Stratasys NASDAQ: SSYS reported lower first-quarter revenue and a wider GAAP loss as printer purchasing timelines remained extended, but management said recurring revenue, defense demand and growth at Stratasys Direct supported its outlook for the year.
On the company’s earnings call, Chief Executive Officer Dr. Yoav Zeif said the results reflected “the continued resilience of our operating model in a measured spending environment.” He said consumables and customer support continued to provide stability, while customers remained cautious with capital spending amid global uncertainty.
Chief Financial Officer Eitan Zamir said first-quarter consolidated revenue was $132.7 million, down about 2.4% from the prior-year period. Product revenue declined to $88.8 million from $93.8 million a year earlier. Within that category, system revenue was $28.8 million, compared with $31.2 million, and consumables revenue was $60 million, compared with $62.6 million.
Service revenue rose to $43.9 million from $42.2 million, helped by growth at Stratasys Direct. Zamir said Stratasys Direct delivered 23% organic growth after divestments compared with the first quarter of 2025. Zeif said the top three parts customers at Stratasys Direct were again all U.S.-based drone-related companies.
Margins Pressured by Tariffs and Foreign Exchange
GAAP gross margin was 41.7%, down from 44.3% in the year-earlier quarter. Non-GAAP gross margin was 46.3%, compared with 48.3% a year ago. Zamir attributed the decline primarily to a $2.4 million year-over-year increase in tariff expense, representing a 180-basis-point impact, along with lower revenue.
GAAP operating expenses rose to $81.9 million from $72.6 million, which Zamir said was primarily due to higher professional fees and the impact of foreign currency exchange, particularly the appreciation of the Israeli shekel against the U.S. dollar. Non-GAAP operating expenses were $64.6 million, compared with $62.6 million, with foreign exchange contributing about $3.1 million to the increase.
The company posted a GAAP operating loss of $26.5 million, compared with a loss of $12.4 million in the prior-year quarter. Non-GAAP operating loss was $3.2 million, compared with operating income of $3 million a year earlier. Adjusted EBITDA was $2 million, down from $8.2 million, with Zamir citing roughly $5.3 million of combined foreign exchange and tariff pressures.
GAAP net loss was $23.8 million, or $0.28 per diluted share, compared with a net loss of $13.1 million, or $0.18 per diluted share, in the year-earlier period. Non-GAAP net loss was $1.3 million, or $0.01 per diluted share, compared with non-GAAP net income of $2.9 million, or $0.04 per diluted share.
Cash Flow Positive, Guidance Reiterated
Despite the loss, Stratasys generated $2.4 million in operating cash flow during the quarter. Zamir said that reflected working capital discipline and structural cost improvements implemented over recent quarters. The company ended the quarter with $237.8 million in cash equivalents and short-term deposits and no debt.
Stratasys reiterated its full-year 2026 revenue guidance of $565 million to $575 million. Zamir said the company expects revenue to grow sequentially each quarter through the year and expects 2026 consumables revenue to increase over 2025.
In response to an analyst question, Zeif said Stratasys is “progressing according to our growth plan” and added that the company expects 2026 to be its first year of growth in three years. He said the company’s transition from prototyping to manufacturing is “working.”
Defense Demand Remains a Central Theme
Management emphasized aerospace and defense as a major growth opportunity, particularly as additive manufacturing is adopted for drones, missiles, munitions, sustainment and maritime applications. Zeif said aerospace and defense is “the leading vertical today” with a promising pipeline, driven by higher budgets and demand for more agile manufacturing.
Zeif said Stratasys Direct ships more than 100,000 parts annually to the defense industry and operates under quality and compliance systems including AS9100, ISO 9001, CMMC compliance and ITAR requirements. He said the company’s defense work is “not prototype stage or pilot stage engagement” but production-scale additive manufacturing for demanding customers.
The company highlighted its selection during the quarter for the U.S. Department of Defense’s Joint Additive Manufacturing Acceptability IV Pilot Parts program, or JAMA IV. Zeif described the program as a multi-million-dollar initiative intended to accelerate qualification and deployment of 3D-printed parts across military platforms.
During the question-and-answer session, Zeif said drones are leading current demand, but the opportunity extends into missiles, munitions and sustainment. He cited aging military platforms such as the B-52 as examples of sustainment needs and said additive manufacturing can support efforts to refresh depots and shipyards with production tools and parts.
Dental Certification Expands European Opportunity
Stratasys also discussed a regulatory milestone for its TrueDent resins, which received CE Class IIa medical device certification. Zeif said TrueDent is the first polychromatic monolithic 3D-printed denture solution certified at that classification in Europe.
The certification expands TrueDent’s indications to include long-term intraoral removables, crowns and bridges. Zeif said the European segment is projected by analysts at about $2.45 billion by 2028, while the U.S. opportunity for removables is nearly $5 billion.
Zeif said the Class IIa designation removes an adoption barrier for clinicians and laboratories and requires no changes to print settings, formulation, workflow or shelf life on the company’s J5 DentaJet platform. In the Q&A, he said Stratasys plans to be “the largest player in Europe” in this area, citing a first-mover advantage in polychromatic dentures.
Product and Software Updates Aim to Expand Applications
Stratasys also pointed to new material and software developments intended to broaden its manufacturing applications. Zeif said ULTEM 1010 resin is now available as filament for the F3300 printer, enabling aerospace-grade high-temperature parts and composite tooling applications. He also said ToughONE material has been expanded to the J3 and J5 PolyJet systems for durable functional prototyping and end-use parts.
On the software side, Zeif said measurement-based warp adaptive modeling is being integrated into GrabCAD Print Pro for the Origin One P3 platform. He said the feature uses measured dimension data to automatically correct warping, reducing iterative correction cycles for parts such as electrical connectors, precision jigs and industrial fixtures.
Zeif said the company intends to use its debt-free balance sheet to pursue inorganic opportunities aligned with high-requirement applications. He said Stratasys does not want to focus on basic prototyping where competition can become “a race to the bottom,” but instead aims to capture higher-value use cases in manufacturing, defense, dental and other demanding markets.
About Stratasys NASDAQ: SSYS
Stratasys, Inc is a global leader in additive manufacturing and 3D printing solutions, offering a comprehensive portfolio of technologies and materials for rapid prototyping and production. Founded in 1989 by Scott and Lisa Crump, the company pioneered fused deposition modeling (FDM) and has since expanded its capabilities to include PolyJet, stereolithography and metal deposition systems. Stratasys serves a broad array of customers, from small design studios to major industrial manufacturers, enabling accelerated product development and on-demand part production.
The company's product line encompasses both desktop and industrial-grade 3D printers, dedicated support materials and proprietary software designed to streamline the digital manufacturing workflow.
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