Stratasys Ltd. Aktie

Good day, and welcome to today's conference call to discuss Stratasys' First Quarter 2026 Financial Results. My name is Darryl, and I'll be your operator for today's call. And now I'd like to hand the call over to Yonah Lloyd, Chief Communications Officer and Vice President of Investor Relations for Stratasys. Mr. Lloyd, please go ahead.

Good morning, everyone, and thank you for joining us to discuss our 2026 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 provided 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 report on Form 20-F for the 2025 year.

Please also refer to that annual report, along with our reports filed with or furnished to the SEC throughout 2026 for additional operational and financial details. Reports on Form 6-K that 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 first quarter results reflect the continued resilience of our operating model in a measured spending environment. Recurring revenue streams from consumables and customer support continues to provide stability, while printer purchasing time lines remained extended as customers exercise capital discipline amid ongoing global uncertainty. Meanwhile, we remain focused on executing our strategy to grow as we deepen our penetration into manufacturing.

On a sequential basis, compared to the fourth quarter of 2025, consumables and services both grew slightly, and Stratasys Direct delivered over 10% sequential growth and 23% organically after divestments when compared to the first quarter of 2025, reinforcing the trajectory of our production parts business as was the case for the full year 2025. The top 3 parts customers were again all U.S.-based drone-related companies. But note that Stratasys Direct produces and use parts across a wide variety of industrial applications using Stratasys printers almost exclusively, demonstrating the versatility of our technologies and the view into its potential future benefits.

At the same time, we continue to make meaningful strategic progress. Innovation, customer engagement and market development remain the foundation of our long-term growth strategy, one that centers on secular megatrends of supply chain protection and operational efficiency, reshaping global manufacturing. Nowhere are these megatrends more pronounced than in aerospace and defense, where mission-critical performance requirements, supply chain resilience mandates and expanding U.S. Department of War investment in advanced digital manufacturing are creating a strong structural demand environment.

To that point, we believe Stratasys is uniquely positioned to win. In a tariff-sensitive environment, in particular, our platform's ability to enable local, rapid and cost-effective production is a genuine competitive advantage, one we continue to highlight in customer conversations and one we expect will accelerate adoption over time.

Turning to new technology developments and customer activity. In aerospace and defense, we continue to demonstrate the depth and durability of our position this quarter. As a reminder, Stratasys has deployed thousands of systems across aerospace and defense production environments worldwide. We serve as a program of record for the U.S. Air Force and NAVAIR. Our technology is embedded across active platform from C-17 microvanes that save an estimated $14 million annually in Air Force fuel costs to certified flight-ready parts produced for the world's leading aircraft manufacturer.

Stratasys Direct, our parts manufacturing division, ships over 100,000 parts annually to the defense industry and operates under certified quality systems, including AS9100, ISO 9001 CMMC compliance and ITAR requirements. This is not prototype stage or pilot stage engagement. This is production scale additive manufacturing at operational tempo for the most demanding customers in the world. Against that backdrop, our selection in the first quarter for the U.S. Department of War's Joint Additive Manufacturing Acceptability IV pilot parts program is a meaningful endorsement. Gamma 4 is a multimillion-dollar initiative to accelerate the qualification and deployment of 3D printed parts across military platforms and Stratasys Direct was selected on the basis of its proven production role across thousands of active military systems.

The program positions us to extend our share of U.S. defense additive spending, a budget which surged 83% for fiscal year 2026 and continues to flow into qualification and deployment for the Department of War. More broadly, our customer engagement across leading aerospace contractors and OEMs remains substantive with use cases advancing through qualification pipelines from production tooling to certified flight-ready components.

These cycles are long, but the outcomes generate durable recurring demand, anchored in certification and workflow integration, exactly the kind of revenue profile that strengthens our business over time. And we are seeing continued momentum in high reliability aerospace applications with thousands of parts in orbit, leveraging our materials. In fact, on the recent Artemis II moon mission, hundreds of components produced with Stratasys Antero materials on our FDM system were flown, highlighting the maturity and scalability of additive manufacturing in space systems. This is a strong validation of the high-performance applications of our materials and our position in mission-critical environments, reinforcing the growing role of additive in next-generation space and defense platforms.

In Dental, we reached an important regulatory milestone. TrueDent Resin received CE Class IIa medical device certification, making TrueDent the first polychromatic monolithic 3D printed denture solution. Certified at this classification in Europe, a segment projected at $2.45 billion by 2028. This upgrade from the prior CE Class I designation extends TruDent's indications to include long-term intraoral removables and crowns and bridges, broadening the range of restorative cases dental laboratories can address through a single integrated digital workflow.

CE Class II is a regulatory classification. Clinicians and laboratories routinely expect for restorative dental materials. Achieving it removes a meaningful adoption barrier strengthens biocompatibility and safety confidence for clinicians and patients and positions Stratasys to deepen penetration across European dental labs and clinics as digital denture production scales.

Importantly, the transition to Class IIa requires no change to print setting formulation workflow or shelf life on our J5 DentaJet platform, making this a frictionless expansion of our commercial reach in regulated European regions. We believe we are building the commercial and regulatory foundation for meaningful growth in this vertical. On the material and software side, we continue to invest in expanding what our installed base can do. ULTEM 1010 resin is now available as filament for the F3300 printer, enabling the production of aerospace-grade high-temperature parts with the lowest coefficient of thermal expansion in FDM portfolio.

Optimized for composite tooling applications, ULTEM 1010 on the F3300 allows manufacturers to produce precision fixtures and tools that maintain reliability in demanding environments and to do so faster at lower cost per part relative to prior configurations. And on our PolyJet systems, we recently expanded TUF1 to be available on the J3 and J5 series. TUF1 is an advanced material engineered for strong, durable functional prototyping as well as end-use parts. Materials extensions like these are designed to further drive consumable attach rate and deepen application coverage.

On the software side, measurement-based warped adaptive modeling has been integrated into GrabCAD Print Pro, using measure dimension data to automatically correct warping on the Origin P3 platform. For complex parts like electrical connectors, precision jigs and industrial fixtures, this eliminates the iterative correction cycle that have historically added time and cost, and it delivers a meaningfully better experience for customers scaling production on our DLP platforms.

With that, I will turn the call to Eitan to review our financials. Eitan?

Thank you, Yoav, and good morning, everyone. Our first quarter results reflect continued execution against the operational priorities we established at the start of the year. In an environment where customers remain deliberate on capital spending, we maintained adjusted EBITDA profitability and generated positive operating cash flow, outcomes that reflect both the structural improvement embedded in our cost model and the stability of our recurring revenue base.

Let me get into the details. First quarter consolidated revenue was $132.7 million, down approximately 2.4% year-over-year. Product revenue in the first quarter was $88.8 million compared to $93.8 million in the same period last year. Within product revenue, system revenue was $28.8 million compared to $31.2 million in the same period last year. Consumables revenue was $60 million compared to $62.6 million in the same period last year. Service revenue, which includes Stratasys Direct was $43.9 million compared to $42.2 million in the same period last year, driven by 23% organic growth after divestments in Stratasys Direct as compared to the first quarter of 2025. Within service revenue, customer support revenue was $29.7 million compared to $30 million in the same period last year.

Now turning to gross margins. GAAP gross margin was 41.7% for the quarter compared to 44.3% for the same period last year. Non-GAAP gross margin was 46.3% for the quarter compared to 48.3% in the same period last year. The change was primarily due to the 180 bps impact of $2.4 million of year-over-year incremental tariff expense as well as from lower revenue.

While we typically do not reference sequential margin improvement, we believe that despite the reduction in revenue from fourth quarter, margins were sequentially flat, marking a positive mix efficiency. GAAP operating expenses were $81.9 million compared to $72.6 million during the same period last year. The rise in expenses was primarily due to an increase in professional fees and the impact of foreign currency exchange due to the significant appreciation of the new Israeli shekel relative to the U.S. dollar.

Non-GAAP operating expenses were $64.6 million compared to $62.6 million during the same period last year. The increase was primarily due to the impact of foreign currency exchange rates given the increased strength of the shekel against the dollar of approximately $3.1 million. Regarding our consolidated earnings. GAAP operating loss for the quarter was $26.5 million compared to a loss of $12.4 million for the same period last year. Non-GAAP operating loss for the quarter was $3.2 million compared to operating income of $3 million for the same period last year.

Adjusted EBITDA was $2 million for the quarter compared to $8.2 million in the same period last year. The change in both was primarily due to the impact of approximately $5.3 million of FX and tariff pressures. GAAP net loss for the quarter was $23.8 million or $0.28 per diluted share compared to a net loss of $13.1 million or $0.18 per diluted share for the same period last year.

Non-GAAP net loss for the quarter was $1.3 million or $0.01 per diluted share compared to a net income of $2.9 million or $0.04 per diluted share in the same period last year. From a cash flow perspective, we generated $2.4 million in operating cash flow in the first quarter, reflecting working capital discipline and the structural cost improvements we've embedded over the past several quarters.

This builds on the $15.1 million in operating cash flow we delivered for the full year of 2025, and we remain confident in our ability to expand cash generation as revenue scales through the year. We ended the quarter with $237.8 million in cash, cash equivalents and short-term deposits. Our balance sheet remains strong and debt-free, providing the financial flexibility to continue investing in technology, market development and inorganic opportunities to drive further growth.

Regarding our outlook for 2026, our first quarter performance is consistent with the framework we established at the start of the year, and we are reiterating the full year guidance we provided on our last call. Revenues are expected to range between $565 million to $575 million, growing sequentially each quarter through the year, and we expect 2026 consumable revenue to increase over 2025. Please refer to the press release or slide presentation for further details. With that, let me turn the call back over to Yoav for closing remarks. Yoav?

Thank you, Eitan. Coming out of the first quarter, our customer engagement continues to increase, and our deal pipeline for 2026 and beyond continues to build, especially in defense. The strategic progress we shared today reinforces the trajectory we plan for tomorrow.

Our solutions for the defense industry are no longer just emerging, but are established, certified and operating at scale across active military platforms. We have increased access to multibillion-dollar regulated European dental vertical. With a product already proven and deployable without workflow disruption, supported by positive operating cash flow and a debt-free balance sheet, we have built multiple opportunities to generate profitable growth, both through inorganic and organic opportunities, focusing on our position in high requirement use cases as we capitalize on the increased demand for additive manufacturing solutions.

With that, let's open it up for questions. Operator?

[Operator Instructions] Our first questions come from the line of Greg Palm with Craig-Hallum.

This is Jackson Schroeder on for Greg Palm. I wanted to start on this defense opportunity, everyone obviously seeing the top line budget request. Curious if you could really talk on opportunities, particularly outside of drones with what's happening in Iran ammunitions replenishment. There's a lot of opportunities here as well as the JAMA IV program. So I just want to get some more color on that.

Thank you, Jackson, for the question. So let me take a step back and talk a little bit about aerospace and defense because this is, to be honest, a leading vertical today with a very promising pipeline. So when we are looking at aerospace and defense, what we are experiencing is part of what's going on in the industry.

Practically, aerospace and defense, this industry is going through transformation globally, by the way, not only in the U.S. And the transformation is both in terms of the increased budget, like numbers that we haven't seen in the past and also new solutions like drones, but also ammunitions, missiles and others. So we see it across the board, not only in drones.

And we have, for example, parts in missiles, which are a very strong growing area in defense. And no doubt that additive manufacturing AM is playing and probably will play a major role in this transformation because we deliver things that no other advanced manufacturing methodology can. We are more agile. We are in the front where you need to produce, we are versatile. We secure the supply chain, and we can deliver lightweight geometries that no other manufacturing methodology can.

You put all this together and Stratasys is in the best position to benefit from this transformation because we worked on this for years. We have relationship with the Department of War now. Used to be Department of Defense. We have relationship with the large OEMs. Practically all the leaders in defense are sitting in our customer advisory board, and they are having an impact on our R&D as well. So they know what we are developing for them.

On top of it, we have relationship with key bodies that are adopting additive like NAVAIR, like the U.S. Air Force and others. So we are talking here about very strong position that is also supported by our Stratasys Direct. Stratasys Direct grew 23% year-over-year, led by drones, but also other applications. So we are in munition, we are in sustainment. Sustainment is major for us, major for us. Because you take, for example, [ VCC ] it needs to fly for the next 20 years. It will be 100 years old, almost 100 years old airplane. We are there.

