UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934

For the month of February 2020

Commission File Number 001-35751

STRATASYS LTD.
(Translation of registrant’s name into English)

c/o Stratasys, Inc. 1 Holtzman Street, Science Park
7665 Commerce Way P.O. Box 2496
Eden Prairie, Minnesota 55344 Rehovot, Israel 76124
(Addresses of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F ☒ Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐


CONTENTS

Quarterly and Annual Results of Operations

On February 26, 2020, Stratasys Ltd. (“we” or “us”) announced our financial results for the fourth quarter and the full year ended December 31, 2019. A copy of our press release announcing our results is furnished as Exhibit 99.1 to this Report of Foreign Private Issuer on Form 6-K (this “Form 6-K”) and is incorporated herein by reference.

In conjunction with the conference call being held on February 26, 2020 to discuss our results, we are also furnishing a copy of the script used for the conference call to provide additional information regarding our business and our financial results (attached to this Form 6-K as Exhibit 99.2 and incorporated herein by reference) and a PowerPoint presentation with additional information (attached to this Form 6-K as Exhibit 99.3 and incorporated herein by reference).

The information in this Form 6-K, including Exhibits 99.1, 99.2 and 99.3, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

STRATASYS LTD.
 
Dated: February 26, 2020 By: /s/ Lilach Payorski
Name:   Lilach Payorski 
Title: Chief Financial Officer 

EXHIBIT INDEX

The following exhibits are furnished as part of this Form 6-K:

Exhibit        Description
99.1 Press release dated February 26, 2020 announcing the financial results of Stratasys Ltd. for the fourth quarter and full year ended December 31, 2019
99.2 Script for conference call of Stratasys Ltd. discussing quarterly and annual financial results, held on February 26, 2020
99.3 PowerPoint presentation with additional information for the foregoing conference call



NEWS RELEASE

STRATASYS RELEASES FOURTH QUARTER AND FULL YEAR 2019 FINANCIAL RESULTS

Fourth Quarter Revenue of $160.2 million and $636.1 million for full year 2019

Fourth Quarter GAAP net loss of $2.8 million, or $0.05 per diluted share, and non-GAAP net income of $10.0 million, or $0.18 per diluted share

Company releases full year 2020 earnings guidance

Minneapolis & Rehovot, Israel, February 26, 2019 — Stratasys Ltd. (NASDAQ: SSYS) announced financial results for the fourth quarter and full year 2019.

Q4 2019 Financial Results Summary:

Revenue for the fourth quarter of 2019 was $160.2 million, compared to $177.1 million for the same period last year.

● GAAP gross margin was 49.1% for the quarter, flat compared to the same period last year.
 
● Non-GAAP gross margin was 52.4% for the quarter, compared to 52.2% for the same period last year.
 
● GAAP operating loss for the quarter was $3.3 million, compared to an operating loss of $3.8 million for the same period last year.
 
● Non-GAAP operating income for the quarter was $10.2 million, compared to non-GAAP operating income of $12.8 million for the same period last year.
 
● Non-GAAP EBITDA was $15.8 million for the quarter, compared to $20.1 million for the same period last year.
 
● GAAP net loss for the quarter was $2.8 million, or ($0.05) per diluted share, compared to a net income of $6.3 million, or $0.12 per diluted share, for the same period last year.
 
● Non-GAAP net income for the quarter was $10.0 million, or $0.18 per diluted share, compared to net income of $11.3 million, or $0.21 per diluted share, for the same period last year.
 
● The Company used $3.4 million of cash from operations during the fourth quarter and ended the period with $321.8 million in cash, cash equivalents and short-term deposits.

