Stratasys boosts its consistent cash flow from consumable sales
Stratasys Ltd. (SSYS), a pioneer of 3D printing technology, has released its first-quarter earnings report. The corporation expands sales of high-margin consumables and components, resulting in increased profitability. Stratasys, like many other creative businesses, suffers losses as a result of the expense of integrating new technology into existing manufacturing processes. However, the report for the first quarter of 2022 highlighted Stratasys’ potential to increase profitability. Stratasys’ gross margin climbed to 42.6 percent in the latest quarter, while sales increased to $163.4 million from $134.2 million a year ago.
The GAAP loss per share remained at $0.32. The Stratasys corporation is expanding its 3D printing capabilities, including for medical applications. As a consequence, the sale of consumables and replacement parts generates a consistent cash flow. This is a tried-and-true business strategy known as “razor and blades”: “razor” (basic equipment) is offered for a low price, and the company’s major profit comes from “blades” (consumables and parts). The first quarter of 2022 at Stratasys was the company’s most profitable in six years. In addition to increasing profitability, the company increased 36.7 percent its sales of 3D printers, associated materials, and services.
Despite fierce competition, strong sales of Stratasys plastic for printing are an encouraging indicator. Although there are many other polymers for 3D printing on the market, customers choose Stratasys materials. The freshly obtained Origin P3 printers, as well as the Stratasys Neo line, which is built for large-scale manufacturing, are selling well. This is particularly significant since 3D printing is rapidly becoming a full-fledged industrial technology while it was previously limited to specific applications such as prototyping. For Stratasys, scaling means raising sales and profits even more.
