Q1 2024 Stratasys Ltd Earnings Call
Operator: Greetings and welcome to the Stratasys first quarter 2024 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Yonah Lloyd, Chief Communications Officer and Vice President of Investor Relations. Thank you. Good afternoon.
Greetings and welcome to the Stratasys first quarter 2024 earnings call.
Speaker Change: At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.
Speaker Change: As a reminder, this conference is being recorded it.
Yonah Lloyd: It is now my pleasure to introduce your host you Wanna Lloyd Chief Communications Officer, and Vice President of Investor Relations. Thank you you may begin.
Yonah Lloyd: Good afternoon, everyone, and thank you for joining us to discuss our 2024 first quarter financial results. On the call with us today are our CEO, Dr. Yoav Zeif, and our CFO, Eitan Zamir.
Speaker Change: Good afternoon, everyone and thank you for joining us to discuss our 2024 first quarter financial results.
Speaker Change: On the call with US today are our CEO, Dr. Yao Zeiss and our CFO eight tonnes zamir.
Yonah Lloyd: I would like to 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. Please note that some of the information you will hear during our discussion today will consist of forward-looking statements, including, without limitation, those regarding our expectations as to our future revenue, gross margin, operating expenses, taxes, and other future financial performance and our expectations for our business outlook. All statements that speak to future performance, events, expectations, or results are forward-looking statements. However, actual results or trends could differ materially from our forecast.
Speaker Change: I would like to remind you that access to today's call, including the slide presentation is available online at the web address provided in our press release and.
Speaker Change: 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.
Yonah Lloyd: For risks that could cause actual results to be materially different from those set forth in forward-looking statements, please refer to the risk factors discussed or referenced in Stratasys' annual report on Form 20-F for the 2023 fiscal year. Please also refer to our Operating and Financial Review and Prospects for 2023 and for the first quarter of 2024, which are included as Item 5 of our Annual Report on Form 20-F for 2023 and in Exhibit 99.2 to the report on Form 6-K that we are furnishing to the SEC tomorrow, respectively.
Please note that some of the information you will hear during our discussion today will consist of forward looking statements, including without limitation those regarding our expectations as to our future revenue gross margin operating expenses taxes, and other future financial performance and our expectations for our business outlook all statements that.
Yonah Lloyd: Please also see the press release that announces our earnings for the first quarter of 2024, which is attached as Exhibit 99.1, to a separate report on Form 6K that we are furnishing to the SEC today. Our reports on Form 6K, which we furnish to the SEC on a quarterly basis and throughout the year, provide updated current information regarding our operating results and material developments concerning our company. Stratasys assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.
Speaker Change: To future performance events expectations or results are forward looking statements actual results or trends could differ materially from our forecast for risks that could cause actual results to be materially different from those set forth in forward looking statements. Please refer to the risk factors discussed or referenced in Stratasys annual report on form 20.
Speaker Change: For the 2023 ear.
Speaker Change: Please also refer to our operating and financial review and prospects for 2023 and for the first quarter of 2024, which are included is item five of our annual report on form 20-F for 2023.
Speaker Change: In exhibit 99 point too to the report on form 6K that we are furnishing to the SEC tomorrow, respectively.
Speaker Change: Please also see the press release that announces our earnings for the first quarter of 'twenty 'twenty, four which is attached as exhibit 99, one to a separate report on form 6K that we are furnishing to the SEC today. Our reports on form 6K that we furnished to the SEC on a quarterly basis and throughout the year provide updated current information regarding our operating results in may.
Speaker Change: Developments concerning our company Stratasys assumes no obligation to update any forward looking statements or information, which speak as of their respective dates.
Yonah Lloyd: As in previous quarters, today's call will include GAAP and non-GAAP financial measures. The non-GAAP financial measures should be read in combination with our GAAP metrics to evaluate our performance. Non-GAAP to GAAP reconciliations are provided in tables in our slide presentation and today's press release.
Speaker Change: As in previous quarters today's call will include GAAP and non-GAAP financial measures. The non-GAAP financial measures should be read in combination with our GAAP metrics to evaluate our performance non-GAAP to GAAP reconciliations are provided in tables in our slide presentation and today's press release.
Yonah Lloyd: I will now turn the call over to our Chief Executive Officer, Dr. Yoav Zeif. Dr. Zeif? Thank you, Yonah.
Speaker Change: I will now turn the call over to our Chief Executive Officer, Dr. Yao of Zeiss you off.
Speaker Change: Thank you Yana.
Yoav Zeif: Good afternoon, everyone. And thank you for joining us. Our solid results for the first quarter of 2024 reflect the resilience of our business model, even as we are seeing constrained capital spending across the industry, resulting in relatively flat year-over-year revenue after backing out divestitures. Gross margins improved, and consumables recurring revenue reached a record high, reflecting the strong utilization of our existing systems and demonstrating the impact of this revenue stream. Our customers are using their systems at a high level, displaying a promising indication of their increasing reliance on 3D printing as they expand its usage in manufacturing applications while also managing cost.
Speaker Change: Good afternoon, everyone.
Speaker Change: And thank you for joining us.
Dr. Yao: Our solid results for the first quarter of 'twenty 'twenty four reflect the resilience of our business small data even as we have seen a constrained capital spending across the industry.
Dr. Yao: Resulting in a relatively flat year over year revenue after backing out divestitures.
Dr. Yao: Gross margins improved and a consumable recurring revenue reached a record high reflecting the strong utilization of our existing systems and demonstrating the impact of this revenue stream.
Dr. Yao: Our customers are using their systems at the high live and displaying a promising indication of the increasing reliance on three D printing as they expand usage in manufacturing applications, while also managing costs.
Yoav Zeif: Our results this quarter and throughout the prolonged capital spending market downturn demonstrate the effectiveness of our strategy that drives high-margin consumables, and our unique approach continues to produce strong results. Specifically, in the quarter, we generated over $7 million of cash from operations, and Positive Free Cash Flow strongly differentiates us in our sector and will help drive increased growth and profit as the current macrocapital challenges subside and spending normalizes. We continue to maintain a healthy balance sheet that provides us with stability to manage the current environment and Optionality to support our growth through both organic investments and accretive acquisitions.
Dr. Yao: Our results this quarter and for all of the prolonged capital spending market downturn demonstrate the effectiveness of our strategy that drives a high margin consumer book and our unique approach continues to produce strong results.
Dr. Yao: Specifically in the quarter, we generated over 7 million of cash from operations and positive free cash flow, we believe it's always financial discipline.
Dr. Yao: Through only differentiates us in our sector.
Dr. Yao: And it will help drive increased growth and profit is the current macro capex challenges subside and spending normalizes.
Dr. Yao: We continue to maintain a healthy balance sheet that provides us the ability to manage the current environment.
Dr. Yao: And optionality to support our growth through both organic investments and accretive acquisition and when capital spending returns to normal level, our differentiated offering.
Yoav Zeif: And when capital spending returns to normal levels, our differentiated offering of industry-leading printer technology, Materials, and Software Solutions positions us to meaningfully accelerate growth, driving sustainable long-term shareholder returns. Now, let me give you an update on our exciting recent technology offering, the F3300, which we launched at the end of last year. As we have shared, the F3300 establishes a new standard in FDM industrial 3D printing form and effect, with up to twice the speed and throughput of standard FDM systems.
