Stratasys, Ltd (SSYS) stock took flight in pre-market trading on Wednesday, surging over 18% after the 3D printing company delivered a surprisingly strong third-quarter earnings report. While revenue dipped by 13.6% year-over-year to $140.01 million, it managed to beat analyst expectations of $139.49 million.
This positive performance was attributed to the company’s ability to improve its adjusted gross margin to 49.6% from 48.3% a year ago. Additionally, Stratasys achieved adjusted earnings per share (EPS) of $0.01, exceeding the analyst consensus estimate of a loss. This signifies a return to profitability for the company.
The company’s flagship F3300 platform has been gaining significant traction in the market, contributing to this positive trend. Stratasys is also seeing strong growth in its Aerospace, Automotive, and Healthcare sectors, further driving its performance.
Dr. Yoav Zeif, CEO of Stratasys, attributed the company’s return to non-GAAP profitability to the effective execution of its business strategy, despite facing persistent revenue challenges due to the ongoing macroeconomic environment. He also highlighted the steady growth in recurring revenue from Consumables, driven by increased utilization of FDM technology in manufacturing. This growth in consumables partially offset weaker hardware sales, which were impacted by the broader economic climate.
Looking ahead, Stratasys maintained its revenue outlook for fiscal year 2024 (FY24), projecting revenue between $570 million and $580 million, against a consensus estimate of $631.63 million. The company’s restructuring plan is progressing ahead of schedule, with Stratasys expecting to realize $40 million in annual savings starting in the first quarter of next year.
These cost savings, coupled with the ongoing market traction, position the company for higher revenue growth, profitability, and cash flow in 2025, as market conditions stabilize. Stratasys expects adjusted EPS to fall between $0.03 and $0.07, compared to a previous range of $0.01 to $0.05. The company also anticipates adjusted EBITDA of $25 million to $28 million and an adjusted operating margin of 0.6% to 1.3%.
Despite the recent positive news, Stratasys stock has struggled this year, plunging over 40% year-to-date. This decline was largely attributed to disappointing second-quarter results and a cautious fiscal 2024 guidance. However, the company’s improved performance in the third quarter and the positive outlook for 2025 could reignite investor interest in Stratasys.
