Stratasys reported its second quarter on 13 August. We are writing about it today.
Errors or inaccuracies are possible. Spotted something that looks wrong? Write to me and I will correct it.
What the Company Does
Stratasys sells polymer 3D printers and the materials they consume. Its headquarters are split between Minnetonka, Minnesota and Rehovot, and it trades on Nasdaq. Its business model has two layers: a one-off sale of a printer, followed by an ongoing stream of consumables revenue - and that is the part the company is trying to grow.
The Quarter
| The quarter | A year ago | |
|---|---|---|
| Revenue | $137.6 million | $138.1 million |
| Revenue in the first quarter | $132.7 million | |
| Consumables | $66.3 million | |
| GAAP gross margin | 42.3% | 43.1% |
| Non-GAAP gross margin | 47.2% | 47.7% |
| GAAP operating loss | $13.5 million | $16.6 million |
| Non-GAAP operating income | $0.1 million | $1.1 million |
| GAAP net loss | $16.9 million | |
| Loss per diluted share | $0.19 | |
| Non-GAAP net income | $2.3 million | |
| Non-GAAP earnings per share | $0.03 | |
| Adjusted EBITDA | $5.3 million | $6.1 million |
| Cash and deposits | $212.5 million | |
| Debt | none |
Revenue Did Not Move, and What Sits Beneath It Did
Revenue fell from $138.1 million to $137.6 million - a change that is not a change. But against the first quarter's $132.7 million it is an increase of 3.7%, and the company presents that as sequential progress.
What clearly did move is the mix. Consumables reached a record quarterly $66.3 million, meaning roughly 48% of total revenue. CEO Dr Yoav Zeif attributes this to manufacturing materials, and presents it as evidence for the strategy of growing the manufacturing portion of the business.
And aerospace and defence, which the company describes as its largest and highest-value vertical, grew 17% year over year.
Why mix matters here more than scale: selling a printer is a one-off event dependent on the customer's capital budget. A consumable sells for as long as the printer runs.
When revenue is flat but consumables are at a record, it means the installed base is working harder
- even though no more machines were sold. That turns a growing share of revenue into recurring revenue, less dependent on the capital cycle.
And the Shekel, the Quiet Story of the Quarter
Adjusted EBITDA stood at $5.3 million against $6.1 million a year ago - a decline. But the company notes explicitly that the figure would have been $8.2 million but for a net impact of $2.9 million from the strong shekel.
This is the structural problem of an Israeli company reporting in dollars: revenue is in dollars, and a substantial part of the cost base - salaries, research and development, headquarters - is in shekels. A strengthening shekel raises the cost structure without changing anything in the business itself.
And When You Cross That With the Full-Year Guidance
| 2026 guidance, as reaffirmed | |
|---|---|
| Revenue | $565-575 million |
| Non-GAAP gross margin | 46.7%-47.1% |
| Non-GAAP operating expenses | $260-262 million |
| Non-GAAP operating margin | 0.7%-1.5% |
| GAAP net loss | $67-83 million |
| GAAP loss per share | $0.76-0.95 |
Within that guidance the company details two adverse effects: approximately $7 million in gross margin, arising from tariffs and exchange rates relative to 2025, and approximately $10 million in operating expenses, arising from exchange rates.
And this is the calculation worth pausing on. The midpoint of the revenue guidance is $570 million, and the midpoint of the non-GAAP operating margin is 1.1% - meaning non-GAAP operating income of roughly $6.3 million for an entire year.
And within that same guidance, the cumulative adverse effect of tariffs and currency is approximately $17 million.
That is to say, the currency and tariff headwind is nearly three times the entire non-GAAP operating profit the company expects this year. These are two factors outside management's control, and at the current level of profitability they determine whether the line is positive or negative.
And the cross-reference is interesting in the other direction too: the producer price index published yesterday showed US core goods rising 0.9% in a single month. Stratasys is a concrete example of a company recording tariffs as a quantified hit to margin - and that is precisely the absorption into margin that I wrote about there.
What Was Not Reaffirmed
The headline says the company reaffirms its 2026 guidance - but it reaffirms it except for one line.
Operating cash flow will not be positive for the full year, contrary to what the original guidance stated. The reason: increased cash usage in the first half. In this quarter alone $18.7 million was used in operations, which the company attributes to atypical non-routine items.
The company does expect cash flow to be positive in the second half.
And what balances this: $212.5 million in cash, cash equivalents and short-term deposits, and no debt.
A burn of $18.7 million in a quarter does not threaten a balance sheet like that. What it does do is push out the point at which the company funds itself from its own operations, and that is a point the original guidance promised for this year.
And the Acquisition
The company is acquiring MarkForged. According to the CEO, the acquisition will meaningfully enhance its industrial offering through continuous carbon fibre technology, materials and a software platform. The release does not include the transaction terms or the closing date, so no figure appears here.
הזווית שלי
דעה אישית של אילן אברמוב - לא ייעוץ ולא המלצה
This is a quarter in which almost every good number is mix, and almost every problematic number is external.
The mix genuinely is improving: consumables at a record, roughly 48% of revenue, and aerospace and defence growing 17%. Those are exactly the two parts a company like this wants to grow - one because it recurs, the other because it is the most profitable. Anyone looking only at the flat revenue line misses that.
But profitability still depends on things nobody at the company controls. A non-GAAP operating margin of 0.7% to 1.5% is a margin so thin that two external variables - the shekel rate and tariffs
- are three times the size of the profit itself. A company in that position does not really decide whether its year is profitable.
And what drew my attention most is precisely what was not reaffirmed. Reaffirming all of the guidance except the cash flow is a way of saying the business is progressing to plan while self-funding has been pushed out. With $212.5 million and no debt this is not a liquidity problem - it is a question of when, not whether.
What I would follow: whether the consumables share keeps rising above 48%, and whether cash flow does turn positive in the second half as promised. The second is a promise with a date on it, and it will be easy to check.
(An important note: this is my personal opinion only, and nothing here is a recommendation to take any action.)