Dr. Yao: Industry, leading printer technologies materials and software solutions positions us to meaningfully accelerate growth driving sustainable long term shareholder returns.
Dr. Yao: Now let me give you an update on our exciting recent technology offering the F 3300, which we launched at the end of last year.
Dr. Yao: As we have shared the F 3300 establishes a new standard in F. D M industrial three D printing for them in the factory.
Dr. Yao: With up to twice the speed and throughput of standup F. D M systems.
Yoav Zeif: The value proposition continues to resonate in the market, with our sales funnel growing. After securing our first buyer, Toyota, we are building on that momentum. BAE Systems, Europe's largest defense contractor, purchased F3300s to drive production improvement and reduce costs and time to market across their air sector products, and our newest FDM technology is perfectly suited to deliver that need. Sikorsky, a Lockheed Martin company and a world leader in vertical flight, purchased the F3300 to help them to stay at the forefront of additive manufacturing through the production of end-use parts for the aircraft in a faster and more cost-effective way.
Dr. Yao: The value proposition continues to resonate in the market with our sales funnel growing.
Dr. Yao: After securing our first by your Toyota we are building on that momentum.
Dr. Yao: A E systems Europes largest defense contractor purchase F 33, hundreds to drive production improvement and reduce cost and time to market across their air Sixto product.
Dr. Yao: And our newest SDN technology is perfectly suited to deliver that need.
Dr. Yao: Sikorsky and Lockheed Martin Company, a world leader in vertical flight parents, just the F 3300 to help them to stay at the forefront of additive manufacturing.
Dr. Yao: The production of end use parts for the aircraft in a faster and more cost effective way and Nissan.
Yoav Zeif: And Nissan, the automotive OEM, has also become an F3300 customer, where our technology is replacing that of a 3D printing competitor for multiple use cases. Our F3300 pipeline is strong, with accelerating interest and engagement levels. Orders have surpassed our expectations in the first half of this year, and we look forward to achieving and sharing more details on customer wins throughout the year. We also recently introduced new SAF iDef printing capabilities with the launch of our H350 version 1.5, which provides additional applications and use cases for a growing set of manufacturing and users without compromising speed or quality.
Dr. Yao: Multiple OEM is also became an F 3300 customer where our technology is replacing death of a three D printing competitor so multiple use cases.
Dr. Yao: Our F 3300 pipeline is strong with accelerating interest in engagement levels.
Oh, there's if surpassed our expectations in the first half of this year and we look forward to achieving and sharing more details on customer wins.
Dr. Yao: Here.
Dr. Yao: We also recently introduced new SaaS I deaths printing capabilities with the launch of our <unk> III 50 version 1.5.
Dr. Yao: Which provides additional applications and use cases.
For a growing set of kind of factoring and use it without compromising speed all quality.
Dr. Yao: Okay.
Yoav Zeif: Now, I'd like to highlight a couple of milestones subsequent to quarter end. First, we announce the promotion of our new COO, Amir Kleiner. Amir has been with Stratasys for over 12 years, and he will now lead the company's global operations, MIS, and quality team, while continuing to manage the customer success team.
Dr. Yao: No I'd like to highlight a couple of milestones subsea.
Dr. Yao: Subsequent to quarter end.
First we announced the promotion of our new CLO Kleiner.
CLO Kleiner: Is it being we'd start to see it for over 12 years and he will now lead the company's global operations M. A S and quality teams, while continuing to manage the customer success team.
Yoav Zeif: This appointment will strengthen the connection between the Customer Success Organization and the Operations and Supply Chain Division. Also, post-quarterly, we proudly published our second ESG and sustainability report. Sustainability is core to 3D printing, with benefits for our customers, employees, people, and the planet.
CLO Kleiner: Disappointment, we strengthen the connection between the customer success organization and the operations and supply chain divisions.
Also post quote their hand, we proudly published our second ESG and sustainability report.
CLO Kleiner: Sustainability is core to three D printing with benefits to our customers employees.
Yoav Zeif: It's also at the heart of our DNA at Stratasys, as we are clear ESG leaders in our industry. Our achievements include improved environmental impact, employee health and safety, diversity and inclusion, good governance, and ethical conduct. The certifications, processes, and practices we have implemented are a critical component to help cement our leadership role as we partner with some of the largest manufacturing companies in the world. We are an increasingly important part of our customers' journeys to decarbonize their operations and optimize supply chains and production.
CLO Kleiner: People and the planet. It's also the heart of our DNA it strikes us.
CLO Kleiner: As we are clear ESG leaders in our industry.
CLO Kleiner: Our achievements include improved environmental impact.
CLO Kleiner: <unk> health and safety diversity and inclusion.
CLO Kleiner: Good governance and ethical conduct.
CLO Kleiner: The certification for <unk>.
CLO Kleiner: Also says and practices, we have implemented are a critical component to cement our leadership role.
CLO Kleiner: We partner with some of the largest manufacturing companies in the world. We are an increasingly important part of our customers' journey to decarbonize.
Operations and optimized supply chain and production.
Yoav Zeif: We invite our investors and customers to join us in the shift to what we call Mindful Manufacturing, where we leverage additive manufacturing technology to produce parts in a more sustainable manner. Overall, we are driving ahead to serve as our customers' most trusted additive manufacturing partner and believe we will see meaningfully improved results when the current CAPEX down cycle reverts. To that end, we are continuing to invest in technological innovation, best-in-class sales channels, and key partnerships, building on our meaningful foundations for growth that will drive our industry leadership for the long term.
CLO Kleiner: We invite our investors and customers to join us on the shift towards we call milestone manufacturing, where we leverage additive manufacturing technology to produce parts in a more sustainable manner.
CLO Kleiner: Overall, we are driving ahead to service our customers most trusted additive manufacturing partner and believe we will see meaningfully improved results when the current capex downside can reverse.
CLO Kleiner: To that end, we're continuing to invest in technological innovation best in class sales challenges and key partnerships building going on or a meaningful foundation for growth that will drive our industry leadership for the long term.
Yoav Zeif: Before I turn it over to our CFO to cover the details of the financial results, let me provide an update regarding our ongoing strategic review. We continue to run a comprehensive process as our Board of Directors considers and evaluates all avenues to maximize value. As we have communicated previously, we will disclose further developments in the process when we determine that such disclosure is appropriate or necessary.
CLO Kleiner: Before I turn it over to our CFO to cover the details of the financial results. Let me provide an update regarding our ongoing strategic review.
CLO Kleiner: We continue to run a comprehensive process as our board of directors consider and evaluate all avenues to maximize value.
Speaker Change: As we have communicated previously we will disclose further developments on the process, where we determine that such disclosure.
Speaker Change: Is appropriate or necessary.
Speaker Change: Over to you eight then.
