6-K

Exhibit 99.1

STRATASYS LTD.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED

MARCH 31, 2021

(UNAUDITED)

INDEX TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2021

(UNAUDITED)

Item	Page
Consolidated Balance Sheets	2
Consolidated Statements of Operations and Comprehensive Loss	3
Consolidated Statements of Changes in Equity	4-5
Consolidated Statements of Cash Flows	6
Notes to Condensed Consolidated Interim Financial Statements	7-18

1

STRATASYS LTD.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Unaudited)

Consolidated Balance Sheets
(in thousands, except share data)
		March 31, 2021			December 31, 2020
ASSETS
Current assets
Cash and cash equivalents	$	421,398		$	272,092
Short-term Deposits		109,000			27,000
Accounts receivable, net of allowance for credit losses of $0.9 million as of March 31, 2021 and December 31, 2020		102,780			106,068
Inventories		124,199			131,672
Prepaid expenses		10,345			6,717
Other current assets		16,745			16,943
Total current assets		784,467			560,492
Non-current assets
Property, plant and equipment, net		199,382			201,232
Goodwill		38,074			35,694
Other intangible assets, net		131,619			131,569
Operating lease right-of-use assets		19,089			21,298
Other non-current assets		43,299			39,717
Total non-current assets		431,463			429,510
Total assets	$	1,215,930		$	990,002
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	28,062		$	16,987
Accrued expenses and other current liabilities		29,283			31,061
Accrued compensation and related benefits		30,937			25,659
Deferred revenues - short term		49,413			49,165
Operating lease liabilities - short term		8,941			9,282
Total current liabilities		146,636			132,154
Non-current liabilities
Deferred revenues - long term		14,074			14,227
Operating lease liabilities - long term		10,501			12,567
Contingent consideration		40,234			37,400
Other non-current liabilities		32,470			34,059
Total non-current liabilities		97,279			98,253
Total liabilities	$	243,915		$	230,407
Contingencies (see note 12)
Redeemable non-controlling interests		227			227
Equity
Ordinary shares, NIS 0.01 nominal value, authorized 180,000 thousand shares; 65,218 thousand shares and 56,617 thousand shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively		181			155
Additional paid-in capital		2,984,048			2,753,955
Accumulated other comprehensive loss		(7,634	)		(8,846	)
Accumulated deficit		(2,004,807	)		(1,985,896	)
Total equity		971,788			759,368
Total liabilities and equity	$	1,215,930		$	990,002

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

2

STRATASYS LTD.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Unaudited)

Consolidated Statements of Operations and Comprehensive Loss
	Three Months Ended March 31,
in thousands, except per share data		2021			2020
Revenues
Products	$	90,324		$	83,172
Services		43,865			49,735
		134,189			132,907
Cost of revenues
Products		46,920			39,248
Services		31,692			33,789
		78,612			73,037
Gross profit		55,577			59,870
Operating expenses
Research and development, net		20,601			24,194
Selling, general and administrative		53,334			55,576
		73,935			79,770
Operating loss		(18,358	)		(19,900	)
Financial expenses, net		(377	)		(829	)
Loss before income taxes		(18,735	)		(20,729	)
Income tax expenses (benefit)		(942	)		221
Share in losses of associated companies		(1,118	)		(838	)
Net loss	$	(18,911	)	$	(21,788	)
Net loss attributable to non-controlling interests		-			(85	)
Net loss attributable to Stratasys Ltd.	$	(18,911	)	$	(21,703	)
Net loss per ordinary share attributable to Stratasys Ltd. - basic and diluted	$	(0.32	)	$	(0.40	)
Weighted average ordinary shares outstanding. - basic and diluted		58,616			54,544
Comprehensive loss
Net loss		(18,911	)		(21,788	)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		(961	)		(1,954	)
Unrealized gains (losses) on derivatives designated as cash flow hedges		2,173			822
Other comprehensive income (loss), net of tax		1,212			(1,132	)
Comprehensive loss		(17,699	)		(22,920	)
Less: comprehensive loss attributable to non-controlling interests		-			(85	)
Comprehensive loss attributable to Stratasys Ltd.	$	(17,699	)	$	(22,835	)

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

3

STRATASYS LTD.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Unaudited)

Consolidated Statements of Changes in Equity
(in thousands )
Three Months Ended March 31, 2021 and 2020
											Accumulated
						Additional					Other
	Ordinary Shares					Paid-In		Accumulated			Comprehensive			Total
		Number of shares		Par Value		Capital		deficit			Loss			Equity
Balance as of December 31, 2020		56,617		155		2,753,955		(1,985,896	)		(8,846	)		759,368
Issuance of shares in connection with stock-based compensation plans		670		2		2,881		-			-			2,883
Stock-based compensation		-		-		7,205		-			-			7,205
Public offering of ordinary shares, net		7,931		24		218,851		-			-			218,875
Deferred tax assets in connection with public offering expenses		-		-		1,156		-			-			1,156
Comprehensive income (loss)		-		-		-		(18,911	)		1,212			(17,699	)
Balance as of March 31, 2021	$	65,218	$	181	$	2,984,048	$	(2,004,807	)	$	(7,634	)	$	971,788

4

STRATASYS LTD.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Unaudited)

Consolidated Statements of Changes in Equity
(in thousands )
Three Months Ended March 31, 2021 and 2020
											Accumulated
						Additional					Other
	Ordinary Shares					Paid-In		Accumulated			Comprehensive			Total
		Number of shares		Par Value		Capital		deficit			Loss			Equity
Balance as of December 31, 2019		54,441		148		2,706,894		(1,542,175	)		(7,716	)		1,157,151
Issuance of shares in connection with stock-based compensation plans		358		1		29		-			-			30
Stock-based compensation		-		-		4,907		-			-			4,907
Comprehensive loss		-		-		-		(21,703	)		(1,132	)		(22,835	)
Balance as of March 31, 2020	$	54,799	$	149	$	2,711,830	$	(1,563,878	)	$	(8,848	)	$	1,139,253

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

5

STRATASYS LTD.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Unaudited)

Consolidated Statements of Cash Flows
	Three Months Ended March 31,
in thousands		2021			2020
Cash flows from operating activities
Net loss	$	(18,911	)	$	(21,788	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		13,802			12,457
Stock-based compensation		7,205			4,907
Foreign currency transaction loss		4,181			3,428
Deferred income taxes		(1,774	)		(409	)
Share in losses of associated companies		1,118			838
Revaluation of investments		(3,670	)		-
Other non-cash items, net		193			201
Change in cash attributable to changes in operating assets and liabilities:
Accounts receivable, net		2,620			16,541
Inventories		7,046			(5,659	)
Other current assets and prepaid expenses		(3,775	)		3,519
Other non-current assets		1,595			902
Accounts payable		10,197			(3,086	)
Other current liabilities		6,453			9,047
Deferred revenues		(433	)		(2,154	)
Other non-current liabilities		(3,096	)		(7,470	)
Net cash provided by operating activities		22,751			11,274
Cash flows from investing activities
Cash paid for acquisitions, net of cash acquired		(6,356	)		-
Purchase of property and equipment		(4,012	)		(6,291	)
Investments in short-term bank deposits		(109,000	)		-
Proceeds from short-term bank deposits		27,000			-
Net proceeds from divestitures of subsidiaries and associated companies		-			1,000
Purchase of intangible assets		(278	)		(413	)
Other investing activities		(98	)		206
Net cash used in investing activities		(92,744	)		(5,498	)
Cash flows from financing activities
Proceeds from public offering, net of issuance costs		218,875			-
Proceeds from exercise of stock options		2,883			30
Other financing activities		407			-
Net cash provided by financing activities		222,165			30
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(2,872	)		(2,116	)
Net change in cash, cash equivalents and restricted cash		149,300			3,690
Cash, cash equivalents and restricted cash, beginning of period		272,216			293,597
Cash, cash equivalents and restricted cash, end of period	$	421,516		$	297,287
Supplemental disclosures of cash flow information:
Transfer of inventory to fixed assets		884			832
Transfer of fixed assets to inventory		210			5

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

6

STRATASYS LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

Note 1. Business Description and Basis of Presentation

Stratasys Ltd. (collectively with its subsidiaries, the “Company” or “Stratasys”) is a global leader in connected, polymer-based 3D printing solutions, across the entire manufacturing value chain. The Company leverages its competitive advantages, which include a broad set of best-in-class 3D printing platforms, software, a materials and technology partner ecosystem, innovative leadership, and global GTM infrastructure, in order to position itself to capture share in a significant and growing global marketplace, with a focus on manufacturing.  The Company’s approximately 1,600 granted and pending additive technology patents to date have been used to create models, prototypes, manufacturing tools, and production parts for a multitude of industries including aerospace, automotive, transportation, healthcare, consumer products, dental, medical, and education. Stratasys’ products and comprehensive solutions improve product quality, development time, cost, and time-to-market. The Company’s 3D ecosystem of solutions and expertise includes 3D printers, materials, software, expert services, and on-demand parts production.

The condensed consolidated interim financial information herein is unaudited; however, such information reflects all adjustments (consisting of normal, recurring adjustments), which are, in the opinion of management, necessary for a fair statement of results for the interim period. The condensed consolidated interim financial statements include the accounts of Stratasys Ltd. and its subsidiaries. All intercompany accounts and transactions, including profits from intercompany sales not yet realized outside the Company, have been eliminated in consolidation.

The Company's financial statements are prepared in conformity with U.S. generally accepted accounting principles (“GAAP”), which requires the Company to make estimates based on assumptions about current and, for some estimates, future economic and market conditions which affect reported amounts and related disclosures in its financial statements. Although the Company current estimates contemplate current and expected future conditions, as applicable, it is reasonably possible that actual conditions could differ from the Company expectations, which could materially affect its results of operations and financial position.

In particular, a number of estimates have been and will continue to be affected by the ongoing COVID-19 pandemic. The severity, magnitude and duration of, and recovery from, as well as the economic consequences of, the COVID-19 pandemic, remain uncertain, rapidly changing and difficult to predict. As a result, the accounting estimates and assumptions may change over time in response to COVID-19. Such changes could have an additional impact on the Company’s long-lived asset and intangible asset valuation; inventory valuation; assessment of the annual effective tax rate; and the allowance for expected credit losses and bad debt.

The results of operations for the three months ended March 31, 2021 are not indicative of results that could be expected for the entire fiscal year. Certain financial information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. The reader is referred to the audited consolidated financial statements and notes thereto for the year ended December 31, 2020, filed with the U.S. Securities and Exchange Commission (the “SEC”) as part of the Company’s Annual Report on Form 20-F for such year on March 1, 2021.

Note 2. New Accounting Pronouncements

Accounting Pronouncements Adopted in 2021

In December 2019, the FASB issued new guidance to simplify the accounting for income taxes by removing certain exceptions to the general principles and simplification of areas such as franchise taxes, step-up in tax basis goodwill, separate entity financial statements and interim recognition of enactment of tax laws or rate changes The guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company adopted this guidance effective January 1, 2021, with no material impact on its consolidated financial statements.

7

STRATASYS LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

Note 3. Certain Transactions

 Origin acquisition

 On December 31, 2020 (the “Origin transaction date”) the Company acquired 3D printing start-up Origin Laboratories Inc. (“Origin”) for an aggregate purchase price of $97.1 million (the “Origin transaction”), including cash and shares. The acquisition enables Stratasys to expand its leadership through innovation in the fast-growing mass production parts market with a next-generation photopolymer platform. Stratasys expects Origin’s proprietary Programmable PhotoPolymerization (P3) technology to be an important growth engine for the Company. The acquisition was aimed at fortifying the Company's leadership in polymers and production applications of 3D printing in industries such as dental, medical, tooling, and select industrial, defense, and consumer goods markets.

