business expected such performance printers. with new

also material. to advance We our continue own

the For data in qualification enabling modeling Lockheed anatomic realistic materials we ready Antero others use and use collaborated healthcare, And created Martin with materials and published scans for other images. example, on with industry parts. in that for it we to aerospace space CT our is

for customers advantages offering by adopters able As multiple to across additive support we manufacturing expand now the to is Stratasys that entire This technology evidenced early the technologies platform our we GrabCAD's chasm HXXX, of our XD integration and printing earlier majority. of we critical to and on the differentiator to GrabCAD use is software from GrabCAD crossing portfolio, our added rely fact are our have new In expanded who with XD manufacturing XXXX, software to all the software us. platform of application them, One offerings, Origin truly a One single print many Printers. having GrabCAD across a introduced which Dental Origin for partners and software is

a few a giving opportunity to of on two spend dental most of market like the medical. end company. is I'd largest The for minutes for details and one dental our key healthcare, Stratasys exciting added as us avenues and in growth

parts manufacturing the produces surgical of crown, become believe drivers future. additive Our industry parts and over as billion our of strongest use in the well and volume guides. highest dentures, overall today. end such time Dental one Dental focus We the in on of growth dental an remains sector The $XX non-elective as bridges will

on call. we As would last noted happen our

is translucency specifically and the one FDA structure, excited recently shade, new on dentures natural at is very compatible permanent temporary TrueDent, using tooth Stratasys our a It dentures We of create crowns have TrueDent use are and to dentures. with for and exclusively to looking JX regions. accurate in first was for DentaJet. labs launched our print. device resin is It medical fabrication invented and removable continuous and with enables cleared

TrueDent, ones. denture integrated to workflow. traditional believe X% a their seamlessly represents a TrueDent provides in XD According X.X module, majority also are dentures leader X the denture recent printed billion partnership We of opportunity export in to with required has GrabCAD an announced In XShape U.S. today the in files a to IDATA dentures design created to dental our the move digitally. efficiency software. annually Study, connections dental million created leap the into with of to over TrueDent workflow we from allowing digital industry XShape the Only

benefit market. accurate affordably part and most other quickly created on Our option the than customer more the possible, additive with traditional will mailing or

best launch the sized the announced solution accuracy focused small believe the recently the labs we labs JX the tailored and JX in two-thirds of all is and medium our is provides also newest that The and DentaJet. market dental very level entry industry. of models surgical guides We in towards represent that printer, on multi-material an implant

with week last trade dental U.S. in month, the significant later are LAB growing dental and expect that with the dental have is We and presence measurable at XXXX we show DAY LMT major these two and making labs top announcement in the we timed result meeting our start progress shows this the on to Germany. industry. in IDS show. The large two

for We service by files XD Another and The QX expenses. offering AI go and our visual patient provide pre-operative made the majority solution company powered realistic uses JX scan XD providers for models medical. medical planning models Stratasys device accelerate One and this model solution to and service prepare printed and by diagnostic and are radiologists way from without company key medical our solution, are XD printing With is XD can AxialXD. or formally launched for growth in we MediJet fulfilled area possible surgical specific investment this Most using healthcare cloud yet surgeons to be to our XD quickly medical capital Ricoh a can that large used believe software Origin use upfront a AxialXD's anatomical printer to or to adoption. printers. purposes biomechanically digital not anatomy using printers

plan leaders and tools, using anatomical to be be as of using to to planning planning economical result XD after evidence, later printer positioning part look believe of can model we offerings, a conclude new result, favorable value We surgical year, that sharing we service Importantly, forward new tool. will this key patient marketing to prospective of of Stratasys study. and supportive pre-operative we with pool first lead opinion exciting a as XD area will run specific manufacturer pre-operative a prove more such the trial. clinical printing new part that and clinical us in a to the launch this the study, study this a models

will turn XXXX. to for to I results our call Eitan financial share CFO, initial the the over and Zamir, Eitan? outlook now our

Eitan Zamir

Thank quarter you, for morning in environment Yoav, and against the an increasingly challenging achieved the We everyone. good and results full-year. solid

constant as XXXX. compared Importantly, in quarter a X.X% currency our OEM of quarter to the fourth of XXXX. fourth business grew basis On the

we're progress a we reduction to of on we across proud continue which higher the than the on And particularly revenues to OpEx driving improve lowest quarters, efficiencies that are level our operating in platform. promise We eight its as meeting to by X% executed metric. income as making the percentage in our shows deliver of guidance