Eitan Zamir: Thank you, Yoav, and good afternoon, everyone. We are encouraged by multiple improvements in the results of the first quarter relative to the first quarter of last year, while we continue to experience the effects of macroeconomic weakness on customer CAPEX spending. Despite their relatively flat revenues, our growth margins improved, thanks in part to another record level in our consumables sales. And we generated over $7 million in operating cash and over $4 million in free cash. For the first quarter, consolidated revenue of $144.1 million was down 3.5% compared to Q1 2023. However, excluding the non-core divestitures, our revenues were relatively flat.
Speaker Change: Thank you Yakov and good afternoon, everyone.
Speaker Change: We are encouraged by multiple improvements in the results of the first quarter relative to the first quarter of last year, while we continued to experience the effects of macroeconomic weakness in customer capex spending.
Speaker Change: Despite the relatively flat revenues, our gross margins improved.
Speaker Change: Thanks in part to another record level in our consumables sales.
Speaker Change: And we generated over 7 million in operating cash and over $4 million in free cash flow.
Speaker Change: For the first quarter consolidated revenue of $144 1 million was down three 5% compared to Q1 2023.
Speaker Change: Excluding the non core divestitures, our revenues were relatively flat.
Eitan Zamir: Product revenue in the first quarter was $99.2 million compared to $101 million in the same period last year, or down by 0.9% excluding divestitures. Within product revenue, system revenue was $32.9 million compared to $40.5 million in the same quarter last year. Excluding divestitures, revenue declined 17.8%, but consumable revenue grew 9.6% to $66.3 million compared to the same period last year. This represents yet another record level for Stratasys and, as Yoav pointed out, signals that utilization rates of the system, as we have thought, continue to be strong.
Speaker Change: Product revenue in the first quarter was $99 2 million compared to one 1 million in the same period last year or down by <unk>, 9% excluding divestitures.
Speaker Change: Within product revenue.
System revenue was $32 9 million compared to $40 5 million in the same quarter last year.
Speaker Change: Cruising divestitures revenue declined <unk>.
Speaker Change: 17, 8%.
Speaker Change: Consumable revenue grew nine 6% to $66 3 million compared to the same period last year.
Speaker Change: This represents yet another record level for us to try to see if any of you all have pointed out.
Speaker Change: She knows that utilization rates of the system. We have felt continued to be strong.
Eitan Zamir: Service revenue, including our Stratasys Direct Service Bureau, was $44.9 million, compared to $48.4 million in the same period last year. Absent divestitures, service revenue was up 1.8%. Within service revenue, customer support revenue remains at strong levels and was up 3.3% compared to the same period last year, another indication of strong use of our system.
Service revenue, including our stride to seize direct service Bureau was $44 9 million.
Speaker Change: Compared to $48 4 million in the same period last year.
Speaker Change: <unk> divestitures service revenue was up one 8%.
Speaker Change: Within service revenue customer support revenue remained at strong levels and was up three 3% compared to the same period last year and another indication of strong views of our system.
Eitan Zamir: Now turning to gross margins. Gap gross margin expanded to 44.4% for the quarter, compared to 43.8% for the same period last year. Non-gap gross margin also grew to 48.6% for the quarter, compared to 47.3% for the same period last year. The improvement versus the prior year period was driven, in part, by a greater mix of consumables.
Speaker Change: Now turning to gross margins.
Speaker Change: GAAP gross margin expanded to 44, 4% for the quarter compared to 43, 8% for the same period last year.
Speaker Change: non-GAAP gross margin also grew to 48, 6% for the quarter compared to 47, 3% in the same period last year.
Speaker Change: The improvement versus the prior year period was driven in part by a greater mix of consumables.
Eitan Zamir: Higher margins at Stratasys Direct due to their vestitures and better operational efficiency. Gap operating expenses were $88.4 million, compared to $82.2 million during the same period last year. The change in expenses was primarily related to our recent acquisitions and extraordinary expenses associated with our strategic review process. Non-GEP operating expenses were $71.2 million, compared to $69.2 million during the same period last year, due to the inclusion of Covestro and higher merit costs.
Charlie: Higher margins, it's Charlie this is direct due to divestitures and better operational efficiency.
Charlie: GAAP operating expenses were $88 4 million compared to $82 2 million during the same period last year.
Charlie: Change in expenses was primarily related to our recent acquisitions and extraordinary expenses associated with our strategic review process.
Charlie: non-GAAP operating expenses were $71 2 million compared to $69 2 million during the same period last year.
Charlie: Due to the inclusion of covers Joe and higher merit costs.
Eitan Zamir: Non-GEP operating expenses were 49.5% of revenue for the quarter, compared to 46.3% for the same period last year. Regarding our consolidated earnings, Gap's operating loss for the quarter was $24.5 million, compared to a loss of $16.8 million for the same period last year. Non-GEP operating loss for the quarter was $1.2 million, compared to operating income of $1.5 million for the same period last year. The change reflects the change in overall revenues and increase in OPEC, offset somewhat by a $4.7 million improvement in non-GAAP cost of goods sold.
Charlie: non-GAAP operating expenses were 49, 5% of revenue for the quarter compared to 46, 3% for the same period last year.
Charlie: Regarding our consolidated earnings.
Charlie: GAAP operating loss for the quarter was $24 5 million compared to a loss of $16 8 million for the same period last year.
Charlie: non-GAAP operating loss for the quarter was $1 2 million compared to operating income of $1 5 million for the same period last year.
Charlie: The change reflects the changing overall revenues and increasing opex.
Charlie: Offset somewhat by a $4 7 million improvement in non-GAAP cost of goods sold.
Charlie: GAAP net loss for the quarter was $26 million.
Charlie: Or 37 cents per diluted share.
Eitan Zamir: Gap net loss for the quarter was $26 million, or $0.37 per diluted share, compared to a net loss of $22.2 million, or $0.33 per diluted share, for the same period last year. Non-gap net loss for the quarter was $1.7 million, or $0.02 per diluted share, compared to non-GEP net income of $1.1 million, or $0.02 per diluted share, for the same period last year. Adjusted EBITDA was $4.1 million for the quarter compared to $7 million for the same period last year.
Charlie: Impaired to a net loss of $22 2 million.
Charlie: Our 33 cents per diluted share for the same period last year.
Speaker Change: non-GAAP net loss for the quarter.
Speaker Change: Was $1 7 million or two cents per diluted share.
Speaker Change: Compared to a non-GAAP net income of $1 1 million or two cents per diluted share in the same period last year.
Speaker Change: Adjusted EBITDA was $4 1 million for the quarter compared to 7 million.
Speaker Change: I'm period last year.
Eitan Zamir: We generated $7.3 million of cash in our operations during the first quarter compared to the use of $17.9 million of cash from operations in the same quarter last year. After $3 million of capital expenditures, we generated free cash flow for the quarter of $4.3 million. We ended the quarter with $161.1 million in cash, cash equivalents, and short-term deposits, compared to $162.6 million at the end of 2023. Our balance sheet remains strong, and we are well capitalized and well positioned to identify and capture value-enhancing market opportunities. Now let me turn to our outlook for 2024. We expect the ongoing challenging backdrop to most likely persist this year, continuing to cause delayed purchases and longer sales cycles.
Speaker Change: We generated $7 3 million of cash in operations during the first quarter.
