Stratasys stock jumps 13% on earnings and revenue

Shares of Stratasys (SSYS 12.73%) gained 12.7% on Tuesday, after the 3D printing company reported its first quarter 2022 results the previous afternoon.

There is no doubt that the stock benefited from a tailwind from the overall market dynamics, as the S&P500 and very technological Nasdaq Compound rose 2% and 2.2%, respectively, on Tuesday. Moreover, rival shares 3D systems jumped 6.6% without news.

However, a significant portion of the surge in Stratasys shares was attributable to the company’s first-quarter revenue and earnings beating Wall Street consensus estimates. Investors were also likely at least pleased that management slightly raised the midpoint of its full-year 2022 revenue forecast and reiterated its 2022 earnings outlook.

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Stratasys key figures

Metric Q1 2022 Q1 2021 Switch
Revenue $163.4 million $134.2 million 22%
GAAP operating profit ($19.6 million) ($18.4 million) Loss widened 6.5%
Adjusted operating income $2.0 million ($2.6 million) Result reversed from negative to positive
GAAP net income ($20.9 million) ($18.9 million) Loss widened 11%
Adjusted net income $1.2 million ($3.8 million) Result reversed from negative to positive
Earnings per share (EPS) GAAP ($0.32) ($0.32)
Adjusted EPS $0.02 ($0.06) Result reversed from negative to positive

Data source: Stratasys. GAAP = generally accepted accounting principles.

Investors should focus on the adjusted numbers, as they exclude one-time items.

Wall Street was looking for an adjusted loss per share of $0.04 on revenue of $157.6 million, as shown in my earnings preview. Thus, the company exceeded both expectations. It also beat its own revenue forecast, which called for year-over-year growth in the teen percentage range. He did not provide an earnings outlook.

GAAP gross margin was 42.6%, compared to 41.4% a year ago. Adjusted gross margin reached 47.3%, compared to 46.7%.

The company used cash of $16.1 million for operations in the quarter, compared to cash generation of $22.8 million the previous year. He attributed the decline to higher inventory purchases and an increase in accounts receivable. It ended the quarter with $475.6 million in cash and cash equivalents.

For context, in the fourth quarter of 2021, Stratasys’ revenue jumped 17% to $167 million, beating the $165 million that Wall Street expected.

Segment results driven by 3D printer sales

Segment Q1 2022 revenue Change (YOY)
Product $113.1 million 25%
A service $50.4 million 15%
Total $163.4 million 22%

Data source: Stratasys. YOY = year after year.

In the product segment, 3D printer (“systems”) revenue jumped 37% year-over-year, and consumables (printing materials) revenue increased 16%.

“Our strong start to the year, with our highest total first quarter revenue in six years, was anchored by 22% revenue growth that included improved contributions from all of our technologies. It is important to note that systems was the main driver, up 36.7% for its strongest first quarter in five years, and 16.4% more than the same period before COVID 2019,” said the CEO Yoav Zeif in the earnings release.

Orientation

For the second quarter, management has guided year-over-year revenue growth in the low to medium percentage range.

For 2022, the company now expects revenue of between $685 million and $695 million, representing annual growth of approximately 13 to 15 percent. This range represents a tightening from the previous range of $680 million to $695 million, with the midpoint now $2.5 million higher.

Management reaffirmed its earlier guidance for adjusted earnings for 2022 of $0.14 per share to $0.19 per share. In 2021, it posted an adjusted loss of $0.07 per share.

Encourage revenue growth

Stratasys’ first quarter revenue growth was solid. Its robust 3D printer sales are a particularly encouraging sign as 3D printer sales drive sales of printing materials, which have higher profit margins. That said, investors should not get carried away. The company was barely profitable from an adjusted perspective and remains unprofitable from a GAAP perspective. Moreover, it used – rather than generated – cash for its operations during the quarter.

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