In exchange for 100% of the outstanding shares of Origin the Company issued 1,488 thousand ordinary shares, paid cash upon closing, and is obligated to pay additional payments (combination of cash and shares) subject to performance-based earn-outs over 3 years.

The Origin transaction is reflected in accordance with ASC Topic 805, “Business Combinations”, using the acquisition method of accounting with the Company as the acquirer.

The following table summarizes the fair value of the consideration transferred to Origin stockholders for the Origin transaction:

		U.S. $ in thousands
Cash payments	$	33,025
Issuance of ordinary shares to Origin stockholders		26,636
Contingent consideration at estimated fair value		37,400
Total consideration	$	97,061

 The fair value of the ordinary shares issued was determined based on the closing market price of the Company’s ordinary shares on the Origin transaction date.

In accordance with ASC Topic 805, the estimated contingent consideration as of the Origin transaction date was included in the purchase price. The total contingent payments could reach to a maximum aggregate amount of up to $40 million. Approximately 50% of the payments shall be settled in cash, and 50% shall be settled through the issuance of ordinary shares. The estimated fair value of the contingent consideration is based on management’s assessment of whether, and at what level, the financial metrics will be achieved, and the present value factors associated with the timing of the payments. This fair value measurement is based on significant unobservable inputs in the market and thus represents a Level 3 measurement within the fair value hierarchy. Changes in the fair value of contingent consideration will be recorded in Consolidated Statements of Operations and Comprehensive Loss. Refer to note 9. 

An additional payment of $6 million, which is subject to the founders' retention over 3 years, will be recorded as compensation expense over the retention period. Compensation expenses for the three-month period ended March 31, 2021 were approximately $1.1 million.

8

STRATASYS LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed, based on the information that is available as of March 31, 2021. Thus, the measurements of fair value reflected are subject to changes and such changes could be significant. The preliminary allocation of the purchase price to assets acquired and liabilities assumed is as follows:

		Allocation of Purchase Price
		(U.S. $ in thousands)
Cash and cash equivalents	$	2,083
Goodwill		36,379
Intangible assets		71,125
Other assets		4,364
Total assets acquired		113,951
Net deferred tax liabilities		14,007
Other labilities		2,883
Total liabilities assumed		16,890
Net assets acquired	$	97,061

The allocation of the purchase price to net assets acquired and liability assumed resulted in the recognition of an intangible asset related to developed technology of $71 million. This intangible asset has a useful-life of 10 years. The fair value estimate of the developed technology is determined using a variation of the income approach known as the “Multi-Period Excess Earnings Approach”. This valuation technique estimates the fair value of an asset based on market participants’ expectations of the cash flows an asset would generate over its remaining useful life. The net cash flows were discounted to present value.

Pro forma information giving effect to the acquisition has not been provided as the impact of the transaction for purposes of Stratasys' consolidation results of operations and financial condition would not be material.

  RPS acquisition

 On February 16, 2021 the Company acquired RP Support Limited (“RPS”), a provider of industrial stereolithography 3D printers and solutions. In exchange for 100% of the outstanding shares of RPS, the Company paid cash upon closing and is obligated to make additional payments (in cash), subject to performance-based criteria, via earn-out payments over two years.

  Marketable equity investment

The Company recognized in the first quarter of 2021 an income of $3.7 million for revaluation of an equity investment. In prior periods the investment was treated as a non-marketable equity investment without readily determinable FV. The entity has become public during the first quarter and accordingly the investment is now treated as a marketable equity investment.

9

STRATASYS LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

Note 4. Revenues

Disaggregation of Revenues

The following table presents the Company’s revenues disaggregated by geographical region (based on the Company's customers' locations) and revenue type for the three months ended March 31, 2021 and 2020:

	Three months ended March 31,
		2021		2020
	(U.S. $ in thousands)
Americas
Products	$	49,568	$	48,244
Service		32,545		38,329
Total Americas		82,113		86,573
EMEA
Products		22,501		20,747
Service		6,417		6,173
Total EMEA		28,918		26,920
Asia Pacific
Products		18,255		14,181
Service		4,903		5,233
Total Asia Pacific		23,158		19,414
Total Revenues	$	134,189	$	132,907

The following table presents the Company’s revenues disaggregated based on the timing of revenue recognition (at a specific point in time or over the course of time) for the three months ended March 31, 2021 and 2020:

	Three months ended March 31,
		2021		2020
	(U.S. $ in thousands)
Revenues recognized in point in time from:
Products	$	90,324	$	83,172
Services		10,601		10,644
Total revenues recognized in point in time		100,925		93,816
Revenues recognized over time from:
Services		33,264		39,091
Total revenues recognized over time		33,264		39,091
Total Revenues	$	134,189	$	132,907

10

STRATASYS LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

Contract Assets and Contract Liabilities

Contract assets are recorded when the Company's right to consideration is conditional on constraints other than the passage of time. The Company had no material contract assets as of March 31, 2021 and December 31, 2020.

Contract liabilities include advance payments and billings in excess of revenue recognized, which are primarily related to advanced billings for service type warranty. Contract liabilities are presented under deferred revenues. The Company's deferred revenues as of March 31, 2021 and December 31, 2020 were as follows:

		March 31,	December 31,
		2021	2020
	U.S. $ in thousands
Deferred revenue*		63,487	63,392

*Includes $14.1 million and $14.2 million under long term deferred revenue in the Company's consolidated balance sheets as of March 31, 2021 and December 31, 2020, respectively.

Revenue recognized in 2021 that was included in deferred revenue balance as of December 31, 2020 was $18.4 million for the three months ended March 31, 2021.

Remaining Performance Obligations

Remaining Performance Obligations (“RPO“) represent contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. As of March 31, 2021, the total RPO amounted to $89.7 million. The Company expects to recognize $74.9 million of this RPO during the next 12 months, $9.2 million over the subsequent 12 months and the remaining $5.6 million thereafter.

Incremental Costs of Obtaining a Contract

Sales commissions earned mainly by the Company’s sales agents are considered incremental costs of obtaining a contract with a customer, as the Company expects the benefit of those commissions to be longer than one year. The majority of the sales commissions are not subject to capitalization, as the commission expense is recognized as the related revenue is recognized. Sales commissions for initial contracts related to the service type warranty are deferred and then amortized on a straight-line basis over the expected customer relationship period if the Company expects to recover those costs. Amortization expense is included in selling, general and administrative expenses in the consolidated statements of operations. As of March 31, 2021 and December 31, 2020, the deferred commissions amounted to $5.3 million and $5.0 million, respectively.

11

STRATASYS LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

Note 5. Inventories

Inventories consisted of the following:

		March 31,		December 31,
		2021		2020
	U.S. $ in thousands
Finished goods	$	52,845	$	61,297
Work-in-process		3,739		3,163
Raw materials		67,615		67,212
	$	124,199	$	131,672

Note 6. Goodwill and Other Intangible Assets

Goodwill

Changes in the carrying amount of the Company’s goodwill for the three months ended March 31, 2021 were as follows:

		U.S. $ in thousands
Goodwill as of January 1, 2021	$	35,694
Goodwill acquired*		1,716
Foreign currency translation adjustments and other		664
Goodwill as of March 31, 2021	$	38,074

*The goodwill was acquired as part of RPS acquisition. See Note 3.

   

During the third quarter of 2020, the Company had noted that indicators of potential impairment existed which required an interim goodwill impairment analysis for Stratasys-Objet reporting unit. These indicators included longer and deeper than expected reduction in the business, refinement to the company’s business focus into additional inorganic technologies and sustained decline in the Company’s market capitalization during the past two quarters, all, primarily as a result of the COVID-19 impact on the global economy and the Company’s business.

 

As a result of the factors discussed above, the Company revisited its assumptions supporting the cash flow projections for its Stratasys-Objet reporting unit, including: (i) the expected duration and depth of revenue reduction and certain revenue growth assumptions; (ii) the associated operating profit margins; and (iii) the long term growth rate. In estimating the discounted cash flow, the Company used the following key assumptions: the Company currently expects it will take approximately two years to regain the loss of revenue and return to its pre COVID-19 activity levels considering the impact of both volume and price with a similar effect on profitability. Following such period, the Company expects to return to similar growth rates as estimated in prior valuations. The Company assumes a long term terminal growth rate of 2.5%, which is lower than the 3.1% used in prior valuations. In addition, changes in business focus due to introduction of new technologies is expected to lower the total revenues related to the Stratasys-Objet reporting unit. The resulting cash flow amounts were discounted using the same discount rate of 13.5%.

 

Based on the revised cash flow projections, the value of the reporting unit had decreased below its carrying value, and the Company recorded in the third quarter of 2020, goodwill impairment charge of $386.2 million, the entire reporting unit’s goodwill.

12

STRATASYS LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

   

Other Intangible Assets

Other intangible assets consisted of the following:

	March 31, 2021							December 31, 2020
		Carrying Amount,					Net		Carrying Amount,					Net
		Net of		Accumulated			Book		Net of		Accumulated			Book
		Impairment		Amortization			Value		Impairment		Amortization			Value
	U.S. $ in thousands
Developed technology	$	365,207	$	(265,352	)	$	99,855	$	357,863	$	(260,123	)	$	97,740
Patents		17,894		(8,812	)		9,082		17,699		(8,487	)		9,212
Trademarks and trade names		26,031		(21,397	)		4,634		26,036		(21,114	)		4,922
Customer relationships		100,883		(82,835	)		18,048		101,107		(81,413	)		19,695
Capitalized software development costs		7,410		(7,410	)		-		7,410		(7,410	)		-
	$	517,425	$	(385,806	)	$	131,619	$	510,115	$	(378,547	)	$	131,569

Amortization expenses relating to intangible assets for the three-month period ended March 31, 2021 and 2020 were approximately $7.5 million and $6.2 million, respectively.

As of March 31, 2021, the estimated amortization expenses relating to intangible assets for each of the following future periods were as follows:

		Estimated
		amortization expense
		(U.S. $ in thousands)
Remaining 9 months of 2021	$	22,840
2022		28,662
2023		14,081
2024		10,185
2025 and thereafter		55,851
Total		131,619

Note 7. Net Loss Per Share

The following table presents the numerator and denominator of the basic and diluted net loss per share computations for the three months ended March 31, 2021 and 2020:

	Three Months Ended March 31,
		2021			2020
	In thousands, except per share amounts
Numerator:
Net loss attributable to Stratasys Ltd. for basic and diluted loss per share		(18,911	)		(21,703	)
Denominator:
Weighted average shares - for basic and diluted net loss per share		58,616			54,544
Net loss per share attributable to Stratasys Ltd.
Basic and diluted	$	(0.32	)	$	(0.40	)

The computation of diluted net loss per share excluded share awards of 5.4 million shares and 5.3 million shares for the three months ended March 31, 2021 and 2020, respectively, because their inclusion would have had an anti-dilutive effect on the diluted net loss per share.

Note 8. Income Taxes

The Company had income tax benefit of $0.9 million for the three-month period ended March 31, 2021 compared to income tax expenses of $0.2 million for the three-month period ended March 31, 2020. The Company’s effective tax rate as of March 31, 2021 was primarily impacted by the geographic mix of its earnings and losses, as well as a valuation allowance on losses of the Company's US subsidiaries. 