We're already part of sustainment program of the U.S. But when you look at Stratasys Direct, our SDM unit, this is the best indicator that you can have for demand for OEMs for machine solutions in the future because the parts business is practically indicating what the customers will adopt internally in the future. First thing that they are doing, they are ordering parts.

So we see it across the board, back to your question, across different applications, drones are leading because this is kind of the best example of the transformation of this industry. And you can see it also in the numbers. If I remember right, the U.S. Department of War is asking for 2027 for $1.5 trillion budget, which is almost 45% increase year-over-year. $75 billion out of it is for advanced digital manufacturing and additive will have a major part here. So we are excited about it. We are working with everybody and also the pipeline. We have more confidence in our pipeline in aerospace and defense.

That's really exciting. And should we think about this as like Stratasys being the real indicator driver of that? Or should we look at like with these drone customers? Will this kind of transition into like big system sales? Could that also happen to the government? How should we be thinking about that?

Absolutely both. Stratasys Direct is an indicator because every day, we are delivering parts for drones, large parts, small parts. By the way, in large parts, we have huge advantage because of our reliable FDM solution, industrial FDM solution, the F900 and the F3300 with unique materials that only Stratasys has. So probably in every large UAV, you will see Stratasys ULTEM parts.

But not only there, it's also relationship with the Department of War and large appropriations that are targeting sustainment and also renew of the depots. And I'll give you an example of shipyards. U.S. builds less ships, battle ships since World War II than China in the last year. That's what I heard in the Pentagon. What does it mean? It means that there is a lot to catch up. And if you want to catch up and fast, additive is a solution. We are experiencing the same thing also in Europe. Germany and Japan mainly, they need to catch up and the quickest way to catch up is additive manufacturing.

Our next questions come from the line of Trevor Sahr with William Blair.

This is Trevor on for Brian. I wanted to stick with A&D, if we can here. I'm trying to square your opportunity with some of your largest A&D customers on production versus prototyping. It would be helpful to hear any kind of detail you could give or examples. You don't have to name a customer, obviously, but how should we think about your development with some of these largest customers and where you are in your business with them on a production versus prototyping standpoint?

Great question, Trevor. Currently, we are focusing all the way on manufacturing. And the main areas are this drone transition or drone dominance, one of them. The other one is the sustainment, and the third one is everything which relate to maritime and catching up on the ability to be there with renewed fleets, I would say.

The main indication, as I said, it's going both in different direction, but the main indication now is Stratasys Direct. We shipped over 100,000 production parts annually. And we have never seen it before in defense, this level of demand. And we are working in different layers or different routes to the market. One is through the government. We are very strong with the U.S. government, but also with other governments globally because we have the reputation, and we see there large programs that are being built and allocation and assignment of budgets. Majority of this demand is production part, not prototypes.

We also see demand for tooling because when you need to refresh or renew a depot, you need many tools, same with shipyards. And the fastest way to have tools is to print it. Tooling is also a major thing in defense now because you need to put all those new lines of production, and there is nothing faster than additive manufacturing to equip those lines with tools. So this is another area.

And one more, probably I can talk about it for hours, but I want to shed light on the fact that this is not only a U.S. phenomenon. This is a global phenomenon. It's the strongest demand we see in the U.S. and also the innovation, but it's definitely a global phenomena that we see more budget, more programs that are being now established, and we will see the demand over the next quarter, but also years from now. We have a strong lines of solutions that can really match those requirements and the high requirement and the demand.

That's great. I wanted to switch back over to Dental. You gave some great detail there on the European market and that you project it to be $2.45 billion by 2028. I'm just trying to get a sense of what your specific opportunity is in the European 3D printed venture market. And maybe if you could give any kind of indication of where you expect your share might be within that market by 2028.

So the dental market is one of the leading industries in adopting additive manufacturing because of the ability to personalize and in a very quick way. Traditionally, the dental market is labor-intensive. And we are bringing here solution that solves 2 major issues in dental, the lack of professional labor.

And the second one, we are dramatically as an industry, as an additive manufacturing industry, we are dramatically reducing the chair time for the doctor, for the clinic, for the dentist. And there is nothing more valuable for a dentist than his chair time. And our dentures, and we call it removables, we are focusing on removables. It's for restorative dental, so dentures, but also night guards. We are focusing there with our PolyJet technology. It's the only multi-material technology for dentists or for dental.

But what does it mean multi-material? It means that we can deliver parts that no other technologies can. And we are already established because in the U.S., our dentures are already -- we are already working with the leading players like Affordable and Glidewell, and we plan to grow and to be the largest player in Europe because we have the first-mover advantage. We are the first player with polychromatic dentures that received the Class IIa. Great position to be in.

And it's also opening up for us new applications like partial dentures and crown and bridges, and we will see growth there.

Our next questions come from the line of Alek Valero with Loop Capital Markets.

Yes, just kind of on that same point on TrueDent. So you projected the European segment at $2.45 billion by 2028. I wanted to ask, how does -- did this certification come sooner than you were expecting? And what is the likelihood that we could see more certifications down the road? And how would that expand your TrueDent opportunity? And additionally, a clarification question. Is the $2.45 billion in addition to the American market?

So the $2.45 billion is analyst projection in the European market. When we look at our TrueDent, it will definitely get into new applications that we were not there in the past, like, as I said, partial dentures and crown and bridges. And we have the first mover advantage there.

In the U.S. it's a bigger opportunity. It's almost $5 billion when you look at removables. It's only the beginning. We are improving the material. We're improving the machines. We're improving the solution. We are improving the workflow. We are the first mover, but we are not laying back and said, okay, this is it. We are building the foundation, and we are building the best offering for restorative dental. And once we have this foundation, I have no doubt that we will experience exceptional growth.

Just a quick follow-up. Two quarters ago, you mentioned a large tech company that bought some F3300s. Any update there? And any color on what potential applications they could be using these -- your products for?

Unfortunately, we cannot share. But I want to do something just to share one perspective, which I think is important because it's kind of connecting all the questions today. And I want to state it very clearly. We are progressing according to our growth plan. This is a plan that we shared with you last quarter. It's true that Q1 is always is the softer one and H1 are softer than H2, but H2 is definitely defense driven.

So we are maintaining our guidance. We are on plan. And when I'm saying on plan, this will be the first year for 3 years now, that we will grow. So our transition plan from prototyping to manufacturing that we also shared with you in the past, will generate growth this year. Our transition is working.

Our next questions come from the line of Kieran McCabe with Cantor Fitzgerald.

It's Kieran on for Troy Jensen. You mentioned that customer engagement continues to be strong or increasing, but customers are maintaining capital discipline. Can we read any insight into the Stratasys Direct organic growth that may be a precursor to an inflection in system sales in the future at all?

Hi Kieran, thanks for the question. As we mentioned earlier, STM, the parts business is an indicator to the behavior of the OEMs that follow. When we print parts, the cycle is very quick. We see the growth relatively quick. We demonstrated in Q1, 23% growth organically, as you mentioned. And that's part of the confidence we have in the ability to -- with a strong pipeline that we see for the second half to grow also on the hardware and OEM business. And we start to see it already in Q2. In Q2 this year, we expect to see similar revenue to Q2 2025 levels.

And my follow-up is that you have a strong balance sheet, no debt, cash on hand. You talked about some inorganic -- taking advantage of inorganic opportunities. Kind of can you provide any color maybe where you see some areas you want to add to or areas of interest on the inorganic side?

No doubt that we are aiming to leverage our balance sheet to capture inorganic opportunities to strengthen our position in what we define as high requirement use cases because this is our strategy. Our strategy is to deliver and capture high value in high requirement applications.

We don't want to be in prototyping, in basic prototyping. We don't want to compete with solutions that deliver no value. They deliver value, but it's race to the bottom. We are focusing on the high end, on the high requirement applications, and there are plenty of inorganic opportunities to capture in those areas. And this is our direction. It's completely aligned with our strategy, and we are going to capture those opportunities.

We've reached the end of our question-and-answer session. I'd now like to hand the call back over to Dr. Yoav Zeif for any closing comments.

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

Ladies and gentlemen, thank you so much. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time and enjoy the rest of your day.

Good day, and welcome to today's conference call to discuss Stratasys' Fourth Quarter and Full Year 2025 Financial Results. My name is Donna, and I'm your operator for today. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to hand the call over to Yonah Lloyd, Chief Communications Officer and Vice President of Investor Relations for Stratasys. Mr. Lloyd, please go ahead.

Good morning, everyone, and thank you for joining us to discuss our 2025 fourth quarter and full year 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 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 and for the 2025 year, the latter of which will be filed with the SEC on or about today.

Please also refer to our operating and financial review and prospects for 2024 and 2025, which are included as Item 5 of our annual reports on Form 20-F for 2024 and 2025. Please also see the press release that announces our earnings for the fourth quarter of 2025, which is attached as Exhibit 99.1 to a report on Form 6-K that we are furnishing to the SEC today. 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 fourth quarter performance caps a year in which we successfully maintained our operational discipline, delivered solid cash flow generation and protected our margin profile, demonstrating once again the resilience that distinguishes Stratasys. Importantly, even in a market environment marked by macro spending constraints, we continued to improve our position in our focused target areas as we drove positive cash flow and profitability, setting us apart from our industry peers.

To that end, as we share each year, in 2025, we generated 37.5% of our revenues from manufacturing, up from 36% in 2024 and from just over 25% when we started tracking in 2020. We expect to see this percentage continue to grow every year, which we see as a key driver of consumables utilization to help deliver increased margins. Throughout 2025, our focus on additive manufacturing, delivering compelling solutions relative to conventional production resulted in robust customer engagement that was strategically focused.

We have made meaningful progress building on the foundational infrastructure of our highest value target use cases, which notably grew in revenue year-over-year, led by aerospace and defense as well as automotive tooling, dental and medical. These are not transient opportunities. They represent durable competitive advantages that position us for sustained leadership as market conditions normalize. Our long-term value strategy continues to center on the powerful megatrends reshaping global manufacturing, increasing aerospace and defense budgets, the corporate drive for efficiency, cost optimization, supply chain localization and onshoring, next-generation mobility platforms, advancing sustainability mandates and mass personalization.

These secular forces have intensified, and they align directly with additive manufacturing's core trends.

Our commitment to innovation remains unwavering, supported by a strong balance sheet and continued R&D investment. Our cutting-edge products, materials and software capabilities cement our industry leadership. As we enter 2026, we do so with proven operational excellence, strategic clarity and the technology portfolio to capitalize on the inevitable return of customer spending.

Importantly, in the fourth quarter, we delivered $9.2 million in adjusted EBITDA, a 6.6% margin, and $0.07 in adjusted EPS. We remain confident that when capital spending constraints ease, our operational efficiencies will result in sustainably higher profitability in coming years. We continue to maintain a healthy balance sheet of $244.5 million in cash and equivalents and no debt. This provides stability and optionality that will support our growth through both organic investments and accretive acquisition opportunities.

Stratasys is a world leader in industrial polymer 3D printing for high requirement use cases. We provide comprehensive solutions that include innovative, reliable hardware, the largest portfolio of materials in the industry, award-winning software, post processing and full suite of services and support for complete end-to-end workflow solutions.

A leading example of our requirements is aerospace and defense. It is our largest contributing target sector, highlighted in the fourth quarter by the announcement of our transformational partnership with Airbus, which produced over 25,000 flight-ready parts last year using our ULTEM 9085 filament. This brings the total certified Stratasys part in active service at Airbus to more than 200,000 across the A320, the A350 and A400M aircraft. This collaboration demonstrates true production scale additive manufacturing, delivering 43% weight reduction, 85% lead time reduction and eliminating minimum order quantities while enabling distributed manufacturing that reduces aircraft downtime and supply chain risk.

Beyond Airbus, we are seeing comprehensive solution adoption across the commercial sector. Boeing 737 Innovation Center purchased 2 of our newest F3300 printers for production tooling in the fourth quarter. And another leading aircraft manufacturer acquired 2 more F900s for flight grade parts, increasing their fleet to 9 Stratasys systems. We also secured strong sales to several major U.S. drone companies for applications such as part production and wind tunnel testing with expanded demand from nontraditional defense primes in unmanned and space sectors.

