Q4 2024 Stratasys Ltd Earnings Call
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Speaker Change: Greetings and welcome to the Stratasys Q4 2024 Earnings Conference call and webcasts at this time all participants in the Sonoma mode. If anyone would require operator assistance, please press Stars 0 on your telephone keypad.
Speaker Change: A question and answer session will follow the formal presentation. You have replaced the question in tune anytime by pressing star one on your telephone keypad. As a reminder, this conference is being recorded.
Speaker Change: It's time for my pleasure to turn the call over to Yonah Lloyd, CCO and the Pre-Vessel Relations. Yonah, please go ahead.
Speaker Change: Good morning everyone and thank you for joining us to discuss our 2024 fourth quarter and full year financial results.
Speaker Change: on the call with us today are our CEO , Dr. Yoav Zeif and our CFO , Eitan Zamir.
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.
Speaker Change: In addition, a replay of today's call including access to the slide presentation will be available and can be accessed through the Investor Relations section of our website.
Please note.
Speaker Change: 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.
Speaker Change: All statements that speak to future performance, events, expectations or results are forward-looking statements.
Actual results for trends could differ materially from our forecast.
Speaker Change: For risk that could cause actual results to be materially different, from those set forth and forward-looking statements.
Please refer to the risk factors discussed. [inaudible]
Speaker Change: or referenced in Stratasys Annual Reports on Form 20F for the 2023 year and for the 2024 year, which will be filed with the SEC within the coming few days.
Speaker Change: Please also refer to our operating and financial review and prospects for 2023 and 2024, which are included as Item 5 of our annual reports on Form 20F for 2023 and 2024.
Speaker Change: Please also see the press release that announces our earnings for the fourth quarter of 2024, which is attached as Exhibit 99.1 to a report on Form 6K that we are furnishing to the SEC today. Stratasys assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.
Speaker Change: As in previous quarters, today's call will include gap and non-GAAP financial measures. non-GAAP financial measures should be read in combination with our gap metrics to evaluate our performance.
Speaker Change: non-GAAP to Gap Reconciliation are provided in tables in our slide presentation and today's press release. I'll now turn the call over to our chief executive officer, Dr. Yoav Zeif. Yoav. Thank you, Yonah.
Speaker Change: Good morning everyone and thank you for joining us in 2024 and early 2025.
Speaker Change: We took several key steps to enhance our leadership and strengthen our position at the forefront
Speaker Change: Despite the industry-wide challenges due to macro-edwins, a recent commitment to the right-side company and deliver profit and cash flow was executed successfully.
Speaker Change: Further demonstrating the resilience of our operating model and effectiveness of our team.
Speaker Change: We also shared with you our strategy to be laser focused on the most compelling applications, particularly once the center around full scale production.
Speaker Change: As we share each year, in 2024, we generated 36% of our revenues from manufacturing.
Speaker Change: Up from 34% in 2023, and up from just over 25% when we started tracking in 2020.
Speaker Change: We expect to see this percentage grow every year to a point where the majority of our business will be derived from end-powered manufacturing.
Speaker Change: The strength of our offering is our ability to deliver measurable value through best-in-class solutions that enable our customers to scale their additive manufacturing operations effectively.
Speaker Change: These solutions are the growth engines that will drive our revenue and profit over time.
Speaker Change: And our customer trust is reflected in the continued strong levels of engagement.
despite prolonged capital spending constraints.
Speaker Change: This challenging environment resulted in revenues being off 6.9% for the year after backing out the investment.
Eitan Zamir: Yet, our adjusted gross margin for the year expanded by 100 basis points to 49.2% reflecting our continued focus on cost controls and operating efficiencies.
and 12th Century B.C.
Eitan Zamir: Adjusted EPS, we remain confident that when capital spending constraints is our operational efficiencies, we result in sustainably higher profitability in the coming years.
Eitan Zamir: We continue to maintain a healthy balance sheet of $150.7 million in cash and equivalent and know that.
Eitan Zamir: This provides stability and optionality that will support our growth through both organic investment and a creative acquisition opportunities.
Eitan Zamir: This financial strength will be bolstered by the upcoming $120 million investment in Stratasys by Fortissimo Capital.
Eitan Zamir: which is targeted to close in second quarter. At that time, we look forward to welcoming Fertissimo's founder and managing partner, Yuval Cohen, to join our board, who brings more than 30 years of successful innovation-driven investing experience.
Eitan Zamir: Now, let me touch on some of our fourth quarter and more recent updates.
Eitan Zamir: Feused the position modeling, the technology invented by Stratasys and commercialized under the Stratasys FDM trademark is the world's most popular 3D printing technology.
Eitan Zamir: and we continue to innovate and enhance its capabilities for production at scale.
Eitan Zamir: As an example, in the fourth quarter, we launched the Photos FDC filament dryer.
A cabinet system that uses Stratasys Ltd FDM technology
Eitan Zamir: to maintain right conditions for storage of consumable filament materials. Increasing printer uptime by up to 2.7 times while eliminating moisture-related printing defects.
