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Eitan Zamir; CHIEF FINANCIAL OFFICER; Stratasys Ltd.
Yoav Zeif; CEO; Stratasys Ltd.
Yonah Lloyd; CCO and Vice President of International Relations; Stratasys Ltd.
Ananda Prosad Baruah; MARYLAND; Loop Capital Markets LLC, Research Division
Blake Stuart Keating; Research Analyst; William Blair
Danny James Eggerichs; Associate Analyst; Craig-Hallum Capital Group LLC, Research Division
Jacob Michael Stephan; Senior Research Analyst; Lake Street Capital Markets, LLC, Research Division
James Andrew Ricchiuti; Senior Analyst; Needham
Troy Donavon Jensen; Research Analyst; Cantor Fitzgerald
Operator
Hello and welcome to today’s phone convention to discuss the monetary effects of Stratasys for the fourth quarter and fiscal year 2023. My call is Kevin and I will be your operator for today’s call. A Q&A consultation will be limited to formal presentation. Instructions) And now, I’d like to turn the floor over to Yonah Lloyd, Director of Communications and Vice President of Investor Relations at Stratasys. Sr. Lloyd, please come in.
Yona Lloyd
Eitan Zamir
Thanks Yoav and hello everyone. We achieved good results in the fourth quarter in an environment that remains challenging due to unfavorable macroeconomic aspects and relevant pressures. We are confident that the biggest spike we are seeing in our visitor engagement will translate into significant expansion once those headwinds subside. Overall, our effects demonstrate the resilience offered by our diversified portfolio, leading to our 10th consecutive quarter of profitability. Now let me dig into the numbers. It should be noted that after several years of volatility, the impact of currencies in year-on-year comparisons for 2023 has been much more moderate. Therefore, I will not highlight comparisons with consistent exchange rates. For the fourth quarter, $156. 3 million in counterfeit coins decreased 1. 9% from the same period last year, but increased 1. 3% after adjusting for the sale of our metals and urethane transactions. Stratasys Direct support service. The fourth quarter decreased 0. 7% to $110. 4 million compared to the same period last year. Within product currencies, formula currencies decreased 13. 7% to $47. 4 million compared to the same period last year, as limited capital budgets continue to impact the purchasing habit of new formulas by visitors. Consumable coins under construction increased 11. 9% in the fourth quarter compared to the same period last year, achieving a new record of $63 million. This accretion reflects continued strong use of our existing visitor formulas and contribution from the Covestro acquisition in April 2023. Service coins entered were $4. 9 million for Q4 2023, up 4% less than the same constant period. last year. Excluding divestitures in our Stratasys Direct business, facilities under construction currencies increased 3. 6% year over year. Within facilities, visitor aid in construction increased by 1. 6% compared to the same period last year, continuing to reflect strong use of existing formulas. For full year 2023, counterfeit coins decreased by 3. 7% compared to 2022, but increased by 1. 3% when taking into account the effect of workplace removals from MakerBot facilities and Stratasys Direct. Product coins in 2023 were down 4. 1% and 1. 1%, excluding the MakerBot divestment. The decline from 2022 was primarily due to a easing in hardware sales that more than offset record consumables. Within product currencies, formula currencies in 2023 were down 16. 4% from 2022. Consumable currencies were another record, up 8. 2% in 2023 from 2022. For the full year 2023, service currencies decreased by 2. 8% in comparison. until 2022, and increased 1. 3% following the abandonment of the two Stratasys Direct disposals. Within facilities, visitor aid coins in 2023 increased 4. 5% compared to 2022, reflecting continued strong use of existing formulas by our visitors. Now let’s move on to gross margins. GAAP gross margin was 4. 7% for the quarter, compared to 4. 1% for the same period last year. Non-GAAP gross margin was 48. 8% during the quarter, compared to 48. 4% in the same period last year. The year-over-year improvement in gross margin was the result of increased contribution from Stratasys Direct, adding to currency reduction margins resulting from the sale of the two Stratasys Direct businesses, as well as an improvement in freight , which more than compensated for the fall. gross margin of the device. GAAP gross margin was 42. 5% for the full year 2023, compared to 42. 4% for the same period last year. Non-GAAP gross margin improved by 20 basis points to 48. 2% for the full year, compared to 48% in 2022. The improvement in non-GAAP gross margin for the full year was the result of a higher contribution from the consumables. and Stratasys Direct, in addition to minimizing shipping prices. prices that more than compensated for the drastic drop in contributions. GAAP operating expenses were $64. 1 million for the quarter, compared to $67. 1 million in the same period last year, reflecting reduced M&A liabilities and the elimination of consistent operating expenses for the two divested Stratasys Direct businesses. Non-GAAP maintenance expenses were $74. 