In fact, in 2025, our top 3 customers at our FDM parts manufacturing division are all large military drone suppliers. And our fourth quarter sales spanning from start-up to traditional primes across multiple F3300 and F900 systems for flight grade parts, supported by high adoption of premium service contracts position us at an inflection point where certified additive manufacturing is becoming a mainstream across aviation globally.

Automotive continued to demonstrate strong momentum, highlighted by major wins with leading manufacturers, deploying our advanced technologies for production applications. Subaru of America became among the first customers to implement our new T25 high-speed head for the F770 printer, achieving over 50% reduction in tooling development time, 70% cost reduction in prototyping and tooling and nearly twice the printing speed on large parts compared to standard heads. This breakthrough enabled Subaru to consolidate production in-house, improving repeatability while reducing reliance on outsourced manufacturing with 8- to 12-week lead times.

Additionally, Rivian's extensive deployment of 28 Stratasys systems demonstrates our technology's scalability. With the F900 system operating at over 90% utilization, and newer F3300 delivering nearly twice the printing speed, processing 6,000 requests annually, equaling tens of thousands of parts used in product development, tooling and production. And we are proud to congratulate our performance partner, McLaren F1 Formula 1 on winning in 2025 constructors and drivers championships, where they leverage our SLA, FDM and PolyJet technologies to support race winning innovation.

These partnerships exemplify how automotive manufacturers are integrating additive manufacturing into production workflows, from Formula 1 racing innovation to electric vehicle manufacturing position us strongly within the rapid evolving automotive market.

Now let me touch on some recent partnership updates. Evidencing our progress in workflow solutions, we have partnered with Novineer, a leading generative modeling, design and simulation software company to integrate their NoviPath simulation technology into our GrabCAD Print Pro. This creates the industry's first complete validated workflow for FDM that no other 3D printer manufacturer offers.

This eliminates costly trial and error testing, reducing validation time from weeks to hours with early customers achieving up to 35% weight reductions on load-bearing parts. This solution positions Stratasys as the production-ready additive manufacturing leader with early access launching in Q2 2026 for our F3300, F900 and Fortus 450mc systems.

We also recently announced 2 new partnerships. We launched our post-processing partnership program with PostProcess Technologies, a company revolutionizing additive manufacturing with the only automated and intelligent post-processing solutions for 3D printed parts. As the first partner in this area of focus, they enable customers to purchase validated post-processing equipment through a single Stratasys order alongside our system. This simplifies procurement, reduce sales risk and addresses the complexity of manual post-processing by providing an integrated solution guaranteeing compatability across our FDM, PolyJet, SLA and P3 technologies. This alignment positions us to capture more value across the entire additive manufacturing workflow.

And on the go-to-market front, we recently partnered with Hawk Ridge Systems, a leading award-winning provider of additive manufacturing engineering and manufacturing tools, technology, services and training in the U.S. and Canada. The collaboration will expand market reach by adding our PolyJet, SLA and P3 technologies to their portfolio as we target aerospace, automotive, medical and industrial customers.

This collaboration leverages Hawk Ridge's application expertise and customer proximity to accelerate adoption of our industrial printer suite, strengthening our American sales capabilities and driving industrial additive manufacturing momentum.

Building on the success of our Industrial Customer Advisory Board, which has brought together 14 manufacturing leaders such as Boeing, Toyota, Lockheed-Martin and TE Connectivity to advance additive manufacturing at scale, Stratasys has also established a new Medical Advisory Board. Both are focused on strengthening collaboration with industry leaders to drive innovation to accelerate the adoption of 3D printing in their respective industries.

This new medical-focused board convenes clinical and Medtech experts in health care. The Board is focusing on the unique requirements of medical-grade applications. regulatory alignment and patient outcomes. Initial members include 8 senior executives from leading medical technology companies such as Medtronic, the world's largest medical device manufacturer and Edwards Lifesciences, global leader in structural heart diseases and critical care technologies alongside other organizations spanning pharmaceutical, cardiology, orthopedics and clinical education.

To sum up, time and again, some of our most exciting use cases are in the most demanding environment and under the most unforgiven conditions. This includes aerospace and defense applications and advanced manufacturing workflow across a multitude of industrial sectors. We continue to deliver differentiated products and solution to customers as we further penetrate production applications at scale, supported by strategic partnerships that provide complete end-to-end additive manufacturing solutions, including simulation, post-processing and expanded channel reach.

The stage is set for sustained growth based on accelerated adoption of additive manufacturing in mission-critical applications, where customers are achieving measurable operational improvements and moving beyond prototyping to true production scale manufacturing. I will now turn the call over to Eitan to share the financial results and our initial outlook for 2026. Eitan?

Thank you, Yoav, and good morning, everyone. Our fourth quarter results underscore the operational discipline and financial resilience we have built throughout 2025. Despite persistent revenue headwinds and margin pressures that characterized the year, we delivered positive adjusted operating income and adjusted EBITDA, strong operating cash flow generation and solid adjusted earnings per share for the full year.

This performance reflects the sustained benefits of the cost control initiatives implemented in mid-2024, which are now fully embedded in our operating model as well as our team's continued focus on execution and efficiency. The diversification of our revenue streams continue to provide stability through the cycle and distinguishes our financial profile relative to peers in the sector.

As we look to 2026, we remain committed to maintaining this operational rigor while preserving the strategic investments necessary to sustain our technology leadership position. For the fourth quarter, consolidated revenue of $140 million was down 6.9% as compared to the same period last year. Product revenue in the fourth quarter fell to $97.6 million compared to $105.1 million in the same period last year.

Within product revenue, system revenue was $37.8 million, 18% higher sequentially from the third quarter. This compares to $46.7 million in the same period last year as constrained capital budgets continue to impact customer buying behavior for new systems. Consumables revenue in the fourth quarter was $59.8 million, up 2.4% as compared to the same period last year.

Service revenue was $42.4 million for the fourth quarter of 2025 compared to $45.3 million in the same period last year. Within service revenue, customer support revenue was $29.6 million compared to $30.6 million in the same period last year. For the full year 2025, consolidated revenue was $551.1 million compared to $572.5 million in 2024.

Product revenue in 2025 was $380.3 million compared to $392 million in 2024. Within product revenue, system revenue in 2025 was $131.6 million compared to $140.3 million in 2024. Consumables revenue was $248.7 million in 2025 compared to $261.7 million in 2024. For the full year 2025, service revenue was $170.8 million compared to $180.5 million in 2024. Within service revenue, customer support revenue in 2025 was $119 million compared to $124.7 million in 2024.

Now turning to gross margins. GAAP gross margin was 36.8% for the quarter compared to 46.3% for the same period last year, the result of higher restructuring charges, the tariff impact, lower revenues and change in mix. Non-GAAP gross margin was 46.3% for the quarter compared to 49.6% for the same period last year. The year-over-year change in gross margin was the result of the tariff impact, lower revenues and change in mix.

GAAP gross margin was 41.2% for the full year 2025 compared to 44.9% for the same period last year. Non-GAAP gross margin was 46.9% for the full year as compared to 49.2% in 2024. The full year decline in non-GAAP gross margin was a result of the tariff impact, lower revenues and change in mix. GAAP operating expenses were reduced to an improved $72.2 million for the quarter compared to $79.4 million during the same period last year.

And non-GAAP operating expenses were reduced to an improved $60.8 million compared to $65.2 million during the same period last year, reflecting the impact of cost-saving initiatives previously discussed. Non-GAAP operating expenses were flat at 43.4% of revenue for the quarter compared to 43.4% for the same period last year. For the full year, non-GAAP operating expenses were 45.4% of revenues as compared to 48.4% in 2024, primarily due to the cost-saving measures associated with the restructuring plan we announced in August 2024 that had a full year impact in 2025 as well as the additional cost initiatives we introduced in the second half of 2025.

In absolute dollar terms, non-GAAP operating expenses were $26.7 million lower in 2025 as compared to 2024 due in part to the cost-saving measures from our restructuring plan. Regarding our consolidated earnings for the quarter. GAAP operating loss for the quarter was $20.8 million compared to an operating loss of $9.7 million for the same period last year. The change was due primarily to the lower gross profit, partially offset by the lower operating expenses. Non-GAAP operating income for the quarter was $4.1 million compared to $9.4 million for the same period last year, reflecting the lower gross profit, partially offset by the lower OpEx due to the cost-saving measures associated with the restructuring plan.

GAAP net loss for the quarter was $18.9 million or $0.22 per diluted share compared to a net loss of $41.9 million or $0.59 per diluted share for the same period last year, which included a noncash impairment charge of $30.1 million or $0.42 per diluted share related to the investment we made in Ultimaker as part of the merger with MakerBot.

Non-GAAP net income for the quarter was $6.2 million or $0.07 per diluted share compared to the net income of $8.5 million or $0.12 per diluted share in the same period last year. Adjusted EBITDA was $9.2 million for the quarter compared to $14.5 million in the same period last year. This equates to 6.6% EBITDA margins compared to 9.6% in the fourth quarter of 2024.

Regarding our consolidated earnings for the full year 2025. GAAP operating loss was $72.5 million compared to a loss of $85.7 million for 2024. Non-GAAP operating income for the year was $8.3 million compared to $4.9 million in 2024. This equates to 1.5% non-GAAP operating margin compared to 0.9% in 2024. GAAP net loss for the year was $104.3 million or $1.28 per diluted share compared to a net loss of $120.3 million or $1.70 per diluted share for last year.

Non-GAAP net income for the year was $12.7 million or $0.15 per diluted share compared to $4.2 million or $0.06 per diluted share last year. Adjusted EBITDA of $28.5 million, 5.2% of revenue compared to $26 million or 4.5% of revenue in 2024. The 9.6% increase reflects the improvement or decrease in operating expenses that more than offset the lower revenues and gross margin. We generated $4.8 million of cash in our operations during the fourth quarter compared to $7.4 million in the same quarter last year.

For the full year, we generated $15.1 million of cash from operations compared to $7.8 million in 2024. We ended the year with $244.5 million in cash, cash equivalents and short-term deposits compared to $255 million at the end of the third quarter of 2025. Our balance sheet and cash generation profile remains strong, supporting our ability to capitalize on value-enhancing opportunities.

Now let me turn to our outlook for 2026. We expect 2026 revenue to be in the range of $565 million to $575 million, with revenues growing sequentially each quarter through the year, resulting in higher revenues in the second half of the year as compared to the first. For the year, we expect consumable revenue in 2026 to increase over 2025. We also expect the first quarter to have the lowest revenue and profit margin profile on a relative basis to the rest of the year.

Non-GAAP gross margin for 2026 is expected to be in the range of 46.7% to 47.1%, with the second half stronger than the first half based primarily on the expected rise in revenue over the course of the year. In 2026, we expect our operating expenses to range between $260 million to $262 million. This outlook includes anticipated adverse impact from foreign exchange rates as compared to last year. Specifically, if current exchange rates hold for the full year, we expect approximately $10 million of adverse impact on our operating expenses.

Absent this factor and the full year impact of increased tariffs, both of which are beyond our control, we would expect to deliver continued improvement in profitability for 2026. We expect operating income to be in the range of 0.7% to 1.5% of revenue, with the second half stronger than the first half based on the anticipated rise in revenue throughout the year.

We expect a GAAP net loss of $83 million to $67 million or $0.95 to $0.76 per diluted share and non-GAAP net income of $8 million to $12.5 million or $0.09 to $0.14 per diluted share for 2026. Adjusted EBITDA for 2026 is expected to be in the range of 4.5% to 5% of revenue or $25 million to $30 million. This range includes approximately $17 million of combined adverse impact from FX and tariffs and therefore, not reflective of the higher profitability we would otherwise expect to deliver, particularly as we grow the top line.

We expect our capital expenditures for 2026 to range between $20 million and $25 million. Finally, we expect to deliver positive operating cash flow for the full year subject to uncertainty around FX and tariffs. With that, let me turn the call back over to Yoav for closing remarks. Yoav?