13

STRATASYS LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

Note 9. Fair Value Measurements

Financial instruments measured at fair value

The following table summarizes the Company’s financial assets and liabilities that are carried at fair value on a recurring basis, in its consolidated balance sheets:

	March 31, 2021					December 31, 2020
		Level 2			Level 3		Level 2			Level 3
	(U.S. $ in thousands)
Assets:
Foreign exchange forward contracts not designated as hedging instruments	$	41			-	$	56			-
Foreign exchange forward contracts designated as hedging instruments		754			-		793			-
Liabilities:
Foreign exchange forward contracts not designated as hedging instruments		(252	)		-		(1,098	)		-
Foreign exchange forward contracts designated as hedging instruments		(140	)		-		(1,584	)		-
Contingent consideration		-			40,234		-			37,400
	$	403		$	40,234	$	(1,833	)	$	37,400

The Company’s foreign exchange forward contracts are classified as Level 2, as they are not actively traded and are valued using pricing models that use observable market inputs, including interest rate curves and both forward and spot prices for currencies (Level 2 inputs).

Contingent consideration represents liabilities recorded at fair value in connection with acquisitions, and thus represents a Level 3 measurement within the fair value hierarchy (refer to Note 3).

Other financial instruments consist mainly of cash and cash equivalents, short-term deposits, current and non-current receivables, accounts payable and other current liabilities. The fair value of these financial instruments approximates their carrying values.

14

STRATASYS LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

Note 10. Derivative instruments and hedging activities

Since the Company conducts its operations globally, it is exposed to global market risks and to the risk that its earnings, cash flows and equity could be adversely impacted by fluctuations in foreign currency exchange rates. The Company enters into transactions involving foreign currency exchange derivative financial instruments. The Company manages its foreign currency exposures on a consolidated basis, which allows the Company to net exposures and take advantage of any natural hedging. The transactions are designed to manage the Company’s net exposure to foreign currency exchange rates and to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates. The Company does not enter into derivative transactions for trading purposes.

The Company is primarily exposed to foreign exchange risk with respect to recognized assets and liabilities and forecasted transactions denominated in the New Israeli Shekel (“NIS”), Euro, GBP, Korean Won, Chinese Yuan and the Japanese Yen. The gains and losses on the hedging instruments partially offset losses and gains on the hedged items. Financial markets and currency volatility may limit the Company’s ability to hedge these exposures. These contracts mature through December 2021.

The following table summarizes the consolidated balance sheets classification and fair values of the Company’s derivative instruments:

		Fair Value						Notional Amount
			March 31,			December 31,			March 31,		December 31,
	Balance sheet location		2021			2020			2021		2020
		U.S. $ in thousands
Assets derivatives -Foreign exchange contracts, not designated as hedging instruments	Other current assets	$	41		$	56		$	10,981	$	36,882
Assets derivatives -Foreign exchange contracts, designated as cash flow hedge	Other current assets		754			793			50,316		10,417
Liability derivatives -Foreign exchange contracts, not designated as hedging instruments	Accrued expenses and other current liabilities		(252	)		(1,098	)		44,078		37,999
Liability derivatives -Foreign exchange contracts, designated as hedging instruments	Accrued expenses and other current liabilities		(140	)		(1,584	)		18,473		50,186
		$	403		$	(1,833	)	$	123,848	$	135,484

Foreign exchange contracts not designated as hedging instruments

As of March 31, 2021, the notional amounts of the Company’s outstanding exchange forward contracts, not designated as hedging instruments, were $55.1 million, and were used to reduce foreign currency exposures. With respect to such derivatives, gains of $2.2 million and of $1.5 million were recognized under financial income (expenses), net for the three-month period ended March 31, 2021 and 2020, respectively. Such gains or losses partially offset the foreign currency revaluation changes of the balance sheet items. These foreign currencies revaluation changes are also recognized under financial income (expenses), net.

Cash Flow Hedging - Hedges of forecasted foreign currency payroll and other operating expenses

As of March 31, 2021, the Company had in effect foreign exchange forward contracts, designated as cash flow hedges for accounting purposes, for the conversion of $29.3 million into NIS. The Company uses short-term cash flow hedge contracts to reduce its exposure to variability in expected future cash flows resulting mainly from payroll costs and other operating expenses denominated in NIS. The changes in fair value of those contracts are included in the Company’s accumulated other comprehensive loss.

Cash Flow Hedging - Hedges of forecasted foreign currency revenue

As of March 31, 2021, the Company had in effect foreign exchange forward contracts, designated as cash flow hedges for accounting purposes, for the conversion of 33.0 million Euro into U.S. dollars. The Company transacts business in U.S. dollars and in various other currencies. The Company may use foreign exchange or forward contracts to hedge certain cash flow exposures resulting from changes in these foreign currency exchange rates. These foreign exchange contracts, carried at fair value, have maturities of up to twelve months. The Company enters into these foreign exchange contracts to hedge a portion of its forecasted foreign currency denominated revenue in the normal course of business and accordingly, they are not speculative in nature.

15

 STRATASYS LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

Note 11. Equity

a. Stock-based compensation plans

Stock-based compensation expenses for equity-classified stock options, restricted share units (“RSUs”) and performance-based restricted share units (”PSUs”) were allocated as follows:

	Three Months Ended
	March 31,
		2021		2020
	U.S $ in thousands
Cost of sales	$	634	$	402
Research and development, net		1,424		1,556
Selling, general and administrative		5,147		2,949
Total stock-based compensation expenses	$	7,205	$	4,907

A summary of the Company’s stock option activity for the three months ended March 31, 2021 is as follows:

		Number of Options			Weighted Average Exercise Price
Options outstanding as of January 1, 2021	$	2,102,529		$	28.06
Granted		46,366			3.15
Exercised		(137,220	)		21.01
Forfeited		(13,439	)		36.26
Options outstanding as of March 31, 2021		1,998,236			27.91
Options exercisable as of March 31, 2021	$	1,619,049		$	30.82

As of March 31, 2021, the unrecognized compensation cost of $3.4 million related to all unvested, equity-classified stock options is expected to be recognized as an expense over a weighted-average period of 3.3 years.

16

STRATASYS LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

A summary of the Company’s RSUs and PSUs activity for the three months ended March 31, 2021 is as follows:

		Number of RSUs and PSUs			Weighted Average Grant Date Fair Value
Unvested as of January 1, 2021	$	2,801,116		$	21.08
Granted		1,201,186			34.62
Vested		(533,533	)		22.56
Forfeited		(110,731	)		20.69
Unvested as of March 31, 2021	$	3,358,038		$	25.70

The fair value of RSUs and PSUs is determined based on the quoted price of the Company’s ordinary shares on the date of the grant.

As of March 31, 2021, the unrecognized compensation cost of $76 million related to all unvested, equity-classified RSUs and PSUs is expected to be recognized as expense over a weighted-average period of 2.7 years.

b. Accumulated other comprehensive loss

The following tables present the changes in the components of accumulated other comprehensive income (loss), net of taxes, for the three months ended March 31, 2021 and 2020, respectively:

	Three Months Ended March 31, 2021
		Net Unrealized Gain (Loss) on Cash Flow Hedges			Foreign Currency Translation Adjustments			Total
	U.S. $ in thousands
Balance as of January 1, 2021	$	(1,673	)	$	(7,173	)	$	(8,846	)
Other comprehensive income (loss) before reclassifications		1,607			(961	)		646
Amounts reclassified from accumulated other comprehensive loss		566			-			566
Other comprehensive income (loss)		2,173			(961	)		1,212
Balance as of March 31, 2020	$	500		$	(8,134	)	$	(7,634	)

17

STRATASYS LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

	Three Months Ended March 31, 2020
		Net Unrealized Gain (Loss) on Cash Flow Hedges			Foreign Currency Translation Adjustments			Total
	U.S. $ in thousands
Balance as of January 1, 2020	$	(10	)	$	(7,706	)	$	(7,716	)
Other comprehensive income (loss) before reclassifications		849			(1,954	)		(1,105	)
Amounts reclassified from accumulated other comprehensive loss		(27	)		-			(27	)
Other comprehensive income (loss)		822			(1,954	)		(1,132	)
Balance as of March 31, 2020	$	812		$	(9,660	)	$	(8,848	)

c. Public offering of ordinary shares

During March 2021, the Company completed a capital raise of $218.9 million, net of underwriting discounts and offering expenses. The total number of shares sold by the Company in the public offering was 7,931,034.

       A deferred tax asset in an amount of $1.2 million was recorded in respect of a tax benefit, arising from the underwriting discounts and offering expenses, as an increase to Additional Paid-In Capital.

Note 12. Contingencies

Legal proceedings

The Company is a party to various legal proceedings from time to time, the outcome of which, in the opinion of management, will not have a significant effect on the financial position, profitability or cash flows of the Company.

       

EX-99.1

Exhibit 99.1

STRATASYS LTD.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED

MARCH 31, 2021

(UNAUDITED)

INDEX TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2021

(UNAUDITED)

Item	Page
Consolidated Balance Sheets	2
Consolidated Statements of Operations and Comprehensive Loss	3
Consolidated Statements of Changes in Equity	4-5
Consolidated Statements of Cash Flows	6
Notes to Condensed Consolidated Interim Financial Statements	7-18

1

STRATASYS LTD.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Unaudited)

Consolidated Balance Sheets
(in thousands, except share data)
		March 31, 2021			December 31, 2020
ASSETS
Current assets
Cash and cash equivalents	$	421,398		$	272,092
Short-term Deposits		109,000			27,000
Accounts receivable, net of allowance for credit losses of $0.9 million as of March 31, 2021 and December 31, 2020		102,780			106,068
Inventories		124,199			131,672
Prepaid expenses		10,345			6,717
Other current assets		16,745			16,943
Total current assets		784,467			560,492
Non-current assets
Property, plant and equipment, net		199,382			201,232
Goodwill		38,074			35,694
Other intangible assets, net		131,619			131,569
Operating lease right-of-use assets		19,089			21,298
Other non-current assets		43,299			39,717
Total non-current assets		431,463			429,510
Total assets	$	1,215,930		$	990,002
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	28,062		$	16,987
Accrued expenses and other current liabilities		29,283			31,061
Accrued compensation and related benefits		30,937			25,659
Deferred revenues - short term		49,413			49,165
Operating lease liabilities - short term		8,941			9,282
Total current liabilities		146,636			132,154
Non-current liabilities
Deferred revenues - long term		14,074			14,227
Operating lease liabilities - long term		10,501			12,567
Contingent consideration		40,234			37,400
Other non-current liabilities		32,470			34,059
Total non-current liabilities		97,279			98,253
Total liabilities	$	243,915		$	230,407
Contingencies (see note 12)
Redeemable non-controlling interests		227			227
Equity
Ordinary shares, NIS 0.01 nominal value, authorized 180,000 thousand shares; 65,218 thousand shares and 56,617 thousand shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively		181			155
Additional paid-in capital		2,984,048			2,753,955
Accumulated other comprehensive loss		(7,634	)		(8,846	)
Accumulated deficit		(2,004,807	)		(1,985,896	)
Total equity		971,788			759,368
Total liabilities and equity	$	1,215,930		$	990,002

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

2

STRATASYS LTD.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Unaudited)

Consolidated Statements of Operations and Comprehensive Loss
	Three Months Ended March 31,
in thousands, except per share data		2021			2020
Revenues
Products	$	90,324		$	83,172
Services		43,865			49,735
		134,189			132,907
Cost of revenues
Products		46,920			39,248
Services		31,692			33,789
		78,612			73,037
Gross profit		55,577			59,870
Operating expenses
Research and development, net		20,601			24,194
Selling, general and administrative		53,334			55,576
		73,935			79,770
Operating loss		(18,358	)		(19,900	)
Financial expenses, net		(377	)		(829	)
Loss before income taxes		(18,735	)		(20,729	)
Income tax expenses (benefit)		(942	)		221
Share in losses of associated companies		(1,118	)		(838	)
Net loss	$	(18,911	)	$	(21,788	)
Net loss attributable to non-controlling interests		-			(85	)
Net loss attributable to Stratasys Ltd.	$	(18,911	)	$	(21,703	)
Net loss per ordinary share attributable to Stratasys Ltd. - basic and diluted	$	(0.32	)	$	(0.40	)
Weighted average ordinary shares outstanding. - basic and diluted		58,616			54,544
Comprehensive loss
Net loss		(18,911	)		(21,788	)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		(961	)		(1,954	)
Unrealized gains (losses) on derivatives designated as cash flow hedges		2,173			822
Other comprehensive income (loss), net of tax		1,212			(1,132	)
Comprehensive loss		(17,699	)		(22,920	)
Less: comprehensive loss attributable to non-controlling interests		-			(85	)
Comprehensive loss attributable to Stratasys Ltd.	$	(17,699	)	$	(22,835	)

