Stratasys Ltd. (SSYS) on Q1 2021 Results - Earnings Call Transcript

Operator: Hello and welcome to the Stratasys Q1 2021 Conference Call and Webcast. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Yonah Lloyd, Vice President Investor Relations. Please go ahead. Yonah Lloyd: Good morning, everyone, and thank you for joining us to discuss our 2021 first quarter financial results. On the call with us today are our Chief Executive Officer, Dr. Yoav Zeif; and our Chief Financial Officer, Lilach Payorski. I remind you that access to today's call, including the slide presentation, is available online at the web address provided in our press release. In addition, a replay of today's call, including access to the slide presentation, will also be available and can be accessed through the Investor Relations section of our website. Yoav Zeif: Thank you, Yonah. Good morning everyone and thank you for joining us. Today, I will touch on the highlights of the first quarter and share insights from a very exciting global event we had last week. At Stratasys, we're committed to being at the forefront of the polymer 3D printing market, producing and delivering the most innovative, next generation technologies that address the fastest growing manufacturing applications. 3D printing is migrating from being primarily a prototyping tool to providing full scale digital manufacturing platforms at mass production levels. Lilach Payorski: Thank you, Yoav, and good morning, everyone. We are pleased to have delivered on our stated goals this quarter. The revenue growth especially the 40.9% growth in our system sales along with our strong cash generation support our cautious optimism around the continuing economic recovery from COVID-19. For the first quarter, total revenue was $134.2 million in-line with our previously disclosed outlook. On a constant currency basis total revenue declined 1% versus the first quarter of 2020. Product revenue in the first quarter was $90.3 million, an increase of 8.6% compared to the same period last year or 6.1% on a constant currency basis. Within product revenue, system revenue increased 40.9% compared to the same period last year and increased 37.6% on a constant currency basis. This growth rate demonstrates sign of end market recovery compared to 2020 where system sales were lowest in the first quarter. This was due to the impact of COVID starting in the back half of the quarter, when our sales are typically strongest. System sales began to improve by the end of Q2 last year. So, while we expect system growth to continue throughout 2021 the comparable percentage rate will naturally come down over the course of the year. As we noticed on our last call, consumable utilization is subject to the impact of COVID. This quarter consumable revenue was off by 8% compared to the same period last year and was down 10.2% on a constant currency basis. As the market recovers from COVID and usage rates of our systems increase, we expect to see sequential growth in consumables build as we move through the balance of the year. Yoav Zeif: Thank you, Lilach. Our company is executing on our strategy to extend our leadership position in polymer 3D printing. The investment we have made to drive organic growth coupled with the targeted and strategic acquisition to enhance our end-to-end solution portfolio should result in value creation for our shareholders. With that, let's open it up for questions. Operator? Operator: Thank you. Our first question today is coming from Shannon Cross from Cross Research. Your line is not alive. Shannon Cross: Thank you very much. I just wanted to ask, I guess I'll ask both questions. The first is with regard to product sales or system sales. Can you just provide a little more feedback to us on exactly who are buying? What's coming in? How much of this was pent-up demand versus new demand because of some of the products you've launched. And then with regard to consumable sales, given the mix of systems that you're selling, can give us an idea of how long it will take to see some of the follow-on consumable sales? And your confidence level and maybe usage rates on the products? Thank you. Lilach Payorski: Good morning, Shannon. Some flavor on our system sales, I'll start with that. We definitely saw hardware strength growth across all our platforms and regions in the quarter. So, there is no single product or customer that drove the favorable results – we really see it across all our business. Definitely this growth demonstrates signs of end market recovery, compared to 2020 where system sales were lowest in the first quarter. This was due to the impact of COVID-19 starting in the back half of the quarter, where our sales are typically the strongest. So that's why basically you see a very strong and this quarter demonstrates a recovery that we are happy to see here. Important to note the system growth will be the lead driver for growth in the year. With the introduction of the new products, consumable would follow. I would like to remind you that our new product will introduce more at the second half of the year, and will make more impact in Q4 as opposed to the first part of the year. But we – as I mentioned very encouraged with the recovery sign that we saw already now, and sure that consumable will follow. Another thing important to note that system sales began to improve by the end of Q2 last year, so while we expect system growth to continue throughout 2021 the comparable percentage rate will naturally come down over the course of the year, but we do expect to see a