Thank you, Eitan. As we begin 2026 and look toward the future, we do so with confidence in our strategic positioning and the fundamental underpinning of our industry. Throughout 2025, we maintained the disciplined execution necessary to navigate challenging conditions while preserving our capacity to lead and increase profit when market dynamics improve.

The progress we are making in our target industries of aerospace and defense, automotive tooling, dental, medical application and precision industrial components reinforces our conviction that we have built the infrastructure for durable, profitable growth. Customer engagement remains substantive and strategically focused, and we continue to see encouraging signals that adoption timelines, while extended, are advancing toward inflection.

Our margin discipline and operational resilience have enabled us to protect profitability through the cycle. Combined with our strong balance sheet, this positions us to capitalize on inorganic opportunities that we continue to explore to sustain our technology leadership through continued strategic investment in the innovations that will define the next era of digital manufacturing.

As an industry leader with a comprehensive portfolio spanning systems, materials and software, we have the capabilities, the customer relationships and the financial foundation to capitalize on the significant opportunities ahead. Our penetration into high-value production applications continues to deepen, and we remain committed to maximizing long-term shareholder value as additive manufacturing's role in global production expands.

I want to close by acknowledging our global team. Their dedication, professionalism and relentless focus on customer success continue to drive the engagement and trust that positions Stratasys for sustained leadership. We are excited about what 2026 and beyond hold for Stratasys. With that, let's open it up for questions. Operator?

[Operator Instructions] Today's first question is coming from Greg Palm of Craig-Hallum.

This is Danny Eggerichs on for Greg today. Maybe we could just start with aerospace and defense kind of the market that everyone wants exposure to right now. Any way to size up how big that market is for you and kind of think about the growth outlook moving forward, especially with everything going on, increased spending and like you said, some of these drone opportunities really starting to develop. So it just feels like a really big opportunity there. And just curious on how you're thinking about it on a larger scale.

Thank you, Danny. If you have -- well, we don't like wars, but over the years, Stratasys developed the best polymer position in aerospace and defense by far. And what do I mean by position? It's all about having the right qualification and certification to have parts -- flying parts and parts that are being used in the field with a lot of experience, customer relationship and programs that we are running with those customers.

Just to give you a ballpark, this aerospace and defense before we talk about the future, is the highest contribution in 2025 to our use cases and to our vertical. This is the largest vertical, and this is a great example of high requirement vertical, where only companies like Stratasys can do it because coming from the bottom with good enough machines and printers is not good enough for qualified flying parts.

And we have many trusted customers. And only in this call, we mentioned Airbus, we mentioned Boeing, the two leaders in aviation. Now let's look at the future. What happened with the defense budget? It's a step-up change. It's a bit different across the globe because we are selling to defense both in Asia, in EMEA and America. I would say that when we look at the opportunity, the U.S. is more advanced. And then Europe is committed to [indiscernible] budget, but they are not there yet with programs, but it's coming.

So I'll take as an example, the drones. We have experience with companies that are leading this industry like General Atomics. So we are not coming to this growth era of defense and trying to build our credibility and trust. We are already there. And when you look at the U.S. and just take the drone program and our capabilities, both, by the way, in printing parts with Stratasys direct manufacturing, but also with certified parts, it's a major, major future for us, and we put all our resource on it and develop unique end-to-end solution that will put additive as the main tool to build quickly drones, both on land, but also in the field.

And this is sustainable. This is not something that is, okay, we do it now and maybe tomorrow, it will not be in place. It is a very sustainable growing market for us because it comes from the high requirement from the qualifications, from the certification that we already have. Add to the fact that, unfortunately, we have also a lot of experience with Israeli defense tech, successful experience. And this is also another advantage that we are bringing real field experience with parts -- with additive parts for a new era of defense.

Okay. Yes, that's all good stuff. I appreciate the color there. Maybe if I can just hit one last one on the guide here. It's good to see a return to growth expected for this year. But maybe specifically as it relates to kind of the FX and tariff impacts, I think you said what was implied in the FX is kind of the exchange rates you're seeing today.

But I guess both lumped in, are those both kind of assuming levels you're currently experiencing? Or is there any maybe worsening baked into those to provide a little level of conservatism? Just trying to get a feel for what's assumed here if either of these kind of dynamics changes throughout the year.

Yes. Thank you, Danny, for the question. That's great. I'll relate to the question about FX and tariffs. And I just want to make sure that our investors and analysts understand we wanted to explain to touch on these 2 elements because there are changes in 2026 relative to 2025. And we wanted to make sure that we separate between the fundamentals of the business and items like FX, specifically the shekel that change over time. And in 2026, we see a very strong shekel that has a negative adverse impact on our results. But we wanted to also help you model how our results look like absent or excluding those items.

With respect to the shekel, first, I'll say that as part of our strategy, we hedge certain currencies, mainly the shekel and the euro that are more significant to our financials, to our operations. With the Israeli shekel, naturally depends on the levels of that currency at the point of time that we try to hedge it.

For 2026, if you'll check very quickly online, you'll see that the shekel is at the strongest, at the highest level for quite many years. So it's not the time to hedge it. During 2026, as the shekel weakened relative to the dollar, we will consider and may put hedges in place that will improve 2026 relative to the guidance that you provided you today. And we wanted to share with the audience to be able to model it appropriately.

The next question is coming from Jim Ricchiuti of Needham & Co.

So I appreciate the detail on the manufacturing business for 2025. It looks like that business, the manufacturing business based on the percentages you gave was flat year-over-year versus 2024. And just given the use cases you highlighted, I would have thought it would have been a bit better. So how do you see that going forward?

Thank you, Jim, for the question. So what we are experiencing here, and by the way, you are right, when we are looking at the overall, we are a bit higher than flat. But what we are experiencing here is practically a change in the market. So we are investing with programs with our customers -- high-end customers in those high-end -- high requirement applications like aerospace and defense, like dental, like medical, like tooling, and those customers, except of aerospace and defense, have a whole portfolio. Part of the portfolio is our key use cases. All of them grew.

When I'm saying use cases, it's a specific application, like tooling for automotive. Drones, we have a set of things for aerospace and defense. Aerospace and defense, as I said, the whole vertical grew. But there are also other parts that are not part of the use cases, but they are part of manufacturing and part of the vertical. And when you have some CapEx constraints, by the way, mainly in industries like automotive, the uncertainty didn't look good for them. then you see some type of balancing. But overall, the target market, all of them grew.

And then you have the whole portfolio and if it's enough when we have a large installed base in manufacturing that in some part of the installed base, there is less utilization or less CapEx, but it's not the mainstream. It's not the target market, but still we grew. Not a lot, but we grew. So I'm very optimistic we will keep consistently growing the ratio of our sales to manufacturing. I have no doubt about it because we are focusing on the right things, and we have the right programs with our customers.

Another significant effect that was on our sales to manufacturing was the shutdown of the government. The shutdown of the government in H2 had an impact on the pipeline. All those large deals were to manufacturing. And we also mentioned those large deals in previous calls. But I have no doubt that they will come back. They were only pushed back -- pushed forward, sorry. Nothing was dropped. Even despite the macro headwinds, despite the shutdown, despite some industry with challenging CapEx constraints, we grew, not a lot, but we grew.

So we're about, what, a little over 2 months into Q1. I'm wondering if you could give us a sense as to the demand trends you're seeing and maybe just how to think about the sequential -- the seasonal, normally, you see some seasonality in Q1. Any color on that?

Yes, for sure. So as we wrote in the guidance, we are seeing sequential growth over this year. And the sequential growth, by the way, in general, our Q1 is the weakest Q of the year. This is historically right, because Q4 usually is a stronger one. When we decided and we planned the year, and we reflected in our guidance, it's clear what's going to be -- what's going to happen over the year from our perspective, of course, you never know about uncertainty and things like tariffs and wars and all this.

But when we look forward, we see better government and defense demand. We see -- we started to see it in Q1, by the way, but there was this small shutdown and probably will have some type of impact. We also see a plan of launching new products, most of them in H2, so you will not see significant effect in Q1 and Q2, but those are really promising products, addressing our use cases. And we have some new businesses that we acquired from -- the most important one is Forward AM, we brought them from -- acquired them from insolvency. Practically, they were not operational, but we ramped them up during the year. So when you combine all this, you will see sequential growth quarter over quarter over quarter with Q1 solid, but most of the growth will come as we move through the year.

The next question is coming from Brian Drab of William Blair.

First one, just the -- I think you made this clear, but I just want to really make sure the midpoint of guidance implies about 3.5% revenue growth and the midpoint of the guidance range implies about 4.5% growth in OpEx in 2026. And is that increase in OpEx related? Can you kind of break down what that incremental OpEx is associated with? Is it mainly the shekel and the tariff impact? Or are there other modest areas of -- areas of modest investment that are happening in '26?

Yes. Thanks, Brian, for the question. So the answer is quite simple. As you may recall, we introduced in the last couple of years a few cost-saving programs that save significant OpEx levels. If you go back to the 2020 -- you know, 2, 3, 4 years ago, we were a company of close to $300 million OpEx a year, and we're down in 2025 to actual OpEx of $250 million. The main increase, almost the only increase year-over-year for 2026 is driven by the shekel. That's why we also highlighted this today. And that's something that we consider naturally as temporary in nature relative to the FX cycles over time.

Got it. And can you just clarify exactly what you mean by mix when you talk about mix in the context of margin headwind that you saw in the quarter?

Sure. So mix can be driven by 2 elements. It could be a mix within the hardware revenue. So we have systems that come with a very high gross margin, and we have systems that are still in the ramp-up or less mature than others that come with a slightly lower gross margin. So that's one type of mix. And it's also the mix between hardware consumable and services that come with different gross margins. Now as you may recall, we have a huge portfolio of hardware consumable and as well as the services. So it's a matter of changes within the products, but nothing significant.

The next question is coming from Troy Jensen of Lake Street Capital Markets.

It's actually Cantor Fitzgerald as you know, but congrats on the good execution here in '25. Maybe a quick follow-up on Jim's question earlier just about the production applications. I've always been told that material pricing is just the biggest variable. I'd just be curious if you guys feel like that's any type of a headwind in the adoption of additive or FDM in production and tie that into if material sales were down year-over-year this year. And is that a function of utilization or pricing?

Okay. Maybe I'll start and then Eitan can add on the material sales. So -- but let's start with a bit of perspective, and thank you for the question, Troy. Our strategy is very clear. We grow and we are growing in high-value, high requirement use cases. We have 5 like those within verticals that we believe are the verticals where Stratasys is shining. Shining, I mean, we are the leader, to be honest.

And our key manufacturing use cases are the aerospace and defense, dental, medical, tooling and some industrial applications, and we grew significantly in those key 4 that I mentioned, significantly in 2025. Now add to it our execution capabilities and any change in the market, we are ready because we have the leadership position in terms of the technology and the solution and the ability to deliver to our customers. And also, by the way, when you talk about execution capabilities, we have also -- it's a good time for capturing value creation opportunities.

And once we see those -- and this pent-up demand exists, how do I know? Because what we see, and I didn't mention it to Jim, but it is important. For the last 3 quarters, we see a decline in our sales cycles. What does it mean? That when we look at the closed one, the deals that we closed, and we ask ourselves on average, how long it took us to close those deals, there is a decline in the sales cycle, which, by the way, till mid-2025 from end of '22, we're just increasing.

So there is a demand there. It's coming. We are well positioned to be there. And the fact that we kept our position in manufacturing and growing it in the key use cases is also being reflected in our guidance because we are saying this year, we will move from decline to growth. And look at our history, when we are saying something, we do everything to meet it because -- our guidance is saying, yes, there is a shift in our industry from rapid prototyping to manufacturing. We are leading this shift.

We are improving profitability, and I will relate to your question about profitability and materials. And as a result, we will have better EBITDA. The fact that we are adjusting for $17 million for tariff and FX, this is really an exception because of the situation -- the geopolitical situation and what we are experiencing now. But it's not sustainable. It's not the real value of the shekel and tariff will be different long time.

So when I'm looking at those use cases, and I'm asking ourself, okay, what is the future? The future is significant higher utilization, a machine that is standing in one of our large corporate customers like GM or choose any -- or Boeing or any manufacturing customer is consuming between 7 to 12x more than an average rapid prototyping printer. And we have the data because we collect the data. So and maybe we need to sell it a little bit with lower prices.

