Greetings, and welcome to the Stratasys Q1 2025 Earnings Call. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Yonah Lloyd, Chief Communications Officer and VP of Investor Relations. Thank you. You may begin.

Good morning, everyone, and thank you for joining us to discuss our 2025 first quarter financial results. On the call with us today are our CEO, Dr. Yoav Zeif, and our CFO, Eitan Zamir. I would like to remind you that access to today's call, including the slide presentation, is available online at the web address provided in our press release. In addition, a replay of today's call, including access to the slide presentation, will also be available and can be accessed through the Investor Relations section of our website. Please note that some of the information you will hear during our discussion today will consist of forward-looking statements, including without limitation, those regarding our expectations as to our future revenue, gross margin, operating expenses, taxes and other future financial performance and our expectations for our business outlook. All statements that speak to future performance, events, expectations or results are forward-looking statements. Actual results or trends could differ materially from our forecast. For risks that could cause actual results to be materially different from those set forth in forward-looking statements, please refer to the risk factors discussed or referenced in Stratasys' annual reports on Form 20-F for the 2024 year. Please also refer to that annual report along with our reports filed with or furnished to the SEC throughout 2025 for additional operational and financial details. Reports on Form 6-K that we are furnished to the SEC on a quarterly basis and throughout the year provide updated current information regarding the company's operating results and material developments concerning our company. Stratasys assumes no obligation to update any forward-looking statements or information which speak as of their respective dates. As in previous quarters, today's call will include GAAP and non-GAAP financial measures. The non-GAAP financial measures should be read in combination with our GAAP metrics to evaluate our performance. Non-GAAP to GAAP reconciliations are provided in tables in our slide presentation and today's press release. I will now turn the call over to our Chief Executive Officer, Dr. Yoav Zeif. Yoav?