“Since joining Stratasys I have taken the opportunity to begin an in-depth review of the business and am already impressed by the deep level of knowledge, professionalism, and dedication exhibited at all levels of the organization. I strongly believe in the solid foundation for growth that has been created at Stratasys, including an innovative and expanding product portfolio, disciplined financial management, and the industry’s leading distribution partners,” said Yoav Zeif, Chief Executive Officer of Stratasys. “Starting in the back half of this year we expect to introduce our next phase of growth with a notable step-change in our portfolio as we begin to launch a series of new products for both manufacturing and design prototyping solutions. I am extremely optimistic regarding the outlook of the business, and I believe that there is tremendous potential to drive significant near-term and long-term value for all of our stakeholders.”

Fiscal 2019 Financial Results Summary:

● Revenue for fiscal 2019 was $636.1 million compared to $663.2 million for fiscal 2018.
 
● GAAP operating loss for fiscal 2019 was $11.7 million, compared to a loss of $8.8 million for fiscal 2018.
 
● Non-GAAP operating income for fiscal 2019 was $34.1 million, compared to $36.5 million for fiscal 2018.
 
● GAAP net loss for fiscal 2019 was $10.8 million, or ($0.20) per diluted share, compared to a loss of $11.0 million, or ($0.22) per diluted share, for fiscal 2018.
 
● Non-GAAP net income for fiscal 2019 was $30.5 million, or $0.56 per diluted share, compared to non-GAAP net income of $27.8 million, or $0.52 per diluted share, for fiscal 2018.
 
● The Company used $11.2 million in cash from operations in fiscal 2019.

Financial Guidance:

Stratasys today issued the following information regarding the Company’s guidance for the fiscal year ending December 31, 2020:

● Revenue guidance of $620 million to $680 million.
 
● GAAP net loss of $30 million to $18 million, or ($0.54) to ($0.33) per diluted share.
 
● Non-GAAP net income of $25 million to $34 million, or $0.45 to $0.60 per diluted share.
 
● Non-GAAP operating margins of 5% to 6.5 %.
 
● Capital expenditures are projected at $40 million to $60 million.

Given the expected ongoing negative impact of not recording a tax benefit on U.S. tax losses on the Company’s non-GAAP net income, the Company believes that the rate of growth in its non-GAAP operating income is the best measure of its performance.

Non-GAAP earnings guidance excludes $25 million to $26 million of projected amortization of intangible assets; $26 million to $28 million of share-based compensation expense; reorganization and other expenses of ($3 million) to $4 million. Non-GAAP guidance includes tax adjustments of $3 million to $4 million on the above non-GAAP items.

Stratasys Ltd. Q4 2019 Conference Call Details

The Company plans to hold the conference call to discuss its fourth quarter and full year 2019 financial results on Wednesday, February 26, 2020 at 8:30 a.m. (ET).

The investor conference call will be available via live webcast on the Stratasys Web site at investors.stratasys.com; or directly at the following web address: https://edge.media-server.com/mmc/p/fkuz2uod.

To participate by telephone, the domestic dial-in number is (866) 394-5776 and the international dial-in is (409) 350-3596. The access code is 3394546.

Investors are advised to dial into the call at least ten minutes prior to the call to register. The webcast will be available for 90 days at investors.stratasys.com, or by accessing the provided web address.

Stratasys is a global leader in additive manufacturing or 3D printing technology, and is the manufacturer of FDM®, PolyJet™ and stereolithography 3D Printers. The Company’s technologies are used to create prototypes, manufacturing tools, and production parts for industries, including aerospace, automotive, healthcare, consumer products and education. For 30 years, Stratasys products have helped manufacturers reduce product-development time, cost, and time-to-market, as well as reduce or eliminate tooling costs and improve product quality. The Stratasys 3D printing ecosystem of solutions and expertise includes: 3D printers, materials, software, strategic consulting and professional services, and paid parts production. Online at: http://www.stratasys.com, http://blog.stratasys.com and LinkedIn.

Stratasys is a registered trademark and the Stratasys signet is a trademark of Stratasys Ltd. and/or its subsidiaries or affiliates. All other trademarks are the property of their respective owners.

