Stratasys’ (SSYS) Q1 Earnings and Revenues Miss Estimates

Stratasys Ltd. SSYS reported first-quarter 2020 non-GAAP loss of 19 cents per share, which was wider than the Zacks Consensus Estimate of a loss of 6 cents. Moreover, the bottom line was much lower than the year-ago quarter’s reported earnings of 10 cents.

Further, Stratasys’ revenues of $133 million missed the consensus mark of $137 million and declined 14.4% year over year.

Economic weakness due to the outbreak of the coronavirus pandemic affected the top line.

Moreover, the company withdrew its 2020 guidance, considering the uncertainty caused by the pandemic.

However, an increase in demand for 3D printed medical equipment was a tailwind.

Stratasys, Ltd. Price, Consensus and EPS Surprise

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Stratasys, Ltd. price-consensus-eps-surprise-chart | Stratasys, Ltd. Quote

Quarter Details

Segment-wise, Product revenues fell 20.9% from the year-ago quarter to $83.2 million. The figure was down 20.3% in constant currency.

Within Product revenues, System revenues decreased 39.5% and Consumables revenues fell 5.8% year over year, on a reported basis.

Notably, the adoption of PolyJet and FDM printers was strong.

Revenues from Services decreased 0.9% on a reported basis and 0.6% in constant currency to $49.7 million. However, within Service revenues, customer support revenues grew 2.2% year over year.

Margin

Stratasys’ non-GAAP gross profit decreased 20.3% from the year-ago quarter to $64.3 million. Non-GAAP gross margin contracted 360 basis points (bps) to 48.4%.

Non-GAAP operating expenses declined 1.6% year over year to $72.7 million, driven by efforts to cut SG&A costs.

Non-GAAP operating loss totaled $8.4 million against an operating income of $6.8 million in the prior-year quarter.

Balance Sheet and Cash Flow

The company exited the quarter with cash and cash equivalents of $325.5 million compared with $321.8 million at the end of the previous quarter.

As of Mar 31, 2020, there was no long-term debt.

Net cash used in operating activities in the quarter was $11.3 million.

Outlook

The company’s cost-control initiatives are expected to reflect more vividly on expenses in the second quarter of 2020.

Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #4 (Sell).

Anaplan, Inc. PLAN, NVIDIA NVDA and Nutanix NTNX are some better-ranked stocks in the broader computer and technology sector. While AudioEye sports a Zacks Rank #1 (Strong Buy), NVIDIA and Nutanix carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Anaplan, NVIDIA and Nutanix are set to report quarterly results on May 26, 21 and 27, respectively.

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