Thank you, Yonah. Good morning, everyone, and thank you for joining us. Our solid first quarter performance continues to demonstrate the resilience of our recurring revenue model and the high utilization rates across our customer base. Our results reinforce our confidence in expanded implementation for years to come. The robust demand for consumables, which grew 7% sequentially, underscores the enduring value placed in Stratasys additive manufacturing systems. Our strategic positioning remains excellent as we continue benefiting from our ongoing investments in R&D that support the introduction of innovative products, materials and software solutions to several customers and enhance our presence as a digital manufacturing leader. Our long-term value creation strategy focuses on high growth end users driven by powerful megatrends. These include supply chain improvement through onshoring, next generation mobility, sustainability initiatives and the continuous pursuit of manufacturing efficiency and cost reduction through a disciplined market-focused approach centered around the most compelling use cases. While paying close attention to our margin profile, we have established the foundation for Stratasys' profitable growth. We have driven our strategy early in the second quarter; we closed on Fortissimo Capital’s $120 million strategic investment in the company, bringing our cash and equivalents to approximately $270 million with no debt. This significant transaction brought Yuval Cohen, Fortissimo Founding and Managing Partner with over three decades of financial experience, to our Board of Directors. His innovative approach has created tremendous value for his firm and the companies in which they have invested, and we look forward to Yuval’s contribution to our Board. Before diving into the quarter, let me touch on how we are thinking about the ongoing tariff situation. Last quarter, we shared that from our perspective, we are relatively exempt from this issue. Most of our printers and materials are produced in the U.S. or in Israel. We are monitoring the news cycle closely, and at this time, we continue to expect no material revenue impact. In terms of our costs, we are reviewing various mitigation scenarios that can be quickly deployed if needed. As a reminder, additive manufacturing is ideally suited as a solution for high tariff environments as it promotes manufacturing locally, quickly and cost-effectively. Tariffs can actually serve as a long-term positive business catalyst, and we look forward to increased activity with our customers as we demonstrate these benefits. Turning to new technology offerings and customer success, beginning with hardware. We launched the Neo800 plus, an advanced stereolithography 3D printer that builds on the success of the Neo800 with significant performance enhancements for industries that benefit from large, accurate, high-fidelity parts. The new model incorporates technology that boosts printing speed by up to 50% while maintaining precision. Enhanced reliability features and real-time environmental monitoring maximize uptime and consistency at faster scan speeds without compromising quality. Together with our GrabCAD print build preparation software, complementary post-processing solutions and a new improved portfolio of materials, the Neo800 plus provides a complete SLA ecosystem that streamlines production workflows for applications in automotive, aerospace, wind tunnel testing, prototyping, and tooling. We launched this exciting new technology alongside Rivian Automotive, an end core customer at the Rapid Trade Show in April. In aerospace, a recent and exciting example of manufacturing flight rate parts is BOOM Supersonic, where our FDM portfolio is helping to build the next generation of supersonic commercial jets. Their XB-1 jet broke the sound barrier during the first quarter, and we were proud that over 350 end-use parts on the aircraft were made using our system. Our FDM also printed over 750 drill guides for use during aircraft assembly, as well as the Starlink mount on the chase plane to support live streaming of the event. As an example of how additive manufacturing has a clear economic advantage, the flight-controlled test ring tooling for the XB-1 resulted in a 90% saving on cost and lead time as compared to conventionally produced alternatives. And we are proud to mark the 10th anniversary of our Fortus 450mc with the launch of the Gen 3 model, an upgraded factory-floor-ready solution designed for high-strength tooling and production applications. With 92% of units installed over the past decade still in use, the Fortus 450mc and its reputation as a reliable FDM workhorse. The new Gen 3 builds on that legacy with bundled hardened components for advanced materials like Nylon 12CF, a license for full access to the Fortus 450mc material portfolio and enhanced processing capabilities with included GrabCAD Print Pro for greater precision and productivity. Additional upgrades in the coming months include support for glass-filled, fire-resistant materials and features to enable faster build times, expanding the systems' application range for jigs, fixtures, and other factory-ready parts. The Fortus 450mc Gen 3 reinforces Stratasys' commitment to delivering reliable, connected solutions that help manufacturers boost output, reduce costs, and streamline operations. On the material side, we reached another significant milestone in our effort to scale and accelerate the adoption of qualified additive manufacturing with the launch of two new validated Antero materials for the Stratasys F900. These were developed through rigorous qualification collaboration with industry leaders, including Northrop Grumman, Boeing, BAE Systems, and several defense organizations, including the U.S. Navy and Air Force. The advanced industrial solution materials meet stringent requirements for mission-critical applications in aerospace, defense, and other highly regulated industries. The materials offer exceptional resistance to extreme temperatures and harsh chemicals, enabling manufacturers to confidently adopt 3D printing with proven reliability, reduced qualification costs, and consistent performance across production sites, empowering faster innovation and deployment of additive manufacturing for qualified end-use applications throughout enterprise operations. We also introduced PolyJet ToughONE, an advanced material that addresses a key point of feedback from our customers, providing PolyJet with functional prototyping capabilities to expand the number of use cases. The material combines exceptional design precision with functional strength for our high-end platforms, enabling engineers and designers to create prototypes and end-use parts without compromising aesthetics and durability. ToughONE allows engineers to move from concept to functional testing faster while maintaining precision and performance, and it integrates seamlessly with other PolyJet materials to enable hybrid models that combine different mechanical properties or colors within a single part. Now, over to Eitan to review our financials. Eitan?