Cautionary Statement Regarding Forward-Looking Statements

The statements in this press release regarding Stratasys' strategy, and the statements regarding its projected future financial performance, including the financial guidance concerning its expected results for 2020, are forward-looking statements reflecting management's current expectations and beliefs. These forward-looking statements are based on current information that is, by its nature, subject to rapid and even abrupt change. Due to risks and uncertainties associated with Stratasys' business, actual results could differ materially from those projected or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to: the degree of our success at introducing new or improved products and solutions that gain market share; the degree of growth of the 3D printing market generally; the impact of potential shifts in the prices or margins of the products that we sell or services that we provide, including due to a shift towards lower-margin products or services; the impact of competition and new technologies; potential further charges against earnings that we could be required to take due to impairment of additional goodwill or other intangible assets; to the extent of our success at successfully consummating acquisitions or investments in new businesses, technologies, products or services; potential changes in our management and board of directors; global market, political and economic conditions, and in the countries in which we operate in particular (including risks related to the impact of coronavirus on our supply chain and business); costs and potential liability relating to litigation and regulatory proceedings; risks related to infringement of our intellectual property rights by others or infringement of others' intellectual property rights by us; the extent of our success at maintaining our liquidity and financing our operations and capital needs; the impact of tax regulations on our results of operations and financial condition; and those additional factors referred to in Item 3.D “Key Information - Risk Factors”, Item 4, “Information on the Company”, Item 5, “Operating and Financial Review and Prospects,” and all other parts of our Annual Report on Form 20-F for the year ended December 31, 2019 (the “2019 Annual Report”), which we expect to file with the Securities and Exchange Commission (the “SEC”) on February 26, 2020. Readers are urged to carefully review and consider the various disclosures made throughout our 2019 Annual Report and the Reports of Foreign Private Issuer on Form 6-K that attach Stratasys’ unaudited, condensed consolidated financial statements and its review of its results of operations and financial condition, for the quarterly periods throughout 2020, which will be furnished to the SEC throughout 2020, and our other reports filed with or furnished to the SEC, which are designed to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects. Any guidance provided, and other forward-looking statements made, in this press release are made as of the date hereof, and Stratasys undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Use of non-GAAP financial measures

The non-GAAP data included herein, which excludes certain items as described below, are non-GAAP financial measures. Our management believes that these non-GAAP financial measures are useful information for investors and shareholders of our Company in gauging our results of operations (x) on an ongoing basis after excluding mergers, acquisitions and divestments related expense or gains and reorganization-related charges or gains, and (y) excluding non-cash items such as stock-based compensation expenses, acquired intangible assets amortization, including intangible assets amortization related to equity method investments, impairment of long-lived assets, and the corresponding tax effect of those items. These non-GAAP adjustments either do not reflect actual cash outlays that impact our liquidity and our financial condition or have a non-recurring impact on the statement of operations, as assessed by management. These non-GAAP financial measures are presented to permit investors to more fully understand how management assesses our performance for internal planning and forecasting purposes. The limitations of using these non-GAAP financial measures as performance measures are that they provide a view of our results of operations without including all items indicated above during a period, which may not provide a comparable view of our performance to other companies in our industry. Investors and other readers should consider non-GAAP measures only as supplements to, not as substitutes for or as superior measures to, the measures of financial performance prepared in accordance with GAAP. Reconciliation between results on a GAAP and non-GAAP basis is provided in a table below.

Stratasys Investor Relations
Yonah Lloyd
Vice President - Investor Relations
Yonah.Lloyd@stratasys.com

Stratasys Ltd.