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

3

STRATASYS LTD.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Unaudited)

Consolidated Statements of Changes in Equity
(in thousands )
Three Months Ended March 31, 2021 and 2020
											Accumulated
						Additional					Other
	Ordinary Shares					Paid-In		Accumulated			Comprehensive			Total
		Number of shares		Par Value		Capital		deficit			Loss			Equity
Balance as of December 31, 2020		56,617		155		2,753,955		(1,985,896	)		(8,846	)		759,368
Issuance of shares in connection with stock-based compensation plans		670		2		2,881		-			-			2,883
Stock-based compensation		-		-		7,205		-			-			7,205
Public offering of ordinary shares, net		7,931		24		218,851		-			-			218,875
Deferred tax assets in connection with public offering expenses		-		-		1,156		-			-			1,156
Comprehensive income (loss)		-		-		-		(18,911	)		1,212			(17,699	)
Balance as of March 31, 2021	$	65,218	$	181	$	2,984,048	$	(2,004,807	)	$	(7,634	)	$	971,788

4

STRATASYS LTD.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Unaudited)

Consolidated Statements of Changes in Equity
(in thousands )
Three Months Ended March 31, 2021 and 2020
											Accumulated
						Additional					Other
	Ordinary Shares					Paid-In		Accumulated			Comprehensive			Total
		Number of shares		Par Value		Capital		deficit			Loss			Equity
Balance as of December 31, 2019		54,441		148		2,706,894		(1,542,175	)		(7,716	)		1,157,151
Issuance of shares in connection with stock-based compensation plans		358		1		29		-			-			30
Stock-based compensation		-		-		4,907		-			-			4,907
Comprehensive loss		-		-		-		(21,703	)		(1,132	)		(22,835	)
Balance as of March 31, 2020	$	54,799	$	149	$	2,711,830	$	(1,563,878	)	$	(8,848	)	$	1,139,253

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

5

STRATASYS LTD.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Unaudited)

Consolidated Statements of Cash Flows
	Three Months Ended March 31,
in thousands		2021			2020
Cash flows from operating activities
Net loss	$	(18,911	)	$	(21,788	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		13,802			12,457
Stock-based compensation		7,205			4,907
Foreign currency transaction loss		4,181			3,428
Deferred income taxes		(1,774	)		(409	)
Share in losses of associated companies		1,118			838
Revaluation of investments		(3,670	)		-
Other non-cash items, net		193			201
Change in cash attributable to changes in operating assets and liabilities:
Accounts receivable, net		2,620			16,541
Inventories		7,046			(5,659	)
Other current assets and prepaid expenses		(3,775	)		3,519
Other non-current assets		1,595			902
Accounts payable		10,197			(3,086	)
Other current liabilities		6,453			9,047
Deferred revenues		(433	)		(2,154	)
Other non-current liabilities		(3,096	)		(7,470	)
Net cash provided by operating activities		22,751			11,274
Cash flows from investing activities
Cash paid for acquisitions, net of cash acquired		(6,356	)		-
Purchase of property and equipment		(4,012	)		(6,291	)
Investments in short-term bank deposits		(109,000	)		-
Proceeds from short-term bank deposits		27,000			-
Net proceeds from divestitures of subsidiaries and associated companies		-			1,000
Purchase of intangible assets		(278	)		(413	)
Other investing activities		(98	)		206
Net cash used in investing activities		(92,744	)		(5,498	)
Cash flows from financing activities
Proceeds from public offering, net of issuance costs		218,875			-
Proceeds from exercise of stock options		2,883			30
Other financing activities		407			-
Net cash provided by financing activities		222,165			30
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(2,872	)		(2,116	)
Net change in cash, cash equivalents and restricted cash		149,300			3,690
Cash, cash equivalents and restricted cash, beginning of period		272,216			293,597
Cash, cash equivalents and restricted cash, end of period	$	421,516		$	297,287
Supplemental disclosures of cash flow information:
Transfer of inventory to fixed assets		884			832
Transfer of fixed assets to inventory		210			5

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

6

STRATASYS LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

Note 1. Business Description and Basis of Presentation

Stratasys Ltd. (collectively with its subsidiaries, the “Company” or “Stratasys”) is a global leader in connected, polymer-based 3D printing solutions, across the entire manufacturing value chain. The Company leverages its competitive advantages, which include a broad set of best-in-class 3D printing platforms, software, a materials and technology partner ecosystem, innovative leadership, and global GTM infrastructure, in order to position itself to capture share in a significant and growing global marketplace, with a focus on manufacturing. The Company’s approximately 1,600 granted and pending additive technology patents to date have been used to create models, prototypes, manufacturing tools, and production parts for a multitude of industries including aerospace, automotive, transportation, healthcare, consumer products, dental, medical, and education. Stratasys’ products and comprehensive solutions improve product quality, development time, cost, and time-to-market. The Company’s 3D ecosystem of solutions and expertise includes 3D printers, materials, software, expert services, and on-demand parts production.

The condensed consolidated interim financial information herein is unaudited; however, such information reflects all adjustments (consisting of normal, recurring adjustments), which are, in the opinion of management, necessary for a fair statement of results for the interim period. The condensed consolidated interim financial statements include the accounts of Stratasys Ltd. and its subsidiaries. All intercompany accounts and transactions, including profits from intercompany sales not yet realized outside the Company, have been eliminated in consolidation.

The Company's financial statements are prepared in conformity with U.S. generally accepted accounting principles (“GAAP”), which requires the Company to make estimates based on assumptions about current and, for some estimates, future economic and market conditions which affect reported amounts and related disclosures in its financial statements. Although the Company current estimates contemplate current and expected future conditions, as applicable, it is reasonably possible that actual conditions could differ from the Company expectations, which could materially affect its results of operations and financial position.

In particular, a number of estimates have been and will continue to be affected by the ongoing COVID-19 pandemic. The severity, magnitude and duration of, and recovery from, as well as the economic consequences of, the COVID-19 pandemic, remain uncertain, rapidly changing and difficult to predict. As a result, the accounting estimates and assumptions may change over time in response to COVID-19. Such changes could have an additional impact on the Company’s long-lived asset and intangible asset valuation; inventory valuation; assessment of the annual effective tax rate; and the allowance for expected credit losses and bad debt.

The results of operations for the three months ended March 31, 2021 are not indicative of results that could be expected for the entire fiscal year. Certain financial information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. The reader is referred to the audited consolidated financial statements and notes thereto for the year ended December 31, 2020, filed with the U.S. Securities and Exchange Commission (the “SEC”) as part of the Company’s Annual Report on Form 20-F for such year on March 1, 2021.

Note 2. New Accounting Pronouncements

Accounting Pronouncements Adopted in 2021

In December 2019, the FASB issued new guidance to simplify the accounting for income taxes by removing certain exceptions to the general principles and simplification of areas such as franchise taxes, step-up in tax basis goodwill, separate entity financial statements and interim recognition of enactment of tax laws or rate changes The guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company adopted this guidance effective January 1, 2021, with no material impact on its consolidated financial statements.

7

STRATASYS LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

Note 3. Certain Transactions

 Origin acquisition

 On December 31, 2020 (the “Origin transaction date”) the Company acquired 3D printing start-up Origin Laboratories Inc. (“Origin”) for an aggregate purchase price of $97.1 million (the “Origin transaction”), including cash and shares. The acquisition enables Stratasys to expand its leadership through innovation in the fast-growing mass production parts market with a next-generation photopolymer platform. Stratasys expects Origin’s proprietary Programmable PhotoPolymerization (P3) technology to be an important growth engine for the Company. The acquisition was aimed at fortifying the Company's leadership in polymers and production applications of 3D printing in industries such as dental, medical, tooling, and select industrial, defense, and consumer goods markets.

In exchange for 100% of the outstanding shares of Origin the Company issued 1,488 thousand ordinary shares, paid cash upon closing, and is obligated to pay additional payments (combination of cash and shares) subject to performance-based earn-outs over 3 years.

The Origin transaction is reflected in accordance with ASC Topic 805, “Business Combinations”, using the acquisition method of accounting with the Company as the acquirer.

The following table summarizes the fair value of the consideration transferred to Origin stockholders for the Origin transaction:

		U.S. $ in thousands
Cash payments	$	33,025
Issuance of ordinary shares to Origin stockholders		26,636
Contingent consideration at estimated fair value		37,400
Total consideration	$	97,061

 The fair value of the ordinary shares issued was determined based on the closing market price of the Company’s ordinary shares on the Origin transaction date.

In accordance with ASC Topic 805, the estimated contingent consideration as of the Origin transaction date was included in the purchase price. The total contingent payments could reach to a maximum aggregate amount of up to $40 million. Approximately 50% of the payments shall be settled in cash, and 50% shall be settled through the issuance of ordinary shares. The estimated fair value of the contingent consideration is based on management’s assessment of whether, and at what level, the financial metrics will be achieved, and the present value factors associated with the timing of the payments. This fair value measurement is based on significant unobservable inputs in the market and thus represents a Level 3 measurement within the fair value hierarchy. Changes in the fair value of contingent consideration will be recorded in Consolidated Statements of Operations and Comprehensive Loss. Refer to note 9. 

An additional payment of $6 million, which is subject to the founders' retention over 3 years, will be recorded as compensation expense over the retention period. Compensation expenses for the three-month period ended March 31, 2021 were approximately $1.1 million.

8

STRATASYS LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed, based on the information that is available as of March 31, 2021. Thus, the measurements of fair value reflected are subject to changes and such changes could be significant. The preliminary allocation of the purchase price to assets acquired and liabilities assumed is as follows:

		Allocation of Purchase Price
		(U.S. $ in thousands)
Cash and cash equivalents	$	2,083
Goodwill		36,379
Intangible assets		71,125
Other assets		4,364
Total assets acquired		113,951
Net deferred tax liabilities		14,007
Other labilities		2,883
Total liabilities assumed		16,890
Net assets acquired	$	97,061

The allocation of the purchase price to net assets acquired and liability assumed resulted in the recognition of an intangible asset related to developed technology of $71 million. This intangible asset has a useful-life of 10 years. The fair value estimate of the developed technology is determined using a variation of the income approach known as the “Multi-Period Excess Earnings Approach”. This valuation technique estimates the fair value of an asset based on market participants’ expectations of the cash flows an asset would generate over its remaining useful life. The net cash flows were discounted to present value.

Pro forma information giving effect to the acquisition has not been provided as the impact of the transaction for purposes of Stratasys' consolidation results of operations and financial condition would not be material.

  RPS acquisition

 On February 16, 2021 the Company acquired RP Support Limited (“RPS”), a provider of industrial stereolithography 3D printers and solutions. In exchange for 100% of the outstanding shares of RPS, the Company paid cash upon closing and is obligated to make additional payments (in cash), subject to performance-based criteria, via earn-out payments over two years.

  Marketable equity investment

The Company recognized in the first quarter of 2021 an income of $3.7 million for revaluation of an equity investment. In prior periods the investment was treated as a non-marketable equity investment without readily determinable FV. The entity has become public during the first quarter and accordingly the investment is now treated as a marketable equity investment.

