Stratasys sees marginal revenue growth in Q3 2022 despite “challenging global economic backdrop”

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Despite continuing macroeconomic headwinds, 3D printer OEM Stratasys has reported that its revenue increased 2.0% in Q3 2022. 

Stratasys generated $162.2 million in Q3 2022. This is a slight improvement over the $159.0 millions it generated in Q3 2020, but a 3.1% decrease over Q2 2022. While the firm credits its annual revenue growth with strong demand for its 3D printers and acknowledges that it suffered from prolonged sales cycles, delays in acquiring consumables and other factors, its quarterly numbers were down 3.1%. 

“We delivered our highest third quarter revenue in seven years. This was driven by 18.9% growth in our systems, excluding divestitures and on a constant currency basis,” said Dr. Yoav Zeif, CEO of Stratasys. “We have now achieved five consecutive quarters of positive earnings, demonstrating our unique ability to generate profitable growth even while navigating a challenging global economic backdrop.”

Stratasys’ Q3 2022 financials

In Q3 2022, Products remained Stratasys’ largest revenue generator, bringing in $112.1 million, a 2.9% rise on the $108.9 million it turned over in Q3 2021. On the firm’s earnings call, Zeif said this growth was driven by demand for its systems, which jumped 18.9% over the same period, when adjusted for divestitures and exchange rate changes. 

In particular, the Stratasys CEO highlighted the contribution of its SaaS, P3, and Neo offerings, which more than doubled its addressable market and “opened up new use cases and opportunities to replace traditional manufacturing.” Zeif added that the company’s core FDM portfolio also delivered solid growth during Q3 2022, and committed to “expanding and improving” its product lineup in this area. 

By contrast, revenue generated by the consumables part of Stratasys’ Products division fell 1.4% year-on-year, bringing in $55.8 million. This business experienced a 3.4% increase over the same period. However, this was if you exclude the divestitures impact and use constant currency, the slowdown was much more severe. Line-by-line, demand for Stratasys’ P3 materials are said to have been hit especially hard by this. 

Stratasys’ other segment, Services, turned over revenue of $50.1 million, which was flat against Q3 2021 and 1.6% down against Q2 2022. Zeif later explained that in line with the company’s business model, its material and service sales are lagging behind those of its hardware. He said that Stratasys will continue to expand its user base and this will drive greater demand for its other offerings. 

Portfolio expansion continues in Q3 

During Q3, Zeif said Stratasys “laid the foundations for further growth” via the launch of new products that will “drive its industry leadership for the long term.” This was particularly the case in the firm’s material business. In an update on Stratasys’ acquisition of Covestro’s 3D printing polymers division, Zeif explained how it would “accelerate next generation material development,” once completed in Q1 2023. 

Stratasys has also validated 13 FDM polymers from Victrex and Kimya over the past quarter. Zeif explained that some of these new colors were available in new variants. However, Zeif also mentioned how materials such as the ULTEM9085 thermoplastic have allowed for more parts to be produced with customer-facing applications within the rail, aerospace, and automotive industries. 

For its Origin One 3D printer, Stratasys introduced two new validated industrial materials over Q3, including P3 Stretch 475 and another from Henkel’s Loctite range. It is believed that the latter has already been used for 3D printing door seals. The firm also launched P3 Deflect 120 with Evonik, a temperature-resistant material with potential in the creation of manufacturing molds. 

Elsewhere, the company’s investment activities haven’t slowed down either. Stratasys agreed to buy 3D printing software developer Riven in the opening weeks of Q4, and it poured $10 million into medtech startup Axial3D’s recent funding round. The firm now works with Axial3D in a joint offering to lower barriers for 3D printing hospitals in key markets.

Guidance updated for FY 2022 

Stratasys’ FY 2022 forecast has been revised to $648 million to $652 million due to current headwinds such as rising interest rates and currency risks, global supply chain costs and inflation. This takes into account the $17 million impact of Stratasys’ MakerBot divestiture, and the $13 million in revenue the firm expects to miss out on, as clients delay purchases amid macroeconomic uncertainty. 

Stratasys invested $18.4 millions in its operations during Q3, reflecting an investment made in inventories to improve its supply chain management. As the firm’s install base continues to grow, Zeif says its wider consumable portfolio will also pay dividends, not only in broadening the application of its technologies, but boosting its profitability.

“We are excited about the significant expansion of our materials portfolio across multiple technologies, which we believe will drive higher-margin consumables sales in the coming years,” added Zeif. “In addition, as part of our growth strategy we will keep selectively adding and incubating complementary new technology-driven businesses that we expect will spur incremental growth in the future.”

“Stratasys is ideally positioned to provide the necessary solutions to catalyze our customers’ ongoing transformation from prototyping to additive manufacturing at scale.”

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Featured image shows an engineer using Stratasys’ DentaJet J5 3D printer. Photo via Stratasys.