Consolidated Balance Sheets

(Unaudited)

(in thousands, except share data)
      December 31,       December 31,
2019 2018
ASSETS
Current assets
Cash and cash equivalents $      293,484 $      393,167
Short-term deposits $ 28,300 -
Accounts receivable, net 132,558 138,146
Inventories 168,504 123,524
Prepaid expenses 6,567 6,398
Other current assets 29,659 22,936
 
Total current assets 659,072 684,171
 
Non-current assets
Property, plant and equipment, net 189,706 188,150
Goodwill 385,658 385,849
Other intangible assets, net 87,328 107,274
Operating lease right-of-use assets 20,936 -
Other non-current assets 38,819 22,810
 
Total non-current assets 722,447 704,083
 
Total assets $ 1,381,519 $ 1,388,254
 
LIABILITIES AND EQUITY
Current liabilities            
Accounts payable $ 35,818 $ 45,855
Current portion of long term-debt - 5,143
Accrued expenses and other current liabilities 28,528 39,115
Accrued compensation and related benefits 34,013 31,703
Deferred revenues 52,268 53,965
Operating lease liabilities - short term 9,292 -
 
Total current liabilities 159,919 175,781
 
Non-current liabilities
Long-term debt - 22,000
Deferred revenues - long-term 16,039 18,422
Operating lease liabilities - long term 12,445 -
Other non-current liabilities 35,343 29,084
 
Total non-current liabilities 63,827 69,506
 
Total liabilities 223,746 245,287
 
Redeemable non-controlling interests 622 852
 
Equity
Ordinary shares, NIS 0.01 nominal value, authorized 180,000 thousands shares; 54,428 thousands shares and 53,881 thousands shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively 150 146
Additional paid-in capital 2,706,892 2,681,048
Accumulated other comprehensive loss (7,716 ) (7,753 )
Accumulated deficit (1,542,175 ) (1,531,326 )
Total equity 1,157,151 1,142,115
 
Total liabilities and equity $ 1,381,519 $ 1,388,254

Stratasys Ltd.

Consolidated Statements of Operations

(in thousands, except per share data)
Three Months Ended December 31, Twelve Months Ended December 31,
2019 2018 2019 2018
      (unaudited)       (unaudited)       (unaudited)       (unaudited)
Net sales
Products $             108,968 $             124,537 $             430,746 $             456,504
Services 51,189 52,582 205,334 206,733
160,157 177,119 636,080 663,237
 
Cost of sales
Products 46,825 56,502 182,430 203,622
Services 34,673 33,618 139,958 134,391
81,498 90,120 322,388 338,013
Gross profit 78,659 86,999 313,692 325,224
 
Operating expenses
Research and development, net 24,019 24,379 94,253 98,964
Selling, general and administrative 57,921 66,423 231,138 235,107
81,940 90,802 325,391 334,071
Operating profit (loss) (3,281 ) (3,803 ) (11,699 ) (8,847 )
   
Financial income (expense), net 1,760 747 4,555 633
Income (loss) before income taxes (1,521 ) (3,056 ) (7,144 ) (8,214 )
 
Income tax expenses 439 3,626 3,523 4,736
 
Share in profits (losses) of associated companies (907 ) 12,910 (412 ) 1,725
Net income (loss) (2,867 ) 6,228 (11,079 ) (11,225 )
 
Net loss attributable to non-controlling interests (78 ) (79 ) (230 ) (261 )
 
Net income (loss) attributable to Stratasys Ltd. $ (2,789 ) $ 6,307 $ (10,849 ) $ (10,964 )
 
Net income (loss) per ordinary share attributable to Stratasys Ltd.
Basic $ (0.05 ) $ 0.12 $ (0.20 ) $ (0.22 )
Diluted $ (0.05 ) 0.12 $ (0.20 ) (0.22 )
 
Basic 54,435 53,854 54,260 53,751
Diluted 54,435 54,132 54,260 53,751


Three Months Ended December 31,
2019 Non-GAAP 2019 2018 Non-GAAP 2018
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
U.S. dollars and shares in thousands (except per share amounts)
Gross profit (1)     $ 78,659     $ 5,294     $ 83,953     $ 86,999     $ 5,499     $ 92,498
Operating income (loss) (1,2) $ (3,281 ) $ 13,436 $ 10,155 $ (3,803 ) $ 16,574 $ 12,771
Net income (loss) attributable to Stratasys Ltd. (1,2,3) $ (2,789 ) $ 12,741 $ 9,952 $ 6,307 $ 4,993 $ 11,300
Net income (loss) per diluted share attributable to Stratasys Ltd. (4) $ (0.05 ) $ 0.23 $ 0.18 $ 0.12 $ 0.09 $ 0.21
 
