On August 13, Stratasys (NASDAQ:SSYS) held its second-quarter earnings call, and the headline number was consumables revenue hitting a record $66.3 million. For a company trying to prove it has moved beyond selling prototyping machines into recurring, production-grade manufacturing, that record matters more than the top line itself. But underneath the record sat a cash flow warning that investors will want to weigh carefully.
Bull Case: Where The Growth Is Real
Aerospace and defense is Stratasys’s largest business, and it grew 17% year over year in the second quarter. Management pointed to expanding adoption across the U.S. Air Force, where the company’s F900 system is certified for flightworthy production parts, describing the orders as increasing in volume across the Air Force’s sustainment enterprise rather than one-time purchases. Once a part is qualified on a Stratasys platform, switching suppliers becomes costly, which is the basis for calling this demand structural. Stratasys Direct, the company’s parts manufacturing arm, grew 12.1% year over year, fueled by defense technology customers building drones and munitions.
The quarter also delivered two large multiyear systems deals. Quickparts expanded its relationship with Stratasys by purchasing 12 Neo 800-plus systems on top of six units it already owned, with three of the new systems placed in Europe. FAW Group, one of China’s largest auto manufacturers, signed for 12 F900 systems by year-end, with two shipped in the second quarter, adding to five F900s and eight other Stratasys machines it already runs to make interior parts like armrests and panels. Stratasys was also awarded a two-year, $7.8 million program through the 2026 America Makes OIB Modernization Challenge to develop monitoring technology for its F900 and F3300 platforms. Layered on top is the pending $42.5 million cash acquisition of MarkForged, whose continuous carbon fiber technology generated about $70 million in revenue in 2025 and which management expects to add positively to EBITDA within a year of closing.
Bear Case: Where The Pressure Shows
System revenue fell to $26.4 million from $30.6 million a year earlier, meaning machine sales are shrinking even as the recurring materials business grows. Gross margin slipped too, with non-GAAP gross margin at 47.2% versus 47.7% a year ago, which the company attributed largely to a stronger Israeli shekel raising costs incurred in that currency. GAAP net loss widened slightly to $16.9 million, compared to $16.7 million a year ago, though GAAP loss per diluted share improved slightly to $0.19 from $0.20.
The bigger flag came in cash flow. Stratasys used $18.7 million in operating cash this quarter, a level the company called atypically high and tied to legal expenses spent protecting its intellectual property. Cash on hand fell to $212.5 million from $237.8 million the prior quarter. As a result, Stratasys walked back its full-year outlook for operating cash flow, no longer expecting it to be positive for 2026, even while it still expects the second half of the year to generate positive cash flow on its own.
Where Wall Street Sits
Hedge fund ownership of Stratasys slipped to 20 funds from 22 the prior quarter, a modest pullback rather than a rush for the exits. Short interest sits at 3.65% of float, a level that suggests only light organized skepticism toward the stock right now. That combination points to a stock that isn’t drawing strong conviction in either direction at the moment.
The Bottom Line
Stratasys is in the middle of a real transition, and the aerospace, defense, and automotive wins described on this call back that up with actual purchase orders rather than just strategy talk. But the cash flow reversal is the kind of detail that can undercut a growth story if it repeats. For the bullish case to hold, the multiyear deals and the MarkForged integration need to convert into the margin gains management is promising.
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