In resilience, profitability. provide, general, our results demonstrates our our which led sixth offering to consecutive quarter of the diversified

into Now numbers. let me deeper the dive

of was X.X% For and constant million revenue down currency down grew for the for X.X% $XXX.X makeable adjusted from period. a currency. prior adjusted fourth X.X% When was revenue quarter, at year constant consolidated revenue the divestment the

our business, up NSDM out make was would For constant be OEM currency. at X.X% which backing revenue about

was product period million Product last million a revenue and revenue, fourth constant the but last Within in XX.X% year, same compared the revenue quarter $XXX.X currency basis. in to fell X.X% divestitures to period X.X% same compared systems on to fourth to excluding $XX.X the year. quarter grew down the by

Excluding flat basis, quarter fourth and year-over-year. system essentially were constant currency on divestitures a sales

the essentially last in million year. revenue $XX.X quarter flat Consumables period fourth to was same compared the at

constant same year a X.X%, up basis, last X.X% grew by service Excluding constant divestitures divestitures fourth compared and the to a on consumable on and currency was the for compared basis. $XX.X same and divestitures increased X.X% basis. revenue a revenue, currency quarter constant and Service excluding year-over-year. excluding of period currency quarter as Within by to support grew the year customer XXXX and X.X% X.X% million on fourth last revenue the in down period

core up the For at constant taking X.X%, consolidated OEM XX.X% compared X.X% by and constant and was FDM, revenue up on X.X% XX.X% at product XXXX Product business Within grew and currency XX.X% system divestitures constant revenue and currency XXXX, backing was and divestitures growth currency. XXXX our up out MakerBot on basis. compared after on a excluding constant basis for out XX.X% XXXX XXXX in MakerBot basis. in and full-year XX.X% a revenue, by and currency increased to to revenue a currency constant excluding by by

in X.X% on and X.X% currency by compared Consumable constant XXXX divestitures revenue was XXXX up excluding to and basis. by a

XXXX of a currency on to X.X% basis. excluding XXXX, divestitures and grew and revenue XX% revenue, by up a on basis. in constant Within full-year customer compared by service divestitures and XXXX service by XXXX X.X% to compared excluding support was the by For constant revenue X.X% and currency

GAAP to the the the compared margins The to gross gross last XX.X% XX.X% for year. for out decrease same last same quarter period period was for of the impact was carve the to XX.X% offset by the gross year. margin the gross margin, turning Now XX.X% result quarter was in compared somewhat for year-over-year slight margin FX of MakerBot. negative Non-GAAP

increases. year-over-year margin full-year was higher slightly to increases gross For the price offset XXXX, as cost helped

than operating $XX.X planned reflecting period as proud of year quarter given to million XXXX expenses our during reminder guidance have of we're to XXXX the to able slightly compared elimination are and we efficiencies. to difficult that the year, this for last cost $XX.X deliver GAAP environment on improved operating for million been further commitment. divested the flat expenses be margins higher progressed, operating increasingly entities the same the and gross A to

operating million same expenses for operating $XX.X last period revenue quarter for period quarter the Non-GAAP during year. to million of compared Non-GAAP $XX last to same XX.X% the for were the the XX.X% compared year. were expenses

OpEx I lowest continue revenue on to we of efficiency As a just focus in the improvement, percentage eight operational quarter. as mentioned, level was as

of were full-year, the revenue, points. XXX improvement XX.X% For basis expenses operating of an non-GAAP

million for operating million the year. operating the GAAP loss year. $X.X million to was for was last the share for net quarter GAAP period the quarter. million the Non-GAAP was reflects same loss for same $X.X to operational per diluted loss same compared $X.X compared the or income last for earnings per period a a million for our of $XX.X The scalability increase $X.XX business $X.X consolidated improved the our net share period of or and for $X.XX million to efficiencies. quarter year. Regarding diluted $X.X compared last income quarter

reflected same Non-GAAP levels. to income improved $X.X Adjusted the share compared per in profitability year. diluted $X.XX period net period or for the of $X.X million was million our year the per to $X.XX income of for quarter EBITDA last net or [ph] quarter million compared $X.X in share diluted the same $XX.X last million

$XX.X was XXXX. the $XX.X Regarding operational to a full-year for efficiency. our consolidated earnings for million GAAP million reflecting XXXX compared operating of loss loss

of operating Non-GAAP million income was in $X.X year for $XX.X million the compared to a loss XXXX.

despite we margins, As X% at above with increasing challenges reminder XXXX of slightly guidance that non-GAAP coming as gross our a achieved margin the progress, X.X%. operating

or GAAP was a share $X.X was year. loss $XX.X diluted diluted million for year. $X.XX of of compared $XX.X loss compared included per million of gain the million million year share $X.XX last net per $XX diluted deconsolidation to the for net last from for $X.XX million MakerBot. the loss income $X.XX net share Non-GAAP or or chair GAAP year to per diluted a net or a loss $XX