notable growth during the year. Now I will address the consumables. The consumables, we are encouraged to see continuous recovery. As we saw also in Q4, as also we saw in Q3. It's still below 2020 level, as a reminder in Q1 2020 consumable and services were tracked relatively business as usual since COVID hit started to hit most of the end of the quarter. So substantially we had almost a full quarter as a comparison. Unlike Q1 2021, where COVID sill impacts during the full quarter. As we are looking ahead for the year, we expect consumable to grow sequentially based on the trajectory of a macroeconomics, with the expectation that consumption will come back to pre-COVID level, probably at the beginning of 2020. Yonah Lloyd: 2022. Lilach Payorski: 2022. Sorry. Yoav Zeif: Yes. Maybe just to add, hi, Shannon, it’s Yoav. Maybe just to add, overall, definitely there is a – hey, Shannon. Definitely there is a pent-up demand. Very good to be in such a place, because it's across all regions and platforms. Of course, there are some differences between different sectors. So commercial aerospace and government are slower to raise; mainly because of the commercial aerospace situation and the new administration in the U.S. but we see the recovery coming in the next quarter on the government side, and of course, healthcare and dental that we discussed before are early to recover. And what is new in Q1 was that education really joined the healthcare and dental in terms of fast recovery. Shannon Cross: Great. Thank you. Operator: Thank you. Next question today is coming from Troy Jensen from Lake Street Capital. Your line is now live. Troy Jensen: Hi. Thanks for taking my question. First one here for, Yoav. If you look at results you have, Q1 was relatively in-line with consensus, Q2 guide seems to be in-line with consensus. If you continue down the second half, you're going to have about 8% growth this year, but some of that's acquired right from RPS and Origin. Some of that's going to come from the Xaar partnership. If you look at your marketing slides that you use, you talk about an industry that's growing 20% to 25%. So, I'm just curious, what's the real outlook here for FDM and PolyJet and why aren't you guys growing faster than the industry? If the core products are sustaining kind of that industry share, and then you're adding new technologies into your portfolio? Yoav Zeif: Hi. Troy, thank you for the question. As you know, we are not guiding the year. The overall year because of the uncertainty of the COVID and we give just a very specific direction where we can commit and where we see where we have good visibility, so I can just repeat it. In general, what we are seeing is a sequential growth quarter-over-quarter, we see the pent-up demand as we mentioned. We know exactly where we will be in terms of the OpEx like Lilach mentioned, but overall, when you look on our NPI status, and we are delivering. We were with the J55; we launched the J5 Dental with very good traction in the market. We launched the carbon fiber. We are delivering, we have a structured plan and we delivering on it. We launched new products, both on FDM and PolyJet, put it together with the pent-up demand we see good – we'll take good market interest in those new products, which are really at the top of the line and the next generation, both in material jetting and in material extrusion. We are leading the industry in terms of the technology. There is no doubt, and we hear it from our customers. So just take both into your analysis, the fact that we have those new products both on PolyJet and on FDM to the fact that we have three new technologies that we're introducing at the second half of the year and I guess you can do the math by yourself. Troy Jensen: Okay. And just a follow-up for Yoav. Would you agree that FORTUS really hasn't had competition, specifically in ULTEM? And do you fear that there's competition coming now, given that the patents for the heated build chamber have expired? Yoav Zeif: I had a call – just to share a call with a customer, I cannot reveal their name, but like the top five aerospace players in the world. And they told me, and I'm quoting because I prepared myself for this call. They said, you have the best machine out there in FDM, just help us to make it a manufacturing machine. And that's what we are doing in terms of software, in terms of material, you mentioned ULTEM, it's clear that we have the best heated chamber in the market. And also in terms of software material, but not less important certification, regulation, allowables, all this full package that we are the only one who has it. So even if someone is coming with ULTEM, it is still many years behind us in terms of certified to aerospace and automotive. And we are keep working. Our people are keep pushing on new patents, on new IP, on better heated chambers, on better processes, on regulation and Airbus expansion is the – it's the perfect proof for you. Troy Jensen: Alright. Good luck in the second half. Operator: Thank you. Next question today is coming from David Mizrahi from Berenberg. Your line is now live. David Mizrahi: Hey guys. So, I understand the higher operating expenses in 2021. But can you just speak to how you're thinking about some of that leverage moving into 2022? Do you have any goals you're talking to just with respect to those operating expenses? Lilach Payorski: Hi. David, good morning. So specifically, we are not providing a specific guidance in terms of 2022, but definitely I can speak with you in the overall business model that