Thank you, Yoav, and good morning, everyone. This quarter demonstrated the continued resilience of our operating model, a key differentiator relative to competitors in our sector, as well as the fast actions of our team as we delivered significant OpEx savings and bottom-line profit despite pressure on revenues. These solid results were thanks in part to a quarter of sequential growth in consumable sales and full run rate contributions from the cost control initiatives we began in the middle of last year. Now let me get into the details of our numbers. For the first quarter, consolidated revenue was $136 million compared to $144.1 million in the same quarter in 2024 as customers continue to defer major capital spending until market uncertainty subsides. Product revenue in the first quarter was $93.8 million compared to $99.2 million in the same period last year. Service revenue was $42.2 million compared to $44.9 million in the same period last year. Within products revenue, system revenue was $31.2 million compared to the $32.9 million we produced in the same period last year. Consumables revenue was $62.6 million compared to $66.3 million in the same period last year. Note that on a sequential quarterly basis, consumables revenue was up approximately 7%. Utilization rates of the systems we have sold remained strong, and we expect consumables revenue to grow on a full year-over-year basis in 2025 relative to 2024. Within service revenue, customer support revenue was $30 million compared to $31.4 million in the same period last year. Now turning to gross margin. GAAP gross margin was 44.3% for the quarter, compared to 44.4% for the same period last year. Non-GAAP gross margin was 48.3% for the quarter compared to 48.6% in the same period last year. The modest decline compared to the prior year was driven in part by the lower revenue. GAAP operating expenses were $72.6 million, 53.4% of revenue compared to $88.4 million or 61.3% of revenue during the same period last year. The reduction in expenses was due to our cost savings initiatives and by not having the expenses associated with the strategic review process that we conducted in 2024, among other items. Non-GAAP operating expenses were $62.6 million, 46% of revenue compared to $71.2 million or 49.4% of revenue during the same period last year, due primarily to lower employee-related costs, including benefits from the cost-saving initiatives announced earlier last year. Regarding our consolidated earnings. GAAP operating loss for the quarter was $12.4 million compared to a loss of $24.5 million for the same period last year. Non-GAAP operating income for the quarter was $3 million compared to an operating loss of $1.2 million for the same period last year, reflecting the impact of reduced operating expenses due to our cost-cutting efforts. GAAP net loss for the quarter was $13.1 million or $0.18 per diluted share compared to a net loss of $26 million or $0.37 per diluted share for the same period last year. Non-GAAP net income for the quarter was $2.9 million or $0.04 per diluted share compared to a net loss of $1.7 million or $0.02 per diluted share in the same period last year. Adjusted EBITDA was $8.2 million for the quarter compared to $4.1 million in the same period last year. From a cash flow perspective, we generated $4.5 million in cash from operating activities compared to $7.3 million in the same period last year. We ended the quarter with $150.1 million in cash, cash equivalents, and short-term deposits, relatively flat compared to year-end 2024. Our balance sheet remains strong, currently at $270 million and no debt after being bolstered by the $120 million in cash contributed by Fortissimo's investment in Stratasys in early April, strengthening our ability to act on value-enhancing opportunities. Now let me turn to our outlook for 2025. We are reiterating our expectation that full year 2025 revenues will range between $570 million to $585 million, with revenues growing sequentially through the year. We are also reaffirming non-GAAP gross margin, operating expenses, operating margins, adjusted EBITDA, and capital expenditures. And we expect to see year-over-year growth in both operating and free cash flow. Please refer to the press release for additional details. We are raising our earnings per share outlook. As a result of the Fortissimo investment, our share count as of April 8 went up by approximately 11.65 million shares. Our outlook assumes the Fortissimo investment will generate interest income throughout the entire year of 2025, and that this interest income will more than offset the dilution to our earnings from the higher share count. As a result, we are raising our earnings forecast as follows. We now expect GAAP net loss to be in a range of negative $64 million to negative $49 million, an improvement compared to the previous range of negative $68 million to negative $53 million. We also now expect GAAP EPS to improve to a range of negative $0.80 to negative $0.61 per diluted share compared to the previous range of negative $0.93 to negative $0.72. We are also increasing our non-GAAP net income guidance to a new range of $24 million to $30 million compared to the previous range of $20 million to $26 million and EPS to a range of $0.30 to $0.37 per diluted share compared to the previous range of $0.28 to $0.35 per diluted share. With that, let me turn the call back over to Yoav for closing remarks. Yoav?