(1)      Acquired intangible assets amortization expense 4,770 5,221
Non-cash stock-based compensation expense 478 294
Reorganization and other related costs 46 (16 )
5,294 5,499
 
(2) Acquired intangible assets amortization expense 2,985 2,532
Non-cash stock-based compensation expense 4,325 3,686
Impairment charges of intangible assets and other long-lived assets - 4,797
Reorganization and other related costs 556 60
Merger and acquisition and other expense 276 -
8,142 11,075
13,436 16,574
 
(3) Corresponding tax effect (721 ) 1,853
Gain from equity method divestment and related amortization and impairments 26 (13,434 )
12,741 $ 4,993
 
(4) Weighted average number of ordinary shares outstanding- Diluted 54,435 54,738 54,132 54,132


Twelve Months Ended December 31,
2019 Non-GAAP 2019 2018 Non-GAAP 2018
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
U.S. dollars and shares in thousands (except per share amounts)
Gross profit (1)      $ 313,692      $ 19,074      $ 332,766      $ 325,224      $ 22,351      $ 347,575
Operating income (loss) (1,2) $ (11,699 ) $ 45,812 $ 34,113 $ (8,847 ) $ 45,324 $ 36,477
Net income (loss) attributable to Stratasys Ltd. (1,2,3) $ (10,849 ) $ 41,315 $ 30,466 $ (10,964 ) $ 38,782 $ 27,818
Net income (loss) per diluted share attributable to Stratasys Ltd. (4) $ (0.20 ) $ 0.76 $ 0.56 $ (0.22 ) $ 0.74 $ 0.52
 
(1)      Acquired intangible assets amortization expense 16,484 20,866
Non-cash stock-based compensation expense 1,848 1,474
Reorganization and other related costs 742 11
19,074 22,351
 
(2) Acquired intangible assets amortization expense 8,673 10,161
Impairment charges of intangible assets and other long-lived assets - 4,797
Non-cash stock-based compensation expense 18,712 14,212
Gain from divestiture, net of transaction costs (3,578 ) (7,016 )
Reorganization and other related costs 2,655 691
Merger and acquisition and other expense 276 128
26,738 22,973
45,812 45,324
 
(3) Corresponding tax effect (2,919 ) (808 )
Gain from equity method divestment, related write-offs and amortization (1,578 ) (5,734 )
$ 41,315 $ 38,782
 
(4) Weighted average number of ordinary shares outstanding- Diluted 54,260 54,713 53,751 53,898

Stratasys Ltd.

Reconciliation of GAAP to Non-GAAP Forward Looking Guidance

Fiscal Year 2019

(in millions, except per share data)
GAAP net loss       ($30) to ($18)
 
Adjustments
Stock-based compensation expense $26 to $28
Intangible assets amortization expense $25 to $26
Reorganization and other related costs $3 to $4
Tax expense related to Non-GAAP adjustments ($3) to ($4)
 
Non-GAAP net income $25 to $34
 
GAAP loss per share ($0.54) to ($0.33)
 
Non-GAAP diluted earnings per share $0.45 to $0.60


SSYS Q4 2019 Earnings Script

SLIDE 1 & 2: TITLE SLIDES

SPEAKER: Operator

Good day, ladies and gentlemen. Welcome to today’s conference call to discuss Stratasys’ fourth quarter and full year 2019 financial results.

My name is [INSERT], and I’m your operator for today’s call. [INSERT RELEVANT INSTRUCTIONS].