we are anticipating. It's important to remember that as our revenue will grow with the new adoption of our new manufacturing-based systems, we expect to see higher profit. Higher profit as we going to have a higher profit pool, and we are planning to leverage scale on our operating model. We have in place already the infrastructure, in corporate and in go-to-market to capture new technology without adding significant costs in the long-term. And this is really our vision. This is our goal in 2022 and 2022 and beyond 2023; we definitely will be able to see this leverage on the revenue. David Mizrahi: Got it. Okay. And then can you just also comment on how the new printers will impact gross margins going forward? The H350 for example, I know it uses fewer consumables. So, I'm just really curious about gross margin impact from new printers and particulars of H350 and its competitive advantages relative to HP's multi-jet fusion, for example. Thanks. Lilach Payorski: David, so we are now not specifically addressing the new product. Once we launch, we will be fixed more to that, but our vision at the end of the day, that gross margin is a – we have a wide portfolio and definitely it's a mix issue. Okay, and so overall it's a mix issue, but under manufacturing strategy revenue will be significantly higher driven by high consumption, which ultimately generate a higher profit. Even if consumable margins may be lower at this model. Plus we have a design for cost initiatives in place for the new products and for the existing products that we will address over time in the future as we roll out those new products, focus on improving the cost as product will be more mature as part of the product life cycle, this is something that we definitely or actively addressing. Yoav Zeif: Maybe just to add to Lilach, the systems are in-line with our overall profitability. We are living within our industry. Although we are not giving gross margin guidelines, as you know. But I want to relate to the question about H350, we are very proud of the H350 and it's really a step change in our industry in terms of mass manufacturing. So of course I'm not going to relate directly to HP, but I'm happy to share several advantages that the SAF – has, the SAF technology and do it very shortly. We have a whole list of advantages, but in a nutshell I would say consistent accuracy. And I mean that we have the highest consistency of part accuracy, this is must in manufacturing. The second one – second advantage is full control of the printing process and parameters, which is super important because it enabled fast certification of parts and material, which is critical in manufacturing. Everything here is about manufacturing. And the third advantage is really very good economics, because we are working with single-fluid. We are having high powder reuse rate, and we have an exceptional nesting efficiency in terms of the load that you can put of parts in the cake. So really it's an amazing machine. We have great plans around it and we are going to reveal more and more materials for this platform. Yonah Lloyd: David, its Yonah. I would add this as well because you talk about the ability to manage against competition. Remember that we have a very large service bureau that's technology agnostic, and it includes HP, it includes EOS, it includes lots of systems from lots of companies. So as we're doing our own research and development for our own products, we're actually customers using other products and really informs our ability to make decisions to develop the best-in-class competitive systems out there. David Mizrahi: Thank you, guys. Operator: Thank you. Our next question today is coming from Noelle Dilts from Stifel. Your line is now live. Noelle Dilts: Hi, thanks. Good morning. I was hoping that you could expand a little bit on what the M&A pipeline looks like, and specifically if you could speak to – if there's been any – how you're thinking about valuations for target? Obviously the multiples for a lot of the publicly listed companies have been volatile so far this year. Is that impacting target pricing at all? Thanks. Yoav Zeif: Hi, Noelle. Thank you for the question. I'll start – take a step back and start with what is really important. We have a laser focused strategy and everything that we are doing is subject to this strategy, focus, focus, focus, and also M&A. For us the strategy is polymer manufacturing and we are actively looking for, I would say responsible M&A opportunities like we did, and executing the past that will accelerate the implementation of the strategy as title above everything. And there are many opportunities and we are very attractive to many of the startup out there. Like you saw our acquisition of Origin and also RPS because we have the infrastructure and they want to succeed and they want to make that they have – they are growing their sales and they have – their earnout in place and we can commit for it because we have the infrastructure and we have the machine to acquire and to integrate it into our system. So we are continuously looking for potential investments proactively, and we want to maximize the value for our company and the shareholders. And we look all over; we have a structured unit that the way we are working. And this unit is going and screening and scouting, and we are focusing on those technologies and companies that will accelerate our strategy in each one of our technologies. And we know exactly what is needed in the market, which is a great advantage compared to anyone else who is looking out