Speaker Change: Compared to the use of $17 9 million of cash from operations in the same quarter of last year.
Speaker Change: After 3 million copies.
Speaker Change: Capital expenditures, we generated free cash flow for the quarter of $4 3 million.
Speaker Change: We ended the quarter with $161 1 million in cash cash equivalents and short term deposits compared to $162 6 million at the end of 2023.
Speaker Change: Our balance sheet remains strong and we are well capitalized and well positioned to identify and capture value enhancing market opportunities.
Speaker Change: Now, let me turn to our outlook for 2024.
Speaker Change: We expect the ongoing challenging backdrop to most likely persist this year.
Speaker Change: <unk> to cause delayed purchases and longer sales cycles.
Eitan Zamir: Based on our first quarter results and current visibility to our end markets, we are reiterating our four-year guidance as follows. We reiterate our expectations of revenues between $630 million and $645 million with sequential quarterly revenue growth, notably higher in the second half. Given the ongoing softness in customer capital expenditures, we expect the second quarter revenue to show slight improvement sequentially from the first quarter this year and decline relative to the second quarter of 2023.
Speaker Change: Based on our first quarter results.
Speaker Change: Current visibility to our end markets, we are reiterating our full year guidance as follows.
Speaker Change: We are reiterating our expectation of revenues between 630 million to 645 million with sequential quarterly revenue growth, notably higher in the second half.
Speaker Change: Even the ongoing softness in customer capital expenditures, we expect the second quarter revenue to show slight improvement sequentially from this from the first quarter this year.
Speaker Change: And decline relative to the second quarter of 2023.
Eitan Zamir: From a gross margin perspective, we continue to expect full-year 2024 gross margins to be in a range of 49% to 49.5% with improved year-over-year growth in the second half of 2024. We expect our margins to be over 50% next year. In 2024, we expect our operating expenses to range between $292 to $297 million. We continue to expect non-GAP operating margins between 2.5% to 3.5% for the full year. We anticipate a gap net loss of $88 to $72 million, or $1.24 to $1.01 per diluted share, and non-GAP net income of $9 million to $14 million, or $0.12 to $0.19 per diluted share, for the full year of 2024.
Speaker Change: From a gross margin perspective, we continue to expect full year 2024 to be in the range of 49% to 49, 5% with improved year over year growth in the second half of 'twenty 'twenty four.
Speaker Change: We expect our margins to be over 50% next year.
Speaker Change: In 2024, we expect our operating expenses to range between 292 to 297 million.
Speaker Change: We continue to expect non-GAAP operating margins between two 5% to three 9% for the full year.
Speaker Change: We anticipate a GAAP net loss of 88 to 72 million.
124 dollar.
Speaker Change: One for one dollar.
Speaker Change: For diluted shares.
Speaker Change: non-GAAP net income of 9 million to 14 million or 12 cents to <unk> 19 cents per diluted share for the full year of 2024.
Eitan Zamir: Adjusted EBITDA is expected to be in the range of $40 million to $45 million for the year. Capital expenditures are expected to range between $20 to $25 million for the year. And finally... For the full year, we continue to expect positive cash flow from operating activities. However, the second quarter will not generate positive operating cash flow due to certain quarter-specific costs. But we expect to see a reversal back to positive operating cash flow in the second half of the year. With that, I will turn the call back over to Yoav for closing remarks. Yoav?
Adjusted EBITDA is expected to be in the range of 40 million to $45 million for the year.
Speaker Change: Capital expenditures are expected to range between 20 to 25 million for the year.
Speaker Change: And finally.
Speaker Change: For the full year, we continue to expect positive cash flow from operating activities.
Speaker Change: The second quarter will not generate positive operating cash flow due to certain quarter specific costs.
Speaker Change: But we expect to see a reversal back to positive operating cash flow.
Speaker Change: In the second half of the year.
Speaker Change: With that let me turn the call back over to you all for closing remarks.
Speaker Change: Yeah.
Yoav Zeif: Thank you, Eitan. In summary, we delivered another solid quarter in a persistently challenging environment; the strength of our systems' sales in past periods flows through our results today in the form of consumables, as our customers continue to heavily utilize previously purchased systems. We expect that those systems will be replaced by higher performance, more advanced offerings in the coming years. The investment we are making to drive innovation and greater capabilities in additive manufacturing mean that we will be ready to meet those needs when the cycle turns.
Speaker Change: Thank you <unk> in summary.
Speaker Change: We delivered another solid quarter in a persistently challenging environment.
Speaker Change: The strength of our system sales in past periods.
Speaker Change: Flows through our results today in the form of consumables.
Speaker Change: As our customers continue to heavily utilized previously purchase systems.
Speaker Change: We expect that those systems, we've replaced with higher performance more advanced offerings in the coming years.
Speaker Change: The investments, we are making to drive innovation.
Speaker Change: And greater capabilities in additive manufacturing.
Speaker Change: Mean that we would be ready to meet those needs when the cycle turns.
Yoav Zeif: We are laser focused on our commitment to delivering differentiated products and solutions to customers across a wide array of use cases. That, coupled with our relentless focus on execution, sets the stage for us to drive relative outperformance and enhance shareholder value. Operator? Thank you.
Speaker Change: We are laser focused on our commitment to delivering differentiated products and solutions to customers across a wide array of use cases.
Speaker Change: That coupled with our relentless focus on execution is setting the stage for us to drive relative outperformance and enhance shareholder value.
Speaker Change: With that let's open it up for questions operator.
Speaker Change: Thank you.
Operator: Ladies and gentlemen, we will now conduct our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. Please limit yourselves to one question and one follow-up question per each time that you queue up. You may also press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: And ladies and gentlemen, we'll now conduct a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate that your line is in the question queue.
Speaker Change: Please limit yourselves to one question and one follow up question per each time that UQM.
Speaker Change: May also press star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Operator: One moment, please, while we pull for questions. Our first question comes from Troy Jensen with Cantor Fitzgerald. Please state your question.
Speaker Change: Our first question comes from Troy Jensen with Cantor Fitzgerald. Please state your question.
Troy Donavon Jensen: Hey gentlemen, congrats on the good results here in the positive cash flows. Maybe first off for Eitan, you're very welcome. First here for Eitan, a couple questions. I guess could you talk us through Q2 seasonality? I mean you guys are kind of two months through the quarter now, so would you expect normal seasonality in Q2 and, on top of that, are we going to see incremental revenues from the F3300?
Speaker Change: Hey, gentlemen, congrats on the good results here in a positive cash flows.
Speaker Change: Maybe first off after eight tonne you're very welcome Bruce here for a couple of questions I.
Troy Donavon Jensen: I guess could you talk us about.
Speaker Change: Seasonality I mean, you guys had kind of two months through.
Speaker Change: The quarter now so would you expect normal seasonality in Q2, and then on top of that.
Speaker Change: To see incremental revenues from our family at 3300 here this quarter.
Eitan Zamir: Thank you, Troy, for the questions. We expect a slight increase compared to Q1, so there is, in that regard, a normal seasonality of Q2 being better than Q1. The macroeconomic situation is still creating some headwinds in the short term. And with respect to the F3300... What was the last question?
