Fourth Quarter Revenue of $177.1 million and $663.2 million for full
year 2018

Fourth Quarter GAAP net income of $6.3 million, or $0.12 per diluted
share, and non-GAAP net income of $11.3 million, or $0.21 per diluted
share

Generated $18.7 million of cash from operations during the quarter,
and a record $63.7 million in cash from operations in full year 2018

Company releases full year 2019 earnings guidance

MINNEAPOLIS & REHOVOT, Israel–(BUSINESS WIRE)–Please replace the release with the following corrected version to add
clarification to the “Financial Guidance” section.

The corrected release reads:

STRATASYS RELEASES FOURTH QUARTER AND FULL YEAR 2018 FINANCIAL
RESULTS – UPDATED TO INCLUDE GUIDANCE CLARIFICATION

Fourth Quarter Revenue of $177.1 million and $663.2 million for full
year 2018

Fourth Quarter GAAP net income of $6.3 million, or $0.12 per diluted
share, and non-GAAP net income of $11.3 million, or $0.21 per diluted
share

Generated $18.7 million of cash from operations during the quarter,
and a record $63.7 million in cash from operations in full year 2018

Company releases full year 2019 earnings guidance

Stratasys
Ltd. (NASDAQ: SSYS) announced financial results for the fourth
quarter and full year of 2018.

Q4 2018 Financial Results Summary:

Revenue for the fourth quarter of 2018 was $177.1 million, compared to
$179.3 million for the same period last year.

• GAAP gross margin was 49.1% for the quarter, compared to 48.7% for the
  same period last year.
• Non-GAAP gross margin was 52.2% for the quarter, compared to 52.5% for
  the same period last year.
• GAAP operating loss for the quarter was $3.8 million, compared to
  operating loss of $6.0 million for the same period last year.
• Non-GAAP operating income for the quarter was $12.8 million, compared
  to operating income of $13.5 million for the same period last year.
• GAAP net income for the quarter was $6.3 million, or $0.12 per diluted
  share, compared to a net loss of $10.0 million, or ($0.19) per diluted
  share, for the same period last year.
• Non-GAAP net income for the quarter was $11.3 million, or $0.21 per
  diluted share, compared to Non-GAAP net income of $8.4 million, or
  $0.16 per diluted share, reported for the same period last year.
• The Company generated $18.7 million in cash from operations during the
  fourth quarter and ended the period with $393.2 million in cash and
  cash equivalents.

“We are pleased with our fourth quarter and full year profitability, and
finished 2018 with record cash flow from operations as we continue to
build a strong operational foundation for future growth opportunities
and to invest in accelerating new product introductions to expand our
addressable markets,” said Elchanan (Elan) Jaglom, Interim Chief
Executive Officer of Stratasys. “Our consolidated top line results this
quarter reflect continued positive traction in high-end system and
materials sales for our PolyJet and FDM technology platforms, primarily
in North America, offset partially by the impact late in the quarter of
the government shutdown in the United States and what we believe is
temporary weakness in the Automotive sector in Europe.”

Fiscal 2018 Financial Results Summary:

• Revenue for fiscal 2018 was $663.2 million compared to $668.4 million
  for fiscal 2017.
• GAAP operating loss for fiscal 2018 was $8.8 million, compared to a
  loss of $30.5 million for fiscal 2017.
• Non-GAAP operating income for fiscal 2018 was $36.5 million, compared
  to $36.7 million for fiscal 2017.
• GAAP net loss for fiscal 2018 was $11.0 million, or ($0.22) per
  diluted share, compared to a loss of $40.0 million, or ($0.75) per
  diluted share, for fiscal 2017.
• Non-GAAP net income for fiscal 2018 was $27.8 million, or $0.52 per
  diluted share, compared to non-GAAP net income of $24.2 million, or
  $0.45 per diluted share, reported for fiscal 2017.
• The Company generated a record $63.7 million in cash from operations
  in fiscal 2018.