Eitan Zamir: This system, designed for continuous operation, represents a breakthrough in manufacturing efficiency for a loud scale production customers.
Eitan Zamir: and is a key addition to our end-to-end solution that our customer have asked us to deliver.
Eitan Zamir: We continue to expand FDN's capabilities to address our target applications.
Eitan Zamir: We launched Polycarbonate, ESD, a specialized material that addresses critical means in electronic manufacturing, particularly for tools and fixtures requiring electrostatic discharge protection.
Eitan Zamir: and we have enhanced our ULTIM-9085 material with expanded layer height capabilities.
A new color option.
Eitan Zamir: These materials are significant enabler for our defense partners that manufacture spare parts and we have already seen an uptick in materials sales to the US Air Force as a result.
Eitan Zamir: Additionally, for Origin P3 DLP platform, we have added more than 13 new materials, including validating a new material by 4 at AM, specifically designed for injection molding tooling.
This exemplifies our commitment to production grade manufacturing solution.
Eitan Zamir: Position in P3 to deliver injection molding quality across various applications from automotive components to precision flow adapters.
We also announce several partnership and customer success updates.
Eitan Zamir: and particularly excited to highlight a key customer win with a cello metal, one of the world's largest steel manufacturer.
Eitan Zamir: Their adoption of FDM with GrabCAD Software at the European Research Center demonstrate the versatility and effectiveness of our solutions in traditional manufacturing environments.
Eitan Zamir: where they have achieved significant reductions in lead time and enhanced design capabilities for tooling.
Previously unattainable through conventional machining methods.
Eitan Zamir: Switching to Automotive, where we continue to set trends. We were named the official 3D printing partners of NASCAR. This multi-year agreement makes Stratasys the exclusive provider of 3D printing solutions for NASCAR.
Eitan Zamir: in the creation of parts, tools, and to aid in accelerating design.
Eitan Zamir: This represents further penetration into the racing sector as more parts produced by traditional technologies will now come from our system.
In Aerospace, James,
Speaker Change: 3 E O S, a leader in Electrooptic System, enough that it significantly expanded its line of Stratasys System.
Speaker Change: including the addition of multiple FDM 3D printers bringing its fleet to 15.
Speaker Change: It's wide array of capabilities includes our F-3300, Neo-800, F-900, F-7700.
Origin 1 Models and Soft Technologies
Speaker Change: 3E is establishing a dedicated additive manufacturing center to support prototyping, tooling and production
Speaker Change: and its expanded use of additive will allow the company to produce critical components much more quickly and at a saving of roughly 40% versus a traditional manufacturing method.
Speaker Change: And to help fair the drive customer success, we are announcing the promotion of Andreas Langfeld to the position of Chief Revenue Officer.
Speaker Change: Based in our Germany office, Andy has been with Stratasys for over 15 years.
Speaker Change: Since 2018 he has managed our Imiya business, transforming it into a stronger contributor under his leadership.
Speaker Change: and was recently appointed head of our APEC business as well.
Speaker Change: A CRO Andy will enhance our global go-to-market strategy to help ensure customer satisfaction and retention and further build on the long-term partnership with our resellers ecosystem.
Speaker Change: With ending this role, we look forward to further strengthening our position and accelerating the widespread adoption of our solutions.
Thank you.
[inaudible]
Now, switching to the enters.
Speaker Change: We were excited that the trudent resin is available for sale in Europe as a CE-MAR-class one medical device.
Speaker Change: Trudent is now set to deliver a scalable, efficient and high quality solution for denture production.
Speaker Change: for dental labs and clinicians across Europe , which is expected to be nearly a $2.5 billion opportunity by 2028.
Speaker Change: Interest in the trudent resin is already strong, with many customers committed to onboarding early this year.
[inaudible]
Speaker Change: And in our medical business, we recently announced the result of joint research conducted with Sima's health and ears.
which demonstrated the unprecedented accuracy of 3D printed medical
Imaging Phantoms to Replicate Human Anatum
Speaker Change: by offering patient-specific anatomical models that accurately replicate anatomy and pathologies.
Speaker Change: Hospitals and imaging centers can enhance the calibration and performance of CT scanners, ensuring more accurate diagnostics, improve patient's outcome and lower cost.
Turning to software
Speaker Change: I am excited to share some significant developments that strengthen our product offering and demonstrate our commitment to innovation.
Speaker Change: Our new GraphCAD IoT platform is transformative solution to help our customer improve their utilization and uptime by providing accurate real-time data, predictive maintenance and the more efficient support than.
Speaker Change: This represents a major sub-forward in digitizing customer interactions across our entire ecosystem of 3D printed software and services.
Thank you.
Speaker Change: And we are pleased to note that Graftat's Prince Software, Sweet, now supports all five of our core technologies.
Speaker Change: This unified software approach streamlines operations for our customers and reinforces our position as a comprehensive end-to-end solution provider.
to sign up.
Time and again, some of our most exciting use cases.