And now, I’d like to hand the call over to Yonah Lloyd, Vice President of Investor Relations for Stratasys. Mr. Lloyd, please go ahead.

SLIDE 3 & 4: FLS & NON-GAAP DISCLOSURE

SPEAKER: Yonah Lloyd

Good morning, everyone, and thank you for joining us to discuss our 2019 fourth quarter and full year financial results. On the call with us today are our new CEO Yoav Zeif, and our CFO, Lilach Payorski.

I remind you that access to today's call, including the prepared 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 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 in Stratasys' annual report on Form 20-F for the 2019 year, which we are filing today with the SEC, as well as our report on Form 6-K and the related press release concerning our earnings for the fourth quarter of 2019, the latter two of which 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. Certain non-GAAP to GAAP reconciliations are provided in the table contained in our slide presentation and in today’s press release.

Now I would like to turn the call over to our CEO, Yoav Zeif - Yoav?

SLIDE 5: CEO INTRODUCTION

Thanks, Yonah.

I'll start by expressing my excitement and enthusiasm to be serving as Stratasys’ new CEO at such a pivotal time for the company.

Since joining Stratasys this month I have taken the opportunity to begin an in-depth review of the business and am already impressed by the deep level of knowledge, professionalism, and dedication exhibited at all levels of the organization.

I strongly believe in the solid foundation for growth that has been created at Stratasys, including an innovative and expanding product portfolio, disciplined financial management, and the industry’s leading distribution partners. Last month I had the opportunity to attend our annual global partner event where I met with many of our resellers. We believe that Stratasys has the strongest distribution channel in our industry, and I appreciate their input and their passion for mutual success – together we will have an exciting journey in the coming years.

I would like to thank Elan Jaglom and the board of directors, and the oversight committee of David Reis, Scott Crump, and Dov Ofer, for the exemplary work done under Elan’s leadership to guide the company through the transition period, laying the groundwork and building the infrastructure that will be the basis of our future growth.

In addition, over the last several years the Company has implemented a culture of financial discipline led by Lilach Payorski and her team that has resulted in meeting our profitability targets and maintaining a healthy balance sheet.

Starting in the back half of this year we will introduce our next phase of growth with a notable step-change in our portfolio as we begin to launch a series of new products, including both manufacturing and design prototyping focused solutions. We plan to invest in the success of these new launches by increasing our go-to-market spending this year. We also expect to continue to see the steadily increasing adoption of our manufacturing-focused platforms in our target verticals of automotive, aerospace, and healthcare. Our penetration into industrial manufacturing applications is among the deepest in the industry, and we plan to expand our leadership even further with our new solutions.

Overall, I am extremely optimistic regarding the outlook of the business and believe that there is tremendous potential to drive significant near-term and long-term value for all of our stakeholders.

I want to take the opportunity now, as the new CEO, to emphasize my strong belief that Stratasys will continue to lead the additive manufacturing industry as it moves through what we, and industry analysts, expect to be a period of growth and adoption.

We will continue to build on our key focus areas of design and engineering prototyping, manufacturing, healthcare, and software; and we will work to generate a more effective operating model and to execute with excellence on our go-to-market strategy with the goal of offering the broadest, most innovative product portfolio and unique field-support service organization.

As I continue to learn and familiarize myself with Stratasys, I look forward to meeting our customers, partners, investors and most importantly, our amazing employees worldwide, and to providing further updates to you during the course of the year.

Now, I’d like to turn the call over to our CFO, Lilach Payorski, who will review the details of our financial results. Lilach?

SLIDE 6 & 7: FINANCIAL RESULTS SUMMARY

SPEAKER: Lilach Payorski

Thank you, Yoav, and good morning, everyone.

2019 was a year of market challenges, primarily stemming from ongoing macro conditions. We took a conservative approach and continued to drive efficiencies by remaining committed to operating expense controls to meet our profitability objectives, while continuing to invest in our new product introductions.