9

STRATASYS LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

Note 4. Revenues

Disaggregation of Revenues

The following table presents the Company’s revenues disaggregated by geographical region (based on the Company's customers' locations) and revenue type for the three months ended March 31, 2021 and 2020:

	Three months ended March 31,
		2021		2020
	(U.S. $ in thousands)
Americas
Products	$	49,568	$	48,244
Service		32,545		38,329
Total Americas		82,113		86,573
EMEA
Products		22,501		20,747
Service		6,417		6,173
Total EMEA		28,918		26,920
Asia Pacific
Products		18,255		14,181
Service		4,903		5,233
Total Asia Pacific		23,158		19,414
Total Revenues	$	134,189	$	132,907

The following table presents the Company’s revenues disaggregated based on the timing of revenue recognition (at a specific point in time or over the course of time) for the three months ended March 31, 2021 and 2020:

	Three months ended March 31,
		2021		2020
	(U.S. $ in thousands)
Revenues recognized in point in time from:
Products	$	90,324	$	83,172
Services		10,601		10,644
Total revenues recognized in point in time		100,925		93,816
Revenues recognized over time from:
Services		33,264		39,091
Total revenues recognized over time		33,264		39,091
Total Revenues	$	134,189	$	132,907

10

STRATASYS LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

Contract Assets and Contract Liabilities

Contract assets are recorded when the Company's right to consideration is conditional on constraints other than the passage of time. The Company had no material contract assets as of March 31, 2021 and December 31, 2020.

Contract liabilities include advance payments and billings in excess of revenue recognized, which are primarily related to advanced billings for service type warranty. Contract liabilities are presented under deferred revenues. The Company's deferred revenues as of March 31, 2021 and December 31, 2020 were as follows:

		March 31,	December 31,
		2021	2020
	U.S. $ in thousands
Deferred revenue*		63,487	63,392

*Includes $14.1 million and $14.2 million under long term deferred revenue in the Company's consolidated balance sheets as of March 31, 2021 and December 31, 2020, respectively.

Revenue recognized in 2021 that was included in deferred revenue balance as of December 31, 2020 was $18.4 million for the three months ended March 31, 2021.

Remaining Performance Obligations

Remaining Performance Obligations (“RPO“) represent contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. As of March 31, 2021, the total RPO amounted to $89.7 million. The Company expects to recognize $74.9 million of this RPO during the next 12 months, $9.2 million over the subsequent 12 months and the remaining $5.6 million thereafter.

Incremental Costs of Obtaining a Contract

Sales commissions earned mainly by the Company’s sales agents are considered incremental costs of obtaining a contract with a customer, as the Company expects the benefit of those commissions to be longer than one year. The majority of the sales commissions are not subject to capitalization, as the commission expense is recognized as the related revenue is recognized. Sales commissions for initial contracts related to the service type warranty are deferred and then amortized on a straight-line basis over the expected customer relationship period if the Company expects to recover those costs. Amortization expense is included in selling, general and administrative expenses in the consolidated statements of operations. As of March 31, 2021 and December 31, 2020, the deferred commissions amounted to $5.3 million and $5.0 million, respectively.

11

STRATASYS LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

Note 5. Inventories

Inventories consisted of the following:

		March 31,		December 31,
		2021		2020
	U.S. $ in thousands
Finished goods	$	52,845	$	61,297
Work-in-process		3,739		3,163
Raw materials		67,615		67,212
	$	124,199	$	131,672

Note 6. Goodwill and Other Intangible Assets

Goodwill

Changes in the carrying amount of the Company’s goodwill for the three months ended March 31, 2021 were as follows:

		U.S. $ in thousands
Goodwill as of January 1, 2021	$	35,694
Goodwill acquired*		1,716
Foreign currency translation adjustments and other		664
Goodwill as of March 31, 2021	$	38,074

*The goodwill was acquired as part of RPS acquisition. See Note 3.

During the third quarter of 2020, the Company had noted that indicators of potential impairment existed which required an interim goodwill impairment analysis for Stratasys-Objet reporting unit. These indicators included longer and deeper than expected reduction in the business, refinement to the company’s business focus into additional inorganic technologies and sustained decline in the Company’s market capitalization during the past two quarters, all,primarily as a result of the COVID-19 impact on the global economy and the Company’s business.

As a result of the factors discussed above, the Company revisited its assumptions supporting the cash flow projections for its Stratasys-Objet reporting unit, including: (i) the expected duration and depth of revenue reduction and certain revenue growth assumptions; (ii) the associated operating profit margins; and (iii) the long term growth rate. In estimating the discounted cash flow, the Company used the following key assumptions: the Company currently expects it will take approximately two years to regain the loss of revenue and return to its pre COVID-19 activity levels considering the impact of both volume and price with a similar effect on profitability. Following such period, the Company expects to return to similar growth rates as estimated in prior valuations. The Company assumes a long term terminal growth rate of 2.5%, which is lower than the 3.1% used in prior valuations. In addition, changes in business focus due to introduction of new technologies is expected to lower the total revenues related to the Stratasys-Objet reporting unit. The resulting cash flow amounts were discounted using the same discount rate of 13.5%.

Based on the revised cash flow projections, the value of the reporting unit had decreased below its carrying value, and the Company recorded in the third quarter of 2020, goodwill impairment charge of $386.2 million, the entire reporting unit’s goodwill.

12

STRATASYS LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

Other Intangible Assets

Other intangible assets consisted of the following:

	March 31, 2021							December 31, 2020
		Carrying Amount,					Net		Carrying Amount,					Net
		Net of		Accumulated			Book		Net of		Accumulated			Book
		Impairment		Amortization			Value		Impairment		Amortization			Value
	U.S. $ in thousands
Developed technology	$	365,207	$	(265,352	)	$	99,855	$	357,863	$	(260,123	)	$	97,740
Patents		17,894		(8,812	)		9,082		17,699		(8,487	)		9,212
Trademarks and trade names		26,031		(21,397	)		4,634		26,036		(21,114	)		4,922
Customer relationships		100,883		(82,835	)		18,048		101,107		(81,413	)		19,695
Capitalized software development costs		7,410		(7,410	)		-		7,410		(7,410	)		-
	$	517,425	$	(385,806	)	$	131,619	$	510,115	$	(378,547	)	$	131,569

Amortization expenses relating to intangible assets for the three-month period ended March 31, 2021 and 2020 were approximately $7.5 million and $6.2 million, respectively.

As of March 31, 2021, the estimated amortization expenses relating to intangible assets for each of the following future periods were as follows:

		Estimated
		amortization expense
		(U.S. $ in thousands)
Remaining 9 months of 2021	$	22,840
2022		28,662
2023		14,081
2024		10,185
2025 and thereafter		55,851
Total		131,619

Note 7. Net Loss Per Share

The following table presents the numerator and denominator of the basic and diluted net loss per share computations for the three months ended March 31, 2021 and 2020:

	Three Months Ended March 31,
		2021			2020
	In thousands, except per share amounts
Numerator:
Net loss attributable to Stratasys Ltd. for basic and diluted loss per share		(18,911	)		(21,703	)
Denominator:
Weighted average shares - for basic and diluted net loss per share		58,616			54,544
Net loss per share attributable to Stratasys Ltd.
Basic and diluted	$	(0.32	)	$	(0.40	)

The computation of diluted net loss per share excluded share awards of 5.4 million shares and 5.3 million shares for the three months ended March 31, 2021 and 2020, respectively, because their inclusion would have had an anti-dilutive effect on the diluted net loss per share.

Note 8. Income Taxes

The Company had income tax benefit of $0.9 million for the three-month period ended March 31, 2021 compared to income tax expenses of $0.2 million for the three-month period ended March 31, 2020. The Company’s effective tax rate as of March 31, 2021 was primarily impacted by the geographic mix of its earnings and losses, as well as a valuation allowance on losses of the Company's US subsidiaries. 

13

STRATASYS LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

Note 9. Fair Value Measurements

Financial instruments measured at fair value

The following table summarizes the Company’s financial assets and liabilities that are carried at fair value on a recurring basis, in its consolidated balance sheets:

	March 31, 2021					December 31, 2020
		Level 2			Level 3		Level 2			Level 3
	(U.S. $ in thousands)
Assets:
Foreign exchange forward contracts not designated as hedging instruments	$	41			-	$	56			-
Foreign exchange forward contracts designated as hedging instruments		754			-		793			-
Liabilities:
Foreign exchange forward contracts not designated as hedging instruments		(252	)		-		(1,098	)		-
Foreign exchange forward contracts designated as hedging instruments		(140	)		-		(1,584	)		-
Contingent consideration		-			40,234		-			37,400
	$	403		$	40,234	$	(1,833	)	$	37,400

The Company’s foreign exchange forward contracts are classified as Level 2, as they are not actively traded and are valued using pricing models that use observable market inputs, including interest rate curves and both forward and spot prices for currencies (Level 2 inputs).

Contingent consideration represents liabilities recorded at fair value in connection with acquisitions, and thus represents a Level 3 measurement within the fair value hierarchy (refer to Note 3).

Other financial instruments consist mainly of cash and cash equivalents, short-term deposits, current and non-current receivables, accounts payable and other current liabilities. The fair value of these financial instruments approximates their carrying values.

14

STRATASYS LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

Note 10. Derivative instruments and hedging activities

Since the Company conducts its operations globally, it is exposed to global market risks and to the risk that its earnings, cash flows and equity could be adversely impacted by fluctuations in foreign currency exchange rates. The Company enters into transactions involving foreign currency exchange derivative financial instruments. The Company manages its foreign currency exposures on a consolidated basis, which allows the Company to net exposures and take advantage of any natural hedging. The transactions are designed to manage the Company’s net exposure to foreign currency exchange rates and to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates. The Company does not enter into derivative transactions for trading purposes.

The Company is primarily exposed to foreign exchange risk with respect to recognized assets and liabilities and forecasted transactions denominated in the New Israeli Shekel (“NIS”), Euro, GBP, Korean Won, Chinese Yuan and the Japanese Yen. The gains and losses on the hedging instruments partially offset losses and gains on the hedged items. Financial markets and currency volatility may limit the Company’s ability to hedge these exposures. These contracts mature through December 2021.

The following table summarizes the consolidated balance sheets classification and fair values of the Company’s derivative instruments:

		Fair Value						Notional Amount
			March 31,			December 31,			March 31,		December 31,
	Balance sheet location		2021			2020			2021		2020
		U.S. $ in thousands
Assets derivatives -Foreign exchange contracts, not designated as hedging instruments	Other current assets	$	41		$	56		$	10,981	$	36,882
Assets derivatives -Foreign exchange contracts, designated as cash flow hedge	Other current assets		754			793			50,316		10,417
Liability derivatives -Foreign exchange contracts, not designated as hedging instruments	Accrued expenses and other current liabilities		(252	)		(1,098	)		44,078		37,999
Liability derivatives -Foreign exchange contracts, designated as hedging instruments	Accrued expenses and other current liabilities		(140	)		(1,584	)		18,473		50,186
		$	403		$	(1,833	)	$	123,848	$	135,484

Foreign exchange contracts not designated as hedging instruments

As of March 31, 2021, the notional amounts of the Company’s outstanding exchange forward contracts, not designated as hedging instruments, were $55.1 million, and were used to reduce foreign currency exposures. With respect to such derivatives, gains of $2.2 million and of $1.5 million were recognized under financial income (expenses), net for the three-month period ended March 31, 2021 and 2020, respectively. Such gains or losses partially offset the foreign currency revaluation changes of the balance sheet items. These foreign currencies revaluation changes are also recognized under financial income (expenses), net.