Speaker Change: are in the most demanding environment and under the most unforgiving conditions, from high-speed authoracing to space travel to the advancement of state-of-the-art medical techniques.
Speaker Change: We continue to deliver differentiated products and solutions to customers as we further penetrate production applications at scale.
Speaker Change: The stage is set for return to growth based on accelerated adoption of additive manufacturing
Eitan Zamir: I will now turn the call over to Eitan to share the financial result and our initial outlook for 2025, Eitan.
Thank you, Yoav, and good morning, everyone.
Eitan Zamir: Our fourth quarter results reflect solid execution against the ongoing backdrop of adverse
Eitan Zamir: Our customer engagement remains strong and we believe we'll translate into meaningful growth once headwinds abakes.
Eitan Zamir: As a reminder, the cost-saving initiatives we announced last year took effect primarily
Eitan Zamir: The fourth quarter results are more indicative of the future impact of these initiatives on an annualized basis.
Eitan Zamir: In general, our results demonstrate the resilience our diversified offering provides throughout the cycle, enabling us to raise our profitability and cash flow expectations for 2025.
Now let me dive deeper into the numbers.
Eitan Zamir: For the fourth quarter, consolidated revenue of $150.4 million was down 3.8% as compared to the same period last year.
Eitan Zamir: Product revenue in the fourth quarter fell by 4.8% to 105.1 million compared to the Samperer's last year.
Eitan Zamir: Within Product Revenue, Systems Revenue was off slightly, declining 1.5% to 46.7 million compared to the same period last year.
Eitan Zamir: As constraint, capital budgets continue to impact customer buying behaviors for new systems.
Consumable revenue in the fourth quarter was 58.4 million
Eitan Zamir: Down 7.3% compared to 63 million in the same period last year. Service revenue was 45.3 million for the fourth quarter of 2024, relatively flat compared to 45.9 million in the same period last year.
Eitan Zamir: Within service revenue, customer support revenue was relatively flat compared to the same
Eitan Zamir: For the full year 2024, consolidated revenue declined 8.8% to $572.5 million, compared to $627.6 million in 2023.
Eitan Zamir: After backing out the Stratasys Direct Service Bureau, the investments, the revenue decline will 6.9%
Eitan Zamir: Product revenue in 2024 was $392 million compared to $433.7 million in 2023.
Eitan Zamir: Within Product Revenue, System Revenue in 2024 was 140.3 million, compared to 187.7 million in 2023.
Eitan Zamir: Consumables revenue was up 2.3% to 2561.7 million in 2024, compared to 246 million in 2023. We expect consumables revenue in 2025 to increase over 2024.
Eitan Zamir: For the full year of 2024, service revenue was 180.5 million compared to 193.9 million in 2023.
Eitan Zamir: After backing out the Stratys Direct Service Bureau of Investments, 2024 Service Revenue was flat year over year.
Eitan Zamir: Within service revenue, customer support revenue in 2024 was flat compared to 2023.
Eitan Zamir: Now turning to Gross Margin, Get Gross Margin was 46.3% for the quota, compared to 44.7% for the same period last year.
Eitan Zamir: None gap growth margin was 49.6% for the quarter, compared to 48.8% for the San period last year.
Eitan Zamir: The year of a year improvement in growth margins was the result of operational efficiency and cost-saving efforts.
Gap gross margin was 44.9% for the full year 2024.
Eitan Zamir: Compared to 42.5% for the San period last year, Non-Geb Grossmargin improved 100 basis points to 49.2% for the full year, as compared to 48.2% in 2023.
Eitan Zamir: The full-year improvement in non-get gross margin with the result of operation efficiency and cost saving efforts.
Eitan Zamir: GEP operating expenses were 79.4 million for the quota compared to 64.1 million during the same period last year.
Eitan Zamir: as a result of non-recurring revaluation gain that reduced gap operating expenses in the fourth quarter of 2023.
Eitan Zamir: non-GAAP operating expenses improved decreasing to 65.2 million for the quota, compared to 74.3 million during the same period last year and we benefited from our cost-saving initiative.
non-GAAP operating expenses were 43.4% of revenue for the quarter.
compared to 47.5% for the San period last year.
Eitan Zamir: Driven primarily by the cost saving measures associated with the restructuring plan we announced in the second half of 2024, the financial effect of which were realized in the fourth quarter of 2024.
Eitan Zamir: For the full year, non-GAAP operating expenses will 48.4% F revenue, S compared to 46.2% in 2023, primarily due to lower revenue in 2024.
Eitan Zamir: In absolute dollar terms, non-GAAP operating expenses were 13.3 million lower in 2024 as compared to 2023 due in part to the cost saving measures from our restructuring plan.
Regarding our consolidated earnings for the quota [inaudible]
GIF operating loss for the quota was 9.7 million.
Eitan Zamir: Compared to operating income of 5.7 million for the same period last year, you primarily to the non-recurring evaluation gain that reduced gap operating expenses in the fourth quarter of 2023.