Financial Guidance:

Stratasys today provided the following information regarding the
Company’s guidance for projected revenue and net income for the fiscal
year ending December 31, 2019:

• Revenue guidance of $670 to $700 million.
  • As the Company stated on the earnings call today, revenue is
    expected to grow during the first half of 2019, excluding the
    impact of 2018 divestitures. The Company clarifies that it expects
    the 2nd half of 2019 will represent 51%-53.5% of the 2019 revenue.
    Revenue is subject to the variability that may be caused by the
    shifting of large orders.
• GAAP net loss of $22 to $12 million, or ($0.40) to ($0.22) per diluted
  share.
• Non-GAAP net income of $30 to $38 million, or $0.55 to $0.70 per
  diluted share.

Stratasys also provided the following guidance regarding the Company’s
projected performance and strategic plans for 2019:

• Non-GAAP operating margins of 5.5% to 6.5%.
• Capital expenditures are projected at $45 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 $32 million of projected
amortization of intangible assets; $20 to $22 million of share-based
compensation expense; reorganization related and other expense of $1 to
$2 million; and includes ($3) to ($4) million in tax expenses related to
non-GAAP adjustments.

“We are entering into 2019 with an impressive roadmap of new technology
and products, and continued, steady progress in customer adoption of our
additive manufacturing solutions for advanced applications in our target
verticals of aerospace, automotive, healthcare, and high-realism rapid
prototyping,” continued Jaglom. “We are excited about our recent and
upcoming new product introductions and believe that we will see
accelerated growth beginning in 2020.”

Stratasys Ltd. Q4 2018 Conference Call Details

The Company plans to hold the conference call to discuss its third
quarter financial results on Thursday, March 7, 2019 at 8:30 a.m. (ET).

The investor conference call will be available via live webcast on the
Stratasys Web site at www.stratasys.com
under the “Investors” tab; or directly at the following web address: https://edge.media-server.com/m6/p/znvsr248.

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 2462328.

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 on
the “Investors” page of the Stratasys Website 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^® and
PolyJet™ 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, expert services, and on-demand parts
production. Online at: 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
2019, 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 market
acceptance of our 3D printers, high-performance systems and consumables,
and the software and technology included in those systems; potential
declines in the demand for, or the prices of, our products and services,
or volume of our sales, due to decreased demand either for them
specifically or in the 3D printing market generally; potential shifts in
our product mix to lower-margin products or in our revenues mix towards
our AM services business; potential further charges against earnings
that we could be required to take due to impairment of additional
goodwill or other intangible assets; potential failure to successfully
consummate acquisitions or investments in new businesses, technologies,
products or services; the impact of competition and new technologies;
risks related to our relationships with our suppliers, resellers and
independent sales agents, and our operations at our manufacturing sites;
risks related to the international scope of our operations and
regulatory compliance (including reporting, environmental,
anti-corruption and other regulatory compliance) related to that scope
of operations; risks related to the security of our information systems
(including risks related to potential cyber-attacks); changes in the
overall global economic environment or in political and economic
conditions in the countries in which we operate; changes in our
strategy; costs and potential liability relating to litigation and
regulatory proceedings; 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, 2018 (the “2018 Annual Report”), filed with the
Securities and Exchange Commission (the “SEC”) on March 7^th,
2019. Readers are urged to carefully review and consider the various
disclosures made throughout our 2018 Annual Report that attaches
Stratasys’ unaudited, condensed consolidated financial statements as of,
and for the quarter and full year ended, December 31, 2018, and its
review of its results of operations and financial condition for those
periods, which has been furnished to the SEC on or about the date
hereof, 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, changes in fair value of
obligations in connection with acquisitions 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 Ltd.
Consolidated Balance Sheets
(in thousands, except share data)
		December 31,				December 31,
		2018				2017
ASSETS
Current assets
Cash and cash equivalents		$	393,167			$	328,761
Accounts receivable, net			138,146				132,671
Inventories			123,524				115,717
Net investment in sales-type leases			2,658				7,208
Prepaid expenses			6,398				7,696
Other current assets			20,278				22,858
Total current assets			684,171				614,911
Non-current assets
Net investment in sales-type leases – long term			1,552				4,439
Property, plant and equipment, net			188,150				199,951
Goodwill			385,849				387,108
Other intangible assets, net			107,274				142,122
Other non-current assets			21,258				31,219
Total non-current assets			704,083				764,839
Total assets		$	1,388,254			$	1,379,750
LIABILITIES AND EQUITY
Current liabilities
Accounts payable		$	45,855			$	39,849
Current portion of long term-debt			5,143				5,143
Accrued expenses and other current liabilities			39,115				30,041
Accrued compensation and related benefits			31,703				35,356
Deferred revenues			53,965				52,908
Total current liabilities			175,781				163,297
Non-current liabilities
Long-term debt			22,000				27,143
Deferred tax liabilities			1,662				7,069
Deferred revenues – long-term			18,422				15,200
Other non-current liabilities			27,422				32,899
Total non-current liabilities			69,506				82,311
Total liabilities			245,287				245,608
Redeemable non-controlling interests			852				1,635
Equity
Ordinary shares, NIS 0.01 nominal value, authorized 180,000 thousands shares; 53,881 thousands shares and 53,631 thousands shares issued and outstanding at December 31, 2018 and December 31, 2017, respectively			146				145
Additional paid-in capital			2,681,048				2,663,274
Accumulated other comprehensive loss			(7,753	)			(7,023	)
Accumulated deficit			(1,531,326	)			(1,523,906	)
Equity attributable to Stratasys Ltd.			1,142,115				1,132,490
Non-controlling interest			–				17
Total equity			1,142,115				1,132,507
Total liabilities and equity		$	1,388,254			$	1,379,750