Cash Flow Hedging - Hedges of forecasted foreign currency payroll and other operating expenses

As of March 31, 2021, the Company had in effect foreign exchange forward contracts, designated as cash flow hedges for accounting purposes, for the conversion of $29.3 million into NIS. The Company uses short-term cash flow hedge contracts to reduce its exposure to variability in expected future cash flows resulting mainly from payroll costs and other operating expenses denominated in NIS. The changes in fair value of those contracts are included in the Company’s accumulated other comprehensive loss.

Cash Flow Hedging - Hedges of forecasted foreign currency revenue

As of March 31, 2021, the Company had in effect foreign exchange forward contracts, designated as cash flow hedges for accounting purposes, for the conversion of 33.0 million Euro into U.S. dollars. The Company transacts business in U.S. dollars and in various other currencies. The Company may use foreign exchange or forward contracts to hedge certain cash flow exposures resulting from changes in these foreign currency exchange rates. These foreign exchange contracts, carried at fair value, have maturities of up to twelve months. The Company enters into these foreign exchange contracts to hedge a portion of its forecasted foreign currency denominated revenue in the normal course of business and accordingly, they are not speculative in nature.

15

 STRATASYS LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

Note 11. Equity

a. Stock-based compensation plans

Stock-based compensation expenses for equity-classified stock options, restricted share units (“RSUs”) and performance-based restricted share units (”PSUs”) were allocated as follows:

	Three Months Ended
	March 31,
		2021		2020
	U.S $ in thousands
Cost of sales	$	634	$	402
Research and development, net		1,424		1,556
Selling, general and administrative		5,147		2,949
Total stock-based compensation expenses	$	7,205	$	4,907

A summary of the Company’s stock option activity for the three months ended March 31, 2021 is as follows:

		Number of Options			Weighted Average Exercise Price
Options outstanding as of January 1, 2021	$	2,102,529		$	28.06
Granted		46,366			3.15
Exercised		(137,220	)		21.01
Forfeited		(13,439	)		36.26
Options outstanding as of March 31, 2021		1,998,236			27.91
Options exercisable as of March 31, 2021	$	1,619,049		$	30.82

As of March 31, 2021, the unrecognized compensation cost of $3.4 million related to all unvested, equity-classified stock options is expected to be recognized as an expense over a weighted-average period of 3.3 years.

16

STRATASYS LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

A summary of the Company’s RSUs and PSUs activity for the three months ended March 31, 2021 is as follows:

		Number of RSUs and PSUs			Weighted Average Grant Date Fair Value
Unvested as of January 1, 2021	$	2,801,116		$	21.08
Granted		1,201,186			34.62
Vested		(533,533	)		22.56
Forfeited		(110,731	)		20.69
Unvested as of March 31, 2021	$	3,358,038		$	25.70

The fair value of RSUs and PSUs is determined based on the quoted price of the Company’s ordinary shares on the date of the grant.

As of March 31, 2021, the unrecognized compensation cost of $76 million related to all unvested, equity-classified RSUs and PSUs is expected to be recognized as expense over a weighted-average period of 2.7 years.

b. Accumulated other comprehensive loss

The following tables present the changes in the components of accumulated other comprehensive income (loss), net of taxes, for the three months ended March 31, 2021 and 2020, respectively:

	Three Months Ended March 31, 2021
		Net Unrealized Gain (Loss) on Cash Flow Hedges			Foreign Currency Translation Adjustments			Total
	U.S. $ in thousands
Balance as of January 1, 2021	$	(1,673	)	$	(7,173	)	$	(8,846	)
Other comprehensive income (loss) before reclassifications		1,607			(961	)		646
Amounts reclassified from accumulated other comprehensive loss		566			-			566
Other comprehensive income (loss)		2,173			(961	)		1,212
Balance as of March 31, 2020	$	500		$	(8,134	)	$	(7,634	)

17

STRATASYS LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

	Three Months Ended March 31, 2020
		Net Unrealized Gain (Loss) on Cash Flow Hedges			Foreign Currency Translation Adjustments			Total
	U.S. $ in thousands
Balance as of January 1, 2020	$	(10	)	$	(7,706	)	$	(7,716	)
Other comprehensive income (loss) before reclassifications		849			(1,954	)		(1,105	)
Amounts reclassified from accumulated other comprehensive loss		(27	)		-			(27	)
Other comprehensive income (loss)		822			(1,954	)		(1,132	)
Balance as of March 31, 2020	$	812		$	(9,660	)	$	(8,848	)

c. Public offering of ordinary shares

During March 2021, the Company completed a capital raise of $218.9 million, net of underwriting discounts and offering expenses. The total number of shares sold by the Company in the public offering was 7,931,034.

       A deferred tax asset in an amount of $1.2 million was recorded in respect of a tax benefit, arising from the underwriting discounts and offering expenses, as an increase to Additional Paid-In Capital.

Note 12. Contingencies

Legal proceedings

The Company is a party to various legal proceedings from time to time, the outcome of which, in the opinion of management, will not have a significant effect on the financial position, profitability or cash flows of the Company.

EX-99.2

Exhibit 99.2

OPERATING AND FINANCIAL REVIEW AND PROSPECTS.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and the related notes included as Exhibit 99.1 to the Report of Foreign Private Issuer on Form 6-K to which this Operating and Financial Review and Prospects is attached, or the Form 6-K. The discussion below contains forward-looking statements (within the meaning of the United States federal securities laws) that are based upon our current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties, including those identified in “Forward-Looking Statements and Factors that May Affect Future Results of Operations”, below, as well in the “Risk Factors” in Item 3.D of our Annual Report on Form 20-F for the year ended December 31, 2020, filed with the Securities and Exchange Commission, or SEC, on March 1, 2021, or our 2020 Annual Report.

Overview of Business and Trend Information

We are a global leader in connected, polymer-based 3D printing solutions, across the entire manufacturing value chain. Leveraging distinct competitive advantages that include a broad set of best-in-class 3D printing platforms, software, a materials and technology partner ecosystem, innovative leadership, and global GTM infrastructure, we are positioned to capture share in a significant and growing global marketplace, with a focus on manufacturing, which we view as having the largest and fastest growing total addressable market.

Our approximately 1,600 granted and pending additive technology patents to date have been used to create models, prototypes, manufacturing tools, and production parts for a multitude of industries including aerospace, automotive, transportation, healthcare, consumer products, dental, medical, and education. Our products and comprehensive solutions improve product quality, development time, cost, and time-to-market. Our 3D ecosystem of solutions and expertise includes 3D printers, materials, software, expert services, and on-demand parts production.

With our recent acquisition of Origin Laboratories, Inc., or Origin, we have significantly strengthened our leadership in mass production for polymer 3D printing. Origin’s pioneering approach to additive manufacturing of end-use parts will enable us to serve a large market with manufacturing-grade 3D printers, utilizing P³ Programmable PhotoPolymerization. This technology precisely controls light, heat, and force, among other variables, to produce parts with exceptional accuracy and consistency.

Our acquisition, in the first quarter of 2021, of UK-based RP Support Ltd., or RPS, a provider of industrial stereolithography 3D printers and solutions, provides us with a complementary technology that further expands our polymer suite of solutions across the product life cycle.

1

COVID Impact

       As in the preceding quarters, our results of operations for the three month period ended March 31, 2021 should be understood in light of the ongoing global COVID-19 pandemic, which has disrupted businesses on a global scale. Our revenues in the first quarter of 2021 reflected growth on a year-over-year basis relative to the first quarter of 2020, when we first began to experience the impact of the COVID-19 pandemic. This is the first quarter since the outset of the pandemic that we have achieved that year-over-year growth, primarily driven by a 40.9% increase in system revenues.    

At the start of the first quarter of 2021, we eliminated our reduced four-day work-week, returning to a full work schedule for the first time since the second quarter of 2020. The proactive resizing measures we took in 2020 continued to succeed in reducing operating expenses during the first quarter, while our revenues have recovered and have retuned to growth on a year-over-year basis compared to the first quarter of 2020, when we first began to experience the effects of the pandemic in our operating results. We will continue to monitor and evaluate the need for our cost-control measures over time.       

Our cost realignment program is an essential step in our ongoing strategic process, designed to better position the company for sustainable growth. These measures are not expected to affect the progress of our forthcoming product launch plans.   

We continue to monitor the situation, assessing implications for our operations, supply chain, liquidity, cash flow and customer orders, and have been acting in an effort to mitigate adverse consequences as needed. We ended the first quarter of 2021 with $530.4 million in cash, cash equivalents and short-term deposits, following the net capital raise of $218.9 million. We believe that we are well suited to continue to manage the COVID-19 pandemic with a strong balance sheet and no debt, while focusing on cost controls and cash generation. We selectively applied the R&D cost controls to ensure that our NPI programs were not affected, and we plan to continue investing as needed in order to support our new product development programs.          

2

Summary of Financial Results

Our unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP. In the opinion of our management, all adjustments considered necessary for a fair statement of the unaudited condensed consolidated financial statements have been included herein and are of a normal recurring nature. The following discussion compares the actual results, on a GAAP basis, for the three months ended March 31, 2021 with the corresponding period in 2020.

Results of Operations

Comparison of Three Months Ended March 31, 2021 to Three Months Ended March 31, 2020

The following table sets forth certain statement of operations data for the periods indicated:

	Three Months Ended March 31,
	2021					2020
		U.S. $ in thousands		% of Revenues			U.S. $ in thousands		% of Revenues
Revenues	$	134,189		100.0	%	$	132,907		100.0	%
Cost of revenues		78,612		58.6	%		73,037		55.0	%
Gross profit		55,577		41.4	%		59,870		45.0	%
Research and development, net		20,601		15.4	%		24,194		18.2	%
Selling, general and administrative		53,334		39.7	%		55,576		41.8	%
Operating loss		(18,358	)	(13.7	)%		(19,900	)	(15.0	)%
Financial expense		(377	)	(0.3	)%		(829	)	(0.6	)%
Loss before income taxes		(18,735	)	(14.0	)%		(20,729	)	(15.6	)%
Income tax expenses (benefit)		(942	)	(0.7	)%		221		0.2	%
Share in losses of associated companies		(1,118	)	(0.8	)%		(838	)	(0.6	)%
Net loss attributable to non-controlling interests		-		0.0	%		(85	)	(0.1	)%
Net loss attributable to Stratasys Ltd.		(18,911	)	(14.1	)%		(21,703	)	(16.3	)%

Discussion of Results of Operations

Revenues

Our products and services revenues in the three months ended March 31 2021 and 2020, as well as the percentage change reflected thereby, were as follows:

	Three Months Ended March 31,
		2021		2020	% Change
	U.S. $ in thousands
Products	$	90,324	$	83,172	8.6	%
Services		43,865		49,735	(11.8	)%
	$	134,189	$	132,907	1.0	%

3

Products Revenues

Revenues derived from products (including AM systems and consumable materials) increased by $7.2 million, or 8.6%, for the three months ended March 31, 2021, as compared to the three months ended March 31, 2020.

System revenues for the three months ended March 31, 2021 increased by 40.9% as compared to the three months ended March 31, 2020. Consumables revenues for the three months ended March 31, 2021 decreased by 8.0% as compared to the three months ended March31, 2020.

Our first quarter revenue results demonstrated continued recovery signs in system revenues. As the market recovers from COVID-19 and usage rates of our systems increases, a sequential growth in consumables should be followed through the balance of the year.

Services Revenues

Services revenues (including SDM, maintenance contracts, time and materials and other services) decreased by $5.9 million for the three months ended March 31, 2021, or 11.8%, as compared to the three months ended March 31, 2020. Within services revenues, customer support revenue, which includes revenue generated mainly by maintenance contracts on our systems, decreased by 2.2%, reflecting lower printer utilization due to the effects of COVID-19.

