Stratasys, Ltd.

Greetings and welcome to the Stratasys third quarter 2021 conference call and webcast. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Yona Lloyd, Vice President of Investor Relations, Thank you. You may begin.

Good morning, everyone, and thank you for joining us to discuss our 2021 third quarter financial results. On the call with us today are our Chief Executive Officer, Dr. Yoav Zaif, and our Chief Financial Officer, Lilas Pajorski. I remind you that access to today's call, including the 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 or referenced in Stratasys' annual report on Form 20F for the 2020 year, which we filed with the SEC on March 1, 2021. Please also refer to our operating and financial review and prospects for the third quarter of 2021, as well as the press release that announces our earnings for the third quarter of 2021, which are attached as exhibits to two separate reports on Form 6K that we're furnishing to the SEC today. In order to obtain updated information throughout the year concerning our quarterly results of operations and the risks and other factors that most impact those results, please see the quarterly earnings press releases and our quarterly operating and financial review and prospects, each of which are attached as exhibits to reports on Form 6-K that we furnish to the SEC on a quarterly basis over the course of the year. 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. Non-GAAP to GAAP reconciliations are provided in tables in our slide presentation and today's press release. Now I would like to turn the call over to our Chief Executive Officer, Dr. Yoav Zaif. Yoav?

Thank you, Yonah. Good morning, everyone, and thank you for joining us. Today, additive manufacturing and strategies are at an inflection point. industries around the world better understand the benefits and are increasingly adding 3D printing to their production plans. This is thanks to a number of improvements, such as increased throughput capacity, a growing range of high-performance materials, and consistent part quality. Additionally, there are compelling economic and sustainability advantages and software workflow solutions that can support the shift from prototyping to manufacturing that is happening across industries. Parts can be lighter, equally strong, less expensive, and personalized. And when considering the supply chain challenges in the world today, our customers are increasingly looking to flexible, distributed additive manufacturing to overcome the logistics disruptions we are witnessing around the globe. In short, Edited manufacturing is now viable for production of a wide range of end-use parts at volume scale for global distribution. The investments we are making at Stratasys, along with the strategic initiatives we have undertaken, are steadily driving revenue growth. Just over a year ago, I laid out our strategy to become the first choice for polymer 3D printings with a focus on the biggest addressable market, manufacturing. This quarter, we truly accelerated execution of our strategy. We signed large-scale deals for manufacturing systems. We completed our acquisition of ZAR3D, and we expected to see incremental upside as we prepare to launch two new mass production offerings, the Origin One and the H350. I will now walk you through the highlights of the quarter and some exciting recent achievements. Lilach will then provide financial details for the quarter and give an update on our outlook. The third quarter delivered revenue growth in all business lines and regions. Results were highlighted by top line improvement of 24% year over year. This was driven by growth of approximately 35% in systems and 27% in consumables. Our Stratasys Direct Service Bureau is not yet at 2019 levels, but was up over 25% from Q3 last year and is expected to continue growing. And importantly, system sales grew nearly 7% over Q3 of 2019, thanks in part to our manufacturing-focused system. System sales typically lead to increase consumables and services that generate profitable revenue as customers ramp up their utilization. One of the many highlights of the quarter was our participation at the annual Rapid Plasticity Trade Show, where I was honored to deliver the opening address. We secured significantly more leads than the 2019 event, even though there were less people at the show this year. with especially strong interest for our origin system. In less than two weeks, we will be attending Formnext, our industry's largest trade show, where we look forward to sharing more of our exciting new innovations across our portfolio of systems, materials, and our open software platform. During the quarter, our focus on manufacturing gained additional attraction, as we signed two major end-use part manufacturing wins, The US Navy will purchase up to 25 F900 systems, materials, and support services over five years for a total consideration of 20 million. The F900 is our largest FDN system, featuring the widest range of premium materials. We believe this is the biggest government additive manufacturing deal of its kind. This purchase advances the US Department of Defense's stated strategy for increasing its use additive manufacturing. It allows the Navy to produce mission-critical parts closer to their point of need and demonstrates the ability to use distributed manufacturing with digital inventory and global deployment. The system will be used for producing end-use parts, tooling, and training aids, and will be part of the Navy's aircraft maintenance program. The second major contract, also for multiple F900 systems, is a repeat purchase from a leading global brand name, OEM. It is also a multi-million dollar, multi-year award, and we expect to share more details at a later date. These two notable manufacturing awards demonstrate our outstanding reputation for excellence in both technology and service. Just as importantly, it shows the continuing deep penetration by strategies with leading manufacturers that are turning to our technology for true production of end-use parts. We believe there are many similar opportunities for scale additive manufacturing being considered across industries worldwide. To further strengthen our manufacturing focus, we acquired the remaining 55% share of ZAR3D, giving us complete management of SAF product development. SAF technology is a major leap forward for powder bed manufacturing and is a significant improvement over other powder bed systems. We are excited to welcome the ZAR3D team to Stratasys. We have already deployed H350 system at better sites, including service bureaus. The feedback from our customer has been outstanding, with this early installation already printing end-use parts at volume scale. The H350 can also print many of its own parts, enabling more efficient production capacity support. Healthcare has been an increasing road driver and has grown faster than any other end market for us over the past two years. 