3 million during the quarter, compared to $72 million in the same period last year. Non-GAAP accounting expenses represented 47. 5% of currencies during the quarter, compared to 45. 2% in the same period last year, driven primarily by our acquisition of Covestro. For the full year, non-GAAP transaction expenses represented 46. 2% of currencies compared to 4. 9% in 2022, primarily due to the reduction of currencies. In absolute dollars, non-GAAP transaction expenses decreased by $8. 8 million in 2022, partly due to the divestiture of MakerBot, minimized fees and currency prices, partly offset by the addition of Covestro and consistent with merit pay. consolidated result for the quarter. GAAP constant currency source for the quarter was $5. 7 million, compared to $1. 6 million for the same constant period last year. Non-GAAP profit for the quarter was $2 million, compared to $5. 1 million for the same period last year. The reduction reflects the increase in OpEx as a constant percentage of coins entered. GAAP net loss for the quarter was $15 million, or $0. 22 on a diluted percentage basis, compared to a net loss of $2. 4 million, or $0. 04 on a consistent basis. with consistent percentage diluted, for the same consistent time. from last year. Non-GAAP net currency source for the quarter was $1. 6 million, or $0. 02 per diluted percentage, compared to net currency source of $4. 6 million, or $0. 07 per diluted percentage . consistent with last year. Adjusted EBITDA was $7. 7 million for the quarter, compared to $10. 7 million for the same period last year. Turning to our consolidated profit for the full year 2023, the total GAAP loss was $87. 6 million, compared to a loss of $57. 2 million for 2022. The largest loss reflects $32. 9 million dollars. million in one-time advisory fees similar to M&A activities, as well as various one-time restructuring fees offset in part by relief discussed in the past on M&A-like liabilities. Non-GAAP coin supply for the year was $12. 6 million, compared to $13. 5 million in 2022. This equates to a non-GAAP coin spread of 2. 1%. compared to 2. 1% in 2022. GAAP net loss for the year Last year was $123. 1 million, or $1. 79 on a diluted basis compared to 2022, to a net loss of $29 million or $0. 44 on a diluted basis from last year. This accrual includes the one-time charge discussed in the past, plus a non-cash writedown of $13. 9 million similar to our 2022 investment in MakerBot’s merger with Ultimaker, as well as M&A expenses discussed in the past. As a reminder, the 2022 GAAP net loss included a $39. 1 million benefit from the 2022 merger I just referenced. Net non-GAAP currency source for the year was $7. 7 million, or $0. 11 per diluted percentage, compared to $10. 3 million, or $0. 15 per diluted percentage, last year. Matrix adjusted EBITDA of $35 million, compared to $36. 1 million in 2022, reflects the overall decline in our currencies, more than offsetting improved margins. We used $7. 7 million of consistent operating cash during the fourth quarter, compared to a use of $18. 1 million of consistent operating cash during the same period last year. Excluding one-time pricing similar to the M&A activities discussed above, we generated approximately $7 million in ongoing cash flow revenue. money flow. We ended the quarter with $162. 6 million in cash, money equivalents and short-term deposits, compared to $184. 6 million at the end of the third quarter of 2023. Our balance sheet and cash generation profile remain strong. A matrix that supports our interest in capitalizing on value. decorate opportunities as we face near-term challenges. Let me now address our outlook for 2024. Assuming that the weak global capital purchasing situation continues to pose a challenge, we expect it to improve in the second part of the year. year. For comparison, 2023 currencies, excluding divestitures and Covestro annualization, amounted to approximately $616 million. We expect 202four coins to grow between $630 million and $645 million, with sequential expansion each quarter throughout the year, resulting in a particularly consistent component with coins at the moment compared to the first. . Non-GAAP Gross Margin Array for 202 be be be expectinginginginginginged expanding currencies all year round. ‘year. In 2024, we expect our sustaining expenses to be between $292 million and $297 million, up slightly from 2023. Continued improvement in profitability is a vital goal, and for 202four, we expect to be expecting a return to expansion in all profit parameters. Array we foresee a constant profit of between 2. 5% and 3. 5% of the turnover, with a component that is currently more powerful than the first component thanks to the be be be Be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be be coins from $9 million to $1 four million or $0. 12 to $0. 19 per diluted percentage for 202four. Adjusted EBITDA for 202 is expected to be in the range of $40 million to $45 million. We expect to see EBITDA succeed in 15% of our currencies over the long term as our margins improve over time. We expect our four capital expenditures to be between $20 million and $25 million. Finally, we expect to generate positive or consistent cash flow throughout the year, excluding any other one-time pricing similar to M&A activities. With that, let me back up. to Yoav for his final comments. Yoav?