$XX.X XXXX our to of million during used quarter year. million reflected generating compared cash improved EBITDA profitability cash We $XX.X $XX.X same million million last levels. operations fourth in the the Adjusted from in of our in operations compared quarter of $X.X to

driven The use inventory of cash purchases. by primarily increased was

levels. we return more forward, inventory and to from will normalized Going shift building

or third positive the $XXX.X contribute quarter million change the compared for of XXXX. of cash two deposits a cash, end lag will While ended $XXX.X be us operations quarter short-term there cash XXXX.We returning quarter million towards and with to may the at equivalents this to in from effect, flow

strategic advance used in believe we to will cash During that further companies our make help the we goals. investment quarter,

positioned and Our and sheet as remains generation cash weather near-term and they we're opportunities profile well market on strong well funded and to enhancing balance challenges capitalize value identified. are

turn to XXXX. me outlook let Now for initial our

purposes, comparison MakerBot XXXX For approximately revenue was million. $XXX without

our as customers XXXX. half expect year, potential back the continue many this we In a see started and trend of to to on last hardware spending CapEx of reduced positioned recession, in for we

fluctuations be that, to we FX. of in million revenue Given $XXX subject potential XXXX expect to to $XXX in million range a

you and grow quarter that revenue I'll typically weakest, we expect sequentially the the fourth year. is to first remind strongest, our our quarter throughout our

to second based half, We expect new to than year expected the to and primarily in years. half improve launch. products we margin to share of due gross first, than the forward we're The later products be is a exceed XXXX to XX% stronger few next of also expect modestly higher the customer for first the From excellent range these to demand in year. XX% details notably the planning half been that margins several we revenue, look feedback primarily to the more the has perspective, with gross second on a XX% stronger full-year to

will engines technologies leverage in Assuming responsibly from to newer benefit our we invest and to long-term. a market expect range to million materials $XXX improve continue significant In company our ramp, expenses between and conditions million. we build growth to XXXX, our the strong operating as we $XXX generate

We a for and see for objective be continued to XXXX, long-term in revenue expect slightly important as we expenses the lower percentage as for earnings. relative expect our to profitability improvement full-year to XXXX. us an total of operating Improving

non-GAAP growth. margins the a for X.X% range full-year year benefit to of in to through operating X.X% anticipated with the be from as We improving expect will profitability revenue

of diluted anticipate $XX to $XX diluted share. million non-GAAP we income per $X $X.XX million to share, GAAP a $XX per $X.XX $X.XX a to million XXXX, to of net or loss million For net $X.XX or

some anticipate expected through sequential profitability a to metric expect that seen $XX decline Adjusted start EBITDA on growth be adjusted million. past out we we as for pressure in year, move XXXX. is XXXX to range of the for has we sequential to while a quarters, the point not to like to million and produce profitability I'd eight our this $XX

EBITDA longer-term. to to reach expect We XX% see of revenue our XX%

As for we $XX over our XXXX expect capital to our time, million expenditure to million. margins improve between $XX range

Finally, half. driven anticipated cash we primarily deliver expect growth for by to the flow positive second the full-year, in the operating

me turn the call to let that, for Yoav? over With Yoav back remarks. closing

Yoav Zeif

Thank you, on another while sharpening of our our OEM profitable year offerings. Stratasysproduced core growth Eitan. focus

we years stated, additive the many today of benefits and our challenges forward, time customers expanding hardware, market as the even business environment, confidence As of and we in in in to navigate have continue ahead, portfolio solutions strength face materials, software broaden an current the and ways the investing for highlight we resulting to sheet going our the have presence. balance manufacturing again, our

long-term the and the we to Stratasys of over actions adoption taken forge two printing our grows, team relevance have As leader reflect value raising for thank as the XD XD growth business path I ago, ongoing to challenge make our printing teams of and polymer in shareholders. drive to the management to want began solutions our years our ever for continued all our creating global helping profitability execution. since and our

that, With it open Operator? up questions. let's for

Operator

now Instructions]. [Operator a question-and-answer We'll you. be session. conducting Thank

Our is from line Palm today first from live. now Craig-Hallum, sorry, your Greg I'm coming Greg Hallum from question is --

Danny Eggerichs

Yes, thanks. right This seeing is market Danny just in I more what we'll start Eggerichs you're on now. for Greg broadly guess today. off the

seeing or or Specifically, that strength geographies any end-markets weaknesses? particular you're

Yoav Zeif

you differentiated geographies highly we compensate across seeing sensitive that those, the which diversified Yoav. with some across it's would in across more on but for verticals, you the us the behavior segments. for thank of good very geographies, a see no across are Hi, than with question. I technologies, microeconomic are thing to doubt is and the other, We less that are different Board. position say Stratasys put the The slowdown, board less across overall market. It's or It's what nice

we So coming start were after there, that if it's post for we we it's growing that that many see -- see and up together take I'll suffering example, aerospace quarters pandemic.

