Stratasys Ltd. (SSYS) reported a first-quarter non-GAAP loss of one cent per share, beating analyst estimates, while revenue declined 2.4% year-over-year to $132.7 million.
Management noted that recurring revenues from consumables and support are providing stability as customers remain cautious in capital equipment spending.
The revenue figure narrowly beat the consensus mark of $132 million. The beat on earnings per share was more pronounced, coming in 50% better than the expected two-cent loss. However, the company's non-GAAP gross margin contracted 200 basis points to 46.3%, which management attributed to $2.4 million in incremental tariff expenses.
Despite the revenue dip, shares rose 3.9% after the report, as investors reacted positively to the earnings beat and a 4% rise in higher-margin services revenue. The results highlight a pivot in the company's revenue mix as equipment sales face headwinds.
The company's product revenues, its largest segment, decreased 5.3% from the prior year to $88.8 million. This included a 7.7% drop in system revenues to $28.8 million and a 4.2% decline in consumables to $60 million.
In contrast, services revenues increased 4% year-over-year to $43.9 million. This growth was driven by a 23% organic increase in the Stratasys Direct manufacturing service after accounting for divestments. Customer support revenues, a component of the services segment, were down 1% to $29.7 million.
The divergence comes as peers see mixed results. Proto Labs (PRLB) recently delivered year-on-year revenue growth of 10.4%, while 3D Systems (DDD) is expected to report a 2.5% revenue decline.
Stratasys ended the quarter with $237.8 million in cash and cash equivalents and remains debt-free. Operating cash flow was $2.4 million, a significant drop from $15.1 million in the previous quarter, though the company cited disciplined working-capital management. Adjusted EBITDA for the quarter was $2.0 million, down from $8.2 million in the year-ago period, with the adjusted EBITDA margin contracting 450 basis points to 1.5%.
The report shows Stratasys navigating a cautious capital spending environment by relying on its services division. Investors will be watching the next quarter to see if the 23% organic growth in the Stratasys Direct unit can continue to offset declines in system sales.
This article is for informational purposes only and does not constitute investment advice.