Yoav Zeif
Thanks Eitan. I would like to thank our global groups for their professionalism and determination that are helping us remain profitable as our business grows and creates long-term pricing for our consumers and all our stakeholders. I am especially proud of our Israeli workers and their families, many of whom were called up for military service during up to the fourth quarter, as well as our workers around the world who bravely stepped up to take on the additional workload . This effort helped ensure that our business operations were uninterrupted and without dramatic impacts. We continue to differentiate ourselves in the industry with the most powerful combination of best-in-class technologies, unparalleled go-to-market infrastructure, and a continued focus on operations. efficiencies. Our consumers are lately facing macroeconomic situations that restrict their spending, slowing their purchasing speed for our products that can advance their transition to large-scale virtual manufacturing. However, we consider such demanding situations as an obstacle in the inevitable widespread and faster adoption of additive manufacturing. manufacturing. We just want to take a look at the continued use of existing systems and the strong degrees of engagement to give us a sense of optimism. We are excited about outperformance methods into 2024 and beyond as we continue to lay the foundation for expanded programs to drive accelerated growth. With that, let’s open the query for queries. Operator?
Operator
(Operator Instructions) The first comes from Greg Palm of Craig-Hallum.
Danny James Eggerichs
Yes, today I’m Danny Eggerichs for Greg. I guess I’ll start with the consumables, a pretty counterfeit quarter, clearly a record number. It doesn’t look like it, but are there symptoms of potential stock discounts among customers?Or do you feel like you have pretty smart visibility there, and do you think you’ll be able to continue that kind of expansion in 2024?And then I guess, what was Covestro’s contribution during the quarter?
Eitan Zamir
Danny, then I’ll start, that’s Eitan, I’ll start at the end. Covestro, I think we’ve discussed this in the past, it’s about $4 million to $5 million per quarter, and they were in that diversity in the fourth quarter of 2023 as well. And we think next year will be similar, if not growing. And then, on the question of the moment. . .
Yoav Zeif
Maybe I’ll intervene here. Thanks for the question, Danny. So I think that’s really an explanation of why we celebrate as an industry, because consumables mean that someone is actually using our device and additive manufacturing is driving up the price. And that’s what we do at Stratasys. That’s a record $63 million in consumables this quarter, or $246 million for the full year. And the most important thing we are seeing is the increase in the use of devices. And that’s very vital because consumables are the key to literally penetrating production because you have more fabrics, you penetrate more programs and more use cases. We just brought in a new curtain for Origin. This means we are opening up absolutely new programs for outdoor programs where durability, higher performance, better fabrics and better components are desired. This is a core component of our strategy and we are seeing it work. Additionally, we also see Covestro adding price to Stratasys in other technologies, as WeatherX is a Covestro curtain that we have followed for our Origin platform. And that, of course, also contributes to the gross margin, because we have a higher gross margin on fabrics. In short, curtains are key to entering production. It brings more: a higher gross margin, and we see that expanding with and without Covestro. And we will continue to grow in the future.