Total revenue in the fourth quarter was $160.2 million compared to $177.1 million for the same period last year. On a constant currency basis, total revenue declined 9.3%.

For the full year 2019, total revenue was $636.1 million compared to $663.2 million for 2018, and on a constant currency basis, full year revenue declined 3.1%.

After adjusting for the sale of our divested entities during 2018, on a like-for-like basis total revenue declined 3.2% for the full year, and 2.2% on a constant currency basis.

Regionally, we saw mid-single digit year-over-year growth in our core Americas business for full year 2019, offset by the impact of macro weakness in Europe and Asia.

In the Americas region, we are pleased with the growth we are seeing in our target verticals, as well as the share of new systems that are being sold into manufacturing environments.

GAAP operating loss for the quarter was $3.3 million, compared to an operating loss of $3.8 million for the same period last year.

Non-GAAP operating income for the fourth quarter was $10.2 million, compared to operating income of $12.8 million for the same period last year.

GAAP net loss for the quarter was $2.8 million, or ($0.05) per diluted share, compared to a net income of $6.3 million, or $0.12 per diluted share, for the same period last year.

Non-GAAP net income for the quarter was $10.0 million, or $0.18 per diluted share, compared to Non-GAAP net income of $11.3 million, or $0.21 per diluted share, reported for the same period last year.

For full year 2019, GAAP net loss was $10.8 million, or ($0.20) per diluted share, compared to a loss of $11.0 million, or ($0.22) per diluted share, for fiscal 2018, and non-GAAP net income was $30.5 million, or $0.56 per diluted share, compared to non-GAAP net income of $27.8 million, or $0.52 per diluted share, reported for fiscal 2018.

SLIDE 8: REVENUE

Product revenue in the fourth quarter was $109.0 million, a decrease of 12.5% compared to the same period last year, or 12.1% on a constant currency basis.

For the full year 2019, product revenue was $430.7 million, a decrease of 5.6% compared to 2018. Excluding the divested entities and on constant currency basis, full year product revenue decreased 3.3%.

Within product revenue, consumables revenue for the quarter decreased by 2.9% compared to the same period last year and decreased 2.4% on constant currency basis.

On an annual basis, 2019 consumables revenue decreased 0.5%, and increased 1.7% after adjusting for divestments and constant currency.

Materials for our higher-end platforms, such as Design Realism in PolyJet, and advanced materials in FDM, including Ultem and Antero, grew year-over-year, demonstrating customer adoption of our solutions for high-value applications. We also continue to see materials growth for our F123 platform.

The decrease in the period was driven primarily by regional weakness in Europe and Asia, coupled with some decline in materials associated with our legacy platforms, which we believe will be offset over time by strong growth in materials demand that will come from our new products, as well as from systems that we have placed over the last few years.

System revenue for the quarter decreased 20.6%, compared to the same period last year, with no material change on a constant currency basis. Our systems revenues were negatively impacted primarily by continued macroeconomic weakness in Europe and Asia, as well as declines in certain legacy product lines that we expect will be more than offset by our new product introductions.

For full year 2019, system revenue decreased 10.8%, and 8.3% after adjusting for divestments and constant currency.

Services revenue in the fourth quarter was $51.2 million, a decrease of 2.6% compared to the same period last year, with no material change on a constant currency basis. For the full year 2019, services revenue was $205.3 million, a decrease of 0.7% compared to 2018, and relative flat on a constant currency basis.

Within services revenue, customer support revenue increased by 1.0% compared to the same period last year, with no material change on a constant currency basis. For the full year 2019, customer support revenue increased 1.9% compared to 2018, and 3.1% on a constant currency basis.

SLIDE 9: GROSS MARGIN TRENDS

GAAP gross margin was 49.1 % for the quarter, flat compared to the same period last year.

Non-GAAP gross margin was 52.4% for the quarter, compared to 52.2% for the same period last year.