Thank you, Eitan. Our start to 2025 establishes a solid foundation for the year ahead. Stratasys is exceptionally well positioned, thanks to our strategic cost management initiatives, continuous product innovation, and growing integration into our customers' manufacturing workflow. Our strong financial position, bolstered by the Fortissimo investment, expands our capability to pursue both organic growth opportunities and strategic acquisitions that align with our vision for accretive expansion. We have refined our strategic focus to target the most promising applications while enhancing our customer engagement approach through improved go-to-market strategies and comprehensive user education programs. Our unwavering commitment to increasing profitability while maintaining financial discipline ensures we are optimizing for both near-term performance and long-term value creation. With our strong portfolio across systems, consumables, and software, Stratasys is ideally positioned to capitalize on market momentum when the capital investment cycle accelerates. With that, let's open it up for questions. Operator?

The first question is from Brian Drab from William Blair. Please go ahead.

Good morning. Thank you for taking my questions. It's great to see that you are off to a solid start this year. I would like to clarify something regarding the tariffs. When you import a system from Israel to the United States, how do the tariffs impact you? Do you incur the tariff on the cost of goods since you are shipping it from Israel to your headquarters before distributing it? How is this affecting your current cost of goods?

Thank you, Brian. Yes, exciting times we are experiencing now. So just addressing directly your question, when we are importing from Israel to the U.S., we pay on the cost of goods sold, and currently, the new tariff is 10% for the next 90 days, at least. Who knows? Not material, to be honest.

Okay. Understood. That was my understanding, and I just wanted to check. And then the second question is what type of economic situation are you embedding into the forecast for the second half? There are a lot of expectations for challenges in North America and the United States and Europe for a challenging macro environment. It feels from the call like you're fairly optimistic about the second half of the year. So I want to understand how you're viewing the situation.

Thank you, Brian. Given the current uncertainty in the market, we have reaffirmed our guidance based on the visibility we have at this time. Our projections indicate that the second half will generate slightly more revenue than the first half, which is consistent with our experience in most years, and this also accounts for seasonal trends. I want to remind everyone that, as we noted in our previous call, our short-term focus has been on securing our bottom line this year to achieve an 8% EBITDA. If the market recovers sooner, that will certainly enhance our position. Our priority has been to ensure EBITDA stability. Additionally, as we've mentioned before, we are seeing sequential growth every quarter, including in Q2, and we expect the second half to be stronger than the first half.

Yes. And it's clear that there is uncertainty here, but we still stick to this forecast that there will be a slight increase quarter-over-quarter, also a slight increase in Q2. It's like a personal wish that sometime in the future, things will stabilize, and there will be a new equilibrium. The nice thing here is that we are working internally on the cost structure and on the assets that we have, like the relationship with our customers, the position in aerospace and defense and key use cases, making sure we are delivering the best service. So when manufacturing returns to normal, we are in the best position to capture profitable growth going forward.

The next question is from Greg Palm from Craig-Hallum, please go ahead.

Yes, thanks. This is Danny Eggerichs on for Greg today. Congrats on the good results. I think let's hit on consumables here. Obviously, as you mentioned, kind of a nice bounce back quarter after a little bit of softness last quarter. Maybe just a bit more color on what you kind of saw throughout the quarter in terms of activity utilization, how that trended through the quarter and what you've seen so far through April with your customers?

Sure. Thank you, Danny. So as you mentioned, we're back, and I believe that in the last call, we discussed this as well. We're back to the $62 million, $63 million level. We do see higher utilization as we progress into manufacturing more and more, and that's something that we've discussed in the previous calls as well. We still expect 2025 full year consumables to be higher than the 2024 full year consumables revenue. So we do see the demand. And quarter-by-quarter, of course, we will continue to deliver. Again, it's more and more shifting to manufacturing that has higher utilization and more consumables, of course.