Danny James Eggerichs
Sí. No, that’s fine. It makes sense. Perhaps, moving on to systems, I think you commented that you could expect an uptick in demand in the second half of the year. Is this factored into the 2024 earnings forecast?And if so, how much?
Yoav Zeif
So that’s definitely part of the plan. But in a very considered way, making sure that, as we are precisely within the interdeck in 2023, we must ensure that we are precisely within the interdeck [currently] in 2024. So when we say that a limited number is set, but it also has a maximum limitation point. And when it comes to limits, hardware is pretty much the most delicate offering we have in this industry. And it is very widespread, not us, all players see it. This is a delicate offer because it is at stake with the macroeconomic context, economic uncertainty and also with high interest rates. This creates CapEx limitations for the world’s largest companies. However, I think this is not a long-term phenomenon, because until now you can postpone investments if you are competitive in your market. Take as an example an actor in the automobile sector, which in the end will have to invest in new ranges, will have to invest in a new design, will have to compete with electric cars coming from the East. So we are seeing this repressed call. And we know that the scenario we face now is only temporary. And as we start to see some recovery and communicate about recovery, we see some type of spring recovery, very small symptoms, but they are there. We’re seeing a flattening of sales cycles on some hardware, they’re even shorter sales cycles. Array We see an improvement in the portfolio basically at the moment. And we also see the PMI, the Purchasing Managers’ Index, a little bit better, basically in the United States, this is the first time in January that the PMI crosses the range of 50. And that means that the US B2B market is no longer contracting. It’s not growing yet, but it’s not shrinking either. So we believe that all those intelligent symptoms would create the first stages of a recovery and then release the repressed calling that still exists. And we have the F3300 exactly on time, and we will launch it in the second quarter, at the end of the second quarter or so, to be able to meet that pent-up demand. In practical terms, in a sentence, we have worked very hard over the past two years, under difficult macroeconomic conditions, to demonstrate that we are prepared to heed this suppressed call.
Danny James Eggerichs
Yes. Got it. All of this is very useful. I’m going to do it there.
Operator
The next one comes from Troy Jensen of Cantor Fitzgerald.
Troy Donavon Jensen
Kudos on the wonderful effects here, and I love all that feedback about pent-up demand. I’m on the same page as you. Quick, yes, very welcome, very fast, Yoav, did you give the percentage of sales?True to production applications? I think I’ve heard some of that, but if you could explain it, that would be wonderful.
Yoav Zeif
Yes. Thanks Troya for the question. So we have a very simple and precise strategy. We are moving towards production. And we are going to manufacture with new and very cutting-edge technologies, such as the F3300 that is revolutionizing the FDM market with new use cases such as prostheses with consumables that open new applications with differentiated software, we can communicate it laterArray and with SDM as a tool. So when we look at this, we are pretty much saying that the entire market is poised to move into the new domain of additive manufacturing. We measure it, because if you don’t measure it, it’s a whole story. Then we take each of the points and measure how that helps us get into production. We were: 32. 5% of our sales were for production, this year 34%. What does it mean? This means we are heading in the right direction. This means we are taking the right actions. The strategy works. But this also means that the B2B manufacturing market is heavily constrained by capital expenditure. But ultimately, most of our released portions will be production, end-use [excellent] portions.
Troy Donavon Jensen
Yes, I totally agree. I’m proud and communicate it frequently, 10 consecutive quarters of non-GAAP earnings. I should point out that you have also experienced 8 consecutive quarters of negative operating cash flow. So if you take a look at their forecast, if you need to achieve an operating margin of 1% to 3% in a given quarter, in a given year, it will involve more use of money. So, can you simply communicate to us about money-making goals or positive money?When do you expect to achieve goals like this?
Eitan Zamir
Thank you Troy for the question. So, as I was saying, in the last 2 quarters, in the third quarter of 2023 and in the fourth quarter of 2023, we really had a positive operating cash flow, excluding one-time invoices similar to mergers and acquisitions, adding the DM penalty. So, our operations in the third and fourth quarters of this year, as opposed to last year 2023, nor going forward, have really shown that the business can generate positive operating cash flow when those one-off items are excluded. With that, you’ve probably noticed or seen that over the past few quarters, our stock levels have been decreasing. This trend will continue in 2024. Our current capital will improve for next year. So, to answer your question, we are confident in our ability to generate positive operating cash flow in 2024. Excluding exceptional items, our business will generate positive operating cash flow in 2024.
