It has been about a month since the last earnings report for Stratasys (SSYS). Shares have added about 12.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Stratasys due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Stratasys' Q3 Earnings Beat Estimates, Revenues Fall Y/Y

Stratasys third-quarter 2024 earnings of 1 cent per share in contrast to the Zacks Consensus Estimate of a loss of 2 cents per share. The company had posted non-GAAP earnings of 4 cents per share in the year-ago quarter.

The company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed on one occasion, delivering an average surprise of 37.5%.

Quarterly revenues fell 13.6% year over year to $140 million and missed the consensus mark by 3.08%. The top line was impacted by the current macroeconomic environment on customer capital equipment spending.

Stratasys’ Q3 Release in Details

Segment-wise, Product revenues declined 16.9% from the year-ago quarter’s figure to $94.1 million. Within Product revenues, System revenues plunged 38.4% year over year to $31.7 million. Consumables revenues increased 1% year over year to $62.4 million.

Revenues from Services declined 6.1% year over year to $45.9 million. Within Service revenues, Customer Support revenues advanced 1.3% year over year to $31 million.

Stratasys’ non-GAAP gross profit fell 8.8% from the year-ago period’s levels to $69.5 million. 
The non-GAAP gross margin expanded 130 basis points (bps) to 49.6%.

Non-GAAP operating expenses dropped 6.1% year over year to $69.6 million.

The non-GAAP operating loss was $0.1 million against a profit of $4.1 million in the year-ago quarter. The margin contracted 260 bps to negative 0.1%. Also, adjusted EBITDA plunged 47.9% to $5.1 million.

In the reported quarter, SSYS also saw significant growth driven by the launch of new products, including Origin 2, Stratasys Neo Build Processor for Investment Casting as well as TechStyle Fabric Alignment Station. These developments expanded its manufacturing applications and use cases, contributing to the company’s enhanced performance.

Stratasys’ offerings, including F3300 and TrueDent, showed strong demand in the third quarter. F3300 drove demand for the flagship F3300 industrial platform and delivered high-quality and durable thermoplastic parts with a high level of accuracy.

Stratasys’ Balance Sheet & Other Details

Stratasys exited the third quarter with cash and short-term deposits of $143.95 million compared with $150.9 million reported at the end of the previous quarter.

For the quarter ended September, the company reported an operating cash outflow of $4.5 million, a significant increase compared with $2.4 million recorded at the end of the previous quarter.

Stratasys’ 2024 Outlook

For 2024, management expects revenues to be between $570 million and $580 million. Non-GAAP earnings per share are forecasted in the range of 3-7 cents. The company anticipates gross margins to be between 49% and 49.2%. The non-GAAP operating margin is expected to be in the range of 0.6-1.3%. 

Stratasys estimates 2024 operating expenses in the band of $276-$278 million. Adjusted EBITDA is anticipated in the range of $25-$28 million.

Previously, the company had forecasted 2024 non-GAAP earnings per share ranging from 1 cent to 5 cents. Gross margins were expected to be between 48.7% and 49%, and the non-GAAP operating margin was anticipated to be between 0.5% and 1%. 

Adjusted EBITDA was predicted between $24 million and $27 million.

SSYS’ 2024 forecast for revenues and operating expenses remains unchanged.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

The consensus estimate has shifted -33.33% due to these changes.

VGM Scores

At this time, Stratasys has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Stratasys has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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