SSYS Q2 Deep Dive: Lower Guidance Cites Delays in Large Deals, Cost Controls Offset Margin Pressures

3D printing company Stratasys (NASDAQ:SSYS) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, but sales were flat year on year at $138.1 million. On the other hand, the company’s full-year revenue guidance of $555 million at the midpoint came in 2.9% below analysts’ estimates. Its non-GAAP profit of $0.03 per share was in line with analysts’ consensus estimates.

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StockStory’s Take

Stratasys reported flat sales year over year in Q2, with revenue coming in slightly above Wall Street’s expectations but the market reacting negatively given cautious management commentary and persistent delays in customer capital spending. CEO Yoav Zeif pointed to disciplined customer behavior and longer sales cycles, particularly for large production deals, as central challenges. Zeif described the environment as one where “customers maintain disciplined capital spending approaches as they await signs of normalcy to emerge,” highlighting that while engagement remains high, many significant deals have yet to close.

Looking ahead, Stratasys’ trimmed guidance for the rest of the year reflects delays in closing large production contracts, with management emphasizing that these deals are postponed but not canceled. CFO Eitan Zamir explained that guidance now assumes minimal contribution from these delayed opportunities, with cost reductions expected to support margins through year-end. Zeif acknowledged the extended sales cycles but maintained that Stratasys’ exposure to high-value use cases in automotive, aerospace, and medical sectors positions the company for growth when customer investment confidence returns.

Key Insights from Management’s Remarks

Management attributed the muted quarterly performance to slower-than-expected customer decision-making and a shift toward larger deals with extended sales cycles, while ongoing investments in product and software innovation were highlighted as long-term positives.

• Delayed large production deals: Management emphasized that a key driver of the quarter was the deferral—not cancellation—of major contracts, especially in automotive, aerospace, and other manufacturing segments. CEO Yoav Zeif clarified, “There is no slowdown. There is only delay,” as customers take longer to commit to significant investments in production-level 3D printing.
• Automotive and aerospace partnerships: Stratasys cited its relationships with General Motors and Toyota, where its additive manufacturing systems are now standardized in multiple plants, as proof points for the technology’s value in real-world production. These collaborations resulted in measurable cost and lead time reductions for customers, supporting Stratasys’ long-term strategy.
• Recurring revenue stability: Despite delays in new orders, the company’s recurring service and consumables revenue streams held steady, underscoring the resilience of its installed base and usage-driven business model.
• Cost controls drive margin improvement: The company’s improved operating margin was attributed to ongoing cost-saving initiatives, including reductions in discretionary spending and operational efficiencies, with Zamir noting that planned cost mitigation will continue to benefit results, especially in Q4.
• New product and software launches: Stratasys highlighted the opening of its North American Tooling Center and the launch of new materials and software integrations, such as P3 Silicone 25A and enhanced GrabCAD PrintPro features, which are aimed at expanding the addressable market and improving customer workflow efficiency.

Drivers of Future Performance

Stratasys’ outlook is shaped primarily by the timing of large contract closures, continued cost discipline, and the ramp of new products targeting high-value applications.

• Large deal timing remains uncertain: Management stated that several substantial contracts could close later than initially expected, impacting short-term revenue but potentially benefiting 2026 results. These deals, spanning automotive, aerospace, and dental, are viewed as transformative but come with elongated decision cycles.
• Cost mitigation to support margins: CFO Eitan Zamir detailed ongoing efforts to limit non-essential spending and discretionary costs, which are expected to offset some margin pressures from tariffs and product mix shifts. The company expects further benefits from these controls in the fourth quarter.
• New offerings target growth verticals: Stratasys is investing in product and software innovation, such as its F3300 system and specialized materials, to strengthen its position in manufacturing, healthcare, and aerospace. Management believes these offerings will drive adoption when macroeconomic conditions stabilize and capital spending resumes.

Catalysts in Upcoming Quarters

In coming quarters, our team will focus on (1) the pace at which delayed large production contracts in automotive, aerospace, and dental move to closure; (2) the realization of planned cost savings and their impact on margins, especially in the fourth quarter; and (3) the adoption and performance of new product and software launches, including the F3300 and new material platforms. Progress on upsell opportunities with existing enterprise customers will also be a key indicator.

Stratasys currently trades at $10, down from $11.38 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).

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