Charles: Thank you Charles for the question so.
Speaker Change: We expect a slight increase compared to Q1, so there is.
Speaker Change: And that's regardless of normal seasonality at fab Q2, being better than Q1.
Speaker Change: However.
Speaker Change: And the macroeconomic situation.
Speaker Change: And creating some headwinds in the short term.
Speaker Change: And with respect to the F 3300.
Speaker Change: What was again the question.
Troy Donavon Jensen: Is it going to be initial revenues in Q2? I guess I'm trying to think about base business, is that gonna be seasonal, and then is F3300 gonna be incremental?
Speaker Change: Is it going to be our initial revenues in Q2.
Speaker Change: I guess I'm trying to think base business as I can see normal seasonality and then is that 3300 going to be incremental to that.
Eitan Zamir: Yeah, there is going to be, we expect to have revenue in Q2, but it will be much more significant in the second half of the year.
Yes, there is going to be a we expect to have revenue in Q2.
Speaker Change: But much more significant in the second half of the year.
Troy Donavon Jensen: I'd love to get a third question. I've got one more here for Eitan, and I want to do a follow-up question for Yoav.
Speaker Change: Okay.
Speaker Change: Hey, So I'd love to get a third question I got one more here for every time. They wanted to do a follow up for you all but <unk> at long term deferred revenues, even down a couple of quarters in a row now.
Eitan Zamir: Eitan, long-term deferred revenues, they've been down a couple quarters in a row now. I'm guessing that's just multi-year service contracts. Can you just touch on why long-term deferred revenues?
Speaker Change: I'm guessing that's just you know a multiyear service contracts that you can can you just touch on why a.
Speaker Change: Long term deferred routes at midnight.
Yeah.
Troy Donavon Jensen: There is no specific trend; it's sometimes a mix of the number of years of the contract, so there is no specific reason or trend.
Speaker Change: And there is no specific trend, it's sometimes a mixed austere number of years of contract.
Speaker Change: There is no specific reason or 10.
Troy Donavon Jensen: Okay, all right, that's fine. All right.
Speaker Change: Okay, Alright, that's fine all right now youll out for you.
Speaker Change: You know this quarter was interesting way, we you guys reported two weeks later than normal.
Yoav Zeif: Now, Yoav, for you, this quarter was interesting, right? You guys reported two weeks later than usual. And, you know, there is just kind of a lot of chatter about consolidation. And, you know, I personally believe you guys had a lot of executives out in Barcelona. We're expecting to hear more about, you know, the strategic review update. So, I know you kind of touched on it briefly in your pre-remarks, prepared remarks, but is there anything more you can talk about here about when you guys plan to really kind of do something on the strategic review?
Speaker Change: Yeah. There is just kind of a lot of chatter about consolidation and you know.
Speaker Change: Presumably you guys have a lot of executives in Barcelona.
Speaker Change: Expecting to hear more about the strategic review update so.
Speaker Change: I know you kind of touched on it briefly in your prepared remarks prepared remarks, but is there any more color you can talk about here about when you guys plan to really kind of do something on the strategic review.
Yoav Zeif: Well, on the late report of the quarter, it's a logistic issue, scheduling some resources that are attached to the war, but nothing really important and nothing that really impacts our operation. As for the strategic review, you know, we are precluded from sharing any details. What I can say about the strategic view is that we are engaging... We are making progress, and of course, we will update you when it culminates.
Speaker Change: Well.
Speaker Change: On the luxury part of the quote there, it's a tiny logistics issue scheduling some resources that.
Speaker Change: Attached to the war, but nothing.
Speaker Change: Really important and nothing.
Speaker Change: And I think that really impact the operations.
Speaker Change: As for the strategic review.
Speaker Change: No.
Speaker Change: We are precluded from sharing any detail.
Speaker Change: What I can say on the strategic review is that we.
Speaker Change: Engaging.
Speaker Change: We are making progress and of course, we will update when it will.
Speaker Change: Eliminate.
Speaker Change: Okay.
Troy Donavon Jensen: Alright, understood. Good luck, guys.
Speaker Change: Alright understood good luck guys.
Operator: Our next question comes from Greg Palm, with Craig Hallam. Please state your question.
Speaker Change: Our next question comes from Greg Palm with Craig Hallum. Please state your question.
Danny James Eggerichs: Yeah, this is Danny Eggerich on for Greg today. Thanks for taking the question. Maybe just as we kind of think about the last time we talked a few months ago, obviously, the macro remains challenging, but any kind of change in how you're seeing, maybe overall visibility, sales cycles, continue to elongate or kind of stay the same, any color you can give us, that would be great.
Danny James Eggerichs: Yeah. This is Danny acreage on for Greg today, Thanks for taking the questions.
Speaker Change: Maybe just as we as we kind of think about the last time, we talked.
Speaker Change: A few months ago, obviously, the macro remains challenging but.
Speaker Change: Any kind of change on any kind of change in how youre seeing.
Speaker Change: Maybe overall visibility sales cycles.
Speaker Change: Continue to elongate or kind of stay the same any color you can give us there would be great.
Yoav Zeif: Great question; thank you for asking. We are more or less in the same situation as last quarter. There was an improvement in the sales cycle. Not a real improvement, as I said last quarter, but we saw the second derivative kind of getting lower. So stabilizing; the sales cycles are stabilizing. We don't see the breakthrough yet, but it's there. If I base it on our engagement with our customers, where most of the engagement now is led by the new NPI, the new product, led by the F3300.
Speaker Change: Great question, Thank you for asking.
Speaker Change: So.
We are more or less the same situation like last quarter. There was an improvement in the sales cycle and not a real improvement as I said last quarter, but we saw the second derivative kind of getting lower so stabilizing there is say cycles are stabilizing we don't see yet the breakthrough.
Speaker Change: Is there if I base it on our engagement with our customers where most of the engagement now.
Speaker Change: Led by the new the NPI new product.
Yoav Zeif: There is an appetite in the market, it's clear. But on the other end, all the large customers, and we are focusing on the high end, they are holding their CAPEX. There is a CAPEX constraint.
Speaker Change: Led by the F 3300.
Speaker Change: There is an appetite in the market, it's clear, but on the other end all the large customers and we are focusing on the eye and see how all being there capex there is a capex constraint.
Yoav Zeif: But you know, it can go so far, because at the end, you have new models, you have new drones, and D'Mendy's there. And we are using this time, which is also stable; we did not decline. Year over year, we are flat.
But you know it can go so far because at the end of the revenue model you have new drones.
Speaker Change: And the demand is there.
Speaker Change: And we are using this time.
Speaker Change: Well, we are also stable by the way we did not decline.
Speaker Change: Year over year were flat in a very challenging market.
Speaker Change: We increased our market share in the last three years.
Speaker Change: So we are stable and we are using this time to make sure that we are ready.
Yoav Zeif: [inaudible] to gain more market share and to fulfill more demand that is out there and just waiting to be addressed, and we will address it. And we have the growth engine in place for... So, no doubt there is macro pressure still out there, but we are working on our micro factors to make sure that we will be the ones ready to keep on living this way.