Stratasys Ltd.
Consolidated Statements of Operations
(in thousands, except per share data)
		Three Months Ended December 31,								Twelve Months Ended December 31,
		2018				2017				2018				2017
Net sales
Products		$	124,537			$	129,777			$	456,504			$	474,286
Services			52,582				49,566				206,733				194,076
			177,119				179,343				663,237				668,362
Cost of sales
Products			56,502				59,977				203,622				219,020
Services			33,618				32,100				134,391				126,565
			90,120				92,077				338,013				345,585
Gross profit			86,999				87,266				325,224				322,777
Operating expenses
Research and development, net			24,379				26,585				98,964				96,237
Selling, general and administrative			66,423				66,657				235,107				257,063
			90,802				93,242				334,071				353,300
Operating loss			(3,803	)			(5,976	)			(8,847	)			(30,523	)
Financial income, net			747				667				633				1,047
Loss before income taxes			(3,056	)			(5,309	)			(8,214	)			(29,476	)
Income taxes expense			3,626				4,102				4,736				9,273
Share in profits (losses) of associated companies			12,910				(704	)			1,725				(1,710	)
Net income (loss)			6,228				(10,081	)			(11,225	)			(40,459	)
Net loss attributable to non-controlling interest			(79	)			(101	)			(261	)			(478	)
Net loss attributable to Stratasys Ltd.		$	6,307			$	(9,980	)		$	(10,964	)		$	(39,981	)
Net loss per ordinary share attributable to Stratasys Ltd.
Basic		$	0.12			$	(0.19	)		$	(0.22	)		$	(0.75	)
Diluted			0.12				(0.19	)			(0.22	)			(0.75	)
Basic			53,854				53,356				53,751				52,959
Diluted			54,132				53,356				53,751				52,959

