Stratasys Q1 Results: Still Losses, But Does It Matter?

3D print giant Stratasys announced their financial results for the first quarter of 2017, and things are about the same. 

The company reported revenue slightly less than the corresponding quarter in 2016, at USD$163.2M, from USD$167.9M. That’s about flat, but certainly not the big growth that some expect to see. 

As for profit, Stratasys reported a GAAP loss of almost USD$14M, which turns out to be a dramatic improvement over the 2016Q1’s USD$23.1M loss. But it’s still a loss. 

So what’s going on here? Why has Stratasys remained more or less flat, financially, for so many quarters? 

Is it because there is increasing competition? Disinterest from potential customers? Poor products? 

I think their products are fine, and they do indeed suffer from some level of competition from new, less expensive entrants. But I don’t think Stratasys is too concerned about it. 

Why? There are two reasons. 

One reason is that it appears the company is slowly making a shift to manufacturing systems from prototyping systems. They clearly make the bulk of their income today on prototyping systems, as they have for decades. However, that could be changing in the future. 

Their recent announcements all orbit around the notion of using 3D print technology for producing end-use products and parts, and less about traditional prototyping. 

In particular the recent demonstration machines they’ve announced fall specifically in this realm. They are trying to remake their product line to enable tapping into that monstrous USD$12 Trillion manufacturing market. Their resources are focused on that change, and that’s why we don’t see significant change in current product lines. 

So I see their current actions as a kind of holding action while they make that conversion. Once they gain a foothold in manufacturing, then we will see their financials change dramatically. 

But there is one more reason they may not be too concerned: they currently hold USD$297M in cash and equivalents. Thus, if they are incurring a USD$14M loss each quarter, they can burn off that stash for more than five years before starting to hurt. 

And five years sounds about right for switching your product line, doesn’t it?

Via Stratasys