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3D printer maker Stratasys (NASDAQ:SSYS) reported strong second-quarter results, and there are multiple indications that usage of the company’s products is increasing. Meanwhile, Wall Street appears to be enthusiastic about the results, as two research firms were bullish on the company following the news, and SSYS stock reached levels not seen since March.
Stratasys’ Q2 earnings per share came in at 15 cents, versus the consensus estimate of six cents per share. It reported revenue of $170.24 million, beating the consensus outlook by $3.2 million. Moreover, it reiterated its fiscal 2018 revenue guidance of $670 million-$700 million, versus the consensus estimate of $669 million.
Increased Utilization Will Eventually Boost SSYS Stock
More importantly, the company made multiple statements indicating that customers are using its products much more frequently. Specifically, Stratasys noted that its revenue from consumables, which refers to materials that are used and depleted in conjunction with 3D printers, rose 4.8% year over year last quarter. Stratasys stated that the increase “reflects strong utilization of (its) installed base of systems.” Meanwhile, the company’s customer support revenue surged nearly 10% YoY, also likely reflecting increased usage of its products.
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Stratasys’ revenue from sales of its 3D printers, which it calls “systems revenue,” slumped 8.2% versus the same period a year earlier. But the apparent increase in utilization of the company’s products will eventually lead to increased systems revenue, as the company’s customers have to buy new printers to replace those that have been worn out.
Indeed, the company reported that the sales of its higher-end printers to North American customers have already begun to recover. Going forward, increases in high margin consumable and maintenance revenue, along with eventual jumps in the company’s systems revenue, will meaningfully boost Stratasys’ results and SSYS stock.
Strength In Key Markets Will Boost SSYS Stock
Meanwhile, Stratsys reported that its North American customers in the fields of government, aerospace and automotive were becoming more “committed” to utilizing its 3D printing products.
Along with many others, I have believed for many years that 3D printing would be most widely adopted by the manufacturers of industrial products that are made of many complex parts, all of which have to be precisely made. Common sense dictates that machines will be able to make such parts much more cheaply and reliably than human workers. Automobiles and planes definitely have many complex parts that need to be made precisely. Weapons systems and vehicles made by militaries are also in that category.