Stratasys Ltd.
Reconciliation of GAAP to Non-GAAP Results of Operations
			Three Months Ended December 31,
			2018					Non-GAAP					2018				2017					Non-GAAP						2017
			GAAP					Adjustments					Non-GAAP				GAAP					Adjustments						Non-GAAP
			U.S. dollars and shares in thousands (except per share amounts)
	Gross profit (1)		$	86,999				$	5,499				$	92,498			$	87,266				$	6,864					$	94,130
	Operating income (loss) (1,2)			(3,803	)				16,574					12,771				(5,976	)				19,518						13,542
	Net income (loss) attributable to Stratasys Ltd. (1,2,3)			6,307					4,993					11,300				(9,980	)				18,429						8,449
	Net income (loss) per diluted share attributable to Stratasys Ltd. (4)		$	0.12				$	0.09				$	0.21			$	(0.19	)			$	0.35					$	0.16
(1)	Acquired intangible assets amortization expense								5,221														5,687
	Non-cash stock-based compensation expense								294														497
	Impairment charges of other intangible assets								–														646
	Reorganization and other related costs								(16	)													34
									5,499														6,864
(2)	Acquired intangible assets amortization expense								2,532														2,594
	Non-cash stock-based compensation expense								3,686														3,092
	Impairment charges of intangible assets and other long lived assets								4,797														3,742
	Reorganization and other related costs								60														3,136
	Merger and acquisition related expense								–														90
									11,075														12,654
									16,574														19,518
(3)	Corresponding tax effect								1,853														(1,295	)
	Gain from equity method divestment, related write-offs and amortization								(13,434	)													206
								$	4,993													$	18,429
(4)	Weighted average number of ordinary shares outstanding- Diluted			54,132										54,132				53,356											53,584

Stratasys Ltd.
Reconciliation of GAAP to Non-GAAP Results of Operations
			Twelve Months Ended December 31,
			2018					Non-GAAP					2018				2017					Non-GAAP						2017
			GAAP					Adjustments					Non-GAAP				GAAP					Adjustments						Non-GAAP
			U.S. dollars and shares in thousands (except per share amounts)
	Gross profit (1)		$	325,224				$	22,351				$	347,575			$	322,777				$	26,860					$	349,637
	Operating income (loss) (1,2)			(8,847	)				45,324					36,477				(30,523	)				67,226						36,703
	Net income (loss) attributable to Stratasys Ltd. (1,2,3)			(10,964	)				38,782					27,818				(39,981	)				64,158						24,177
	Net income (loss) per diluted share attributable to Stratasys Ltd. (4)		$	(0.22	)			$	0.74				$	0.52			$	(0.75	)			$	1.20					$	0.45
(1)	Acquired intangible assets amortization expense								20,866														22,768
	Non-cash stock-based compensation expense								1,474														2,581
	Impairment charges of other intangible assets								–														646
	Reorganization and other related costs								11														337
	Merger and acquisition related expense								–														528
									22,351														26,860
(2)	Acquired intangible assets amortization expense								10,161														10,319
	Impairment charges of intangible assets and other long-lived assets								4,797														3,742
	Non-cash stock-based compensation expense								14,212														15,141
	Gain from divestiture, net of transaction costs								(7,016	)													–
	Change in fair value of obligations in connection with acquisitions								–														1,378
	Reorganization and other related costs								691														5,803
	Merger and acquisition related expense								128														3,983
									22,973														40,366
									45,324														67,226
(3)	Corresponding tax effect								(808	)													(3,866	)
	Gain from equity method divestment, related write-offs and amortization								(5,734	)													798
								$	38,782													$	64,158
(4)	Weighted average number of ordinary shares outstanding- Diluted			53,751										53,898				52,959											53,536

Stratasys Ltd.
Reconciliation of GAAP to Non-GAAP Forward Looking Guidance
Fiscal Year 2019
(in millions, except per share data)
GAAP net loss		($22) to ($12)
Adjustments
Stock-based compensation expense		$20 to $22
Intangible assets amortization expense		$32
Reorganization Related Expense		$1 to $2
Tax expense (Income) related to Non-GAAP adjustments		($4) to ($3)
Non-GAAP net income		$30 to $38
GAAP diluted loss per share		($0.40) to ($0.22)
Non-GAAP diluted earnings per share		$0.55 to $0.70

Contacts

Stratasys Investor Relations
Yonah Lloyd
Vice President
– Investor Relations
[email protected]