where great with FDM So that's take example our a big forward. part leadership us

fast without see and player, growth we'll -- adjustments and way. thing the between the to example, profitable future in a diversification is growth, but some XX% to On keep keep the allow doing nice are like, aerospace. But segments actually us than for compensate where growing, end, and almost still different largest it's also that and growing the we and the demonstrate other this medical it we less significant grow growth and the the verticals size by other year-over-year

Danny Eggerichs

confident emphasis half you should good. in just that help it that's guide, wrong Yes, second good your in there product is there? could or there that go Maybe visibility announcements how half levels of the of growth. sounds should and more activity heightened maybe the But you that on be what terms a and in like second said of that some the right makes lot

Yoav Zeif

in have So a we right. HX yes, in we are visibility. We many can thing and go challenge, but believe macroeconomic

We of technologies tech pipeline. we five to leader, have new are all we five of technologies, three. out products a number -- we Since between we in the one them, number the have and are

PolyJet So number are one, between to and two in FDM, one two market. the -- other we the position our by are we in in technologies three new And between far. two

right, go the to deal we impact So Covestro offering. like QX. that can can across the impact huge. the different in platforms. The new on elaborate This dental Eitan the the And things is anticipate product close many

it. elaborate disrupting and can are market the dental restorative later We I about

people delay end the grew in spare at year-over-year you largest at working, and end, significantly it's but and install consumable, parts can and consumable the the our because see the that the industry Our they're situation. it's can base consuming CapEx, of despite

Danny Eggerichs

Thanks. good. That's line. hop in back will I Okay.

Operator

you. Thank

Chung coming Paul is question JPMorgan. from Next from

line Your now is live.

Paul Chung

thanks my questions. taking Hi, for

kind future So how deal just relationship, of similar that time globally for to into revenue kind then of that can and margin size and different be helpful? verticals would contributions potential and talk partnership, how collaborations we expect any forays on the Ricoh about, about over other came

Yoav Zeif

you, Paul. Thank

restructuring how some the a end part of space. the with collaboration Ricoh key XD we think is printing of applications I use great in example are

of very hospital prospects end going here with to about talking surgeries end high to we bring forward, and dozens we're So the at democratize the market but and it stuck about anatomic huge hospitals. want of medical, operation, to high a thousands it model. of it's It's

make really accessible you it build And applications. so that we solution to in of and we other also need will network to do see a this type will

how it in print collaborate or into files in transforming, example, that only We it's an probably with radiologist. are for work? that would surgeon I files they will the CT can and are AxialXD, the MRI the you So front the say AI. invest AI and or end walking

to They building And label the and put the adapt model, this check world printing, we to we compared solution, printed And the into to solution, a a are the of market is transform for without have practically most PolyJet they huge end-to-end anatomic disrupt and and it just offers cost automatically to we need the also a third-party. and an file accessible our order solution unique offer software. digital Ricoh kit our network a hospitals XD full you in current the for because right it's the on suddenly network practically file. where like our the everything in the where print the from together it's MediJet, first anatomic solution and the savings partner

Paul Chung

getting But of of and inputs freight component year costs you. efficiency others. expect you flattish year And Okay, year progression slight there this Can XX%, talk to and the were revenues, on by, here back get date you kind timing you're the to The but in a if as great. those you get about Obviously this expand and about rate the 'XX inflation, to we suggests of think guide on ease run on past gross kind Thanks of that. improvement that hit Thank XX%? second back the XX%? to past you XX% margins. at kind at for similar then, by revenues.

Eitan Zamir

Hi Paul. for Eitan. the Thanks question. It's

I you quarters XXXX start, at guidance. progress on you see look the versus last the XXXX So and you few guess look when our

see the as we towards we we plus our that XX% can believe do scale that achieve You move business. we

We operational with efficiency. have better confidence together our

air, that have and the improve XXXX. We Covestro can We better with come compared manage consideration some us mix our have the versus Take from business fees and XXXX obviously, to margins. more freight inventory in with to to still better headwinds level consumable. that FX try growth help into business our support

So we're improve put been excited that's something could in aside that, growth XXXX. very But the better. proud, if and margins very have increase have -- we about ability FX even you also to

Paul Chung

Thank Great. you.

