Stratasys falls short in Q1 as orders in automotive, aerospace pushed out
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Stratasys, a 3D printing and additive manufacturing vendor, delivered a first quarter that fell short of expectations as orders of high-end systems were pushed out.
The big mystery is whether Stratasys is seeing competitive pressure from rivals like HP and 3D Systems or a broader macro economic trend.
The company reported a first quarter net loss of $13 million, or 24 cents a share, on revenue of $153.8 million, down from $163.2 million in the same quarter a year ago. Non-GAAP earnings for the first quarter were 5 cents a share.
Wall Street was expecting Stratasys to report non-GAAP earnings of 8 cents a share in the first quarter on revenue of $167.5 million.
Stratasys maintained its outlook for 2018.
CEO Ilan Levin said the company saw delays in North America for high-end systems in government, automotive, and aerospace. "We do not believe that our first quarter revenue represents a fundamental change in the demand environment in the North American market. We continue to maintain a strong pipeline of opportunities, and are not modifying the full year guidance we issued earlier this year," said Levin.
The company has been rolling out new materials and prototyping printers. Stratasys is also moving more systems to production, but the first quarter shortfall was worrisome to analysts.
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Levin was repeatedly asked about the market dynamics. He noted that some first quarter orders that were delayed have been closed in the second quarter. Levin made the following points:
- Aerospace and automotive slowed and Stratasys is investigating what went wrong and whether those markets are slowing.
- "The market remains strong, and I think there is increasing spending in general, specifically on new technology that are coming into the market from Stratasys or from any other multiple sources within the market. With respect to specifically to the quarter, as we are moving through the quarter, we were disappointed in primarily the pace at which potential orders were moving through our pipeline. I think our win rates in general in terms of as we track them toward systems has remained stable and pretty much in line with our historical expectation."
- Competitive pressure doesn't appear to be an issue, but new customers are taking more time to evaluate options, new technologies and vendors.
Those points will be further clarified since 3D Systems will also report earnings.
While it's early to say Stratasys is seeing competitive pressure, it's worth noting that 3D Systems has stepped up its vertical game in health markets. Meanwhile, HP has built out its channel, partnered with contract manufacturing firm Jabil and developed its products further. Those moving parts will at least partly explain the longer evaluation period.
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