3D printing brings key benefits, such as personalization for medical needs and mass customization for dental applications. During the quarter, we furthered our expansion into dental, particularly through strong sales of our new DentaJet system. We continue to add new customers to our install base as they appreciate our unique advanced features such as the ability to print a mix of parts on a single tray with unattended operation. On the medical side, our journey toward making our technology accessible at point of care started with the launch of our MediJet system last quarter, and we continue to expand our reach through partnerships. For example, We recently started working with Ricoh 3D to provide anatomical models at the point of care for hospitals across the U.S. with the help of integrated IBM Watson Health technology. This collaboration helped clinicians see inside anatomy for greater visibility into patient needs. It offers both clinical and economic benefits, reducing barriers to entry that healthcare providers can encounter when setting up a 3D printing facility. PradoSys J750 digital anatomy and MediJet printers create lifelike anatomical models. These reflect the pathologies of the patient and can be physically manipulated like human tissue. Hospitals can use our HIPAA-compliant state-of-the-art technology on-site or through an on-demand part service. They can deliver more personalized care through better surgical preparation and patient education and can also improve medical training. And we have a similar agreement in Europe with Bonn 3D to provide hospitals with on-site access to 3D printing through their OSPI factory project. Our Stratasys Direct business recently added anatomical modeling to its services with our J750 digital anatomy printers. Demand by medical device manufacturers and healthcare providers has been strong, with well over 1,000 models already printed. The opportunities in healthcare will continue to expand, and we are often reminded how our advances touch and change people's lives. A few months ago, one-year-old twin girls were conjoined at the back of their heads underwent a successful operation to separate them. Stratasys technology was used extensively, preparing both the medical team and the families with pre-surgical modeling to help ensure the positive outcome and reduce the time of the operation. We continue to develop other exciting healthcare use cases that we believe will have a significant impact and look forward to sharing more in the future. I would now like to update you on our software initiative. We have been actively developing our software solution with several exciting milestones in the past few months. We introduced a new data security solution called ProtectAM to enhance cybersecurity of additive manufacturing as its role in government and defense applications grew larger and more essential. This solution is the first in additive manufacturing to work with Red Hat Enterprise Linux, the world's leading enterprise Linux platform, and the platform preferred by the US government. This is a great example of being tuned in to a specific vertical's needs, in this case, the US government, and tailoring our solutions accordingly. We also recently announced the GrabCAD additive manufacturing platform. the world is increasingly turning to software to help scale additive manufacturing. In a recent report, research firm Smartech Analysis forecasted that the total global additive manufacturing software market will reach $3.3 billion by 2026, up from less than $500 million in 2020. We believe Stratasys can be a catalyst for this growth. Our new platform provides us with the opportunity to strengthen our leadership position in the additive manufacturing industry through this growing addressable market for a number of reasons. First, we are able to leverage our deep additive manufacturing expertise and existing relationship with many of the world's leading manufacturers. Second, we build our platform to be the best solution in the industry. It is enterprise ready, with the capability to integrate the entire digital thread from design through manufacturing. And third, it is also open. We are open to a broad set of additive manufacturing partner applications, giving our customers the freedom to use a wide range of software applications through our GrabCAD SDKs. And yes, we are open to integration with many non-strategic 3D printers. Leading manufacturers tell us They want Stratasys to be their primary additive platform for Industry 4.0, recognizing our leadership position and open approach. As a result, we anticipate software will be an increasing part of our revenues and profit streams, driven by recurring software license subscriptions and SDK licenses from partners and customers. It's a key part of our overall rapid growth plan for our manufacturing business. Finally, in the area of software design, we recently announced a collaboration with Adobe to make full-color 3D printing easy and accessible for their large user base of Adobe Substance 3D Painter with no third-party software or tools needed, which had previously been required. Our multiple competitive advantages, when coupled with our new product offerings, will further advance our position as the leading provider of polymer 3D printing solutions. We have the broadest, most advanced polymer technology portfolio, a comprehensive enterprise-ready software platform to scale additive manufacturing for production, the leading global channel with over 200 partners, the largest team of engineers and customer support in our industry, and a proven, resilient business model designed to scale. We expect strong purchasing cycles to gain momentum as we bring new systems to market, generating increased consumables, service contracts, and software to drive recurring revenues and long-term profitability. I will now turn the call over to Lilach, who will share the financial results of the quarter. Lilach?