Operator

you. Thank

Needham coming Company. & Next question today from Ricchiuti is from Jim

line now is live. Your

James Ricchiuti

Hi, you assumptions full-year about guidance, as I'm the some your you're thank making think relates so wondering, obviously as it environment. you. to macro

to second out of in you wondering where -- business year. versus the legacy Looking I'm traction. make some half to the the framing continue the particularly opportunities the manufacturing you're prototyping how

trying third the I to was feeling So which what to, manufacturing business, I'm is get is, portion think revenues? what how a you're the of that about about of

Yoav Zeif

our gross by recurring and couldn't us Thank you sit say the strategy. can margin I better. clear and you. That's have exists. our in It's in exactly it our prototyping, to revenues that we great it way, in foundations

solid. we We are are there,

XX% what less than already, last in because are announced years, ago. We really is we are And three years we sales have three manufacturing. below strategy But we we X.X years penetration overall the growth and driving strong already into our of just revenues. is the our this recurring three over years started

and And XX.X% going machines It's sales base that's We many are something of manufacturing their this way, transition to already a to we manufacturing, transformed there. solution, the the we machine. the application, application-by-application. but really out a putting in transformed the is is are floor. full company, great And see more

any the look if industry. market sales that by grew of the we at significantly overall see, at of research the can you you will And end 'XX, during XXXX, way, of our share hardware

because Take technologies manufacturing. we focusing about the five all technologies. are we and the working, building is into new machines manufacturing strategy the on the Stratasys, of technologies, them talking in are core transform So we example, two just also but from for FDM,

the aerospace FDM And the we files I in rarely FDM, and industry. are that say but can of the quality of one And files for big build quality power, we take no of build the the thousands power. just for on can You mentioned with airplane. machines hundreds industry in we profile accuracy, have practically, building someone to already want air do, power with the manufacturing, that this of of don't the

our if just this to anatomic it end then mentioned I months And in the an grave restorative is transforming XX launch next we the disrupting just the into but in to machine. you and There PolyJet, launch. and are that We dentists So holy be dental, disrupt market. model, dental. just more the go this park with are will doing, use FDM. is the what just this engaging is we the treatment first dent, will through we are XX are way

some, And -- it's not it's which web. not dental is It's bridges, solution massive, not discretionary. dentures, not it's a crown nice a those is

have the targeting no are print. with, and else monolithic a one We has must

it [ph]. printer, need need We the machine, print in in a completely You glue of don't We labor. don't out, it It's it's you ready. take the dentures to new age anything.

are So very prototyping shift proud of this to is we it. manufacturers. from And exactly the

James Ricchiuti

just in manufacturing acquisition, I beyond is, as environment? in How light guess the the additive economic are you follow-up thinking you in QX. M&A business My Covestro get about current

Yoav Zeif

foundations all the to hard really really opportunity built think times. the I to we tough in foundations we the last, thank and over teams be strong over I globe. makes is worked honest, my But very think an need now it's because what difference and

in workflow, in we in in invested pre-processing, material, post-processing. So we invested

to very But on. it a growth, software. we in it We us the in profitable industry any of part later the position this can platform put M&A in infrastructure, We activity. what are good be call for elaborate on investing

market many way profitable We are in as global companies structure take attractive someone that growth. the a very and can create to

James Ricchiuti

Thank you.

Operator

you. Thank

William Brian Blair. Drab coming Next question from from is

is now line Your live.

Brian Drab

for equipment utilization, seen about was or decline, you if to of you've moved begun if thanks of what through you questions. I my of through lens wondering that in could wondering Hi, macro taking that's soften just terms talk the challenges? consumables maybe And some given the as XXXX. growth

Yoav Zeif

adjusted and recurring XXXX explained when you XXXX actually and double-digit Thanks, on we in Brian. for which When XXXX FX look look as and earlier call, grew X.X% versus on as numbers? We actual actually makeable services, MakerBot excluding you FX. consumable services the -- you our grew revenue, consumable And means by the divestment. on

of this further. very our we with of and our installed our to grow XXXX. very that new have confidence in for consumables even and believe our business base actually journey, increased results also So, very platform, to of excited we're revenue recurring proud with addition the of XXXX this proud the Covestro ability offering And

Brian Drab

I thanks. that see did the in Okay, information slides.

year, they X% be you is, the Were to if quarter. just trying consumables from consumables but wondering lot. this fourth really clear, know or up from want I'm fourth down? quarter saw I'm X% I because sequentially answer for to dollars. what you Just the mean for directly, third Thanks I was quarter growth to the what don't a see to the

Yoav Zeif

versus QX, if question So than is QX the QX QX. is the picture in QX, in the picture actually better

due also the addition As Covestro, of to due we far in and quarter show Origin, SaaS improvement RPS. results as [ph] created platforms, the that again, concerned base and for we XXXX the XXXX but installed to new that believe with the the will further

Brian Drab

Okay. Thanks much. very

Operator

you. Thank

Lake Capital Next Jensen from from question Troy Markets. Street is coming

live. is now line Your

Troy Jensen

on gentlemen, Hey results the quarter. and congrats this nice profitability

Yoav Zeif

you. Thank

Eitan Zamir

Thanks Troy.