Now that we have received the cash infusion from Fortissimo, how should we approach capital allocation in the future? Should we consider an increased focus on mergers and acquisitions in the near term? We also have the buyback in place, so how should we evaluate our options?

Yes. Thank you for the question. So as we know, the industry continues to consolidate. Our industry is struggling, and the result is the shakeout and consolidation. You know all the examples. The primary expected use of the capital from Fortissimo is inorganic growth. As we said also last quarter, we had the privilege over the last few years to learn the industry in depth through several processes. So we really understand the environment. We understand the peers, and we have a good understanding of the industry and the potential value creation. Now add to it the market prices of the assets currently that exist in the market. Those are great opportunities, and we are in the driver's seat practically to capture this value creation because we work so hard and our teams work so hard to create a stable, financially healthy company, which puts us in a good position going forward. We'll do, of course, only moves that make sense and are completely aligned with our strategy, which is focusing on proven use cases to penetrate manufacturing full solutions, building recurring revenue models. We believe in recurring revenues in material and software. All the consolidation has to align with our strategy, and we are keeping profitability in mind, whatever we will do. This is a priority for us.

The next question is from Troy Jensen from Cantor Fitzgerald. Please go ahead.

Hey, gentlemen, congrats on the sustained profitability here. Maybe to that point, to start with you, Eitan, just R&D spending down a lot sequentially and kind of well below where it's been all of last year. Can you just talk about what was cut primarily? And then is this the kind of run rate you think on R&D going forward?

Sure, Troy. So first of all, it's not a cut; it was a focus. If you go back to the second quarter 2024 earnings call, when we announced the restructuring plan, I believe that we discussed this thoroughly. We continue to invest in R&D in the right areas, in the right technologies, in the right use cases. I think I mentioned before, if you look at our R&D as a percentage of revenue, we continue to deliver to keep it at a level that is very similar to the multi-year R&D percentage. So this is, in fact, proving the continuous investment. It's just more focus; it's not a cut, and that's consistent with our plan.

Okay. All right. And then maybe for Yoav here, I just want to talk generically about the low end. I know you guys got your subsidiary with Ultimaker, MakerBot, but competition from Bambu Lab, and what is it doing to just kind of F123 sales?

Thank you, Troy, for the question. Maybe just to add to what Eitan said about R&D, I want to mention that we have excellent teams across our different technologies, which prioritize reliability above everything. I will connect it to Bambu Lab. We put reliability above everything. Since you have good relationships in the industry, you can also talk with our customers; the one big differentiation that we have is that our additive works, and it's industrial grade. Now let's take it to Bambu Lab and the low end. This is not our area. From the beginning when I joined Stratasys five years ago, I said, prototyping is great, but it will be commoditized. The low end prototype will be commoditized. This is not the way to leverage the unique assets and capabilities that Stratasys has. We have amazing relationships with the key players in the key verticals like aerospace, defense, automotive, dental, and medical; those guys will never buy Bambu Lab. Just between us, they will never buy Bambu Lab. Why? Because they care about reliability. They care about the total cost of ownership, which is the full solution. They care about how accurate the part is and the properties of the part, and they care about someone that will be there for them for enablement and service. This is our focus, okay? It takes time. We are penetrating into manufacturing. It’s good, by the way, that the industry is growing and at the low end, people are more exposed and have awareness of additive manufacturing. But when they want to move from a toy to a real machine, they will go to Stratasys. I think it’s good for all of us that everyone is doing well. We are focusing, as I said, just to sum up on industrial manufacturing in the high end of the market, where we will continue to add value. Even our F123 can deliver properties and geometries that the current new machines cannot deliver. And this is our market, and this is our focus.

I would agree 100% on your guys' reliability I hear all the time from the users. So keep up the good work there, and I'm excited to see what Yoav is going to do with the Board changes here. But I mean with his position on the Board, but thank you.

The next question is from Ananda Baruah from Loop Capital Markets. Please go ahead.

