SSYS - NASDAQ

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

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

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