there in terms of financial investment or VCs. And we will keep doing this and we'll keep doing it in a very disciplined way and create value through those acquisitions. Noelle Dilts: Okay, great. And maybe just sticking with that theme, obviously still early days with Origin and RPS, but maybe could you expand upon how things are progressing so far in terms of how the market has received the deals particularly Origin and how things are trending relative to your initial expectations? Thanks. Yoav Zeif: Thank you. Great question. It's growing really well. I don't know if you had the chance to participate in our manufacturing event, more than 4,500 high-end customers and partners participated there. Significant amount of them, actually I would say around two-thirds also participated in the breakout session of Origin and all the guys were there, like all the important companies from Fortune 100 and also the top similar Fortune 100 in Europe and in Asia participated, y’know Tesla, Nike, Amazon, Apple, GM, Ford you name it, Lockheed Martin, they were all there because they are interested in manufacturing and we are bringing the full package for manufacturing. And that's why we created this team together with Origin, together with RPS and if you participated just to close the loop, all those customers of usthat I just mentioned. The Tesla, the Apple, the Google, all those customers were there waiting for the Origin machines to be out, systems, to be more precise for the 770 and for definitely for the H350 participating actively, and we are going to deliver them the full package for manufacturing. So we expect strong demand on those machines. And for me as a CEO, most importantly, I was very proud to see both in our press conference and also in our event that at the end we were one team - Origin, H350, the Xaar joint venture, and our FDM you could see that this is a one team that is pushing forward our industry into manufacturing. Noelle Dilts: Thanks very much. Operator: Thank you. Our next question is coming from Greg Palm from Craig-Hallum Capital Group. Your line is now live. Greg Palm: Yes. Thanks. I guess a question on gross margin; can you quantify the impact that you had from logistics? I'm just curious how that compares to what you said about SDM in mix overall. And if I heard you, right, I don't think you're expecting any improvement this year. So even as revenue increases, at least in the second half, gross margin stays at similar levels and so it almost implies that what you're seeing is worsening because presumably there is some level of overhead absorption in the second half, so just wanted to get a little bit more color there? Lilach Payorski: Good morning, Greg. Specifically on the logistic, yes, we were impacted by the global logistic issue that you saw overall. We are not the only company who actually suffer from that. And it's probably fair to assume that it's about 1% of our gross margins impact due to those logistic costs. And as we mentioned on the call, we expect gross margin to stay at this level through the balance of 2021, given the uncertainty around the logistic – high logistic costs and the consumables impacted by COVID. At the same time, I would like to mention that we are analyzing and increasing our inventory level of raw materials and finished goods to avoid delay, increasing production levels and prepare, for sea or air in our planning process. The most important thing for us is meeting the demand. We try. We are evaluating a wider array of shipping options to ensure we can deliver goods with minimal business and cost impact. It's very, very important for us to address this. Yoav Zeif: Yes, maybe I will just add to it. There are also some positive aspects. There are some positive aspects of the logistics side. So just to put to sleep on the gross margin, gross margin is a combination of the logistics, the consumable mix and SDM. And logistic was quite a large part there and really you can solve it out by yourself, but those were what really impacted our gross margin and since there is uncertainty on the recovery on the consumable and the logistics, there is more control on the SDM side, that's why we are cautious with our projections on gross margin. But what is the positive aspect of this? What is the opportunity here? Supply chains are fragile and it's not only because of COVID, they were fragile before COVID because of the trade wars and because of some barriers and looking forward with the UK-Europe Brexit, we'll see more trade issues and Texas ice freeze then you saw the Suez Canal, the Suez Canal blockage, and the weather issues, and so on and so forth. So supply chains are fragile and are being disrupted. So it's clear to everybody that we need more resilient supply chains. By the way we are facing the same issues. So we are also receiving some parts and machines through the Suez Canal. And we're exposed to the congestion in ports all over the world. Seven days, it's the average delay, globally. And in some ports, it could be 10 or 20 days. So no doubt everybody understands that the future has to take into consideration digital inventory. This is a great solution. You have no shipping issues, no customs, no weather impact, no nothing - instead of delivering from A to B across the Atlantic; you just deliver from A to A because you produce on the spot with digitally stored inventory. It's also an opportunity that's what I'm trying to say. And this is practically what we call industry 4.0. Greg Palm: Yes, I know it's a good point. I guess just as a follow-up because