Revenues by Region

Revenues and the percentage of revenues by region for the three months ended March 31, 2021 and 2020, as well as the percentage change in revenues in each such region reflected thereby, were as follows:

	Three Months Ended March 31,
	2021				2020				% Change
		U.S.$ in thousands	% of Revenues			U.S.$ in thousands	% of Revenues
Americas*	$	82,113	61.2	%	$	86,573	65.1	%	(5.2	)%
EMEA		28,918	21.6	%		26,920	20.3	%	7.4	%
Asia Pacific		23,158	17.2	%		19,414	14.6	%	19.3	%
	$	134,189	100.0	%	$	132,907	100.0	%	1.0	%

* Represent the United States, Canada and Latin America

Revenues in the Americas region decreased by $4.5 million, or 5.2%, to $82.1 million for the three months ended March 31, 2021, compared to $86.6 million for the three months ended March 31, 2020. The decrease was primarily driven by lower consumables revenues and COVID-19 impact on some of our key industries, such as commercial Aerospace and Government.

Revenues in the EMEA region increased by $2.0 million, or 7.4%, to $28.9 million for the three months ended March 31, 2021, compared to $26.9 million for the three months ended March 31, 2020. The increase was primarily driven by higher products revenues, mainly in Manufacturing and Healthcare industries. On a constant currency basis when using prior period’s exchange rates, revenues decreased by $0.2 million, or 0.6%. The decrease was primarily driven by lower consumables revenues.        

Revenues in the Asia Pacific region increased by $3.7 million, or 19.3%, to $23.2 million for the three months ended March 31, 2021, compared to $19.4 million for the three months ended March 31, 2020. The increase was primarily driven by higher products revenues.

4

Gross Profit

Gross profit from our products and services, as well as the percentage change reflected thereby, was as follows:

	Three Months Ended March 31,
		2021		2020
	U.S. $ in thousands				Change in %
Gross profit attributable to:
Products	$	43,404	$	43,924	(1.2	)%
Services		12,173		15,946	(23.7	)%
	$	55,577	$	59,870	(7.2	)%

Gross profit as a percentage of revenues from our products and services was as follows:

	Three Months Ended March 31,
		2021		2020
Gross profit as a percentage of revenues from:
Products		48.1	%	52.8	%
Services		27.8	%	32.1	%
Total gross profit		41.4	%	45.0	%

Gross profit attributable to products revenues decreased by $0.5 million, or 1.2%, to $43.4 million for the three months ended March 31, 2021, compared to gross profit of $43.9 million for the three months ended March 31, 2020. Gross profit attributable to products revenues as a percentage of products revenues decreased to 48.1% for the three months ended March 31, 2021, compared to 52.8% for the three months ended March 31, 2020. Our gross profit from products revenues was adversely impacted by the mix of revenue sources, partially offset by a favorable impact of foreign currencies translation.

Gross profit attributable to services revenues decreased by $3.8 million, or 23.7%, to $12.2 million for the three months ended March 31, 2021, compared to $15.9 million for the three months ended March 31, 2020. Gross profit attributable to services revenues as a percentage of services revenues in the three months ended March 31, 2021 decreased to 27.8%, as compared to 32.1% for the three months ended March 31, 2020. Our gross profit from services revenues was adversely impacted by softness in our direct manufacturing activity (SDM), which has a relatively high percentage of fixed costs.

The decrease in gross profit was primarily driven by the lower proportion of consumables, lower SDM contribution and an increased logistics costs.

5

Operating Expenses

The amount of each type of operating expense for the three months ended March 31, 2021 and 2020, as well as the percentage change reflected thereby, and total operating expenses as a percentage of our total revenues in each such quarter, were as follows:

	Three Months Ended March 31,
		2021			2020		% Change
	U.S. $ in thousands
Research and development, net	$	20,601		$	24,194		(14.9	)%
Selling, general & administrative		53,334			55,576		(4.0	)%
	$	73,935		$	79,770		(7.3	)%
Percentage of revenues		55.1	%		60.0	%

        Operating expenses were $73.9 million in the first quarter of 2021, compared to operating expenses of $79.8 million in the first quarter of 2020. The decrease in operating expenses was driven by the resizing plan initiated in 2020.   

Research and development expenses, net decreased by $3.6 million, or 14.9%, to $20.6 million for the three months ended March 31, 2021, compared to $24.2 million for the three months ended March 31, 2020. The amount of research and development expenses constituted 15.4% of our revenues for the three months ended March 31, 2021, as compared to 18.2% for the three months ended March 31, 2020.

Our research and development expenses were impacted by the timing of project spending and product launches, based on our portfolio management. We continue to invest in strategic long-term initiatives that include advancements in our core FDM and PolyJet technologies and in our new photopolymer-based P3 technology, advanced composite materials, software and development of new applications which will enhance our current solutions offerings. We selectively applied the R&D cost controls to ensure that our new product introduction programs were not affected, and we plan to continue investing as needed in order to support our new product development programs.

Selling, general and administrative expenses decreased by $2.2 million, or 4.0%, to $53.3 million for the three months ended March 31, 2021, compared to $55.6 million for the three months ended March 31, 2020, driven by the restructuring and proactive cost-cutting measures. The amount of selling, general and administrative expenses constituted 39.7% of our revenues for the three months ended March 31, 2021, as compared to 41.8% for the three months ended March 31, 2020.

6

Operating Loss

Operating loss and operating loss as a percentage of our total revenues were as follows:

	Three Months Ended March 31,
		2021			2020
	U.S. $ in thousands
Operating income (loss)	$	(18,358	)	$	(19,900	)
Percentage of revenues		(13.7	)%		(15.0	)%

Operating loss amounted to $18.4 million for the three months ended March 31, 2021, compared to an operating loss of $19.9 million for the three months ended March 31, 2020. The decrease in operating loss was primarily attributable to the lower operating expenses as discussed above, offset, in part, by lower gross profit for the three months ended March 31, 2021 compared to the three months ended March 31, 2020.

Financial Income (Expenses), net

Financial expenses, net, which was primarily comprised of foreign currencies effects, interest income and interest expenses, was $0.4 million for the three months ended March 31, 2021, compared to financial expense, net of $0.8 million for the three months ended March 31, 2020.

Income Taxes

Income taxes and income taxes as a percentage of net loss before taxes, as well as the percentage change in each, year over year, reflected thereby, were as follows:

	Three Months Ended March 31,
		2021			2020
	U.S. $ in thousands						Change in %
Income tax expense (benefit)	$	(942	)	$	221		(526.2	)%
As a percent of loss before income taxes		5.0	%		(1.1	)%	(571.6	)%

We had an effective tax rate of 5.0% for the three-month period ended March 31, 2021, compared to a negative effective tax rate of 1.1% for the three-month period ended March 31, 2020. Our effective tax rate was primarily impacted by different geographic mixes of earnings and losses, as well as a valuation allowance on losses of our US subsidiaries.

7

Share in Losses of Associated Companies

Share in losses of associated companies reflects our proportionate share of the losses of unconsolidated entities accounted for by using the equity method of accounting. During the three months ended March 31, 2021, the loss from our proportionate share of the losses of our equity method investments was $1.1 million, compared to a loss of $0.8 million in the three months ended March 31, 2020.

Net Loss Attributable to Stratasys Ltd. and Net Loss Per Share

Net loss attributable to Stratasys Ltd., and net loss per share were as follows:

	Three Months Ended March 31,
		2021			2020
	U.S. $ in thousands
Net income (loss) attributable to Stratasys Ltd.	$	(18,911	)	$	(21,703	)
Percentage of revenues		(14.1	)%		(16.3	)%
Diluted net (loss) income per share	$	(0.32	)	$	(0.40	)

Net loss attributable to Stratasys Ltd. was $18.9 million for the three months ended March 31, 2021 compared to net loss of $21.7 million for the three months ended March 31, 2020. The decrease in the net loss attributable to Stratasys Ltd. was primarily attributable to the cost-mitigation measures, offset partially by lower gross profit, as described above.

Net loss per share was $0.32 for the three months ended March 31, 2021 as compared to net loss per share of $0.40 for the three months ended March 31, 2020. The weighted average fully diluted share count was 58.6 million during the three months ended March 31, 2021, compared to 54.5 million during the three months ended March 31, 2020.

8

 Supplemental Operating Results on a Non-GAAP Basis

        The following non-GAAP data, 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 (i) on an ongoing basis after excluding mergers, acquisitions and divestments related expense or gains and restructuring-related charges or gains, and (ii) 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 and goodwill, revaluation of our investments 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.

9

Reconciliation of GAAP to Non-GAAP Results of Operations

The following tables present the GAAP measures, the corresponding non-GAAP amounts and the related non-GAAP adjustments for the applicable periods:

		Three Months Ended March 31,
			2021			Non-GAAP			2021			2020			Non-GAAP			2020
			GAAP			Adjustments			Non-GAAP			GAAP			Adjustments			Non-GAAP
		U.S. dollars and shares in thousands (except per share amounts)
	Gross profit (1)	$	55,577		$	7,069		$	62,646		$	59,870		$	4,414		$	64,284
	Operating income (loss) (1,2)		(18,358	)		15,785			(2,573	)		(19,900	)		11,491			(8,409	)
	Net income (loss) attributable to Stratasys Ltd. (1,2,3)		(18,911	)		15,111			(3,800	)		(21,703	)		11,137			(10,566	)
	Net income (loss) per diluted share attributable to Stratasys Ltd. (4)	$	(0.32	)	$	0.26		$	(0.06	)	$	(0.40	)	$	0.21		$	(0.19	)
(1)	Acquired intangible assets amortization expense					5,356									4,065
	Non-cash stock-based compensation expense					634									402
	Restructuring and other related costs					1,079									(53	)
						7,069									4,414
(2)	Acquired intangible assets amortization expense					2,192									2,142
	Non-cash stock-based compensation expense					6,571									4,503
	Restructuring and other related costs					1,810									31
	Revaluation of investments					(3,670	)								-
	Contingent consideration					191									-
	Other expenses					1,622									401
						8,716									7,077
						15,785									11,491
(3)	Corresponding tax effect					(757	)								(431	)
	Equity method related amortization, divestments and impairments					83									77
					$	15,111								$	11,137
(4)	Weighted average number of ordinary shares outstanding- Diluted		58,616						58,616			54,544						54,544

10

Liquidity and Capital Resources

A summary of our statements of cash flows is as follows:

	Three Months Ended March 31,
		2021			2020
	U.S $ in thousands
Net loss	$	(18,911	)	$	(21,788	)
Depreciation and amortization		13,802			12,457
Deferred income taxes		(1,774	)		(409	)
Stock-based compensation		7,205			4,907
Other non-cash items, net		1,822			4,467
Change in working capital and other items		20,607			11,640
Net cash provided by operating activities		22,751			11,274
Net cash used in investing activities		(92,744	)		(5,498	)
Net cash provided by financing activities		222,165			30
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(2,872	)		(2,116	)
Net change in cash, cash equivalents and restricted cash		149,300			3,690
Cash, cash equivalents and restricted cash, beginning of period		272,216			293,597
Cash, cash equivalents and restricted cash, end of period		421,516			297,287

Our cash, cash equivalents and restricted cash balance increased to $421.5 million as of March 31, 2021 from $272.2 million as of December 31, 2020. The increase in cash, cash equivalents and restricted cash in the three months ended March31, 2021 was primarily due to the public offering of shares in a net amount of $218.9 million, partially offset by investing activities.

Cash flows from operating activities

We generated $22.8 million of cash from operating activities during the three months ended March 31, 2021. That cash generation reflects our $18.9 million net loss, as adjusted upwards to eliminate non-cash charges included in net loss, $13.8 million of depreciation and amortization and $7.2 million of stock-based compensation expenses. Favorable changes in our working capital balances were mainly driven by a decrease in our accounts receivable and inventory balances, and an increase in our accounts payable balance.

