A month has gone by since the last earnings report for Stratasys (SSYS Quick QuoteSSYS - Free Report) . Shares have lost about 12.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Stratasys due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Stratasys Q2 Earnings and Revenues Beat Estimates

Stratasys reported second-quarter 2022 non-GAAP earnings of 2 cents per share, which compared favorably with the Zacks Consensus Estimate of a loss of 3 cents per share. The bottom line improved significantly from the year-ago quarter’s loss of 2 cents per share.

The company’s revenues jumped 13.3% year over year to $166.7 million and surpassed the consensus mark of $166 million. This year-over-year top-line growth was driven by strength in the Systems performance.

Quarter in Detail

Segment-wise, Product revenues were up 15.4% from the year-ago quarter to $115.7 million. Within Product revenues, System revenues climbed 29.2%, while Consumables revenues jumped 3.9% year over year.

Revenues from Services increased 9% year on year to $50.9 million. Within Service revenues, customer support revenues advanced 9.1% year over year.

Stratasys’ non-GAAP gross profit increased 9.4% from the year-ago period to $79.3 million. Consequently, non-GAAP gross margin expanded 10 basis points (bps) to 47.6%.

Non-GAAP operating expenses flared up 6.8% year on year to $77.4 million. As a percentage of revenues, it contracted 290 bps to 46.4%. Non-GAAP operating income came in at $1.9 million against the year-ago quarter’s loss of $2.6 million. The margin rose by 300 bps to 1.2%.

Adjusted EBITDA soared 111.4% to $7.4 million.

Balance Sheet & Other Details

Stratasys exited the second quarter with cash and short-term deposits of $438.3 million compared with the $475.6 million witnessed at the end of the previous quarter.

As of Jun 30, 2022, there was no long-term debt.

During the April-June quarter, the company utilized an operating cash flow of $22.8 million.

Updated Outlook

For 2022, Stratasys’ management now projects revenues between $675 million and $685 million, down from the earlier estimate of $685-$695 million. SSYS still anticipates non-GAAP earnings in the range of 14 cents to 19 cents per share in 2022.

Stratasys estimates 2022 operating expenses to increase by $18-$23 million from the 2021 level, primarily due to the ongoing investments in new products associated with higher revenues.

For 2022, Stratasys continues to expect the non-GAAP operating margin to be slightly above 2%. Adjusted EBITDA is still forecast in the band of $38 million to $41 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

The consensus estimate has shifted -80% due to these changes.

VGM Scores

Currently, Stratasys has a poor Growth Score of F, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Stratasys has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.