Troy Donavon Jensen
Génial. Droite. EhArray, good luck and keep working.
Operator
Next up is Needham’s Jim Ricchiuti
James Andrew Ricchiuti
So, it turns out that you are satisfied with the progress you are making in the dental market. I wonder if you could tell us what the profit point is in this sector and maybe what was the rate of expansion last year compared to 2022?
Eitan Zamir
Thanks for the question. We do not make percentages of precise numbers. I can only say that we have noticed a significant expansion in the dental sector. And we focus on the recovery sector of the dental market, which is effectively non-discretionary. If you have a problem, you have to face it. And our focus is dentures, and we are in this domain because we are revolutionizing the market. We disrupt the market in a way that creates a significant price for both parties. If we take the price chain, we start with the patient, it’s just more practical, less difficult to use. We have the right effects and the right response. We are talking about tens of thousands of people who already use our prosthesis, the TrueDent. If we take the dentist, we have especially reduced the visits, from four to five to 1 to 2. If we take the laboratories that produce, we have especially reduced prices because we save labor. That’s the concept for us in the dental field. Additive manufacturing can reshape the dental industry as we virtually disrupt this market and make it digital. And we are concentrating on the restaurant products market, and we are coming up with a unique business style to further capture that price that we are creating throughout the price chain for both participants.
James Andrew Ricchiuti
Hopefully, in the long run we will have a better concept of the contribution this makes to the company. But maybe we’ll shift gears, Eitan, how we think about first-quarter seasonality, given that the fourth-quarter was an outlier. truth? In terms of seasonal weakness, given the weak capital expenditure environment, do we think of the first quarter in the same way we normally would in terms of the seasonal decline from the fourth quarter onwards?
Eitan Zamir
Yes. Thanks, Jim. So, the answer is yes. We expect our industry’s typical seasonality to continue in 2024 as well, with slow earnings and profitability rising throughout the year. This trend will continue.
Operator
Next up is Ananda Baruah of Loop Capital Markets.
Ananda Prosad Baruah
I guess, you know, I’d like to have a little bit of context on the signals within your core business, as opposed to the macro, if you can give us a little bit of context around them that you’re looking for to catalyze adoption in vital spaces of your business. And the signals can be simply, even if they’re anecdotal things that your consumers or other industries are following, maybe a specific type of technical thresholds that they’re looking for. overdoing it to catalyze adoption. That would be great.
Yoav Zeif
Thanks Ananda for the question. We catalyze adoption by being very fair to ourselves. We are going to manufacture, but we are going to manufacture in a designed way. We do a complete layout and framed paintings. What does it mean? Manufacturing in collaboration with our consumers. And we’ll do it one by one to make sure we get it right. And the way to achieve this is through two paths, I would say. One is usage instances. We identify use cases where only additives can provide and we provide value. The time is for us to do it with our consumers. We have a visitor advisory committee. We do it with our consumers, with consumers like Toyota, like Siemens, like McLaren, Daimler, the American government. We are careful not to invent or dream about use cases. We do this with our consumers. We expand the end-to-end solution that includes either hardware, software, hardware, as well as an express service that they need. We put it all together in one software and we do it with them. This is the way to ensure adoption because we are not looking to reduce the cost of the Toyota Corolla by $50. We identify programs and use instances with our consumers and there are many of them. You know, I gave the example of dental prosthetics where we create significant value, but also many other programs, such as fashion, aerospace and drones, for example. We work with our consumers to design larger drones that save energy and ensure the drone’s distance is much greater. We do those kinds of things with our consumers, and it is one use case after another, in collaboration with the visitor. For example, for electric vehicles, we work with the visitor on a lighter solution for electric vehicles, etc. The key here is to do it with the visitor according to the use case, where only additives can do it. A good example is also Toyota and F3300.
