Stratasys(SSYS) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q4 2022, consolidated revenue was $159.3 million, down 4.6% year-over-year, and down 2.8% on a constant currency basis. Adjusted for the MakerBot divestment, revenue grew 1.7% at constant currency [23] - Full-year 2022 consolidated revenue increased by 7.3%, 9.6% on a constant currency basis, and 11.4% at constant currency after excluding MakerBot [25] - GAAP gross margin for Q4 was 43.1%, slightly down from 43.7% in the same period last year. Non-GAAP gross margin was 48.4%, compared to 48.7% year-over-year [26] - GAAP net loss for Q4 was$ 2.4 million or $0.04 per diluted share, an improvement from a net loss of$ 4.8 million or $0.07 per diluted share in the same period last year [28] Business Line Data and Key Metrics Changes - Product revenue in Q4 fell by 5.8% to$ 111.2 million, but grew 1.6% excluding divestitures on a constant currency basis. Systems revenue was down 11.1% to $54.9 million, while consumables revenue was flat at$ 56.3 million [23][24] - For the full year, product revenue grew by 8.3% compared to 2021, with system revenue increasing by 12.6% [25] - Service revenue for Q4 was $48.1 million, down 1.9% year-over-year, but customer support revenue grew by 1.9% [24] Market Data and Key Metrics Changes - The OEM business grew 3.2% in Q4 2022 on a constant currency basis compared to Q4 2021 [22] - Recurring revenue increased significantly in 2022, with consumables up 7.7% and customer support up 11% on a constant currency basis [11] Company Strategy and Development Direction - The company aims to be the leading innovator in polymer-based additive manufacturing solutions, focusing on both organic and acquired technology offerings [7] - The acquisition of Riven and Axial3D positions the company for growth in AI-driven 3D printing solutions, particularly in healthcare [11] - The company plans to unlock new sales opportunities in materials through the Covestro AM acquisition and has formed a partnership with Ultimaker [12][13] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing inflationary pressures and potential recession concerns impacting customer capital spending, leading to longer sales cycles [10] - The company expects 2023 revenue to range between$ 620 million to $670 million, with a stronger second half due to new product launches [32][33] - Gross margins are expected to improve modestly in 2023, with a target range of 48% to 49% [33] Other Important Information - The company ended Q4 with$ 327.8 million in cash and cash equivalents, down from $348.7 million at the end of Q3 2022 [31] - The company anticipates a GAAP net loss of$ 78 million to $57 million for 2023, with non-GAAP net income expected to be between$ 9 million to $17 million [35] Q&A Session Summary Question: What is the current market situation and any specific strengths or weaknesses? - Management noted a microeconomic slowdown across the board but highlighted the company's diversification across geographies and verticals, which helps mitigate risks [40] Question: How confident is the company in the second half of the year? - Management expressed confidence due to new product launches and a strong installed base, despite macroeconomic challenges [43] Question: Can you elaborate on the Ricoh partnership? - The partnership aims to democratize access to 3D printing in medical applications, leveraging AI to transform medical files into 3D printable formats [47] Question: What is the outlook for gross margins? - Management indicated a path towards improving gross margins, with expectations to reach 50% as operational efficiencies improve and new products are introduced [49] Question: How does the company view long-term revenue growth? - Management emphasized the transition from prototyping to manufacturing, which is expected to drive significant growth in the coming years [53]