3D printing company Stratasys (NASDAQ: SSYS) met Wall Streets revenue expectations in Q3 CY2025, but sales fell by 2.2% year on year to $137 million. The company’s outlook for the full year was close to analysts’ estimates with revenue guided to $555 million at the midpoint. Its non-GAAP profit of $0.02 per share was $0.02 above analysts’ consensus estimates.

Is now the time to buy SSYS? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Stratasys’ third quarter results met Wall Street’s revenue expectations, but the market reacted negatively as year-over-year sales declined and margin pressures persisted. Management attributed the top-line softness to continued macro-driven caution in capital equipment spending, particularly in industrial and manufacturing sectors. CEO Yoav Zeif emphasized that cost discipline and operational efficiencies were key in generating positive operating cash flow and non-GAAP earnings. He pointed to “strong execution by our team to leverage notably improved lower adjusted operating expenses by 440 basis points year over year,” even as gross margin remained under pressure from higher tariffs and unfavorable product mix.

Looking forward, Stratasys’ full-year guidance is anchored by expectations that targeted price increases and ongoing cost optimization will help offset external headwinds. Management remains focused on verticals such as aerospace, defense, and dental, where the company believes its additive manufacturing technologies offer compelling efficiency and supply chain localization benefits. CFO Eitan Zamir noted, “We expect profitability to benefit from our ongoing efforts to drive cost reductions along with our additional plan to mitigate the impact from higher tariffs with select price increases.” The company is also investing in new leadership and product innovation to capture growth in specialized applications.

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to persistent macro caution in capital equipment, while highlighting progress in aerospace, defense, and dental verticals as areas of strategic focus.

• Aerospace and defense traction: The company reported increased hardware sales to leading aerospace and defense customers, such as Boeing, Embraer, Honeywell, and L3 Harris. Management cited successful demonstrations with the U.S. Navy and a growing role in distributed manufacturing for mission-critical parts, highlighting additive manufacturing’s ability to address supply chain challenges and reduce turnaround times.

• Strategic wins in technology and pharma: Stratasys secured a notable order from a major U.S.-based technology company for its F3300 systems, initially for prototyping and later for production parts in virtual and augmented reality products. The adoption of the H350 platform by a top-three global pharmaceutical company was described as a significant step into new medical device and drug development opportunities.

• Dental investments and leadership: The company appointed Chris Cabot as VP and Global Head of Dental, aiming to accelerate growth in digital dentistry. Stratasys also launched the SoftRelax post-processing solution to reduce manual labor for dental operators and proactively removed a controversial chemical (TPO) from its dental resins, emphasizing patient safety and sustainability.

• Cost management and margin actions: CFO Eitan Zamir highlighted ongoing cost-saving initiatives, including a reduction in non-GAAP operating expenses through lower employee-related costs and operational efficiency. Management also implemented selective price increases to help offset the impact of higher tariffs, with the full effect anticipated in the next quarter.

• Shift in product and customer focus: The company is prioritizing high-value manufacturing use cases over entry-level prototyping, aiming for higher consumables usage per machine and deeper penetration in industrial verticals. Management expects this shift to drive incremental revenue and material consumption over time.

Drivers of Future Performance

Stratasys’ outlook is shaped by efforts to expand in high-margin verticals, manage tariff headwinds, and leverage operational improvements.

• Expansion in core verticals: Management believes that deeper penetration into aerospace, defense, and dental applications will drive future revenue, as these sectors increasingly adopt additive manufacturing for supply chain resilience and product customization. CEO Yoav Zeif emphasized the growing adoption in these areas, stating they are “just getting started” with significant opportunities ahead.

• Gross margin recovery initiatives: The company is implementing selective price increases to offset recent tariff hikes, with management expecting improvement in gross margin beginning in the next quarter and continuing into the following year. Cost discipline and operational efficiencies remain central to sustaining profitability.

• Risks from macro environment and product mix: While Stratasys is seeing early signs of shorter sales cycles in targeted verticals, management recognized that broader capital equipment demand remains subdued. The company’s shift away from low-margin prototyping toward industrial manufacturing may temporarily pressure top-line growth as it transitions its customer base.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be monitoring (1) the effectiveness of recently implemented price increases and their impact on gross margin, (2) the pace of adoption in key end-markets such as aerospace, defense, and dental, and (3) the company’s ability to maintain cost discipline while investing in R&D and sales. Execution on high-value manufacturing opportunities and the scaling of new leadership in dental will also be critical signposts for progress.

Stratasys currently trades at $9.34, down from $9.53 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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