Ananda Prosad Baruah
That’s very helpful. And that gave me an idea for a follow-up, which I think might help reveal a little bit more of the core of my question. It’s a wonderful start. And that might be a bit of a tricky question, simply because I’m sure other lines of business – other consumers in other industries are in other places. But I guess, is there any general context that I can provide?In the process, you’ve just outlined the extent to which, until you can catalyze profit opportunities in your key segments, how much you rely more on the transmission of technologies at specific thresholds compared to the percentage you have. They want to be dangerous. It’s literally a matter of time and just getting into the design cycles and going through the design cycle process, which I know can take a couple of years depending on the category. And that’s it for me.
Yoav Zeif
That is a wonderful question. It is very difficult to perceive because the average will end everything here. It’s as if each application and use case is a story in itself. For one application, one use case, we already have the complete end-to-end solution. Take dentures as an example, you take the tools, templates and accessories, we have the right software. We have everything, it’s ready. The visitor has to adopt it according to his cycle. If we take other programs, we still have a way to go, like in the medical field, for example, in fashion, we have a way to go to make sure that consumers adopt it with us, connectors for example, we are there, but the Consumers still want us for all those [hands]. But demand is strong. We see that there is interaction because the visitor advisory board I spoke about wouldn’t spend days with us if they didn’t understand it. And there are things they can do with additives that they can’t do with anything else. And that gives them a competitive advantage. So I’m not going to go ahead and give you an average. I can only say that first of all, we have interaction and interaction with consumers at other levels, it depends on other use cases. But we are not talking about 10 or 15 years. It’s nothing that’s. . . it’s not biological. It’s not like we have to wait 15 years for someone to grow up. This is anything that can take from 1 year or a few months to 3 years at most, maybe a little longer. We focus on these programs. And the issue today is that the demand is there, and that’s kind of the paradox of growth. We are suffering as an industry, moving forward step by step, but we are going in the right direction. And as soon as they adapt it to the new cycle or a new product, we will see supergrowth.
Ananda Prosad Baruah
Yes, we’ve noticed it before. It’s very useful. I appreciate that.
Operator
The next one comes from Brian Drab of William Blair.
Blake Stuart Keating
I’m Blake for Brian. I just wanted to ask about the earnings forecasts. Can you talk? He talked about how he has set rules that he can follow. Can you tell me about the other dynamics that take you between the top and bottom end of the range?
Eitan Zamir
Yes. Hi Blake. So I’m going to touch on some of the finishes that help us think about the low finish and the high finish. One of them is the launch of the F3300, which will be a significant expansion driver in 2024. We haven’t introduced it yet, as you know, but we’re really seeing massive demand and a significant backlog starting to build up. So a successful year for the F3300 can take us from the low end to the high end. It is, therefore, an engine of expansion. The other one that you also mentioned above is consumable. This is something that we are sure will continue to grow in 2024. But of course, it is final. Software is another expansion engine that needs time to reach high levels of profits that are starting to be very significant, but still have very high margins and have grown especially in 2023. We believe that progress will continue. And of course, above all, there is also the macroeconomic question which, of course, can influence whether we are at the back or at the most sensitive part of the scale or somewhere on this scale, defining what the macro will do. in 2024.
Yoav Zeif
Yes. And if only to complement what Eitan said, for a more strategic perspective, when we provide this type of guidance, it is based on the foundation that we are building. In fact, we are in a position to capture the next phase of expansion, as I spoke with Ananda. And we are in a position because we are practically at the forefront of the industry in terms of functionality and visitor preferences. Of course, we are not growing much, but in a declining market. We have record sales of consumables with greater use. We have increased our market share in the last 3 years. We demonstrate monetary stability; in fact, unique in terms of profitability, gross margin, debt freedom and cash flow. And we have a strategy with five expansion engines of new technologies, new use cases, consumables, software and SDM as a manufacturing engine. And in the last 3 years we have built foundations such as go-to-market, diversified portfolio, relationships with our visitors, Siemens, Toyota and the US government, which prepared us for this. That is why we have the convenience and confidence to provide this recommendation at a difficult time, because we are in a position.