Troy Jensen

welcome. very You're

I want will you what So, the on about times it Eitan, it closes. from us with a few we've maybe 'XX? And have contribution include can, just acquisition you remind the you talked guidance that for can anything that then doesn't start to call. until confirm first, Covestro,

Eitan Zamir

question. Thanks, the Troy for

clarify So, it's actually very question good for to everyone. and

had revenue million Covestro to QX we during annualized. Yoav earlier, $XX roughly historically for anticipate as So Covestro close mentioned

So It in the we contribution of reflected particular million is in $XX Covestro. in million to our high-end. actually anticipate between $XX numbers, from

that good something for entire clarification is group that's for the here. So

Troy Jensen

accretive it's profitability? and both have to instantly you margins historically right said And

Eitan Zamir

Correct.

Troy Jensen

is know you so, while some to reason And Open I And about, launch, be was it perfect. it before the for how follow-up. Materials. it a half Materials. you had thought been you that my Open last going or a year about guys and a probably ago, but year second a maybe you right, would've launched I guys of started talking All year half

it. thinking FDM Origin? I'm And specifically traction So I I'm about seen you've curious if with and guess

Eitan Zamir

completely in and that, we we high-end see of on year, of supplying are on supply So And to launched it the at we and interested practically pay closed flexibility. material are additive manufacturing we don't changed it's license. look at open system are the the highly willing XXX because many charging starting they not now. this, have are where They to the anymore more way they manufacturing. a It's players end the last because FXXX for

of but they open from can it can, our and new software, those eight more. below willing by materials, just we And one revenues to for new eight but applications broader new now shot. license, have have batch It the take we shifting to customers materials. the us themselves develop buy of much they material material up to almost to because they material, the pay did four are are in You we is peers develop years will new portfolio material a they

attraction very this. and optimistic I'm So, about great

Troy Jensen

work. guys, right up the keep All Awesome. good well

Eitan Zamir

you. Thank

Yoav Zeif

Thank you.

Operator

you. Thank

question Shannon Next Credit from Cross Suisse. coming from is

is line Your live. now

Shannon Cross

wondering Thank go driving and a is like then you coming drive your you. increased years? at increased are should think to where how in it that into very and opportunity revenue what we spending more, the And much. I decision just could about detail if have follow-up. I you was more you Thank on for a to bit the OpEx spend

Yoav Zeif

Hi, Shannon.

XXXX OpEx. XXXX me Let start touch the and of with then really the actual on

OpEx that full-year XX% something million So OpEx when of our we $X.X full-year of is revenue for reflects a of million, of percentage incremental for part XXXX, the you only look XXXX, of which the an with by revenue increased of $XX that's scale. as

we leverage our years. infrastructure businesses basically that That's existing something to our over plan, few the of with the last ability and new that part acquired that's our is

particular guidance on OpEx, do mid-range $XXX that of OpEx the when with a maybe with you Now, of guidance, percentage high-end in as show improvement actually of look exercise on actually our the see the compared an our And on improvement XXX, when if with that's same XXXX. also high-end, an of when you we look and you do the actually revenue the on midrange you this you to $XXX million ratio, of revenue. million

with we same journey. So continue the

our We ability our to continue with scale business.

our take control. into beyond that account elements We do are certain

FX negatively or impact impact negatively OpEx. can FX example, can For our

that if also mentioned, during stabilized FX overall, as actually better in XXXX. be something improving I even that's could the actually year. So OpEx But is

Shannon Cross

talk can Thanks. optimization about but other working Okay, Just then capital, thinking and that for there's capital some obviously, you're your room side, thank the you'll then, about you. business, of incremental And grow inventory? how inventory? you maybe need on as you do working

Eitan Zamir

Yes.

few And also the our in in It is future. that XXXX reaching cash will is that's growth our versus reaching level next also. We're ability that fact also point serve it we're in margin that us serve gross air levels going Shannon. helped our will to shift sea a us confidence freight, in gross which actually favorable support have forward. business thanks to our us But So, and operating that It That inventory something to business, levels we can our the to that why normalized. margin is generate quarters. our that's due inventory the improve help to levels. freight flow a in

Shannon Cross

been business given I'm several for liquidity Okay, and this given then obviously from models. of the question from maturity inventory prices some And share the pressure macro. end that, thanks. perspective my sorry market then competitive space and challenges landscape And and of there's is these of curious days. There's in where -- are competitors about just final all

a standpoint? from into maybe talk you about and positioning you. what a bit So competitive when pricing can Thank and RFPs go you're you seeing just

Eitan Zamir

challenging Yes, we to when It also an we now are it's also COVID -- in opportunity in that but it's times for us the everyone, COVID in times. It time. are also for us definitely shining happened to because us happens competing.

a a profitable the a and would like leader. its for future large hands putting quarter to So of like Stratasys, company player consecutive see someone He six company. in is tech

we As I second are three, in in in five two, in number are and technologies the other the said, one position. or we third

leading are the We vertical.

