Stratasys continues revenue recovery with 11% quarterly growth in Q4 2020

3D printer OEM Stratasys has announced that quarterly revenue grew by 11% between Q3 2020 and Q4 2020 in its FY 2020 financial results. 

During Q4 2020, the company generated $142 million in revenue, 11% less than the $160 million reported in Q4 2019. However, when analyzed on a quarterly basis the figures tell a different story, showing a revenue increase of 11% on the $128 million raised in Q3 2020, and proving that the firm’s restructuring plan is paying off.

Earlier in the quarter, Stratasys also invested heavily in potential growth drivers, acquiring Origin for $100 million and purchasing RPS, as it aims to recover from the impact of COVID-19 on its client demand. Sensing that these investments could further fuel the firm’s revenue revival, investors have now driven the price of its shares up by 9% since the publication of the results. 

On an earnings call with analysts and investors, CEO of Stratasys Yoav Zeif, was buoyant about the company’s chances of returning to annual growth during 2021, emphasizing that it experienced a strong recovery over H2 2020. “Our results reflect the resilience and diversification of our business model,” said Zeif. 

“We delivered sequential revenue growth in the back half of the year, and this quarter produced the highest operating cash flow in almost three years,” added Zeif. “We believe that both our industry and company are starting to enter a meaningful, sustained trajectory of unprecedented growth, and are excited to capitalize on the opportunities ahead.”

An engineer using the Origin One 3D printer.
Stratasys acquired Origin for $100 million during Q4 2020. Photo via Stratasys.

Stratasys’ Q4 2020 results  

Stratasys reports its revenue across two main segments: Products and Services. The firm’s Products division includes any income generated from the sale of 3D printers or materials, and accounts for the majority of its revenue, while Services refers to the income generated by Stratasys’ on-demand manufacturing and consultancy offerings.

In Q4 2020, the company’s Products division yielded $99 million in revenue, 9% less than the $109 million generated during Q4 2019. Over the course of FY 2020, the segment’s revenue decline was even more severe at 21%, but again when broken down on a quarterly basis Products saw a recovery of 18%, reflecting Stratasys’ improvement in H2. 

Unfortunately, the same cannot be said for the company’s service offering, as its revenue dropped from the $51 million reported in Q4 2019, to $43 million in Q4 2020. Even when measured on a sequential quarterly basis, Stratasys generated slightly more revenue in Q3 2020, implying that the impact of the pandemic is continuing to impact upon its ability to conduct servicing and installation visits. 

Stratasys’ 11% Q4 revenue recovery follows its 9% revival in Q3, and suggests that the company’s wider strategy is working. Elsewhere, the firm’s strong H2 2020 was also mimicked by its rivals, with 3D Systems forecasting sequential growth, and Groupe Gorgé’s revenue recovering by 26%, potentially reflecting an industry-wide rally. 

Revenue $ Q4 2019 Q4 2020 Variance % Q3 2020 Q4 2020 Variance %
Products 109m  99m -9 84m 99m +18
Services 51m 43m -16 44m 43m -2
Total Revenue 160m 142m -11 128m 142m +11

Applications and acquisitions in Q4

During Q4 2020, Stratasys saw its technology deployed within a wide variety of applications, and its new clientele could go some way to accounting for the revenue it managed to claw back. For instance, Google’s ATAP division used PolyJet systems to prototype its ‘Jacquard’ wearable electronic sensors in Q4, expediting their production in the process. 

At the start of the quarter, aerospace firm Boeing also qualified Stratasys’ Antero 800NA filament for flight parts, potentially unlocking new applications for the materials. In a similar vein, the company recently launched its new low-cost prototyping J850 Pro 3D printer, which should contribute to its future revenue growth, albeit in the longer-term. 

Elsewhere, Stratasys’ acquisitions of Origin and RPS are set to be central to its revenue prospects going forwards, and Zeif emphasized this on the earnings call. “Our strategy is to be the first choice for polymer manufacturing across the whole product lifecycle,” explained Zeif. 

“RPS has an amazing line of products which are suited to our polymer strategy, they complete our offering, and have both large prototyping and end-use applications,” he added. “Origin is also the leading next-gen DLP platform. They’ve now joined forces with Stratasys, and our customers will perceive it as a big opportunity to advance manufacturing.”

In its quest to lead the polymer market, Stratasys also faces stiff competition from elsewhere in the industry, especially given that its longstanding heated build chamber patent recently expired. Even though many additive firms have found ways around the patent over the years, its removal could yet enable the development of rival high-temperature FDM 3D printers in future.

Google's Stratasys-3D printed 'Jacquard' wearable motion sensor prototypes.
Stratasys’ quarterly growth was partially driven by new clientele such as Google, which 3D printed its Jacquard devices in Q4 (pictured). Photo via Stratasys.

Stratasys’ cautious Q1 guidance 

Over the course of Q4, Stratasys managed to improve its gross margin by reducing operating costs, with the company reverting to a four-day working week. However, in 2021, the firm anticipates a return to five-day spending levels, and given the uncertainty of COVID-19, it has issued cautious guidance for the quarter ahead. 

“Given the business dynamic and the uncertainty surrounding the timing and the extent of an anticipated recovery from the pandemic, we are encouraged that our current quarter is tracking closely to Q1 2020,” said Lilach Payorski, CFO of Stratasys. “We are confident of a potential upside as we move through the year.”

As things pick up in Q2 2021, Stratasys is targeting double-digit revenue growth, and in the longer-term, it anticipates that Origin will return $200 million over the next four years. Zeif wrapped up the call by suggesting that the industry is gearing up for a new phase of growth, and that recent acquisitions have positioned it well to take advantage of this.

“We believe that AM is poised for a period of exceptional growth and we expect Stratasys to lead the way in polymer 3D printing,” he concluded. “Our internal reorganization coupled with organic efforts and strategic acquisitions like Origin, position us to further broaden our leadership, and outperform over the long-term.”

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Featured image shows an engineer using the Origin One 3D printer. Photo via Stratasys.

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