Blake Stuart Keating
Got it. Enjoy all the color. And then, despite everything for me, he talked about some opportunities with the P3 and Origin systems with new hardware and software. Can you tell us about the progress we’ve made with Origin and those systems?At the time of the acquisition, it said it expected to make up to $200 million in additional profits within five years. Since it’s just over halfway there, I was wondering if I had any news on this progress. And then in what markets do you see the biggest demand for those systems?
Yoav Zeif
Certainly the Origin and SAF markets, which are [arrow] for manufacturing. The market: our commercial properties, high-end and premium components, very difficult markets and that’s what we do. Both P3 and SAF focus on the high-end, automotive, aerospace and high-end commercial market, because no one can match the quality of the portions we have. We have used the last 2 years to make them much more. reliable. I can say that they now meet all Stratasys criteria and are aligned with the FDM standard, which we are very proud of. And now it is a question of fabrics because we need to open new commercial applications. So the WeatherX, which is very unique on the market, you can put it outside in the sun, in the rain, it will work. And the same with SAF, it’s the PA12. These are new fabrics like polypropylene in the future, where only SAF can do it because of the thermal properties we have. So it is a very undeniable strategy. We opted for the high-end commercial, it’s Stratasys. We opted for the high range. We use those technologies in which we put a lot of power and brain into innovating those systems and we do it with exclusive fabrics.
Operator
The next one comes from Jacob Stephan of Lake Street.
Jacob Michael Stephan
Apologies if this has already been requested. I’m hopping between calls this morning. But you can just talk about some of the most important platform systems, the F3300, H350, and simply compare the sales cycles and product demand for the Origin and Neo systems.
Yoav Zeif
Thanks Jacob for the question. There is no doubt that the more gigantic the system, the longer the sales cycle will be. It’s a simple question. But that’s also where we strategize, because that’s our step. What we promise and offer to our consumers is reliability, component ownership and the lowest cost per component. And then we see a wonderful sales cycle, I would say wonderful, but a little longer, sales tracking at Stratasys can go from 1 month to almost five months or 6 months, and a lot, even a year. how he deals with the government and others. But on average, the wonderful thing we’re seeing from Q4, Q3 and Q4 of last year is that the momentum derivatives of the sales cycle are more wonderful, so they’re flattening out. And on certain hardware and certain types of products, the sales cycle is also shortened. I am happy to share the F3300, it is a little less difficult because it is disruptive and generates a lot of excitement in the market because we bring anything that is not. exist. We offer jumbo-format FDM with all the wonderful qualities of Stratasys, but with twice the speed and nearly as many loading components. It is an expensive system, but the return on investment is very short because of it. and there are new things that consumers can do that they couldn’t do with other machines. So even though it is a very expensive machine, we see a better sales cycle, at least at first.
Jacob Michael Stephan
They gave it to me. That’s helpful. And then some other kind of verticality. What do you see in terms of the aerospace market? It turns out that there has been a lot of investment and attention in this market, but can you simply communicate your strategy there and the progress you have made?
Yoav Zeif
This is one of our main verticals. That’s nothing new here. And it’s one of our top verticals because of our quality and expertise in this area, and the really unique wisdom and answers that we bring. We are also the first to introduce new fabrics in this box and certify them to qualified bodies, starting with the United States. But the most important thing is that we deliver there. We have real good luck on the ground with the government, with NAVAIR, with the Air Force and with NASA. And we all have an advisory committee, some advisory committees, I mean, consumers, an advisory committee that includes industry figures, what they really need. After all, in the aerospace sector we have. . . I don’t need to say number one, but probably the number one spot there, subsidized by the experience of the government, consumers who are creating exclusive programs with us. We are about to collaborate on a task and believe that the new FDM platform will be your leading solution for the aerospace industry.
Jacob Michael Stephan
They gave it to me. That’s helpful. Good luck to the future, guys.
Operator
Thank you. We have come to the end of our Q&A session. I’d like to send it back to Yoav for any additional final comments.
Yoav Zeif
Thank you for being with us. We hope to keep you updated next quarter.
Operator
Thank you. This concludes today’s telephone convention and webcast. You can disconnect your line right now and have a glorious day. Thank you for your participation today.