But to be honest, there is no pressure there because those applications are so unique. They are coming with -- the parts are certified. You need to go through sometimes 3 or 4 years of qualification. And then there is no alternative. The customers know about the price and the price if you print a part in a missile is not a real factor. And we are the leader in those areas, especially in aerospace and defense.

And our secret weapon, going back to how we are penetrating there is the customer relationship that we have in those areas. Customer relationship, I mean, trust and credibility. From their perspective, we are the most reliable provider. Just lately with the Customer Advisory Board, 1 year of work together with our customers, we increased our reliability by 22% of our largest machine because we are focused on manufacturing.

And the other factor of our secret weapon is our teams because no doubt that the industry is going through a change, this shift to manufacturing, but we have the right teams to adapt on time. Back to your question, material, if you focus on the high-performance material, higher utilization and all the value is there. Maybe another important data point. When you look at the material, the overall additive manufacturing polymers, 70% of the volume of material is low-end consumer type entry-level machines. But it's only 20% of the value. We are a value player. We want to capture the 80% of the value. I hope it was comprehensive enough.

The next question is coming from Alex Valero of Loop Capital Markets.

My first question is, last quarter, you mentioned a large tech company purchased 4 F3300s for prototyping with plans to move to production. Have they placed any follow-on orders? And have they started the transition yet? Any update there?

That's a great question. Thank you for the question. Unfortunately, we cannot share because this is confidential. I can just say that they are very happy with the solution. We cannot share anything that they are not approving in advance.

Got it. No, understood. I guess I was just -- my follow-up. On SAF, I saw that you launched the PA12 qualification with Boeing, Raytheon and a few others last month. I just wanted to ask what's the time to completion there? And how do you size the revenue opportunity?

It's a large revenue opportunity. We usually don't disclose exactly. It's a large revenue opportunity. Those are the programs, and this is only one out of many programs that we have with those large customers because we listen to them, we sit with them, they share with us their needs and then we launch a program. Some programs are on software, some on materials, some on hardware. And it's a large opportunity and the qualification also depends on the class of the part. So there are different classes of parts, and it takes different time, span, duration to qualify the part. It can go from 1 year to 3 years.

Thank you. At this time, I would like to turn the floor back over to Dr. Zeif for closing comments.

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

Ladies and gentlemen, this concludes today's event. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.

Greetings, and welcome to the Stratasys Third Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Yonah Lloyd, Chief Communications Officer and Vice President of Investor Relations. Thank you. You may begin.

Good morning, everyone, and thank you for joining us to discuss our 2025 third 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 provided 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 report 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 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 disciplined approach to cost management enabled us to deliver solid operating cash flow generation and EPS in the third quarter. This continues to demonstrate the underlying strength of our business model as we work to overcome the macro-driven caution facing capital equipment sales. We remain focused on what we can influence: operational excellence, customer partnerships, and executing on our strategy as we advance additive manufacturing adoption with innovative offerings.

Customer engagement remains substantive and strategic as we build the foundational infrastructure to drive growth and scale across key high-value verticals of aerospace and defense, particularly drones, automotive tooling, sensors, precision machine components, and medical anatomic modeling. We are leaders in these areas, where additive is a compelling alternative to conventional manufacturing, as we create durable competitive advantages for years to come. Our long-term strategy remains centered on the fundamental trends reshaping manufacturing, supply chain localization, next-generation mobility, sustainability goals, personalization, and the unrelenting corporate focus on efficiency and cost reduction. These secular drivers haven't diminished. If anything, they have intensified the evolving trade and tariff landscape while creating near-term complexity, ultimately reinforce the strategic value proposition of localized, flexible manufacturing, precisely what additive delivers. We continue to engage customers on how our technologies can mitigate supply chain risks address geopolitical issues and reduce tariff exposure. And we believe these conversations will increasingly translate into action as companies seek resilient manufacturing strategies.

Now turning to updates on customer activities that highlight the traction we are building, as well as steps we are taking to strengthen key end market exposure. Our year-over-year increase in hardware sales included a strong quarter for aerospace and defense, where we see continued progress with new customer purchases across all of our manufacturing focused systems such as F-3300, 770, 450, the new Neo 800+, as well as H350 and Origin systems.

In commercial aviation, we secured wins with industry leaders such as Boeing, Embraer and others, all demonstrating their continued confidence in our solutions, and the critical role our technology plays in production environments for the world's leading aircraft manufacturers.

Our defense business also showed strong performance as we continued to spearhead that sector with notable purchases from Honeywell, TE Connectivity, and L3Harris. We also participated in Trident Warrior 25, the U.S. Navy's flagship fleet experimentation exercise, where we demonstrated the critical role of distributed advanced manufacturing in enhancing military combat readiness. Together with FLEETWERX, and naval postgraduate school, we supported the DoD's largest distributed manufacturing demonstration to date, connecting assets across more than 8,000 miles. This exercise showcased our ability to provide both forward deployed 3D printing capabilities and reach back production through Stratasys Direct, creating a comprehensive ecosystem that significantly reduces reliance on traditional logistics chains for mission-critical repair and replacement. During the exercise, 7 different sites across the globe leveraged our printers to produce lightweight corrosion-resistant polymer parts that met U.S. military specification, demonstrating faster turnaround times and lower delivered cost compared to conventional supply chains. This demonstration reinforces our position as a trusted partner for defense applications and highlight the scalable practical solution we provide to enhance mission readiness and operational resilience across thousands of miles of distributed operations.

Moving to other areas. We are pleased to share that one of the world's largest U.S.-based technology companies, a leader across social media, AI innovation and virtual and augmented reality hardware invested in 4 of our newest FDM F3300 systems during the quarter. Initially, they will be used for large-scale prototyping for their automation platforms as well as their next-gen robot, after which they plan to use these systems to manufacture production parts for their VR and AR products. Our proven SAF powder-based technology platform continues its expansion across core verticals such as aerospace, automotive and government.

Notably, third quarter marked a significant strategic milestone with the adoption of the H350 platform by a global top 3 pharmaceutical company, opening the door to exciting new opportunities across medical device and drug development applications. Additionally, our collaboration with FAA, the National Institute for Aviation Research has launched a comprehensive SAF characterization program involving 5 suppliers across key industries, positioning us to address emerging demand for drone components, aviation parts, tooling and low-volume production applications, while establishing the technical foundations for expanded adoption in this sector.

In automotive, we extended our multiyear partnership with Andretti Global, as the official 3D printing partner of Andretti INDYCAR, building on a successful collaboration that dates back to 2018, where our F370 and Fortus 450mc systems have supported their engineering efforts. We are now designing an optimized 3D printing lab within Andretti's new headquarter to significantly enhance their additive manufacturing capabilities. This partnership demonstrates the real-world performance advantages our technology delivers in demanding motor sport environments where faster turnaround times, complex geometries and higher quality parts are essential for competitive success.

Now turning to Dental. We are enthused about the strategic investments we are making in our TrueDent and related solutions to accelerate growth in this important vertical. Most notably, during the quarter, we welcomed Chris Kabot as VP and Global Head of Dental. Chris brings exceptional credential as one of the world's leader in digital dentistry and additive manufacturing, combining clinical, technical, and commercial expertise. His recent role at Affordable Care, the largest denture manufacturer in the U.S., along with his track record of driving dental additive leadership positions us exceptionally well for the opportunities ahead.

To enhance our dental portfolio, we launched our Soft Relax post-processing solution, helping dental operators reduce manual labor by 90% while minimizing the use of harmful chemicals. We are also proud to be among the first dental additive companies to proactively remove TPO, a common but controversial toxic chemical from all our dental resins, reinforcing our commitment to patient safety and sustainability.

With that, I will turn the call to Eitan, to review our financials. Eitan?

Thank you, Yoav, and good morning, everyone. Our third quarter results reflected strong execution by our team to leverage notably improved lower adjusted operating expenses by 440 basis points year-over-year to deliver solid operating cash flow and positive adjusted earnings per share, as we effectively worked to offset the continued top line and gross margin pressure.

For the third quarter, consolidated revenue of $137 million was down 2.1% as compared to the same quarter in 2024, reflecting continued macro-driven capital equipment spending constraints. Product revenue in the third quarter was $94.1 million, flat compared to the same period last year. Service revenue was $42.9 million compared to $45.9 million in the same period last year. Within products revenue, system revenue was $32.1 million, up from $31.7 million we produced in the same period last year. Consumables revenue was $62 million compared to $62.4 million in the same period last year. Within service revenue, customer support revenue was $29.3 million compared to $31 million in the same period last year.

Now turning to gross margin. GAAP gross margin was 41% for the quarter compared to 44.8% for the same period last year. Non-GAAP gross margin was 45.3% for the quarter compared to 49.6% in the same period last year. The change versus the prior year period was in large part due to the increase in tariffs. When we initially discussed our expectations, the tariff rate had been set at 10%. However, subsequent to our comments, it was raised to 15%. During the quarter, we started to implement select price increases to help offset the impact of tariffs and look forward to seeing the full quarterly impact in the fourth quarter to help improve gross margins. In addition, lower revenues, change in mix, as well as higher absorption due to inventory reduction had an effect as well.

GAAP operating expenses were $78.8 million, 57.5% of revenue compared to $88.2 million or 63% of revenue during the same period last year. The improvement in expenses was due to our cost-saving initiatives, among other items. Non-GAAP operating expenses improved to $62 million, 45.3% of revenue compared to $69.6 million or 49.7% of revenue during the same period last year, due primarily to lower employee-related costs, including benefit from the cost-saving initiatives announced last year.

Regarding consolidated earnings, GAAP operating loss for the quarter was $22.7 million compared to a loss of $25.5 million in the same period last year. Non-GAAP operating income for the quarter was $0.1 million compared to an operating loss of $0.1 million for the same period last year, reflecting the impact of improving operating expenses due to our cost-cutting efforts, partially offset by lower gross profit. GAAP net loss for the quarter was $55.6 million or $0.65 per diluted share compared to a net loss of $26.6 million or $0.37 per diluted share for the same period last year.

During the quarter, we took a noncash nonrecurring impairment charge of $33.9 million or $0.40 per diluted share related to our investment in Ultimaker, a key cause for a larger GAAP net loss in the quarter. Non-GAAP net income for the quarter was $1.5 million or $0.02 per diluted share compared to a net income of $0.4 million or $0.01 per diluted share in the same period last year. Adjusted EBITDA was $5 million for the quarter compared to $5.1 million in the same period last year.

From a cash flow perspective, we generated $6.9 million in cash from operating activities compared to the use of $4.5 million in the third quarter of last year. We continue to expect to generate higher positive operating cash flow for the full year 2025, relative to 2024. We ended the quarter with $255 million in cash, cash equivalents and short-term deposits, $0.4 million higher than at the end of the second quarter with no debt remaining well-positioned to act on value-enhancing opportunities.

Regarding our outlook for 2025, we are reiterating the non-GAAP guidance we provided on the last call and adjusting the GAAP net income and EPS due to the previously mentioned noncash impairment. Specifically, 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.

We are reaffirming that full year 2025 revenue will range between $550 million to $560 million, with non-GAAP gross margin ranging from 46.7% to 47% and full year non-GAAP operating margin ranging from 1.5% to 2%. We still expect adjusted earnings per share of $0.13 to $0.16, with adjusted EBITDA ranging from $30 million to $32 million. We also anticipate producing year-over-year growth in operating cash flow. Please see the press release or slide presentation for further details.

With that, let me turn the call back over to Yoav, for closing remarks. Yoav?

Thank you, Eitan. As we look to the future, we are seeing encouraging signs in the specific verticals and applications where we are focusing, and the stability of our recurring revenue streams continues to provide an important foundation to build growth. While the time line for broader adoption has extended, we remain poised to seize opportunities as the industry inevitably improves. Our margin discipline and cost actions are helping us effectively protect profitability, which positions us well to leverage our strengthened balance sheet to maintain our technology leadership through strategic investments.

