Stratasys (Nasdaq: SSYS) reported a mixed third quarter, with weaker margins due to higher tariffs, but the company still managed to generate solid operating cash flow.The quarter also took a hit because Stratasys had to reduce the value of its investment in Ultimaker, essentially acknowledging that it’s now worth less than before.The adjustment dragged results down, but lower costs and solid cash flow helped steady things.
Despite the challenges, Stratasys heads into the end of the year with a strong cash position and no debt, giving it a solid foundation even as wider adoption of additive manufacturing (AM) continues to move at a slower pace.A Quarter Marked by Pressure on Margins — and One Big Write-Down Stratasys’ headline loss for the quarter looks alarming at first, an unadjusted net loss of $55.6 million.But nearly two-thirds of that number came from a non-cash $33.9 million impairment tied to its Ultimaker investment.
Once that’s taken into account, the loss is much smaller, and the move itself comes as no surprise.Ultimaker operates in one of the toughest corners of the 3D printing market, a crowded, competitive, low-margin desktop segment that now faces falling printer prices and intense pressure from low-cost Chinese brands.With conditions like these, Stratasys had to lower the value of its investment, which makes the reported loss look worse than what’s actually happening in the business.
Margins were the bigger issue in the third quarter.Higher tariffs pushed costs up more than expected and pulled margins down across the company, with unadjusted gross margin falling to 41% and adjusted gross margin dropping to 45.3%.Overall revenue slipped only slightly to $137 million from $140 million a year ago.
Hardware sales were steady, with system revenue going up to $32.1 million, and consumables dropping just a bit to $62 million, showing that customers are still running their printers regularly.Cash flow was a bright spot.Stratasys generated $6.9 million in operating cash during the quarter, representing a strong improvement from last year, when the company used $4.5 million.
Unadjusted earnings also remained slightly positive at $1.5 million.This helped the company maintain a strong cash position of $255 million, with no debt, which remains one of its biggest advantages as it works through a slower market and higher tariff costs.An end-of-arm tool 3D printed at the Toyota ADD Lab using the Stratasys F900 3D printer.
Image courtesy of Stratasys.Cost Cuts Are Finally Showing Up Stratasys also made progress on the cost side.Operating expenses came down; unadjusted expenses in particular dropped by almost $10 million from last year, and adjusted expenses also fell as a result of last year’s restructuring and lower employee-related costs.
These savings helped the company post a small adjusted profit of $1.5 million and $5 million in adjusted EBITDA, roughly in line with last year, even with the pressure from higher tariffs and weaker margins.“We remain focused on what we can influence: operational excellence, customer partnerships, and executing on our strategy as we advance additive manufacturing adoption with innovative offerings.Customer engagement remained substantive and strategic as we build the foundational infrastructure to drive growth and scale across key high-value verticals of aerospace and defense, particularly drones, automotive tooling, dentures, precision machine components, and medical anatomic modeling.
We are leaders in these areas, where additive is a compelling alternative to conventional manufacturing, as we create durable competitive advantages for years to come,” Yoav Zeif told investors during an earnings call to discuss the quarterly numbers.Zeif’s comments lined up with where the company saw the most activity during the quarter.Aerospace and defense sectors were especially strong, with new activity from companies such as Boeing, Embraer, Honeywell, TE Connectivity, and L3Harris.
The company also took part in the U.S.Navy’s Trident Warrior 25 exercise, using its printers to make approved parts at seven sites worldwide.“Our collaboration with FAA [Federal Aviation Administration], the National Institute for Aviation Research, has launched a comprehensive SAF [Selective Absorption Fusion] characterization program involving five suppliers across key industries, positioning us to address emerging demands for drone components, aviation parts, tooling, and low-volume production applications, while establishing the technical foundations for expanded adoption in this sector,” noted Zeif.
The Stratasys F3300 FDM printer, designed with extensive input from Toyota, including from Dallas Martin.Image courtesy of Stratasys.Outside of defense, a major U.S.
tech company purchased four F3300 systems for prototyping and future production of VR and AR components, while a top global pharmaceutical company adopted the H-350 SAF platform, opening the door to new medical and drug development applications.In automotive, Stratasys expanded its long-running partnership with American motorsports organization Andretti Global, helping design a new additive lab inside the team’s headquarters.Meanwhile, Stratasys is still working to make dental a stronger growth driver, and this quarter showed progress.
The company brought in Chris Cabot as the new head of its dental segment, adding deep clinical and commercial experience.It also launched Soft Relax, a post-processing tool that reduces manual labor and improves safety for dental labs, and removed TPO (a controversial chemical) from all its dental resins.While dental is still a long-term opportunity rather than an immediate source of revenue, the company is clearly working to build it up.
SAF Drone.Image courtesy of Stratasys.Tariffs Are the Biggest Challenge Right Now Stratasys was clear that tariffs continue to hurt margins and that the impact is not yet over.
The company has started raising prices to help offset the higher costs, and these changes should show up more in the next quarter.Even so, tariffs, product mix, and inventory changes mean that margins will take time to recover.This is still the biggest drag on the company’s results, not weak demand or rising expenses, but the cost of policy changes.
Zeif told investors, “We continue to engage customers on how our technologies can mitigate supply chain risks, address geopolitical issues, and reduce tariff exposure.We believe these conversations will increasingly translate into action as companies seek resilient manufacturing strategies.Now, turning to updates on customer activities that highlight the traction we are building, as well as steps we are taking to strengthen key end-market exposure.” Meanwhile, Stratasys reaffirmed most of its full-year guidance.
The company still expects revenue between $550 million and $560 million, an adjusted operating margin of 1.5% to 2%, adjusted EPS of $0.13 to $0.16, and adjusted EBITDA of $30 million to $32 million.It also expects to generate positive cash flow for the full year.Unadjusted results will stay heavily negative because of the Ultimaker impairment, but the company stressed that this accounting charge does not affect cash or day-to-day operations.
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