Speaker Change: To gain more market share and to fulfill more demand that is out there and just waiting.
Speaker Change: That someone will address and we have to address it and we have the growth engine in place for that so no doubt.
Speaker Change: There is a macro pressures out there, but we are working on our micro factors to make sure that we would be the one ready.
Speaker Change: So keeping lead and get these things.
Speaker Change: Okay.
Danny James Eggerichs: Okay, makes sense. And maybe just touching on consumables, obviously really good in the quarter again. Sounds like printer utilization remains pretty strong. I guess, what kind of contribution did Covestro make to that business in the quarter? And I guess, should we expect that business to continue to grow sequentially as we move throughout the year? How should we think about that?
Okay makes sense and maybe just touching on consumables, obviously really good in the quarter again.
Speaker Change: Sounds like printer utilization remains.
Speaker Change: Pretty strong I guess.
Speaker Change: Or what kind of contribution did cholesterol make to that business in the quarter and I guess should we expect that that business continues to grow sequentially as we move throughout the year, how should we think about that.
Okay.
Yoav Zeif: Thank you for the question. So Covestro, as we discussed in the past, revenue levels are 4 to 5 million a quarter. And Covestro, so the growth was both acquisition and organic growth, and better utilization of our printers, which is something that creates a lot of confidence for the future. Maybe I can add here.
Speaker Change: Thank you for the question.
Speaker Change: So <unk> as we.
Speaker Change: Discussing in the past.
Speaker Change: <unk> levels are $4 million to $5 million a quarter and covers choice. So the growth was both cholesterol and organic growth.
Speaker Change: Better utilization of our printers, which is something that create.
A lot of confidence for the future maybe I can add here if I may.
Yoav Zeif: Maybe I can add here, if I may. Consumables are our focus because we believe that consumables will allow us to accelerate the adoption of additive manufacturing because it opens up new applications. So, we are very proud of our consumable performance growth year-over-year with and without Covestro. We also observe higher utilization. And practically, in FBM, we have a record high of utilization across the board. [inaudible] Selling more consumables, and keeping and even increasing the share of consumables out of our total revenue will be there for a long time. And this is the strength of Stratasys.
Speaker Change: Consumable for US is focus because we believe that consumables will allow us to accelerate.
Speaker Change: The adoption of additive manufacturing because it opens up new applications.
Speaker Change: So we are very proud and our consumable.
Speaker Change: <unk>.
Speaker Change: <unk> growth year over year with and without <unk>.
Speaker Change: We obviously have higher utilization.
Speaker Change: Proxy clean SPM, we have record high of utilization across the board.
Speaker Change: We increased.
Speaker Change: Our manufacturing installed base step by step by step even in a tough time.
Speaker Change: And all of this to get it there we'll make sure that this trend of.
Speaker Change: Selling more consumable.
And keeping and even increasing the share of consumable out of our total revenue will be there for a long time and this is the strength of processes.
Speaker Change: Yeah.
Danny James Eggerichs: Okay, great. Thanks. I'll leave it there.
Speaker Change: Okay, great. Thanks, I'll leave it there.
Operator: Our next question comes from Brian Drab with William Blair. Please state your question.
Speaker Change: Our next question comes from Brian Drab with William Blair. Please state your question.
Brian Paul Drab: Hi, thanks for taking my questions. I just wanted to talk a little bit more about consumables because the step up sequentially from the fourth quarter to the first quarter really caught my attention. It's a significant step up. Can you talk a little bit more about what's driving that? Are you surprised that in this kind of tougher environment you saw that step up from a fourth quarter to a first quarter? And also, you know, it's the 3300, you know, and the consumables usage, which is significant with that, you know, potentially going to get, you know, continue the momentum here in consumables.
Brian Paul Drab: Hi, Thanks for taking my questions and I, just wanted to talk a little bit more about consumables, because the step up sequentially from the fourth quarter to the first quarter.
Speaker Change: Really is.
Brian Paul Drab: My attention and I'm I'm, just it's a significant step up in <unk>.
Brian Paul Drab: Can you talk a little bit more about what's driving that are you surprised that you saw that.
Brian Paul Drab: And this is kind of tough tougher environment that you saw that step up from our fourth quarter to first quarter.
Speaker Change: And then also the 3300.
Speaker Change: You know in the consumables usage, which is significant with that.
Speaker Change: Potentially going to.
Speaker Change: The momentum here in consumables.
Eitan Zamir: Thank you, Brian. So maybe I'll start with your first question. So to your point, when you look at the trend for the last three or four quarters, and I'm talking about the trend after the acquisition of Covestro, when you think about Q2 2023 onward, we're up from 60.8 to 61.8 to 63 in Q4, as you mentioned, and then to 66.3 this quarter. That, to Yoav's point from earlier, demonstrates higher utilization, and that creates confidence.
Brian Paul Drab: Thank you, Brian So maybe first.
Speaker Change: Your first question. So so to your point when you look on the trend.
Speaker Change: For the last three or four quarters and I'm talking about the trend after.
Speaker Change: The acquisition of cholesterol.
Speaker Change: When you think about Q2 2023 onward, we're up from 68 to $61 eight to <unk> 63 in Q4 as you mentioned and then to $66 three this quarter.
Speaker Change: Let's see I'll just point from earlier.
Speaker Change: Demonstrate the high utilization and Thats create confidence.
Eitan Zamir: So, we have confidence in our ability to achieve levels above 63 million, but sometimes, every quarter lands in this range between maybe 63 to 66. It also depends on specific deals. So, to your question... We do see the trend is a positive trend. We believe we can achieve higher than 63 million during the 2024 quarter.
Speaker Change: So we have confidence in our ability to achieve.
Speaker Change: And that goes above $63 million, but sometimes.
Speaker Change: Or every quarter land in this range between maybe 63 to 66, it's also depends on the specific deal.
Speaker Change: So to your question.
Speaker Change: We do see the trend is a positive trend we believe we can achieve higher than 63.
Speaker Change: During 2024 quarter, but sometimes.
Eitan Zamir: But sometimes, you know, the.
Sam: Specific Sam can move somewhere within this range.
Speaker Change: It helps.
Brian Paul Drab: Okay, yeah, that's helpful.
Speaker Change: Okay.
Speaker Change: Thats helpful. And then on the 3300 I guess as my follow up what is the consumables usage attach rate or usage relative to other machine.
Yoav Zeif: Maybe I can help here. F3300 was designed and targeted manufacturing, with large parts. So what is unique about those machines? We are talking about high-performance materials. And we are talking about hype, you know. Thank you very much.
Speaker Change: Maybe I can help here.
Speaker Change: F 3300 was designed.
Speaker Change: And targeting.
Speaker Change: Factoring.
Speaker Change: Large parts.
Speaker Change: So what is unique for those machines, we are talking about high performance materials.
Speaker Change: Talking about <unk>.
Speaker Change: No.
Speaker Change: Hi, consuming off high performance materials, because those are large bath and those machines are running in very high utilization.
Yoav Zeif: It's the same as our F900. We have machines that are running at 90% and 95% utilization, which is much higher than any prototyping machines that we have that can be around 10%, 15%, this range. So I'm very optimistic because this is designed for manufacturing, and it's coming with our high-end materials.