SLIDE 10: OPERATING EXPENSES & OPERATING INCOME

GAAP operating expenses decreased by 9.8% to $81.9 million for the fourth quarter, as compared to the same period last year. For full year 2019, GAAP operating expenses decreased 2.6% to 325.4 million.

Non-GAAP operating expenses decreased by 7.4% to $73.8 million for the fourth quarter as compared to the same period last year, driven by our focus on efficiency. We remain committed to our long-term strategy and we continue to invest in developing new products that we believe will expand our addressable markets.

For full year 2019, non-GAAP operating expenses decreased 4.0% to $298.7 million reflecting our successful operational discipline and the impact of divestments.

SLIDE 11: BALANCE SHEET SUMMARY & CASH FLOW FROM OPERATIONS

The Company used $3.4 million of cash from operations during the fourth quarter, as compared to $18.7 million of cash generated in the fourth quarter last year, primarily due to proactive steps to increase inventory levels in order to improve fulfillment time and support product demand as well as to prepare for new product launches in 2020.

We ended the fourth quarter with $321.8 million in cash, cash equivalents and short-term deposits, compared to $347.1 million at the end of the third quarter of 2019.

SLIDE 12: FINANCIAL SUMMARY

To recap:

1.       We are pleased with the full year growth we observed in our target verticals in the Americas.
2. We successfully drove efficiencies through expense control, demonstrated by our stable gross margins and ability to meet profitability objectives while investing in new product introductions.
3. Our balance sheet remains healthy and we are well positioned for future opportunities

I would now like to turn the call over to our VP of Investor Relations, Yonah Lloyd, who will provide greater details on our 2020 financial guidance. Yonah?

SLIDE 13: REVENUE & EARNINGS GUIDANCE

SPEAKER: Yonah Lloyd

Thank you, Lilach.

We are providing full year guidance for 2020 as follows:

1.       Revenue guidance of $620 million to $680 million.
2. GAAP net loss of $30 million to $18 million, or ($0.54) to ($0.33) per diluted share.
3. Non-GAAP net income of $25 million to $34 million, or $0.45 to $0.60 per diluted share.
4. Non-GAAP operating margins of 5% to 6.5%.
5. Capital expenditures are projected at $40 million to $60 million.

We are committed to successfully introducing our new products and our guidance reflects increased investments earlier in the year in resources for specific go-to-market initiatives in order to support the planned launches that will begin in the back half of 2020, primarily in Q4.

We believe that this increase in operating expenses will provide the basis for long term growth.

Additionally, our guidance range is larger than we typically provide, due primarily to the ongoing industrial macro-economic issues globally, as well as uncertainty around the potential impact of the Coronavirus. We are in the early stages of understanding if and to what extent we may be temporarily impacted by this and we will provide additional updates later in the year.

Non-GAAP earnings guidance excludes $25 million to $26 million of projected amortization of intangible assets; $26 million to $28 million of share-based compensation expense; reorganization and other expenses of $3 million to $4 million. Non-GAAP guidance includes tax adjustments ranging from $3 million to $4 million on the above non-GAAP items.

The estimated non-GAAP tax rate for 2020 is impacted by the ongoing non-cash valuation allowance on deferred tax assets that we expect to record throughout the year on U.S. losses.

Given the expected ongoing negative impact of not recording a tax benefit on U.S. tax losses on our net income, as well as significant quarter to quarter variability in our non-GAAP tax rate, the Company believes non-GAAP operating income is the best measure of our performance.

Appropriate reconciliations between GAAP and non-GAAP financial measures are provided in a table at the end of our press release and slide presentation, with itemized detail concerning the non-GAAP financial measures.

Operator, please open the call for questions.

SLIDE 14: Q&A

SPEAKER: Yoav

Thank you for joining today’s call. I am thrilled to be joining the Stratasys team and look forward to speaking with all of you again next quarter.

SLIDE 15: FINANCIAL RECONCILIATION TABLES