Stratasys Q2 Earnings Beat, Revenues Miss on Weak System Sales

Stratasys SSYS reported second-quarter 2026 non-GAAP earnings of 3 cents per share, flat year over year. The figure beat the Zacks Consensus Estimate by 200%. 

Revenues declined 0.4% year over year but grew 3.7% sequentially to $137.61 million. However, it missed the consensus mark by 1.7%. 

Record consumables revenues supported results, while weaker system sales weighed on the top line. Aerospace and defense revenues increased 17% year over year, reflecting growing adoption of Stratasys’ additive manufacturing platforms for production applications.

SSYS Revenue Mix Shows Consumables Strength

Product revenues declined 2.2% year over year to $92.7 million. Within products, system revenues fell 13.7% to $26.4 million, reflecting continued variability as the company shifts toward larger manufacturing-oriented deals. Consumables revenues increased 3.3% to a record $66.3 million, driven by manufacturing materials. 

Stratasys, Ltd. Price, Consensus and EPS Surprise

Stratasys, Ltd. price-consensus-eps-surprise-chart | Stratasys, Ltd. Quote

Services revenues rose 3.7% year over year to $44.9 million. Customer support revenues decreased 1% to $29.9 million, while Stratasys Direct recorded 12.1% year-over-year growth.

Stratasys Margins Face Currency Pressure

Non-GAAP gross margin contracted 50 basis points year over year to 47.2% from 47.7%. The strong Israeli shekel pressured profitability, partially offsetting the benefit from higher-margin consumables. The margin nevertheless improved from 46.3% in the first quarter.

Non-GAAP operating expenses were $64.8 million, or 47.1% of revenues, compared with $64.7 million, or 46.9%, a year earlier.

Adjusted EBITDA declined to $5.3 million from $6.1 million. Management said EBITDA would have been $8.2 million excluding the $2.9 million adverse currency impact.

Non-GAAP operating income declined 90.9% year over year to $0.1 million from $1.1 million in the year-ago quarter.

SSYS Builds Aerospace and Defense Momentum

Aerospace and defense, Stratasys' largest vertical, grew 17% year over year. Management highlighted the expansion of U.S. Air Force adoption of F900 systems for sustainment and the production of flightworthy parts, with orders increasing across larger, ongoing programs.

Stratasys also expanded its relationship with Quickparts through an agreement to purchase 12 Neo800+ systems, in addition to six existing units. The company was also awarded a two-year, $7.8 million America Makes program to advance in-situ monitoring capabilities for its F900 and F3300 platforms.

Stratasys Expands Industrial Growth Opportunities

Automotive activity included FANUC's adoption of Stratasys industrial solutions and an agreement with FAW Group to purchase 12 F900 systems by year-end. Two of those systems were shipped during the second quarter. FAW already operates five F900 systems and eight other Stratasys systems.

The pending Markforged acquisition is expected to broaden Stratasys' production offering with continuous carbon fiber technology, materials and software. The $42.5 million all-cash transaction involves a business that generated roughly $70 million in 2025 revenues. Stratasys expects the deal to close by the end of 2026 and contribute positively to EBITDA within the first year.

SSYS Cash Flow Reflects Non-Routine Spending

Stratasys ended June 30, 2026, with $212.5 million in cash, cash equivalents and short-term deposits, down from $237.8 million at the end of the first quarter. The company remained debt-free, providing financial flexibility for technology development and inorganic growth initiatives.

Operating activities used $18.7 million of cash during the quarter compared with $1.1 million used a year earlier. Management attributed the elevated cash usage mainly to non-routine items, including legal expenses related to protecting intellectual property.

Stratasys Reaffirms Most of 2026 Outlook

Stratasys reaffirmed its 2026 revenue outlook of $565-$575 million and continues to expect sequential revenue growth through the year. Non-GAAP gross margin is projected to be in the range of 46.7-47.1%, while non-GAAP operating margin is expected to be between 0.7% and 1.5%.

The company maintained its non-GAAP earnings guidance of 9-14 cents per share and adjusted EBITDA forecast of $25-$30 million. Capital expenditures are projected to be in the range of $20-$25 million. However, Stratasys no longer expects positive operating cash flow for the full year following first-half cash usage, although it expects operating cash flow to turn positive in the second half of 2026.

Zacks Rank & Other Stocks to Consider

Currently, Stratasys carries a Zacks Rank #2 (Buy). 

Caterpillar CAT, Generac Holdings GNRC, and Schneider Electric SBGSY are stocks worth considering in the broader Zacks Industrial Products sector. While Caterpillar and Generac Holdings sport a Zacks Rank #1 (Strong Buy), Schneider Electric currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
 
The long-term earnings growth rates for Caterpillar, Generac Holdings, and Schneider Electric are 21.07%, 12%, and 17.18%, respectively.

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