an a is by aerospace, proven track if example, our for we of record aero execution, highly RFP For appreciated in which in sales customer. go have we

we and We number based is it's our customers not scores in on are judging see our the industry, NPS me that walking talks. have service this one and surveys and it,

has with And than solution. his material something. application the better portfolio superior on and industry spot in and of when whole fit the the I'm a especially promising I'm and problem technologies I'm selling the I believe solving not the front a best after Covestro. five solve with genuinely the I go-to-market I'm me everything, the one with no us, best can because and problem, have he your that customer full And him

great of are customers place. things to our these Stratasys is house all really in our put observe work good and and us in So platforms those Good reputation building it. a happening

Shannon Cross

much. Thank you very

Operator

you. Thank

Next coming question from from is Ananda Capital. Baruah Loop

is line Your live. now

Ananda Baruah

including growing mid-to-high-single-digits, macro new follow-up. And manufacturing challenges, with you it could. think attractive call you're front of you for have I Thanks Yes, even up have do couple long-term then revenue all it. that if given kind appreciate of in quick in a pretty growth, about the and guys, as of guys questions. a I putting opportunities ones, sales. you the Hey taking quick if How the just growth, Thanks. contextually, revenue percentage

Yoav Zeif

you. Thank

the for the So for three really we work profitable growth. years in to the last platform tranches, build

terms the we quality capture released the automotive. moment have [ph], to parts RPS, in the challenges, positioned dental we five the growth the So we and going because significant for of have technologies, the will is the growth use trigger the the Origin, drivers the this, are FDM be mainly macro like end and in aerospace that SaaS

solution which our we the share quarter-over-quarter we that something strong growth in is Then this it you in are critical unique driver. leveraging can see hardware have build sell. base installed see their leadership our we base license to growth are and we it. hardware and large, that we for pay started our based in market the open largest software fantastic materials willing they have, actually we every So and very And it this the And customers are that on in industry. for the The really bring research. a to to material installed to

that the confidence us to in the vertical place, place, we govern which position for in in create next can the the So are is business three in drivers years. the the five growth

Ananda Baruah

over to ask normalize a think or that but grower? my I next could commitment guide, XX% question, which you, a an time And you company revenue was not going organic philosophically XX% that as do maybe a there's the just opportunity to answers was be

Yoav Zeif

what if you your said and I think take calculate I order.

Ananda Baruah

that's answer. Yes, the

Yoav Zeif

the But you are analyst.

Ananda Baruah

it guys. Appreciate

Yoav Zeif

you. Thank

Operator

Thank you.

coming from is today question Next from Noelle Stifel. Dilts

Your line now is live.

Noelle Dilts

software contribution on so from thanks quarter. how initiatives, you're And congrats the could thinking you in some hoping Hi, about of I good the expand beyond? over your and on software Thanks. much. was XXXX and

Yoav Zeif

thank question. for you the -- software So

about Software terms is rate. doubt there that we additive at -- opportunities in growth top we unique manufacturing, strategy around no And our unique critical that that we the of install are it's analyzing And of manufacturing. in one that the software the the software to when that those is fact have is to scale base leveraging this all and large connected us. segments is, is different positions have,

be we connected the system the to not By but printers, only into operating in customers we we that that to them future SDKs our one connected offer printers. and to to our a So machine, it way, others, we card because is the our platform to living are to go connectivity. and APIs delivering the leverage hand transform of graph on could

we or the already digital platform, willing this way working partner to tags way are they of and And because on the we that don't a entire They on only software. suddenly can they where have technologies across put best they're one on different use manage have simulation partners, it. is open feature the need for on the many and other platform end, to they our five and to thread on it that one XX platform screen them put have we a to pay parts,

contribution. are already another That our recurring explain is a revenues be the time, our what service offerings. very we'd going different that XD it. will material. have, will great I'm to are. specific additional strong for to and and pay at we we We them exactly be And in One request and it'll right And -- expectations addition have at features two to for it

Noelle Dilts

like you've granular. XXXX this guidance you then on is And how little Great. to versus at Thank what I acquisitions in that to maybe you growth there but that's you're maybe of think revenue Covestro? share recent or going have bit think market close base about kind more when growth gain thinking about market just the look When that element sort that, the you. and guess comments, expanded you're touched get following about Thanks. from of coming would of some way as organic your trying addressable to a and the a of you

Yoav Zeif

One, divide growing amazing. my we So are two. to answer across technologies. will I all This is

and by XXXX, So grew of technologies us. our that one in a with one, confidence creates all lot

technology, visibility those So we any mentioned. was we I that the not drivers future are have quite which not bleeding already case in have because past. on good we the road in the And

technologies partners that looking new that And we is our need And our exactly the achieve. we And go-to-market, to share and three where know expecting the know sales our exactly I'm what market. we and what triple have sales they more to forward, addressable than almost when gain are there. reps first our double guys

up. ramp a given it's course, Of

huge state grow. a to for us is this So

that first, step, example, the XX it, next is to the applications. to we this the first On for of developing doing come Take in we dentures. the are the one now each is Take months. launch solution and for only top XX the what that are of an end-to-end for example, technologies, is specific we more just for product

and even five the high So end applications those market, We by great to deliver fashion, applications from and have really the driver we example, took for grow us. the solutions prioritize like those. we application analyzed the attraction fashion and market, them the one a XXX for one more go Take we and itself is across technologies.