I'm still not entirely clear because usually when you have a better volume in top-line, you see better absorption and you see higher gross margin. So if the assumption is that that volumes and top-line revenue are going to increase solidly in the second half yet gross margins are going to stay up the same level as Q1, it implies that something is worsening from what you saw here in the most recent quarter. So are you assuming that that either mix or logistics or SDM worsens from here, just something that's doesn't add up and I just want to make sure we're all clear on that. Lilach Payorski: Greg, basically we are still conservative in terms of what we see currently. No one really, really know what's going to happen with the logistic constraint that we have. There is some publications even say that maybe it will take us to the end of the year, how severe it will be also no one knows. Okay. So we see prices that we knew in Q1 actually now even higher what we see in Q2. So prices will continue go high, so we believe the logistics situation and challenge all over will impact us significantly. Yoav Zeif: Yes, that's a great point. And also the prices went really up and more to the end. At least our prices of logistics from China and from Israel went up more at the end of the quarter. So we are being cautious. But I want to make one thing very, very clear. It's all about mix, as we mentioned, and logistics and SDM, but overall APS in general stayed at the same level. Yonah Lloyd: ASPs. Yoav Zeif: Sorry, ASP, so the average selling prices stayed more or less in general in the same ballpark and the issue is not coming from there. This is very important to mention. Greg Palm: Okay, great. Really helpful, thanks so much. Operator: Thank you. Your next question today is coming from Brian Drab from William Blair. Your line is now live. Brian Drab: Thanks. I was going to ask something that's kind of related to pricing as well, but specifically on consumables, you're down 10% organically year-over-year in consumables, but I think customer activity would have increased materially year-over-year given many of the service bureaus manufacturing design companies were shutdown or at least slowed down materially last March. And also if you compare it with first quarter of 2019, if you go back two years, consumables revenues down about 15% and product gross margins down over 600 basis points since first quarter of 2019. So, I mean, there are a few things that can explain this. I don't know is it lower utilization of your machines? Even though machine sales have been soft, there are more machines in the market than there were two years ago. So is it lower utilization of those machines going out to the market? Or are you lowering price and consumables or what is it? Thanks. Yoav Zeif: Great question. Thank you. You just answered it. It's lower utilization, definitely. It's not that all our customers are back. And even if they are back, they are not utilizing at the same level as pre-pandemic. Add to it the fact that there are some segments that really were heavily hitted by the pandemic and are slow to recover, mainly aerospace. And we think aerospace, commercial aerospace, they are slow to recover, also automotive. And we are highly focusing on those because those are the high-end segments that are buying our high-end machines. This is manufacturing. So we are more exposed, but I have no doubt that in the future, we will see them coming back strongly. The utilization will go up and consumable, as we said, will grow sequentially throughout the year. Brian Drab: Okay. And, I guess, is it the same dynamic that's playing out in the system sales because I mean, that's a great result that system sales are up 40% year-over-year, but they were down 40% year-over-year last first quarter and going down 40 and then back up 40. It means you're still – on a two year stack basis, you're still down 15% in system sales from first quarter 2019 levels. Is that the same dynamic that you're just – it's going to take another year maybe to get back to 2019 levels? Yoav Zeif: In general, yes. We don't know exactly when aerospace will be exacting 2019, but what we can see is that hardware is – as you see, because of the deep decline in Q1 that we had in some areas of the world, we see this spend demand. And this spend demand is a sign for consumable because hardware is probably a phase or two phases before the consumable. So you can use the hardware in order to predict the demand for consumable. Brian Drab: Okay. Thank you very much. Operator: Thank you. Our next question today is coming from Wamsi Mohan from Bank of America. Your line is now online. Wamsi Mohan: Yes. Thank you. You did a capital raise last quarter. You're calling this as growth capital. You obviously already have a pretty strong balance sheet before that. So how should we think about maybe pace of either M&A or investments? Is this going to be at some level of accelerated pace versus even the last few years? Or how should we think about the relative pace of investments and M&A? If you could share any color on that, that would be helpful. Yoav Zeif: We are sticking to our strategy and to the same concept that we mentioned two quarters ago. We have a strategy. Part of the strategy is a structured M&A proactive. I would say proactive scouting and screening to make sure that we are building pipeline for M&A in a way that will maximize shareholder value through synergies and the synergies are very clear here. It has to be something that accelerates the strategy. It has to be