As a technology leader with a comprehensive portfolio spanning systems, materials, and software, we remain confident in our competitive position. Our continuing penetration into key growth industries, where we are building the infrastructure to grow in the key verticals where we lead, such as defense and aerospace parts and automotive tooling, reinforces our conviction in additive manufacturing's expanding role in production applications, and we look to maximize value for shareholders in the coming years.

With that, let's open it up for questions. Operator?

[Operator Instructions] The first question is from Brian Drab from William Blair.

I guess it's not morning for you, so I acknowledge that, too. Can you talk about the gross margin? And I know you said that you're putting into place the mitigating actions and the pricing. What do you expect the trajectory to be for gross margin? And how quickly do you think you can get it back maybe to the levels that you were seeing last year, fourth quarter, first quarter, second quarter? Can you talk about that trajectory of gross margin we should model?

Thank you, Brian, for the question. We anticipate -- so first of all, as you mentioned, the impact of the tariffs and the mix and also the absorption due to inventory reduction, which is a good thing, all had impact on our Q3 gross margin. As you also mentioned, we introduced price increase during Q3, and we expect a full impact in Q4. We anticipate the improvement, the increase in gross margin as early as Q4, during the coming quarter, and we anticipate this to continue to improve also into 2026. It's hard to at this point to say at which level, but you should expect improvement in Q4.

Yoav, you mentioned a couple -- what sounds like pretty significant opportunities with the social media AI company and others. Are any of those something for 2026, where you feel like they move the needle on revenue? What are you most excited about in terms of opportunities, specific opportunities that can maybe add some incremental material incremental revenue in 2026?

Thank you, Brian, for the question. We have a clear strategy. We are going for manufacturing period. And this position us, I would say, better than other players. So if I look relatively at the premium markets, those use cases that we are focusing on, and I will elaborate on them. We are in a better position than we ever have been because we are the strongest player now in those premium markets, which are our targets. And I'm talking about use cases that frankly, we're just getting started there. Aerospace and defense, dental, medical, tooling and some industrial machine components. But the main ones are those aerospace and defense and tooling.

Also when we talk about machine components and components for consumer goods, those are the AI and consumer goods company, the media company that we shared. No doubt that we will see growth in those use cases next year. We already have seen significant growth in those use cases, especially in hardware this year. So this is our growth going forward. And this is the direction. And I'm sure you will hear more about it during next year.

The next question is from Greg Palm from Craig-Hallum Capital Group.

Kind of following up on that last question. But I know last quarter, we were talking a lot about some of these more substantial production applications, longer sales cycles that initially maybe earlier this year, potentially could land this year. I know that got pushed out. But can you just maybe give us an update on where some of that lies? And just to be clear, on some of the stuff that you talked about, are these the same? Or are these sort of additional opportunities?

So those are the same opportunities because we are very focused. So those are the same opportunities and talking about or asking about sales cycle. We are not there yet, but it's the first quarter for a long time that we see some light at the end of the tunnel. Slight improvement in the sales cycle because those sales cycles are long, as you said, it could be between 1 to 2 years. And you need specific capabilities as a company to deliver the sales and to have the ability to enable the customers and our partners to be successful with those full solutions. So going forward, this is the focus. Those are the use cases that I mentioned, and we have great examples.

Maybe I'll share a real-world example of how additive manufacturer really address real-world problems. And I'm talking about in aerospace, I'm talking about supply chain and logistic problems in commercial aviation. I don't know if you remember, but around 18 months ago, we announced a strategic investment and collaboration with AM Craft. It's a European, I think it's EASA certified aviation part manufacturer. We entered into a commercial agreement with them to extend the certification of 3D printed aviation parts based on our technologies. And only this quarter, they purchased two more F900s. And together, the F900 fleet and F3300 reached now 10 machines, 10 machines that consume significant amount of material because it's reproduction. And aerospace is attractive because there is a real problem that they are solving there. You go to the association, I forgot the -- I think it's IATA, the Association of the Commercial Aviation. There is a supply chain problem there. And only the cost to the airline because of shortage and supply chain issues will be $11 billion only in 2025. And also, there is a backlog of new airplanes. So the two big players, Airbus and Boeing are not meeting their demand, and there is a huge backlog of 17,000 aircraft. It means that the old fleet is aging and need more spare parts.

Here, the solution of additive is exactly addressing the problem because you can print in hubs near the airport, and you solve problems. So take, for example, a seat that is broken and this seat needs to be replaced and you don't have the part. And if it's a business seat, it could be between $5,000 to $10,000 that the airline is losing on one flight. So recently, AM Craft certified or qualified our Texas Stratasys direct manufacturing site to produce those certified parts. And in the short term, we're going to certify also our Arizona site and also our Minnesota site. And effectively, it will make Stratasys direct manufacturing, the largest service bureau for certified aviation parts worldwide, where, of course, U.S. is the biggest market.

And essentially, it create distributed network for on-demand production of spare parts, where it takes time to build this infrastructure. But once you are there, it's a new world of production and maintenance. This is our focus, and this is only 1 example out of 5 use cases.

My second question on consumables, it's trending down a little bit on a year-over-year basis through the first 9 months. I know at one point, we were thinking a little bit of growth this year. Is that still the case? Or what's your -- what's sort of the implied revenue range for Q4 for consumables specifically?

Thank you. Consumables practically this year are flat or stable. And this is despite the challenging environment that we all see around us in terms of constraint on expenses because we have a resilient model there where people keep buying our material. But there will be a change because I'm trying to connect it to our focus on use cases, manufacturing use cases. Every manufacturing machine consumed much more than a prototyping machine. It's not a secret that we are not focusing on our installed base in entry-level rapid prototyping and low and rapid prototyping.

So we are not focusing there. It means that someone else will sell in the future to this installed base. We are focusing on the high end on those use cases that consume sometimes 10x more in terms of utilization and consumption of material than a rapid prototype machine. And because we are selling more F3300 like to this media company and more H350 and more FDM and P3 and SLA large machines, really industrial machines, we will see gradually consumption going up.

The next question is from Troy Jensen from Cantor Fitzgerald.

Maybe to start with Eitan here. OpEx, $62 million on a non-GAAP basis. Do you expect that to like start to grow now on a sequential go-forward basis? Or are we still doing kind of cost cuts and cost controls here?

Sure. Thanks, Troy, for the question. As you mentioned, if you compare year-over-year, we're at $69.6 million Q3 last year. We're down to $62 million. And I believe we shared with you quarter after quarter the tight management of our OpEx, and we continue to do that. I actually expect Q4 to trend slightly down relative to Q3 in OpEx terms. But we continue to invest, of course. So going forward, we will balance between tight cost management and, of course, securing our growth engine and investing in R&D and sales and marketing.

Maybe for Yoav here. On the production applications, I've always been told that the material pricing is the biggest variable in the price per part. So can you just talk about like pricing structure? How do you -- just thoughts on like forward gross margins on materials too with maybe potential pricing structures on material pricing?

Thank you, Troy, for the question. Definitely this is one of the areas we are making investments and making sure that we will differentiate ourselves because we are creating scale in material. So we are acquiring material players, you know it. And we are consolidating the DAC operation and making sure that we are creating the scale and coming with more affordable materials. Having said that, the high-performance material in most of the applications that we are targeting is not a barrier. So if I take aerospace, high performance material, the barrier is certifications and not the cost of the material because we are solving such a huge problem in aerospace that we have enough space to charge. But we understand that long term, this is something that we need to work on year-over-year over year, and we are doing it. And you will see gradually that we are improving the material prices in order to penetrate more applications.

The next question is from Alek Valero from Loop Capital Markets.

Yes, I wanted to ask, can you speak to how big you view the dental opportunity now? And how much you think you can capture there? And additionally, any details on timing?

Thank you, Alek, for the question. So of course, we are not sharing specific numbers around specific applications. But I can only share on dental that we lately recruited probably one of the most talented digital dental experts in the world, Chris Kabot. He came from Affordable Care, which are the largest denture player in the U.S. And you just do one by one. He selected us because of the technology and the prospects of our technology going forward. We have clear plan there. We know exactly what we are doing, where we need to focus. It's about restorative dental. It's about specific use cases that we can win with our 2 unique technologies, the PolyJet and P3. And as being reflected already, we have already 2 of the leading U.S. providers, Affordable Care and Glidewell are already our customers. So it's main focus for us. We are very positive about it. And we believe that we have the most superior offering in terms of color, option, light weight, cost, and we take it forward. This is for us, this is the way forward. It's personalization, it's customization. It's all the value that additive brings with the unique innovation that Stratasys is bringing to the table.

Just a follow-up. So on the purchase of 4 of your F3300s by an AI social media company, which sounds like Meta, do you foresee any future purchases? And additionally, I believe you said that the initial uses for prototyping with the plant to manufacture production parts. If and when they reach the point of manufacturing, what does that look like for you in terms of incremental products and software purchases?

Thank you. Of course, we cannot share the name of the customer, but we can share the prospect of the application. We are very excited about it from two aspects or from two different viewpoints. One, the potential is huge. But the other, we have been chosen from many other competitors after a very long sales cycle, which is a proof point to our capabilities in high-end FDM. So the F3300 is not a story. It went through certification. It went through tests. We printed benchmark, the same with aerospace, by the way. And we are talking about those companies want to create capabilities where they start with prototyping, but immediately, they can use the same machine for manufacturing, which is a huge advantage in terms of speed and being in the market before their competitors.

So this is the main thing business-wise that they see in our technology.

This concludes the question-and-answer session. 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.

Good day, and welcome to today's conference call to discuss Stratasys' second quarter 2025 financial results. My name is Kevin, and I'm your operator for today's call. Now I'd like to hand the call over to Yonah Lloyd, Chief Communications Officer and Vice President of Investor Relations for Stratasys. Mr. Lloyd, please go ahead.

Good morning, everyone, and thank you for joining us to discuss our 2025 second 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 [Technical Difficulty] and can be accessed through the Investor Relations section of our website.

Please note that some of the information provided 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. [ Statements made of ] 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 report 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 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 second quarter results aligned with expectations as revenue grew slightly over the second quarter last year, reflecting the resilience of our recurring revenue streams and the continued reliance customers place on our additive manufacturing technologies.

Customer engagement for our solution remains strong despite a global operating environment marked by ongoing uncertainty around challenged macroeconomic conditions and tariff policies. The result is customers maintaining disciplined capital spending approaches as they await signs of normalcy to emerge. Importantly, we are making meaningful progress in crafting and delivering key use cases with major customers that we believe will eventually begin flowing through to our financial results at some point in the future. Furthermore, our ongoing investment and commitment to R&D excellence bolstered by our strong balance sheet positions us well to continue delivering innovative products, materials and software capabilities that further solidify our leadership in digital manufacturing, particularly when customer spending eventually and inevitably returns.

Innovation and execution remain the foundation of our long-term growth strategy, which centers the drive towards supply chain localization and onshoring, the evolution of next-generation mobility platforms, advancing sustainability requirements, and a relentless focus on operational efficiency and cost optimization by companies around the globe.

By maintaining our disciplined approach to end-use development, prioritizing the most compelling applications while working to preserve margin integrity, we have built a platform that will enable Stratasys to emerge stronger as market dynamics stabilize.

While the tariff environment continues to evolve, it is worth re-emphasizing that additive manufacturing can be an ideal solution in tariff-sensitive environment by enabling local, rapid and cost-effective production capabilities. Tariff policies can actually accelerate adoption of our technologies, and we anticipate increased customer engagement as we continue to highlight these strategic advantages.

Turning to new technology offerings and customer success. During the quarter, we launched the North American Stratasys Tooling Center in collaboration with Automation Intelligence at their Flint, Michigan location. This facility is a dedicated hub to help manufacturers validate and scale additive manufacturing applications in production environments. The center operates Stratasys F3300 and F900 3D printers to demonstrate practical tooling solutions including jigs, fixtures, end-of-arm tooling and automotive components, enabling customers to explore how additive manufacturing can streamline operations, reduce costs, and accelerate response to manufacturing challenges. By combining additive manufacturing technologies with traditional capabilities, this new center addresses the growing demand for localized on-demand production solutions for production environment.