Eitan Zamir: Monegap operating income for the quota was 9.4 million, compared to 2 million for the Samford last year.
Eitan Zamir: The increase reflects the lower opex as a percentage of revenue driven by the cost savings.
Eitan Zamir: Gaplanet law for the quarter was 41.9 million, or 59 cents per diluted chair.
Eitan Zamir: Compared to a net loss of 15 million or 22 cents per diluted chair for the same period last year.
Eitan Zamir: During the quarter, we took a non-cash impairment charge of 30.1 million or 42 cents per share related to our investment in ultimaker, a key cause for a larger gap net loss in the quarter.
Eitan Zamir: None get net income for the quarter was 8.5 million or 12 cents per diluted share compared to net income of 1.6 million or 2 cents per diluted share in the same period last year.
Eitan Zamir: Adjusted the bidat was 14.5 million for the quota, compared to 7.7 million in the same period last year.
Eitan Zamir: This equates to 9.6% EBDA margins compared to 4.9% in the fourth quarter of 2023.
Regarding our consolidated earnings for the full year 2024.
Eitan Zamir: Gap operating loss was 85.7 million compared to a loss of 87.6 million for 20.3 million.
Eitan Zamir: non-GAAP operating income for the year was 4.9 million, compared to 12.6 million in 2023. This equates to 0.9 percent non-GAAP operating margin, compared to 2 percent in 2023.
Eitan Zamir: Gap net loss for the year was 120.3 million or $1.70 per diluted share, compared to a net loss of $123.1 million or $1.79 per diluted share for last year.
Eitan Zamir: non-GAAP net income for the year was 4.2 million or 6 cents per diluted share compared to 7.7 million or 11 cents per diluted share last year.
Eitan Zamir: Egested EBDA was 26 million in 2024, compared to 35 million in 2023, reflecting lower revenues
Eitan Zamir: We generated 7.4 million of cash in our operations during the fourth quarter [inaudible]
Eitan Zamir: Compared to a use of 7.7 million of cash from operations in the same quarter last year This resulted in positive free cash flow in the quarter
Eitan Zamir: The improvement was due to improvement in our working capital and we expect further improvement in 2025 as we benefit from fully realizing the cost saving measures.
from a restructuring plan.
Eitan Zamir: For the full year we generated 7.8 million of cash from operations compared to using 61.6 million of cash in 2023.
[inaudible]
Eitan Zamir: During the quarter, we repurchased 266,000 shares of stock at an average price of $7.5 per share for a cost of approximately 2 million.
Eitan Zamir: We had approximately $48 million remaining capacity on our share repurchase authorization at
Eitan Zamir: We ended the quota with 150.7 million in cash equivalent and short-term deposits compared to 144 million at the end of the third quarter of 2024.
Eitan Zamir: Our balance sheet and cash generation profiles remain strong, supporting our interest to capitalize on value enhancing opportunities.
Eitan Zamir: L.P.O.V. mentioned, our strong balance sheet and cash positions are set to be further enhanced with the prospective 120 million investment from Fortissima.
Eitan Zamir: Now let me turn to our outlook for 2025, based on the expectation that the global softness in capital equipment purchasing will continue.
Eitan Zamir: We expect 2025 revenues to be in a range of 570 to 585 million dollars with revenues growing sequentially each quarter through the year resulting in higher revenues in the second half of the year as compared to the first.
Eitan Zamir: We expect the first quarter to have the softest revenue and margin profile on a relative basis
Eitan Zamir: non-GAAP gross margins for 2025 is expected to be in a range of 48.8% to 49.2%, with the second half stronger than the first half based primarily on the expected driving revenue throughout the year. The second half is expected to be in a range of 48.8% to 49.2% to 49.2% to 49.2% to 49.2% to 49.2%
Eitan Zamir: In 2025, we expect our non-GAAP operating expenses to range between 2564 to 2567 million dollars.
Eitan Zamir: Continued improvements in profitability is an important objective and for 2025 we expect to see growth across the profit metrics.
Eitan Zamir: For 2025, we expect non-gift operating margins to be in the range of 4% to 5% of revenue, with the second half stronger than the first half, based on the anticipated rising revenue throughout the year.
Eitan Zamir: We expect a gap net loss of $68 to $53 million.
Eitan Zamir: for $0.93 to $0.72 per diluted chair and non-GAAP net income of $0.20 to $0.26 million or $0.28 to $0.35 per diluted chair for $0.20 to $0.25.
Eitan Zamir: A gesture to be done for 2025 is expected to be in the range of 7.8% to 8.5% of revenue, or $44,000,000 to $50,000.
Eitan Zamir: We expect our capital expenditures for 2025 to range between 25 million and 30 million dollars.
Eitan Zamir: Finally, in 2025, we expect to deliver improved operating and free cash flow at higher levels than 2024.
Eitan Zamir: With that, let me turn the call back over to Yoav for closing remarks, Yoav. Thank you, Eitan.
Speaker Change: Before we move to questions, I want to take a moment to acknowledge our global team, their professionalism, dedication.