Speaker Change: It's the same like how F 900, we have machines that are running 90%, 95% utilization, which is much higher than any prototyping machines that we have that can be around 10%, 15%. This range. So I'm very optimistic because this is designed for manufacturing and it's coming but we know it.
Brian Paul Drab: Got it. Okay. Thank you very much.
Speaker Change: The high end materials.
Speaker Change: Got it okay. Thank you very much.
Operator: Thank you. And our next question comes from Jacob Stephan with Lake Street Capital Markets. Please state your question.
Speaker Change: Thank you and our next question comes from Jacobs, Stephan with Lake Street Capital markets. Please state your question.
Jacob Michael Stephan: Yeah, hey guys, congrats on the results. I just wanted to get some clarity on a comment, Yoav, you made in the earlier prepared remarks. You kind of mentioned that orders have surpassed expectations so far in the first half of the year. I mean, maybe you could just provide a little clarity on, you know, the base business, or is that just the F3300?
Yeah, Hey, guys congrats on the results.
Stephan Jacobs: I wanted to get some clarity on the comment.
Stephan Jacobs: Have you made in the earlier in the prepared remarks.
Stephan Jacobs: You kind of mentioned that orders and surpass expectations. So far in the first half of the year.
Stephan Jacobs: I mean, maybe you could just provide a little clarity on that.
Stephan Jacobs: Is that the base business or is that just yet.
Speaker Change: <unk> hundred.
Speaker Change: Color there would be helpful.
Jacob Michael Stephan: Any color there would be helpful?
Jacob: Jacob Thank you, it's an opportunity to clarify I related to the FDIC 300, we of course like.
Yoav Zeif: Jacob, thank you. It's an opportunity to clarify.
Speaker Change: Every time that we are launching a new product we have a plan.
Yoav Zeif: I related to the F3300. We, of course, like every time that we are launching a new product, we have a plan. And we are on plan and exceeding it with the F3300. Of course, there is a ramp-up, and the ramp is starting at age one but will culminate at age two. So that's what I meant. And we are definitely surpassing in terms of purchase orders and in terms also of quality of customers because we have Nissan, we have Sikorsky, we have BAE, we have Toyota, and this is something that creates this flying wheel effect that we are looking for because if they can use it for induced pulse, others will use it for induced pulse.
Speaker Change: And we are on plan and exceeding it we'd ask nearly 300 of course, there is a ramp up and the reptile you're starting.
Speaker Change: At age one but will culminate at <unk>. So that's what I meant and we are definitely surpassing intense of purchased over there and staff in terms also of the quality.
Speaker Change: Of the customers because we have Nissan where Sikorsky we have the AE, we have Toyota and this is something that that created this flywheel effect that we are looking for because if they can use it for end used box also order with you at this point of view it's Bob.
Speaker Change: Yeah.
Jacob Michael Stephan: Yeah, that understood. And then, so you do have these, you know, nice blue chip customers, but maybe you could kind of talk about some of the mid market opportunity that you're seeing with the F 3300. Maybe some of those companies that don't have the, you know, balance sheet that these large customers do, what, I guess, what traction are you kind of seeing there?
Speaker Change: Yes, understood and then.
Speaker Change: I mean, you you do have these.
Speaker Change: Nice blue chip customers, but maybe you could kind of talk about.
Speaker Change: Some of the mid market opportunity that you're seeing with the F 3300.
Speaker Change: Maybe some of those companies that don't have that.
Speaker Change: <unk> balance sheet that these.
Speaker Change: Large customers do what I guess, what traction are you kind of see them there.
Yoav Zeif: We are seeing traction in the mindset that FDM can run, and also in the mid market, can run applications, your manufacturing application, because this machine doubles the speed and almost doubles the throughput and almost half the cost. So it's a disruption in the high end, large part FDMR.
Speaker Change: We are seeing traction in.
Speaker Change: And the mindset.
Speaker Change: SDN can run.
Speaker Change: Also in the mid market can run application.
Speaker Change: Your manufacturing application because this machine.
Speaker Change: And that the speeds and automobiles.
Speaker Change: Double the throughput and almost half the cost.
Speaker Change: It's a disruption in the high end large box.
Speaker Change: Mark.
Speaker Change: Yeah.
Jacob Michael Stephan: Okay, I got it. Thank you.
Speaker Change: Okay got it.
Speaker Change: Thank you.
Operator: Thank you. As just a reminder, to ask a question, press star 1 on your telephone keypad. To remove yourself from the queue, press star 2.
Speaker Change: Thank you and just a reminder to ask a question press star one on your telephone keypad to remove yourself from the queue Press star two.
Operator: Our next question comes from Alec Valero with Loop Capital Markets. Please state your question.
Speaker Change: Our next question comes from Alec Valero with loop capital markets. Please state your question.
Alec Valero: Hey guys, it's Alakon for Ananda. Congratulations on the result. My first question is... Have you guys seen any notable changes in the conversational tone with customers? And if so, what kinds of things are they focusing on?
Speaker Change: Hey, guys. Its telecom Fernanda congrats on the results. My first question is.
Alec Valero: Have you guys seen any notable changes in the conversational tone with customers.
Alec Valero: If so what kind of what kinds of things are they focusing on it.
Yoav Zeif: That's a great question. I would say that the level of engagement that we have is much more specific. And I'm very proud of my team as well that we are no longer talking high level at 36,000 feet.
Speaker Change: That's a great question.
Speaker Change: I would say that the level of engagement that we have.
Speaker Change: It is much more specific.
Speaker Change: And I'm very proud to lead.
Speaker Change: My team as well that we are not anymore talking high liver therapy.
Speaker Change: See we are talking about what is the application what.
Yoav Zeif: We are talking about what the application is, what the requirements are, and how we work together with our customers to meet those requirements. This is the only way to get those blue chip customers. It's the only way, and I think this change in mindset is also happening within Stratasys. So it's a different level of engagement than three years ago and four years ago when I joined Stratasys because we are talking about real requirements, we are talking about what we need to meet, what type of standards we are working with the right institutions. And customers, when you do that, start to understand the benefit of additive manufacturing, and the benefit is very clear. Of course, it's different from each application. For each application, it's completely different, but it's there.
Speaker Change: What are their requirements.
Speaker Change: We work together with our customers to meet those requirements is the only way to get those blue chip customer thats the only way.
Speaker Change: And.
Stratus: I think this change in mindset also happening within Stratasys. So it's a different level of engagement and three years ago and four years ago. When I joined Stratus is because we are talking about real requirements. We are talking about what do we need to meet what type of standouts, we are walking with the right institution.
Speaker Change: And Castilla when you do a debt start to understand the benefit of Etsy manufacturing.
Speaker Change: And the benefit it is very clear of course, it's different from each application.
Speaker Change: For each application completely different but it's there and we are not trying to compete.
Yoav Zeif: And we are not trying to compete on the injection molding part. We are trying to compete where we have an absolute advantage in personalization, on lightweight, on specific geometries, and so on and so forth. And the customers are with us on this journey.