Our strategic collaboration with General Motors exemplifies the transformative power additive manufacturers brings to automotive production. For over 2 decades, we have helped GM revolutionize its manufacturing processes through our industrial 3D printing solutions, culminating in GM's launch of its additive innovation and additive industrialization centers in Michigan, one of North America's largest and most advanced additive manufacturing facilities. This collaboration has extended with many F900 systems deployed across over 15 high-value GM plants throughout North America, achieving excellent utilization rates and demonstrating the mature production-ready nature of our technology.

The results demonstrate substantial value delivery to enterprise customers. GM has achieved significant cost reduction on additive tooling compared to traditional methods while streamlining manufacturing workflow and accelerating tooling lead time from weeks to days or even hours. This provides critical competitive advantage, enabling a faster ramp of new vehicles in both internal combustion engine and electric vehicle programs.

We are supporting GM's aggressive EV launch schedules with rapid production of specialized tools for battery and high-voltage component handling while improving operator safety through lightweight custom polymer tooling solutions. Importantly, our solution helped GM achieve localized supply chain resilience and security, reducing dependencies and transportation requirements while enabling faster response to urgent production needs.

Also within automotive, we recently shared a video highlighting our strong multi-year partnership with Toyota, featuring testimonials from their production engineering group around the critical value our technology plays in their production plan. Through this collaboration, Toyota has achieved significant cost reduction by producing tools additively compared to traditional methods. We have helped compress lead times from weeks to days or even hours, allowing programs to reach production readiness far faster and supporting rapid replacement of damaged tools to minimize production line downtime.

Our additive solutions enable Toyota to create highly precise custom fit tools that reduce manufacturing variation and support consistent assembly via lightweight ergonomic design by nearly 33%. Our additive manufacturing technology is integral to meeting these accelerated targets.

Our systems provide parts Toyota cannot produce using conventional methods with comparable speed or accuracy, often creating polymer components stronger than metal alternatives. Toyota utilizes all 5 of our additive technologies plus our GrabCAD software to manage their printer fleet, exemplifying how we partner with customers to expand their understanding and adoption of 3D printing in an opportunity that could be far greater than today's market penetration.

Also during the quarter, our aerospace customer, Blue Origin, purchased multiple Neo800 SL systems for the production of investment casting patterns. Blue Origin is a leading aerospace manufacturers and space technology trailblazer in reusable rocket technology and a major participant in NASA contracts, including the current Artemis program plan to bring astronauts to the moon in 2027. Stratasys is also participating in this program. This partnership represents more than just today's application.

Blue Origin is validating the strength and durability of our polymer product for space flight applications, which could translate to approval for use in the tens of thousands of aerospace parts still made by hand today. The rigorous quality and data security standards that space flights demand position our technology for potentially significant future aerospace production applications. These sales align with our manufacturing strategy around aerospace production parts, demonstrating how our technology contributes to space travel today or potentially enabling next-generation travel solution that could extend far beyond space exploration tomorrow.

In the medical sector, utilizing Stratasys 3D printing capabilities proved critical in preparing for complex life-saving procedures, showcasing how 3D printing technology is revolutionizing life-saving medical applications and unprecedented preoperative planning capabilities. As a reminder, last year, we launched the J5 DAP system, an affordable anatomical model solution targeting thousands of hospitals worldwide, and we are seeing positive traction and life-saving example.

One such recent case was how Brisbane's Herston Biofabrication Institute created a life-sized 3D printed model based on a patient scan that revealed he was walking around with a ticking time bone inside his chest. The aorta, the biggest blood vessel in the body, had ballooned to about 4x the usual size, leaving it in danger of rapturing, a medical emergency likely to have cost him his life. The printed model enabled the surgeons at Prince Charles Hospital to better understand the complex anatomy and to plan and practice on the life-like model prior to the operation. This allowed them to optimize execution of the surgery and minimize potential risks and complications, in the end, saving the patient's life. The anatomical model opportunity for Stratasys, such as training and presurgical planning, is $1.8 billion annually.

On the material side, we commercially launched P3 Silicone 25A, a high-performance material developed through strategic collaboration with global silicon leader, Shin-Etsu, the largest chemical company in Japan. It is designed exclusively for the Stratasys Origin DLP platform to further reducing lead times and enabling localized low-volume production for applications, including seals, gaskets, vibration dampers, and soft-touch components.

The material has passed Shin-Etsu's biocompatibility and flame retardancy certification, representing the first in a planned portfolio of silicon materials that combine Stratasys' production-grade P3 DLP technology, which enhances silicon's chemistry expertise to deliver trusted performance backed by repeatable results and real-world data.

On the software side, our progress reflects our commitment to delivering complete use case [ solutions-based ] software company to integrate its fixture-made software into Stratasys GrabCAD PrintPro, enabling users to design and generate production-ready fixtures quickly without CAD experience needed. This capability launched in GrabCAD Print throughout 2025, uses intelligence automation in designing custom fixtures, allowing manufacturers to create secure, precise work holding solutions in minutes. This combined solution eliminates the manual effort and complexity traditionally associated with fixture design, enabling accelerated adoption of 3D printing by removing the constraint of needing an expert card designer, shifting fixture design to additive operators and reducing fixtures creation time from days to hours. This results in a higher utilization of the printers and higher rate of 3D printing adoption.

The new Fortus 450mc we mentioned last quarter exemplifies our complete solution approach, providing an integrated tooling solution, combining software, printer and materials in a factory-ready package.

We are also receiving great feedback from customers regarding our software ecosystem, which continues to drive customer value. NASCAR's Tim Murphy recently said that what sets our partnership with Stratasys apart is the complete ecosystem, from our in-house machine, to Streamline Pro software, to on-demand production. NASCAR now manage hundreds of parts through a single platform and has transformed 3D printing from a support function into strategic business units with full P&L tracking.

Furthermore, to continue to scale this success across our customer base, we are launching a dedicated software customer success management team in the third quarter to enhance onboarding, drive engagement and support renewals for both GrabCAD Print Pro and Streamline Pro users. These are all real-world examples of how we are pushing forward our leadership position despite longer than expected market headwinds.

We are excited by the innovation across our portfolio, making meaningful inroads into a multitude of high-growth industries and customer opportunities. Our customer spending has remained challenged for longer than expected, impacting our near-term view of the business, but our long-term outlook for our company and industry remains intact. We have the financial strength to invest and innovate so that our leadership position expands over time.

With that, I would like to turn the call to Eitan to review our financials. Eitan?

Thank you, Yoav, and good morning, everyone. The second quarter results once again demonstrate the resilience of our operating model as we delivered positive adjusted operating income and adjusted net income compared to losses in both in the year ago period. This despite an only slight revenue increase relative to the second quarter last year and lower gross margins. These results were thanks in part to 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 second quarter, consolidated revenue of $138.1 million was slightly higher as compared to the same quarter in 2024, as customers continue to defer major capital spending until market uncertainty subsides.

Product revenue in the second quarter was $94.8 million compared to $93.6 million in the same period last year. Service revenue was $43.3 million compared to $44.4 million in the same period last year. Within product revenue, system revenue was $30.6 million, up from $29 million we produced in the same period last year.

Consumables revenue was $64.2 million compared to $64.6 million in the same period last year, and up 2.6% sequentially over the first quarter as the utilization rates of the system we have sold remained strong. Within service revenue, customer support revenue was $30.1 million compared to $30.5 million in the same period last year.

Now turning to gross margin. GAAP gross margin was 43.1% for the quarter compared to 43.8% for the same period last year. Non-GAAP gross margin was 47.7% for the quarter compared to 49% in the same period last year. The change versus the prior year period was primarily due to the mix in product revenues and higher absorption due to reduced inventory levels, which have come down from June 2024 to June 2025 by over $30 million, partially offset by operational efficiency.

GAAP operating expenses were $76.1 million, 55.1% of revenue compared to $86.5 million or 62.7% of revenue during the same period last year. The improvement in expenses was due to our cost-saving initiatives, among other items.

Non-GAAP operating expenses improved to $64.7 million, 46.9% of revenue compared to $70.9 million or 51.3% of revenue during the same period last year, due primarily to lower employee-related costs, including benefits from the cost savings initiatives announced last year.

Regarding our consolidated earnings, GAAP operating loss for the quarter was $16.6 million compared to a loss of $26 million for the same period last year. Non-GAAP operating income for the quarter was $1.1 million compared to an operating loss of $3.2 million for the same period last year, reflecting the impact of improved operating expenses due to our cost-cutting efforts.

GAAP net loss for the quarter was $16.7 million or $0.20 per diluted share compared to a net loss of $25.7 million or $0.36 per diluted share for the same period last year. Non-GAAP net income for the quarter was $2.2 million or $0.03 per diluted share compared to a net loss of $3 million or $0.04 per diluted share in the same period last year. Adjusted EBITDA was $6.1 million for the quarter compared to $2.3 million in the same period last year.

From a cash flow perspective, we used $1.1 million in cash for operating activities compared to the use of $2.4 million in the second quarter of last year. We expect to generate positive operating cash flow for the full year 2025. We ended the quarter with $254.6 million in cash, [ cash equivalent ] position to act on value-enhancing opportunities.

Regarding our outlook for 2025, the return to normalized capital spending has been pushed out further than we anticipated when we issued our guidance for 2025. While customer engagement remains strong, sales cycles are still longer than usual. Specifically, there have been several substantial opportunities focused on production applications that have been in the works for some time and are advancing towards final stages. But the exact timing -- while we had expected them to close this year, they could move into 2026. Therefore, we're adjusting our guidance for this year accordingly. We believe the depth and quality of these anticipated awards, combined with the use case momentum we are seeing across a number of our end-use segments positions us well for 2026 and beyond.

As part of our disciplined approach regarding profitability, we plan to introduce some additional cost mitigation with the primary benefit and impact expected in the fourth quarter this year. It is important to note that these relate to targeted non-essential costs that will not impact our investment in technology innovation and future growth.

We still expect sequential revenue growth in the second half of 2025 with third quarter expected to range from slightly lower to slightly higher than Q2 and fourth quarter higher sequentially.

We expect that full year 2025 revenue will range between $550 million to $560 million. Non-GAAP gross margins are expected to range from 46.7% to 47% due to a number of factors, including a different mix in product revenue, tariffs and higher absorption costs due to reduced inventory levels.

Full year non-GAAP operating margins are expected to range from 1.5% to 2%, with adjusted earnings per share of $0.13 to $0.16, while adjusted EBITDA should range from $30 million to $32 million.

Note that with the cost mitigation I mentioned earlier, adjusted EBITDA in the fourth quarter is expected to be 8% or higher. Recall that we previously targeted 8% for the full year, if revenue [Technical Difficulty] for Q4, we expect to deliver at least 8% adjusted EBITDA, reflecting the overall improvement in our operating model. And we expect operating cash flow to be positive for the year. Please see the press release for further details.

As Yoav mentioned, despite the stubbornly prolonged challenges of the near term, our excitement for the future and our expanding leadership position within it remain intact.

With that, let me turn the call back over to Yoav for closing remarks. Yoav?

Thank you, Eitan. Stratasys differentiated approach and business model continue to demonstrate remarkable adaptability due to our cost discipline, innovation leadership and the increasingly mission-critical role our solutions play in customer operations.

Our focus on high-value applications, combined with enhanced customer education and go-to-market execution continues building the foundation for accelerated adoption when investment confidence rebounds. With our recently bolstered balance sheet, we are extremely well positioned to continue leading the industry in systems, material and software innovation as well as the scaling of additive solutions towards more widespread manufacturing applications as macro conditions eventually normalize.

The stability inherent in our recurring revenue streams, paired with our commitment to operational efficiency and margin discipline creates a platform designed to help us mitigate near-term volatility while positioning us to deliver compelling long-term returns.

As industry leaders with a comprehensive technology portfolio spanning hardware, materials and software solutions, we are uniquely positioned to capture the significant opportunities that will emerge when uncertainties subside and customers eventually resume normal capital deployment cycles and embrace the localized manufacturing advantages our platforms deliver. With that, let's open it up for questions. Operator?

[Operator Instructions] Our first question today is coming from Brian Drab from William Blair.

This is Tyler on for Brian Drab. Just starting off with the revenue guidance regarding the lower guidance, what are -- while you cited delays in customer decision-making and macro uncertainty, can you clarify which specific verticals or regions are seeing the most pronounced slowdown or delays? And I have a follow-up.