Yoav Zeif: and Howard Wolk continues to drive strong customer engagement and excitement for our solutions.
Yoav Zeif: I have personally met many of our key customers across industries over the last few months.
Yoav Zeif: The resounding message is that the increased use of additive manufacturing in their businesses is most certainly expected once spending constraints are lifted.
Yoav Zeif: We also see and feel the enthusiasm and excitement at all of the largest trade shows and industry events.
Yoav Zeif: There is no question that when our solution ramp and deliver the exceptional capabilities our significant growth and corresponding operating leverage and margin expansion will follow.
Yoav Zeif: We have taken the difficult but necessary step to right size the business for today.
Yoav Zeif: Without sacrificing R&D resources for innovation and while maintaining the ability to scale quickly as capital spending eases
Yoav Zeif: We believe that as the next growth phase of additive manufacturing emerges, we are well positioned to lead for today and into the future. We are excited for what 2025 and beyond old for Stratasys.
With that, let's open it up for questions. Operator?
Speaker Change: Thank you and now we're conducting a question and answer session. If you'd like to be placing the question Q, please press star one on your telephone keypad.
Yoav Zeif: A confirmation tone will indicate your line is in the question, Q.
Yoav Zeif: You may press star 2 if you'd like to move your question from EQ. Once again, that's star 1 to be placed into question Q.
Speaker Change: I'll first question is coming from Greg Palm from Craig Helen, who lies in our lives.
Yeah, thanks, everyone.
Speaker Change: Maybe just a little bit more kind of color on kind of what you're seeing out there in the market place customer feedback given you know everything going on and then can you just kind of help us a little bit more with kind of the cadence of of the year it sounds like revenue building sequentially but any more. Do you guys know how that looks from the modeling sample it would be helpful.
Hi, Greg. Thank you for the question, and you are.
Speaker Change: That's a super important question because we are in a time period of a downturn in our industry.
Speaker Change: and everything that looks dark and great. But this is not the case with our customers. Just three weeks ago, we had a customer advisory board in Florida, the top corporate in the world, the leaders of additive manufacturing in those companies, 14 of them.
Speaker Change: and we are forgetting as an industry and as a capital market, we are forgetting the basics and the value proposition of additives because in manufacturing there are requirements that only additives can deliver.
Speaker Change: for example, Low Volume High Mix, Special Geometry and Assembly of Park, Formitation of Park, Ensure the Supply Chain Resiliency, Personalization, Improves Sustainability, Only Editive Can Do It.
Speaker Change: and especially in the world of uncertainty and geopolitical tension and trade wars.
So, we are so focusing on the...
Thank you very much.
Speaker Change: So when we are talking with customers, back to your question
Speaker Change: They are strength to us. Focus on what you are doing. Reliability, accuracy accuracy.
Speaker Change: OE, the effectiveness of our commitment, the total cost of ownership and enable our engineers to use more additives. So I'm very optimistic.
Speaker Change: Yes, we feel the show's theme was ranked, but over time I see us going out of there.
Speaker Change: And our customers are happy with our solution. The F-3300 has great feedback. We expect to sell more in 2025. We expect to extend our reach within those same customers by doing it to new sites.
Speaker Change: It will be gradual, because we are in a downturn period, but it has nothing about the long term of this industry, of even the mid-short term.
Yep, okay, that's helpful.
Speaker Change: You know, obviously for the year it implies a lower gross margin relative to the run rate in the second half at 24. So I was just curious if you can give us a little bit of what your built in assumptions are.
Thanks Greg for the question, it's Eitan. So...
Speaker Change: First of all, I start saying that our actual 2024 growth margin was in 2024, was 49.2 percent.
Speaker Change: which is an improvement of a hundred basis point compared to last year.
Speaker Change: And I think you fought us for quite many years. That's a very solid growth margin for Stratasys and also in general for the industry which enabled us to grow and also to invest.
Speaker Change: to grow the business further. Now, as far as it concerned with 2025, I'll say few things. First of all, we kept the growth margin in very similar levels for 2025. But then it's a mix of different things. We continue to invest, of course, in the business and in growing the business and in the production. [inaudible]
Speaker Change: On the other hand, there will be some savings from the restructuring plan that we introduced last year.
Thank you very much.
Speaker Change: Impact the 2025 growth margins, but overall as you can see very solid .
continue to be a...
Speaker Change: 49 in the 49 level which is very good and very promising.
Yoav Zeif: for the future. And within 2025, when you think about the quarter, in 2025, it will improve sequentially quarter by quarter throughout 2025. And maybe a word about it, the Tarris, yeah. So I think the Tarris has two sides to it.
Speaker Change: One is how it impacts us and the other one is how it impacts our customers. In terms of us, we have a long time of planning.
Speaker Change: Last majority of what we are doing is in secured zones, so we are quite immune.
Speaker Change: Most of our FDM is being produced in the US so it has no impact on it and the rest of our production most of it is in Israel which has a free trade agreement.