On the injection molding parts, we are trying to compete where we have absolute advantage on personalization on.
Speaker Change: Lightweight on specific geometry, and so on and so forth and the customers are with us on this journey.
Speaker Change: Okay.
Speaker Change: Very helpful.
Alec Valero: As a quick follow-up, what are the more notable things industry-wise that we should all be focusing on in the second half of 2024?
Speaker Change: As a quick follow up.
Speaker Change #100: What are some what are what are the more notable things industry and company wise that we should all be focusing on in the second half of 2024.
Yoav Zeif: That's a great question. Thank you.
Speaker Change #101: Oh, that's a great question. Thank you.
Yoav Zeif: I think we should focus on how the additive manufacturing industry can deliver real value. Stop talking about the promise, and talk about specific applications and how we can deliver value to specific applications. And this is a combination of the reliability of the machine, the TCO, the total cost of ownership of the park. It's a matter of materials, how good are the materials.
Speaker Change #102: I think we should focus.
Speaker Change #101: On.
Speaker Change #101: How the additive manufacturing industry can.
Speaker Change #101: Can deliver real value.
Speaker Change #101: So talking about the promise okay about specific applications.
Speaker Change #101: And how we can deliver value to specific applications.
Speaker Change #101: And this is a combination of the.
Speaker Change #101: The reliability of the machine the D C O. The total cost of ownership of the park.
Speaker Change #101: Metal off material.
Speaker Change #101: The material.
Yoav Zeif: It's related to the software and how we can help the customer be successful along the digital thread with our software. And that's exactly what we are doing. The moment the industry will be there; it's only a matter of time. And I know that today the industry is kind of depressed. Because of the macro condition, because we are in a transition crossing the chasm. But we have absolute advantages, and we are going to use them.
Speaker Change #101: Related to the software and how we can help the customer be successful along the digital thread.
Speaker Change #101: Our software and Thats exactly what we are doing the moment of the industry will be there. It's only a matter of time and I know that today the industry is kind of depressed.
Speaker Change #101: Because of the macro condition because of that we are in a transitional crossing the chasm.
Speaker Change #101: But we have absolute advantages and we're going to deliver them and thats the way.
Yoav Zeif: And that's the way to analyze or judge each one of the players? Do you have the fundamentals to deliver value? And I think Stratasys has the fundamentals. We are leading with a lot of stability, financial stability. It's very important for customers, by the way, to see the discipline and to understand that there is someone there, a partner in additives, that can take the journey with them for many years to come with the right fundamentals, with the portfolio, with the go-to market, with the service, with the software, with the material portfolio. That should be the focus, not about promising, but about delivering.
Speaker Change #101: Two.
Speaker Change #101: Annualized or two jobs each one of the player do you have the fundamentals to deliver the value and I think the strategies has the fundamentals.
Speaker Change #101: We are leading with a lot of stability financial stability is very important to the customers by the way.
Speaker Change #101: To see the discipline and to understand that there is someone they're a partner in additive that can take the journey. We therefore, many years to come with the right fundamentals.
Speaker Change #101: The portfolio with a go to market with a therapy with the software with the material portfolio that should be able to focus not about promising about delivering.
Speaker Change #101: Okay.
Alec Valero: Very helpful; thank you, guys.
Speaker Change #103: Very helpful. Thank you guys.
Operator: Our next question comes from Jim Ricchiuti with Needham & Company. Please state your question.
Speaker Change #104: Our next question comes from Jim Ricchiuti with Needham <unk> Company. Please state your question.
James Andrew Ricchiuti: Hi, good afternoon. This is Chris Grangon on Jim's behalf. With respect to systems that were shipped in the quarter, are the customers replacing existing systems or expanding existing fleets, or are they new to 3D printing, or is there any breakout that you would call attention to there?
Speaker Change #104: Hi, Good afternoon. This is Chris Green gone for Jim.
Speaker Change #105: With respect to systems that were shipped in the quarter or are the customers.
Speaker Change #106: Uh huh.
Speaker Change #106: Replacing existing systems are expanding existing fleets or are they new to three D printing or is there any.
Speaker Change #106: Is there any breakout that you would call attention to there.
It's a combination thank.
Yoav Zeif: It's a combination. Thank you, Chris, for the question. It's a combination of many things.
Chris Green: Thank you Chris for the question, it's a it's a combination.
Yoav Zeif: And, by the way, this is another thing that kind of helps us, I wouldn't say tailwind, but we have such a large installed base of, I would say, almost 40,000 machines out there. So even in tough times, we always have those customers, the loyal customers, that we can sell another Stratasys machine to, even in tough times, because they trust us. We don't need to read to prove it, but it' We are giving a lot of attention to maintain the happiness of our installed base, but at the same time, we are crossing the chasm into manufacturing, and we are hunting for new logos. Back to your question, it's a combination of several things.
Chris Green: And by the way this is another thing that.
Chris Green: Kind of help us I wouldn't say a tailwind, but we have such a large installed base.
Chris Green: I would say almost 40000 machines out there.
Chris Green: Even in tough times, we always have.
Chris Green: Those.
Chris Green: Customers the loyal customers as we can.
Speaker Change #108: <unk> said theyre not there.
Speaker Change #109: Hi, This is machine even in tough times, because they trust us we don't need to read to prove ourselves, but its a combination.
Speaker Change #108: And.
Speaker Change #108: We are given a lot of attention to maintain the happiness.
Speaker Change #108: Of our installed base, but at the same time.
Speaker Change #108: Crossing the chasm into manufacturing and we are hunting for new logos, but.
Speaker Change #110: Thanks for your question, it's a combination.
Speaker Change #108: Yeah.
James Andrew Ricchiuti: Got it. Thank you. And then just with respect to the outlook, does it assume no incremental change with respect to customer CapEx patterns that you've observed so far, or is there any change that is embedded in the outlook?
Speaker Change #111: Got it thank you.
Speaker Change #112: And then just with respect to the outlook does it assume.
Speaker Change #113: No incremental change with respect to customer capex patterns that you've observed so far or is there any.
Speaker Change #113: Any change that is embedded in the outlook.
Eitan Zamir: Chris, the outlook is based on what we see now and the outlook that we currently see for the second quarter and the second half of the year.
Speaker Change #113: Chris the outlook is based on what we see now.
Speaker Change #113: And the and the outlook that we currently see for the second quarter and the second half of the year.
Speaker Change #113: Okay.
James Andrew Ricchiuti: Got it. Thank you very much.
Speaker Change #114: Got it thank you very much.
Speaker Change #115: Thank you.
Operator: And ladies and gentlemen, there are no further questions at this time. I'll hand the floor back to Yoav Zeif for closing remarks. Thank you.
Speaker Change #116: And ladies and gentlemen, there are no further questions at this time I'll hand, the floor back to <unk> for closing remarks. Thank you.
Yoav Zeif: Thank you for joining us. I look forward to updating you again next quarter.
Speaker Change #117: Thank you for joining us looking forward to updating you again next quarter.
Operator: Thank you. This concludes today's conference. All parties may disconnect. Have a good day.
Speaker Change #118: Thank you. This concludes today's conference all parties may disconnect have a good day.