Well, there is no slowdown. There is only delay. I want to be very clear. And maybe we take a step back, and I'll try to explain the situation. We are going as a leader in this industry. We're going through a shift, a shift towards production applications. And by nature, those production applications come with larger deal size and longer sales cycles. So this is like a new situation that we are heading the entire industry into it.

Then when we are looking at our pipeline, we need to look at it completely differently. So when we are deciding to adjust the outlook, it is related to the uncertainty around those large deal and the exact timing to close them. So we have less diversified, low, low, low value deals, and we have large deal in production. Those deals may be delayed this year, but definitely not canceled.

When I look at the overall pipeline, it is strong. And despite the delay in customer spending, we see many leads coming. But the real difference is those large deals that take us into manufacturing, like the deals that we just emphasized in the script about Toyota, about GM, those are transformative deals. We are becoming the backbone of some operations of the largest companies on earth. This is a breakthrough for additive manufacturing.

So when we look forward, and we are obligated historically, we are always trying to be as transparent as possible with our investors. So once we saw that it might be delayed, we say, okay, let's put it on the table. But when I look at the verticals, we have large customers, best relationship in the industry with those large customers in key verticals, you take government, aero, defense, very high level of engagement, especially, for example, with the government and defense and aero customers. And the guidance is a reflection of this new situation that we are in.

I want to emphasize that those deals are across multiple verticals, both new and existing customers. So they are also diversified across verticals like aero, tooling, dental, medical.

I appreciate you providing more color on that. Just wanted to ask a follow-up on the fourth quarter adjusted EBITDA margin. You mentioned that it should be 8% or more of revenue. What assumptions have baked into that ramp outside of cost controls? Are there any specific customer deals that are expected to pick up, product launches, or seasonal trends? Because last year's fourth quarter was particularly stronger than the other quarters. So just any more color you can provide on the ramp-up in margin.

Thanks, Tyler, for the question. So it's actually to complement Yoav's answer to the last question. Those large deals are not baked into our 2025 model. They are not baked into our Q4 model. If they were still high probable to be in Q4, the guidance would have been higher.

So to answer your question, it is largely associated for Q4 based on the new model. It is largely associated with tight cost monitoring and some cost reduction.

Next question is coming from Greg Palm from Craig-Hallum.

I think you had maybe covered the revenue guide well, but I'm still a little bit unclear on, call it, the magnitude of the earnings reduction. Can you just talk a little bit about, one, what is specifically impacting the gross margin as much as it is? And just to be clear, can you give us some sense on the magnitude of this new cost reduction effort that you seem to be alluding to that takes place or takes into account Q4?

Thank you, Greg. Thank you for the question. I cannot be specific about each deal size, but the magnitude is more or less the gap between the new guidance and the old guidance, maybe a little bit more. That's more or less the magnitude of those deals.

Greg, on the cost side, so -- or gross margin in specific, so it is associated by a few factors. One is changes in the sales mix. And these are small changes that are aggregated. The other element is the absorption [Technical Difficulty] inventory levels went down by $30 million. That's something that has a big positive impact. And we've discussed this with you every call in the last couple of years, our efforts to reduce inventories, and that's something that is also meaningful for our future cash flow. So that's something that is definitely a good thing. But in the short term, it has an impact on the absorption and that has a negative impact temporarily on the gross margin. So that's the second element.

The third element is associated with tariffs. Our biggest production is in the U.S., but we do produce outside of the U.S. and the changes in tariffs had some impact. We have mitigation plan that is ongoing. It will take a few months. It will take a short period to complete everything, and that's why we have a temporary impact on our gross margin between now and the rest of the year.

With respect to the cost mitigation that I believe you also asked about, these are non-essential projects, mainly variable costs and some discretionary items like travel. This is more or less the areas of savings.

Okay. So maybe more sort of short-term temporary reductions, my follow-up was going to be just kind of thinking about fiscal '26, what's your comfort level on, call it, 8% EBITDA margins under a lower revenue relative to 2024?

Greg, I'll say, I think it's very important to say, we look quarter-by-quarter. We're a public company. But we structure a company with a cost infrastructure that will help us make us profitable and much more profitable when revenue increase. So to your question, we will plan 2026 in the next few months as we build our budget for next year. But we designed the company, we structured the company in a way to have next year 8% or better when we finish this plan.

[Operator Instructions] Our next question is coming from Jim Ricchiuti from Needham & Company.

Eitan, you may have answered this next question in response to Greg's earlier question. But it's a little surprising to have seen the slightly lower gross margin in Q2 versus Q1, even though the revenues were up sequentially, modestly, but including sequential growth in consumables. So what occurred there? Was that an absorption or tariff-related impact? Maybe you could just shed a little bit more light on that.

Sure. So I guess at the start, I'll say that the gross margin in Q1 was 48.3%, gross margin in Q2 is 47.7%. The difference to start with is not that significant. However, to address your question, there are two main elements. One is the absorption that I mentioned, and you mentioned also in your question, that's something that had some impact on this change, small change. And the other element is tariffs. Tariffs did not have significant impact on Q2. But again, when we bridge between 48.3% to 47.7%, that's part of the bridge.

I noticed that the company acquired some of the Nexa assets. And I was wondering -- I know this is fairly insignificant, but which of these Nexa3D printing processes were part of the asset purchase? And I wonder if you have any -- you could elaborate on what your plans are for some of these assets that were acquired?

Jim, Yoav here. So we are in a very unique situation in our industry. Practically, there is a shakeup. And we are lucky that we work so hard to be in a situation where we deliver, we are not burning cash, we are stable. I would even say that we are one of the best operators in the industry because we have the infrastructure. So infrastructure is coming with synergies. And it led us to be financially healthy, both in terms of the balance sheet with the cash with no debt, $255 million on our balance sheet, positive operating cash flow on an annual basis and a very strong position with the best customers on earth in terms of relationships.

When you take all the above and you blend it, it put us in the best position to acquire, I would say, companies with really good value for remaining of companies with prices that no one could even dream about them only 2 years ago. And we can capture this opportunity, and we did similar things with 2 companies, which, as you said, are not significantly material, but we acquired Forward AM from the solvent, and we are now rebuilding it.

Forward AM came with amazing portfolio of IP and materials that are unique and position us much stronger in key use cases that are part of our strategy. And great people as well, researchers, chemists, product managers that know the material arena better than anyone else in this industry. So this is one example.

If you take Nexa -- and IP, of course -- if you take Nexa, which is another example, they had tremendous success only a few years ago in terms of the ability to deliver great parts and machines to the market. But the shakeout didn't do well for them as well. And we acquired them, again, I would say, in favorable terms, and we received not an operational company, but we received a great IP portfolio with know-how, with R&D knowledge, and it will position us again in those use cases that we are focusing on like aerospace and defense, for example, with the ability to have significant R&D shortcut.

So both those opportunities demonstrate the strength of Stratasys as a healthy company, both on the financial side, but more importantly, on the operational side and on the go-to-market. We are very happy with it. Of course, there is a lot of work to do because we need to rebuild those businesses, but we will do it.

Next question is coming from Troy Jensen from Cantor Fitzgerald.

Gentlemen, congrats on the nice results here in a tough environment. Maybe for Eitan, just on the -- when you guys talk about these deals that kind of slipped or haven't closed yet or delayed, if I remember correctly, coming into the year, were these related with the F3300 and maybe automotive opportunities?

Troy, sorry, we couldn't hear the question. Can you repeat it, please?

Yes, sure. I think coming into the year, you guys have pretty good confidence on the second half ramp, and now you're talking about some deals slipping, right? So I guess I thought they were associated with the F3300. So I'm wondering if you could just kind of confirm that maybe the automotive opportunity slipped to the right? Just update us on the F3300, please.

Troy, thank you for the question. Happy to update on this. So the -- as you know, F3300 is key in our use case strategy. So it's practically the best tooling machine out there in terms of throughput and reliability by far. It is great for aerospace and defense, and we already have customers that are using it in aerospace and defense and are very, very happy, and they have repeatable purchasing of the same machine. And there is no connection between the deal slip and F3300. This is about how those guys are building the infrastructure, how they are building the workflow, how they collaborate, how they prepare within the organization, the site. This is the type of challenges that we are facing.

On the contrary, F3300 is a major, I would say, promoter of us being the one being considered for those deals. So actually, we are very happy with F3300. It's the most reliable today, the most reliable and will be better and better, the most reliable FDA machine that we have. No one can print in this speed. No one has this level of reliability. No one has this level of accuracy, and it all come together to a better TCO for our customers.

Troy, I will add that the plan, the model that we just released with the new guidance reflects more F3300 in 2025 compared to 2024 when we launched.

Yes, that's good to know. And maybe just a follow-up for you, too. Just in the second half guidance, is there any revenue or OpEx from Forward AM and Nexa?

We have just acquired the 2 businesses. We are rebuilding it. And once we have a better understanding of the situation and the market traction, we will be better off. Currently, it's immaterialized.

Next question is coming from Alek Valero from Loop Capital Markets.

This is Alek on for Ananda. So given the success of your strategic collaborations with General Motors and Toyota involving your F900 systems, do you guys anticipate this momentum to lead to additional partnerships with other vehicle OEMs, especially in light of the growing emphasis on localized manufacturing?

Thank you for the question. I think you put light on a very important, I would say, trend in additive. We need to penetrate new use cases. And in order to penetrate, we need proven use cases. We need to prove the concept. And it's true for automotive, but it's also true for dental and it's also true for aerospace. But let me start with GM and Toyota. By the way, those are super respectable, leading in their areas, and they decided to go with Stratasys.

I want to relate to three points here. The first one that it's a proof of concept of the use case in production because practically what they have done -- and if you look at GM as an example -- they standardize the AM workflow in manufacturing. So it's something that they will be able to replicate and extend.

The second point is about the demonstration of the value proposition of additive and of Stratasys' offerings in those production applications. And the value proposition here is mainly -- by the way, on both Toyota and GM is about the speed and it's about the cost savings. And of course, speed also save a lot of costs.

So when you look at Toyota, it is part of their program to reduce 33% of the time of developing a new product. This is huge. And in terms of GM, they can print a tool not in months, but in hours. That's again, huge contribution to their competitiveness. And GM cost savings, in some cases, the tool that they are printing is less than 10% than the cost of the traditional tool. So it's a real demonstration of the value proposition.

The third thing is all about how it creates growth. And relating to your question, you can expand within the customer because it's standardized, so to other plants, and we see it, it is happening. And we can replicate it to other OEMs. So we are very happy with this result.

We have similar results, by the way, in dental. We are the first one in terms of the competitive landscape, I don't know what others are saying, but we are the first in the market to be with solution, inkjet solution, monolithic denture that utilize multiple materials in a single print process. No one did it before us, even if they claim. And already, we have 85,000 dentures printed. So thousands of people are going with our dentures, and that creates the momentum. The proven use case creates the ability to replicate and [Technical Difficulty]

[Audio Gap]

The consumables recurring revenue stream that's tied post sale. But could you speak to any upsell opportunities you foresee with General Motors and Toyota as well as with any future collaborations?

Definitely there is an upsell opportunity here to others. So we're discussing here. By the way, I encourage -- it'd be great if the listeners could watch the video. Seeing is believing. I can talk here for hours. But once you see this video, you will understand the value prop, the value proposition of additive and the value proposition of Stratasys and why Stratasys within additive.

Please click the link on the slide. It's so simple, and it will explain better -- definitely in better English, better than anything that I can say. So please click the link there. So when I'm looking at the opportunity, it is huge, not only on the hardware side, but those are manufacturing machines. They are being used in up to sometimes around 85% utilization and more. And what does it mean that they -- rule of thumb, they consume sometimes 10x more than a rapid prototyping, same machine used in terms of material. So the consumption of material can be 10x, sometimes more than a prototyping machine. This is the essence of what we are doing here. We are moving into real production and reproduction consumes more material. But you need to meet the production requirements. And Stratasys is one of not many companies that can meet those requirements and definitely leading the industry.

We have reached the end of our question-and-answer session. I'd like to turn the floor back over to Dr. Yoav Zeif for any further closing comments.

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

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.