Speaker Change: and FDM is our largest business and US is our largest region so we are in a good shape regarding the size and I'm looking at our customers on the other side this is a huge opportunity for us [inaudible]
Speaker Change: because no matter what the level of the tariff, if you bring the machine to the specific country and you produce onshore near the customer, you don't pay the tariff.
Speaker Change: which we see here, a global opportunity just a week ago, a week ago. I was with a large...
actually a large logistic customer, Fold Operator,
Speaker Change: and they see the uncertainty and they have an interest to see how they are creating capabilities in editing.
Speaker Change: to handle the uncertainties, the geopolitical tension, the potential broke and supplied chain and also the impact of stories. And this is coming from our customers.
[inaudible]
Speaker Change: Yeah, it seems like it could be a big opportunity. I will leave it there. I look forward to seeing you all next month at Rapid, thanks.
Thank you. Thanks, Rick.
Speaker Change: Thank you. Next question is coming from Brian Drab from William Blarrier Line, is that live?
Speaker Change: Good morning, guys. It's Tyler here for Brian . Thanks for taking my questions. Just starting off, I wanted to know, I know you're mostly exposed to the US, but is there anything to note for organic revenue growth in 2025? Are there any anticipated aspects, headwinds, or recent divestitures that we should think about then all the follow-up?
Thanks, say Taylor, so um...
other than a relatively small impact of one of the...
Speaker Change: S.D.M. Businesses, the Stratas Direct Businesses that we divested in the middle of 2024.
Speaker Change: There is nothing as significant as far as it's concerned with the divestments or inorganic as you as you model. Hello.
Speaker Change: On the ethics side, of course we do have business in Europe and based on how the Euro behaves throughout 2020.
Speaker Change: 2025 that could have some impact, and we're also operating in countries like Israel, however...
Speaker Change: We are normally, and I think we've discussed this in the past, we hedge a significant part of our exposure on the most significant currencies that are not US dollar, so the impact is relatively small. [inaudible]
[inaudible]
Speaker Change: Okay, thank you. And in your side, you said the denture market opportunity about 2028 is $2.5 billion. That's on a global basis, correct? And then could you provide your estimate of the total term today and how will you capture more sharing this market and what differentiates you from the other additive competitors? Thank you.
Speaker Change: Thank you Tyler for the question. So we are very proud.
in our denture solution.
Thank you very much.
Speaker Change: To be honest, because it's between six to eight meetings, models, and you need to come back and give the time that the patients feel that it's really fitting, the dentist already lost a lot of money.
Speaker Change: and we are coming with a new solution with a very large coverage, like 2.5 billion in Europe and another 5 to 6 billion in the Americas.
Speaker Change: And we are the leader here in terms of being ahead of the industry in terms of the technology.
We believe that...
It will still be gradual.
Speaker Change: Over next year, but we have also large plans, how to penetrate the market. We already signed several large ventures. We have several large ventures companies.
Speaker Change: So, core to our 3D printing industry, we believe that we will be able to gather with some organic and inorganic moves.
Speaker Change: to create a position ahead of competition and ahead of the entire dental industry because practically we are disrespecting it.
Speaker Change: and it's an industry that knows how to adopt editing and now we are coming with a very simple INSolution, we are very optimistic
[inaudible]
Okay, appreciate it. I'll pass along.
Speaker Change: Thank you. Our next question is coming from Troy Jensen from Canterbury, Sheryl. Your live is now live.
Hey, gentlemen, congrats on the fourth quarter results results.
Thank you.
Speaker Change: Hey, Sue, I guess maybe Eitan for you, consumables are down 7% that year over year, but they've also been down 3 consecutive quarters here on a sequential basis.
Speaker Change: and I'd guess the install base has been growing right as you ship in my systems into the customer. So, can this touch about consumables and why they declined three consecutive quarters?
Speaker Change: Sure, thanks Troy. So, maybe I'll start saying that I think that in the last year throughout the discussions with Danielis on their new scope. We always discussed...
A range of consumable as a...
Speaker Change: A quarterly average kind of run rate, Q4 was lower than that average run rate, but it was that I consider Q4 as an outlier, it does not reflect, it does not represent what we see for the future for the portal of 2025.
Speaker Change: Actually, in 2025, we're already more than two months into the quarter. We actually see that we're back on track.
Speaker Change: to levels that are similar to last year and will be higher than the Q4 numbers that we announced today.
Speaker Change: We expect, and that I think also address your question. We expect 2025 full year to be higher than the 2024 full year, and that's after 2024 was already higher by 5.6 million.
Speaker Change: from the school year of 2023. So we do see utilization increasing and we do expect 2025 to have overall higher, consumable compared to 2024.
Eitan Zamir: All right, perfect. And also for you, Eitan, I just want to talk about long-term investments. I'm as down 40 million sequentially. What's in that? Is this all just equity investments? Is there any financial instruments? Is the 32 million dollar loss that you talked about? Is that the reason for the 40 million dollar decline?
Thanks, Troy.