then there So there more deliver. selling because like Stratasys machines we are the full that and only solution can not the is is direct there,

very optimistic well. on one as We are this

Noelle Dilts

Thank much. you very

Operator

you. Thank

from Jared coming from Berenberg. question is Next Maymon

live. is line now Your

Jared Maymon

since just past, on it again of about dentures. quarter closer this ask in kind to We've on a just touched becoming to guys. real I Hey it but But opportunity. wanted the a we're kind

So this. about obviously you talking guys are

increasingly talking it. Some your are competitors about of

not better be magnitude things par additive of opportunity aligners you'd think to the than given sounds aids. I or demand been order hearing like of crazy maybe even have great for on generators the and that

your geographically? from are think opportunities number you curious guess that just guys where are concentration, in you customers I'm you you seeing are the perspective, of for there on big what So I to address think

you're development left of show that lastly, revenues what then on can some capable the go the of meaningful of And out before what's generate customers you and and to from side start some market? kind

Yoav Zeif

over by is way. the denture billion $X So opportunity,

the need of dentures we a currently for are only, technology U.S. think is dentists and market. I the sure, that the think and produce area of but only reduce to to And real numbers $XX of the order not it, is to overall our value label it's about dental think billion. bridges. suddenly the X% And are reduce our where I around not Think I put lab, technology the we denture, can the to bringing address visits, and in we because overall only crown in it's the digital denture, in The amount U.S. I'm example. you almost time dentures only

talk XX the of in in next $X about, you want to XX and by things things Europe, billion X% because multiple the then months the process. that which are didn't we see that's to of that's So add the one will I one

it because best And it stations so dentures, new that traditional way. friction. It's them. really it's we it's I because mouth of saw their an using a marketing. I believe the them And scan to bring because them a And those you the that and problems we easy replace have XXX% by are disruptive. I fit, which new dentures put we creates FDA and use just the are and are approved, the station that from heard for heavier which reel those in thing videos, probably that and few the are will dentures,

We the are market. changing

use resins, has industry. in a They to our of or people TrueDent in happier to -- because and developing teams. we snide and use want and it's pulse we'd our will we We and keep would them part say the we one make ability you in No us support something ceiling no one will do technology those to our have that as the non-discretionary PolyJet have making achieved constraint end achieved PolyJet the see I the them technology. the And dentures, the leader the technology and machine, those and blast make simply break it.

Jared Maymon

at clarify few look And great. a of to a I of volume? just then become of so this this that's at guys the concentration look on technology let that of can this to want or big customers from a customers? market. that, at guess and Yes, base the strategy come like you targets of more approach Or choice as demand when a the Do you you Stratasys' lot of look clear supplier big you addressing build of is for drive that spread kind

Yoav Zeif

channels. few different We are going a in

reduce different are going the channels through we but developing here, And we elaborate people developed world, many as to for in will as possible world, going important the the not most denture. dramatically to able and the in market. also the also to not I'm thing course, Of but because be cost enjoy us that only for

Jared Maymon

then And Got margin it. the Thanks. follow-up just target. on one EBITDA

on you mentioned to XX% So of you that capable the as of think EBITDA. XX% is kind guys what business

of back gauge a good and So we normalized has curious, before even a as profitability if whole, kind I'm industry additive since challenge. as been a XXXX getting of well, look just that real

wondering, at estimate a guys as XX% you you good you do that the year a and what an you looking can way and perpetuity to for hit or look mind in long-term? think at you XX% that's this to sense just like I'm industry to are guys So in where XX% time have this makes additive targeted? is Are out XX%

Eitan Zamir

We we scale. business is continue believe EBITDA. this income state. beyond as and and target, can definitely a profitability the Thanks, we that the XX% reach probably grow That's our target to the end years Jared, grow to and with double-digit for to that three target journey not -- This our XX% to so two mid-term the operating continue to question. is

Jared Maymon

nice And congrats on Perfect. Thanks guys. quarter.

Yoav Zeif

you. Thank

Operator

management We've of you. floor back Thank question-and-answer to turn comments. the or our to like closing for reached any over further session. end the I'd

Yoav Zeif

Thank you us. joining for

Looking quarter. forward to next again you updating

Operator

webcast. Thank and does you. That conclude today's teleconference

at your lines may you have wonderful day. for today. We this disconnect a time participation your and You thank

Stratasys (SSYS) 2 Mar 232022 Q4 Earnings call transcript