Yes, guys, good afternoon. Thanks for taking the questions. Really appreciate it. I guess just two, if I could, sort of at a higher level, with regards to maintaining or reiterating the 2025 guide. Are you guys loud and clear that you aren't seeing any business deterioration yet? Are you having any conversational context that you're having with larger customers that you could share to help us get a sense of how they're thinking about things and what's having them not alter their forecast yet in the big picture? And then I have a quick follow-up.

Thank you, Ananda. It's kind of a unique situation that we are facing. On one hand, there is so much uncertainty; macro conditions are not supportive. We see hesitation. We see longer sales cycles. This doesn't bear fruit. On the other hand, engagement and our customers are highly engaged and look and explore additive as a tool or a mitigation to the uncertainties. So the demand behind the scenes is strong, but there is definitely a constraint on capital expenditure, no doubt. That's why we need to take a deep breath, keep doing the great job that we are doing, leveraging our assets and delivering the message of the absolute advantage that additive manufacturing has in different use cases. We benefit our customers with onshoring, with lower costs, with better geometries, and with personalization. Only additive can do it. We shouldn't focus now on the gloomy world and the uncertainty that we are seeing. We should focus on profitability, a model of cost that is agile and sustainable and improving our solution that when manufacturing will come back to normal, we are there, and we will deliver to the pent-up demand of our customers. This is the idea. I think that there is no one better than Stratasys once we are back to the upward cycle, and it will happen. It will happen.

That's really good context. And let me ask maybe a little bit of a sexier question here. This is another big picture one. I don't think I asked this of you 90 days ago. But just this whole conversation that's amplified a little bit more over the last 12 months around manufacturing factory automation that's been GenAI catalyzed and NVIDIA has given, I think, in the last 13, 14 months, like four on-stage long-form presentations around the increased use of robotics energized by GenAI, you guys fit very nicely into that whole automation conversation. I guess really the question is, is there work going on between you guys and that whole GenAI community, robotics community, broader automation community to sort of connect into and see whatever that NVIDIA vision is? I know that it's not just NVIDIA doing it; there's a whole ecosystem of companies. They seem to be like the flag bearers over the last 13, 14 months in propagating the vision sort of the next step forward. So you guys would seem to fit that conversation really snugly. Just wondering if it's the time where there are efforts actually taking place to sort of further bring together the various communities or if it's too early to do that? Just trying to get a sense of that.

Thank you so much for the question. And full disclosure, we didn't ask you to ask it. Yes, the answer is yes. This is the nice thing about additive; we are a digital solution. The world is becoming more and more digital, and on top of it, we are moving to GenAI and robotics and automation. Robotics and automation are benefiting tremendously from additive manufacturing. Why? Because all the advantages of additive are there. You need special geometries. You need to consolidate parts. You need a way to have very small batches of production. On top of it, when we are talking about AI, the whole way and methodology of designing and delivering parts will move to artificial intelligence. We will stick to the computer, and we will create digital files that will be printed and used in end-use parts and also in finished goods and models. We have a unit that is focusing on it. We already have an AI solution out there based on the Riven acquisition that we had a couple of years ago, where we are correcting the parts based on AI because one of the main challenges of additive is the ability to have repeatability and accuracy at first print. We have so much data, and we will leverage all the data that we have to make sure that at first print, you get the best part. We are also working on a service model with AI, predictive service model, and so on and so forth. The way we look at it strategically, looking at the big picture, we have relationships with the top corporates in the world. We are asking them, what are you expecting from us on AI? This is one stream, and we call it the Customer Advisory Board. In addition, we have this unit that works independently, brainstorming and trying to innovate on artificial intelligence and how it can transform additive. Very exciting, I have to say. Very exciting, and we work with our customers, customer advisory boards like Boeing, Lockheed, Northrop, Toyota, GM, and so on.

There are no further questions at this time. I would like to turn the floor back over to Yoav Zeif for closing comments.

Thank you for joining us. Looking forward to updating you again next quarter.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.