Eitan Zamir: So this one item is larger related to our equity investment.
Eitan Zamir: in Ultimaker. We, as you remember, we divested that business two and a half years ago.
and that was part of our strategic decision.
Eitan Zamir: to not to play on the low end and to focus on manufacturing and mass production.
Eitan Zamir: So that's a business that we do not control but of course from an accounting perspective we have to take our share in that situation and that's what we did but it's nothing more than that.
Speaker Change: Okay, but the $80 million is that all just equity in ultimaker or is there other things in there?
What, what do you see, A.T.?
and Yonah Lloyd, Yoav Zeif, Eitan Zamir.
Speaker Change: Gadgets, that's all equity, not financials, okay? And then for you all, just can you talk about these acquisition targets, obviously you're raising more capital and you guys are profitable and have a decent balance sheet. So, hardware, software, materials, what interests you most?
Speaker Change: Whatever we'll announce, share all the value more. And we have a strategy, very clear strategy.
Speaker Change: We are very proud of the both confidence from Portissimo. They are really well established and successful investors in technology and innovation and remember they decided to invest in Stratasys
with a significant premium and a low cup.
which
It's a sign.
Speaker Change: There are opportunities out there and the best operator to capture those opportunities.
Speaker Change: By the way, we also demonstrated it because we committed at the end of Q3 last year
Speaker Change: After a tough start of H1, we committed to saving, we were committing, we committed to stability and cash flow, and we delivered on all of them.
Speaker Change: 49.6% margin, 9.6% if it does, 7.4 million of cash flow, it doesn't exist in our industry.
Speaker Change: We are the top performer and operator in this industry, and then you combine it with an investor that sees the opportunities in the market and says where I should put my money in order to capture those opportunities, and you want to put your money where there are execution
Speaker Change: And in a company that is consistent because you look at our guidance
We are Clips.
Troy, yes, slowly, but we have a strong business model.
Speaker Change: We secure the 40 million of saving that we committed to and next year in our guidance, measured by measure we are better year over year and now we just need to wait.
Speaker Change: to their manufacturing sector, to come back to normal, and you will see growth, you will see a growth in revenue, the increase in profitability.
Speaker Change: and there are plenty of opportunities out there and we learn a lot about this industry over the last few years.
Speaker Change: Really, you know it. We have had the opportunity to widespread due diligence across the industry.
Speaker Change: So we have good understanding what's going on out there, who are the right targets and which one of them will better support our long-term strategy and create a lot of value to our shareholders in the short term and in the long term.
And you know also Marcus Price's [inaudible]
of the outfit
Thank you very much.
and the overall proven abilities of 3D printing.
Thank you.
Speaker Change: Stratasys is the right solution and we know and we have a plan. What to do with the money?
Speaker Change: Thank you. As a reminder, that star one to be placed in the question queue, then we ask you, please ask one question, one follow-up, never turn to the queue.
Speaker Change: Our next question is going to come from Jim Rashoody from Demon Company. Your line is now live.
Jim Raschutte: Thanks, most of my questions have been answered, but I just want to follow up on the way you're viewing
Jim Raschutte: 2025. It sounds like you're assuming, obviously, continued challenging.
Speaker Change: that you have perhaps more confidence in, it sounds like dental being one of them but I don't want to put words in your mouth and which markets you might be more cautious on or geographies.
Thank you, Jim.
Speaker Change: Yes, we are cautious, and what we see is a soft market, this is a reality, but it's only a cycle.
There are ups and downs in these cycles and we are now in a down period. But as I said, that's it.
Speaker Change: Fundamental of the value proposition of 3D printing is there and the customer knows it.
Speaker Change: Okay, this is the most important thing. Then, getting to 20-25 .
We have quite good.
Pipeline Visibility.
and we have confidence in our guidance.
But it takes into consideration the softness of the mountain.
Speaker Change: So, we have 500 visibility. We see the customer engagement, you know, even in such a downturn, at 14, this is just an example, 14.
Speaker Change: Top executives from 14 top corporate came from all over the world to Florida to sit with us and tell us what they are looking from our solutions so there is an engagement there.
Speaker Change: We are also improving our offering constantly, as you said, our new product. This year a lot of focus on material and software and we believe this is very profitable part of our business.
Speaker Change: And again, the current geopolitical situation in 2025 is a great tailwind for the industry and for us, a great tailwind. Okay, now there is kind of...
You know, the entire-
Speaker Change: The political environment is kind of looking for what's next, but it will stable and it will be a new state of the world and in this new state of the world
The basic value proposition of editing will be announced.
because with geopolitical dynamics, with uncertainty.
With this type of wand
It's a great support for Editing.
Speaker Change: and I give you an example for the verity card because that's a great question. Definitely dental because this is a verity card of early adopters and we focus on dentures we believe the best solution there.
Ben
because the world is highly...
Speaker Change: from CERN about the stability and the budget of aerospace and defense of skyrocketing and we see more also in Europe now we have we are the leader in aerospace and defense
Speaker Change: Then it's about tooling, which is a huge opportunity, it's a twelve billion dollar market and we are the leader also in tooling.