something that either accelerated through technology or go-to-market or material or software. So we work on the workflow, which is the software and the other type of workflow or material for hardware technology. And we'll keep doing it in a disciplined way. We build an M&A team internally, and it's a very strong team. We are not rushed to do anything, but we do it in a very disciplined way to accelerate the strategy. Wamsi Mohan: Okay, thanks, Yoav. And you talked about this acceleration in revenue growth in 2022 and beyond. When you think about that in relation to maybe market growth, are you expecting to take share and grow in excess of the market? And maybe if you could just talk about that growth acceleration coming between existing products and new products, I'm trying to isolate what is sort of a cyclical recovery that can drive an acceleration in 2022 versus a more secular sustainable recovery in that growth? Thank you. Yoav Zeif: We are growing, we are leading, but also in the future, we will lead the polymer manufacturing segments. We are leading additive manufacturing in polymers. This is the strategy. This is the target. And the way to do it is by making sure that we have the right match for every application. This is why we expanded our portfolio to five technologies. In each one of them, we believe we have the best-in-class technology. And I'm already in this industry almost a year and a half now. And I can tell you that it's quite simple, you need to have the best parts and this is scientific. You need to make sure that you have the best parts properties and we are working on it on each one of the technologies. We leverage it through our channel partners and we are delivering to our customers. We focus on manufacturing, a full package of hardware, software, material, and services and we package all of it in a seamless platform of software. This is a big advantage. This is something we heard from our customers. They want to have one supplier and we will be this one supplier in polymer manufacturing. And as we said last quarter, we believe that our specific revenue will grow over 20% in this sector of additive manufacturing. So we are currently – as we said last quarter, in 2020 around 25% of our sales went to end-use parts. We are going to grow it in the mid-teens this year and 20% from next year onwards. Wamsi Mohan: Thank you, sorry. Operator: Thank you. Our next question today is coming from Ananda Baruah from Loop Capital Markets. Your line is now live. Ananda Baruah: Hi. Yes, thanks guys for taking the questions. I guess just when you guys talk about – Yoav, when you talk about the revenue acceleration beyond the 20% seemingly starting kind of in 2022 going into 2023. Can you share with us – presumably that would be sort of through most of the pent-up demand, could you sort of share with us if that's the case you really think at that point the production systems are really driving the growth? And then if they are, do you yet have the qualifications in the key verticals kind of aero and auto that you would need for that? And if you don't have them, what do you think the difficulty level to getting there is? Thanks a lot. Yoav Zeif: Ananda, thank you very much for the question. So I want to be very clear and I want to separate short-term catalyst and long-term catalyst here in the market. So we said, and again, just to clarify that the part in our sales that is growing for manufacturing as we defined it as end-use part will grow mid-teens this year and above 20% from 2022 onwards. So this is the statement. Why we believe in it? Because first of all there are some catalysts and pent-up demand in the short-term because of the recovery from the COVID, because of supply chain pressure that people want to make sure that they are insuring themselves against it, because of the entire environment that we see in the macro economy. This is one. And then, which is more important everybody is seeing the long-term trends that we are facing, which leads us to an inflection point in additive manufacturing. And this inflection point is underlined, as I said before, by three very strong forces. One is the need to have responsive and versatile supply chain, this digital manufacturing that we discussed so many times. The second very strong trend is the fact that additive manufacturing technologies reach, I would say, new levels in terms of their ability to deliver end-use parts and mass production. We were in the 100s, maybe 1000s. Now we are in the dozens of thousands and maybe hundreds of thousands and you saw in the case of the nasal swabs that we even printed millions. So it's a different era in additive manufacturing. And add to it the third very strong trend, which is the whole industry trends that you have those new segments like electric vehicle and new type of aerospace solution where polymer and composites are so important for the type of the parts, for the complexity of the parts, but also for the need for customization and short series of production. So it's a new era. It leads us to manufacturing. Being in manufacturing, it's a whole new story because in manufacturing you need… it’s about new applications. It's about new materials. It's about very strong and solid service because you cannot allow yourself down time and not less important you need software, you need software in order to be connected to the manufacturing system, the MES, the ERP, the PLM, you need to be there, and you need to put all this in one package connected. So connectivity is also very important. And we have relationships with those blue-chip customers, FORTUNE 100 customers that are leading this transformation. And those OEMs are working with us to transform the industry. And it gives us the confidence that we are on the right direction, because at the end, we are not working in a vacuum, but we are working with our customers to take this industry into manufacturing. Ananda Baruah: That's super helpful. Yoav, I really appreciate. That's really great context by the way. Thanks for that. And just a quick follow-up to that, it sounds like you have like at least a good amount of the capability in so you just referenced your ability to do production parts of volume, certain production parts of volume. And I liked that you're sticking your neck out and giving the growth context. So thanks for that. This is fluid. How much of sort of the capability you've mentioned software M&A et cetera workflow? How much of the capability do you think you need to get to putting together solutions, software services, like you said, putting into one package? How challenging is that over the next, call it, four to eight quarters to get to where you want to be? Where your production customers are saying they want you to be to be able to really inflect that growth? I know that's a lot, but I think the context would be helpful. Thanks. And that's it for me, Yoav Zeif: Another great question. We have currently the internal capabilities to deliver our strategy. Having said that, it's also clear to us that we can accelerate it, so the focus is on acceleration, not on enabling because we can do it, but this is a great place to be when you are looking for M&As because you're coming from a place where you have the certainty that you are good with alternatives. We are not depending on anyone to execute our strategy. We have many that can help us to accelerate. Ananda Baruah: That's great. Thank you. Operator: Thank you. We have reached the end of our question-and-answer session. I would like to turn the floor back over to Yoav for any further closing comments. Yoav Zeif: Thank you. Thank you for joining us. Stay safe and healthy, looking forward to updating you again next quarter. Operator: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.
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Stratasys Ltd. (NASDAQ: SSYS) Analyst Evaluations and Future Prospects

  • Analysts' consensus price target for Stratasys Ltd. (NASDAQ: SSYS) has fluctuated, reflecting changing perspectives on the company's stock value and future prospects.
  • Despite challenges, Needham analyst James Ricchiuti set a price target of $12 for Stratasys, indicating a cautiously optimistic view on the company's financial health and market position.
  • Stratasys' collaboration with CollPlant Biotechnologies on regenerative breast implants showcases its innovative capabilities and potential to tap into new market opportunities valued at $3.0 billion.

Stratasys Ltd. (NASDAQ: SSYS) specializes in connected polymer-based 3D printing solutions, playing a pivotal role in the additive manufacturing industry. The company's innovative approach to 3D printing technology has positioned it as a key player among competitors, focusing on sectors ranging from healthcare to aerospace. Over the past year, the consensus price target for Stratasys has seen fluctuations, reflecting analysts' changing perspectives on the company's stock value and future prospects.

A year ago, analysts set an average price target of $12.67 for SSYS, indicating a positive outlook on the company's performance. This price target remained stable a quarter ago, suggesting a consistent analyst consensus on the company's valuation and its strategic direction. However, the absence of an updated price target last month introduces uncertainty regarding the current sentiment among analysts, making it challenging for investors to gauge the latest expectations for Stratasys.

In the backdrop of these analyst evaluations, Stratasys is gearing up to announce its second-quarter earnings. The anticipation around this report is mixed, with expectations of revenue being negatively impacted by foreign exchange headwinds and the divestment of certain businesses. Despite these challenges, analyst James Ricchiuti from Needham has set a price target of $12 for Stratasys, slightly below the previous average but still indicative of a cautiously optimistic view on the company's financial health and market position.

Furthermore, Stratasys' collaboration with CollPlant Biotechnologies on a pre-clinical study for regenerative breast implants showcases the company's innovative edge and its potential to tap into new market opportunities. This project, leveraging Stratasys' Origin® 3D printer, could revolutionize the field of regenerative medicine and open up a significant market opportunity valued at $3.0 billion. Such initiatives not only highlight Stratasys' commitment to advancing medical technology but also bolster its growth prospects in the eyes of analysts and investors alike.

As Stratasys continues to navigate through its financial and operational challenges, the company's strategic initiatives and collaborations in the healthcare sector, alongside its advancements in additive manufacturing technology, remain key factors that could influence its stock performance and future analyst evaluations. The set price target of $12 by Needham's James Ricchiuti, amidst these developments, reflects a measured but positive outlook on Stratasys' ability to overcome current hurdles and capitalize on its innovative capabilities in the long run.