Now we'll take those out the tree.
Aero Space Defense, Tulin, and the Inter.
Thank you for watching!
Speaker Change: Okay, thanks for that color. When you talk about pipeline visibility.
Speaker Change: and you talk about the way you're viewing second half, first half. Do you actually have a view?
Speaker Change: Relatively good visibility that gives you the confidence about second half or you just assuming like a lot of folks that we see some improvement in the macro environment.
For more information, visit www.FEMA.gov
Speaker Change: So it's both, we believe Michael will be better because of the less uncertainty things will be clear
But, we also have a pipeline for you.
Speaker Change: and we have stages in the pipeline and we have probabilities of this pipeline. The unknown is the same cycle.
Speaker Change: Over the last two and a half years the sales cycle increased for the entire industry and also for Stratasys [inaudible]
Speaker Change: But with the current sales cycle, we have good visibility and that's the way we build our guidance.
Speaker Change: You know, who knows, we don't have the crystal balls, if Scyca, we double themself probably we're not being a good shape, but if they were reduced and get back to normal, we'll be in a better shape. And what is important that we are solid and strong, also with flat revenues, that's the way we build the company. So
We achieved our commitment in a challenging environment.
We have, uh...
Really?
Unheard of EBDI, now in the street, in our industry.
with a strong business model,
Speaker Change: We improved performance also in a soft market, that's what we expect for next year. Now think for a minute, what we left and once the manufacturing sector will give it, we'll be back.
Speaker Change: to normal, because at the end, you need to manufacture it.
Danny is a completely different story.
[inaudible]
Thank you!
Speaker Change: Blake, your next question is coming from Ananda Baruah from Loop Capital Market, [inaudible]
Ananda Bula: Yeah, hey, good afternoon, guys. Thanks for taking the question. Happy New Year. And congrats on the solid results here. I guess a bigger picture one if I could. Do the accept that you guys have thought about this or have had conversations about this?
Ananda Bula: You know, this whole idea that's popped up over the last 12 months more prominently AI factories and factory automation with Gen AI.
Ananda Bula: If that continues and I give it continues to be propagated increasingly, you know, if that were to manifest as that manifests
Speaker Change: How does, like, what impact does that have on your production businesses? Does it help it? Does it hurt it? Is it neutral? Just, uh, and any context around that would just love to get your early thoughts on that. Thanks.
Ananda Bula: Thank you Ananda for the wishes and also for the question.
[inaudible]
A.I. is essential for us.
Ananda Bula: We acquired a company called Riven that, developing an AI, we have already a product.
That's correct.
The deviation of the belt.
Ananda Bula: You scanning, you put it back, and we build a big database and you can practically anticipate the deviations of the printing and correctly before printing.
Ananda Bula: But this is only one example. We have a whole set of use cases that we are working on. Based on the reason we build a group of people that are focusing on AI. And I believe AI will be
Ananda Bula: Ascension in everything manufacturing, and also the transition within manufacturing, taking a step back and looking at the big picture, the transition from analog manufacturing, to digital analog manufacturing, has to go somehow through 3D printing.
because we are versatile. We are working with a fighter.
and AI can be defied. AI can manage defies.
Ananda Bula: So this is like an integral part of the future. The future of manufacturing goes with AI.
Ananda Bula: and we are one of the tools that will make this transition much easier.
Ananda Bula: We are investing in it. I'll give you a few use cases, for example, predictive maintenance is an important thing that we are working on. It's AI.
Ananda Bula: Can do amazingly well there because we have all the data from the machine because we have this we just launched this new IOT platform in the script.
Ananda Bula: and we discussed it with our customers with our customers advisory board. What do they want to see in AI? And we have a whole list and we focus on three of them of course and we're not sharing it here but we are working with our customer.
to enable them to adopt additives and digital manufacturing together.
Bottom line.
Ananda Bula: AI-centric production system with strong disability. I have no doubt.
Speaker Change: and that includes thanks for that detail and that includes the increased use of robotics and manufacturing processes as well.
I assume so. Yes. And by the way, Robots.
Speaker Change: or the whole robot industry is our significant customer of us because you need to change the end of harm and replacement and to be versatile with the functionality of the robot and most of them are doing it with really printing, mainly with FDM.
Thank you. Thanks a lot guys.
Speaker Change: Thank you. We reached end of our question. Interestional. I'd turn them for that co-verbating further closing comments.
Speaker Change: Thank you. Before thanking everybody, I want to invite everybody that is online to visit us at the rapid show in April in the Detroit, we will let you out.
Speaker Change: and I'll demonstrate a very important solution there and also many of our customers will be there, so you can hear from our customer, fair stand, what do they think about Stratasys?
Speaker Change: So, thank you for joining us, looking forward to updating you again next quarter.
Speaker Change: Thank you, that does conclude today's telecom for the webcast and we just connect your line at this time and have a wonderful day. We thank you for your participation today.