Cash flows from investing activities

We used $92.7 million of cash in our investing activities during the three months ended March 31, 2021. Cash was primarily used to invest $4.3 million to purchase property, equipment and intangibles, and $82.0 million net investment in short-term bank deposits. Our principal property and equipment purchases were for our new buildings complex under construction in Rehovot, Israel. The new facility in Rehovot, Israel, which will contain two buildings, houses our Israeli headquarters, research and development facilities and certain marketing activities. In addition, we used $6.4 million of cash for acquisitions, net of cash acquired.

Cash flows from financing activities

We generated $222.2 million of cash from financing activities during the three months ended March 31, 2021. Our public offering of shares generated proceeds, net of issuance costs of $218.9 million, and we generated an additional $2.9 million of proceeds from exercise of stock options. 

11

Capital resources and capital expenditures

Our total current assets amounted to $784.5 million as of March 31, 2021, of which $530.5 million consisted of cash, cash equivalents, short-term deposits and restricted cash. Total current liabilities amounted to $146.6 million. Most of our cash and cash equivalents are held in banks in Israel and the U.S.

The credit risk related to our accounts receivable is limited due to the relatively large number of customers and their wide geographic distribution. In addition, we seek to reduce the credit exposure related to our accounts receivable by imposing credit limits, conducting ongoing credit evaluation, and by implementing account monitoring procedures, as well as credit insurance for many of our customers.

We believe that we will have adequate cash and cash equivalents to fund our ongoing operations and that these sources of liquidity will be sufficient to satisfy our capital expenditure and working capital needs for the next twelve months.

Critical Accounting Policies

We have prepared our consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America. This has required us to make estimates, judgments, and assumptions that affected the amounts we reported. Actual results may differ from those estimates. To facilitate the understanding of our business activities, certain accounting policies that are important to the presentation of our financial condition and results of operations and that require management’s subjective judgments are described in our 2020 Annual Report. We base our judgments on our experience and various assumptions that we believe to be reasonable under the circumstances.

12

Forward-Looking Statements and Factors That May Affect Future Results of Operations

Certain information included in or incorporated by reference into the Report of Foreign Private Issuer on Form 6-K to which this Operating and Financial Review is appended, or the Form 6-K, may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are those that predict or describe future events or trends and that do not relate solely to historical matters. You can generally identify forward-looking statements as statements containing the words “may,” “will,” “could,” “should,” “expect,” “anticipate,” “intend,” “estimate,” “believe,” “project,” “plan,” “assume” or other similar expressions, or negatives of those expressions, although not all forward-looking statements contain these identifying words.

These forward-looking statements may include, but are not limited to, statements regarding our future strategy, future operations, projected financial position, proposed products, estimated future revenues, projected costs, future prospects, the future of our industry and results that might be obtained by pursuing management’s current plans and objectives.

You should not place undue reliance on our forward-looking statements because the matters they describe are subject to certain risks, uncertainties and assumptions that are difficult to predict. Our forward-looking statements are based on the information currently available to us and speak only as of the date of the Form 6-K. Over time, our actual results, performance or achievements may differ from those expressed or implied by our forward-looking statements, and such difference might be significant and materially adverse to our shareholders. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Important factors that could cause actual results, developments and business decisions to differ materially from those anticipated in these forward-looking statements include, among other things:

•

the extent of our success at introducing new or improved products and solutions that gain market share;

•

the extent of growth of the 3D printing market generally;

•

the duration and severity of the global COVID-19 pandemic, and the strength of recovery from it, which may continue to have significant consequences for our operations, financial position, cash flows, and those of our customers and suppliers;

•

changes in our overall strategy, including as related to any restructuring activities and our capital expenditures;

•

the impact of shifts in prices or margins of the products that we sell or services we provide;

•

the impact of competition and new technologies;

13

•

impairments of goodwill or other intangible assets in respect of companies that we acquire;

•

the extent of our success at efficiently and successfully integrating the operations of various companies that we have acquired or may acquire;

•

global market, political and economic conditions, and in the countries in which we operate in particular;

•

government regulations and approvals;

•

litigation and regulatory proceedings;

•

infringement of our intellectual property rights by others (including for replication and sale of consumables for use in our systems), or infringement of others’ intellectual property rights by us;

•  the extent of our success at maintaining our liquidity and financing our operations and capital needs;

•

impact of tax regulations on our results of operations and financial conditions; and

•

those factors referred to in Item 3.D, “Key Information - Risk Factors”, Item 4, “Information on the Company”, and Item 5, “Operating and Financial Review and Prospects” in our 2020 Annual Report, as supplemented herein, as well as in other portions of the 2020 Annual Report

Readers are urged to carefully review and consider the various disclosures made throughout the Form 6-K, our 2020 Annual Report, and in 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.

14

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Reference is made to Item 11, “Quantitative and Qualitative Disclosures about Market Risk” in our 2020 Annual Report.

LEGAL PROCEEDINGS

We are subject to various litigation and other legal proceedings from time to time. For a discussion of our litigation status, see Note 12-“Contingencies” in the notes to our unaudited condensed consolidated interim financial statements attached as Exhibit 99.1 to the Form 6-K.

RISK FACTORS

The global COVID-19 health pandemic has been adversely affecting and could potentially severely adversely affect, our business, results of operations and financial condition due to impacts on the industries in which our customers operate, as well as impacts from actions taken to contain the disease or treat its impact, and due to the unknown speed and extent of the recovery from the disease.

The COVID-19 global pandemic continues to have numerous adverse effects on the global economy. Governmental shutdowns and “shelter-in-place” orders suggested or mandated by governmental authorities or otherwise elected by companies as a preventative measure, continue to adversely affected workforces, customers, consumer sentiment, economies and certain financial markets, and, along with decreased consumer spending, have led to an economic downturn in many of the markets into which we sell our products and services.

Those effects of the pandemic have been adversely impacting our financial results for our operations in all global regions, beginning already in the first quarter of 2020 and continuing through the first quarter of 2021.

While we have imposed counter-measures to try to mitigate the impact of the pandemic on our operating results and our results have shown improvement concurrently with recovery in some of the markets into which we sell, there is no certainty that the success of those measures and that recovery will continue. We continue to monitor the cost-control measures that we first began to implement in February 2020. We have maintained in place certain cost reduction mechanisms, although we have eliminated others, such as our four-day work week, as we returned to a full work week, effective as of the start of 2021.

While we continue to monitor the situation, assessing further implications for our operations, supply chain, liquidity, cash flow and customer orders, and have implemented the foregoing measures in an effort to mitigate adverse consequences, while simultaneously abiding by any government-imposed restrictions, market by market, there is no assurance that we can succeed at doing so.

In addition to the adverse impact of the COVID-19 pandemic on our business and operating results, we furthermore face uncertainty as to the degree and duration of that impact going forward, and as to the degree of recovery from it. We do not know the length of time that the pandemic and related disruptions will continue, the impact of governmental regulations or easement of regulations in response to the strengthening or weakening of the pandemic, and the degree of overall potentially permanent changes in consumer behavior that may be caused by the pandemic. The pandemic may furthermore contribute towards global economic weakness that is more than temporary and that could adversely affect demand for our products and services generally. A future downturn could also have a material adverse impact on our business partners’ stability and financial strength. Given the uncertainties associated with COVID-19, it is difficult to fully predict the magnitude of effects on our, and our business partners’, business, financial condition and results of operations.

Any limited guidance for 2021 that we may provide will lack the certainty that we once had in providing that guidance, due to the number of variables surrounding the COVID-19 pandemic and recovery.

The COVID-19 pandemic may also have the effect of amplifying many of the other risks described under the caption “Item 3. Key Information— D. Risk Factors” in our 2020 Annual Report.

15

XML

Document And Entity Information	3 Months Ended
	Mar. 31, 2021
Document Information Line Items
Entity Registrant Name	STRATASYS LTD.
Document Type	6-K
Current Fiscal Year End Date	--12-31
Amendment Flag	false
Entity Central Index Key	0001517396
Document Period End Date	Mar. 31, 2021
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1
Entity Address, Address Line One	1 Holtzman Street
Entity Address, Address Line Three	P.O. Box 2496
Entity Address, Address Line Two	Science Park
Entity Address, City or Town	Rehovot
Entity Address, Country	IL
Entity Address, Postal Zip Code	76124
Entity File Number	001-35751

XML

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Current assets
Cash and cash equivalents	$ 421,398	$ 272,092
Short-term Deposits	109,000	27,000
Accounts receivable, net of allowance for credit losses of $0.9 million as of March 31, 2021 and December 31, 2020	102,780	106,068
Inventories	124,199	131,672
Prepaid expenses	10,345	6,717
Other current assets	16,745	16,943
Total current assets	784,467	560,492
Non-current assets
Property, plant and equipment, net	199,382	201,232
Goodwill	38,074	35,694
Other intangible assets, net	131,619	131,569
Operating lease right-of-use assets	19,089	21,298
Other non-current assets	43,299	39,717
Total non-current assets	431,463	429,510
Total assets	1,215,930	990,002
Current liabilities
Accounts payable	28,062	16,987
Accrued expenses and other current liabilities	29,283	31,061
Accrued compensation and related benefits	30,937	25,659
Deferred revenues - short term	49,413	49,165
Operating lease liabilities - short term	8,941	9,282
Total current liabilities	146,636	132,154
Non-current liabilities
Deferred revenues - long term	14,074	14,227
Operating lease liabilities - long term	10,501	12,567
Contingent consideration	40,234	37,400
Other non-current liabilities	32,470	34,059
Total non-current liabilities	97,279	98,253
Total liabilities	243,915	230,407
Contingencies (see note 12)
Redeemable non-controlling interests	227	227
Equity
Ordinary shares, NIS 0.01 nominal value, authorized 180,000 thousand shares; 65,218 thousand shares and 56,617 thousand shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively	181	155
Additional paid-in capital	2,984,048	2,753,955
Accumulated other comprehensive loss	(7,634)	(8,846)
Accumulated deficit	(2,004,807)	(1,985,896)
Total equity	971,788	759,368
Total liabilities and equity	$ 1,215,930	$ 990,002

XML

Consolidated Balance Sheets (Unaudited) (Parentheticals) shares in Thousands, $ in Thousands	Mar. 31, 2021 USD ($) shares	Mar. 31, 2021 ₪ / shares	Dec. 31, 2020 USD ($) shares	Dec. 31, 2020 ₪ / shares
Statement of Financial Position [Abstract]
Accounts receivable, net of allowance for credit losses (in Dollars) | $	$ 900		$ 900
Ordinary shares, par value (in New Shekels per share) | ₪ / shares		₪ 0.01		₪ 0.01
Ordinary shares, authorized	180,000		180,000
Ordinary shares, issued	65,218		65,218
Ordinary shares, outstanding	65,218		65,218

XML

Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Revenues
Revenues	$ 134,189	$ 132,907
Cost of revenues
Cost of revenues	78,612	73,037
Gross profit	55,577	59,870
Operating expenses
Research and development, net	20,601	24,194
Selling, general and administrative	53,334	55,576
Total operating expenses	73,935	79,770
Operating loss	(18,358)	(19,900)
Financial expenses, net	(377)	(829)
Loss before income taxes	(18,735)	(20,729)
Income tax expenses (benefit)	(942)	221
Share in losses of associated companies	(1,118)	(838)
Net loss	(18,911)	(21,788)
Net loss attributable to non-controlling interests		(85)
Net loss attributable to Stratasys Ltd.	$ (18,911)	$ (21,703)
Net loss per ordinary share attributable to Stratasys Ltd. - basic and diluted (in Dollars per share)	$ (0.32)	$ (0.40)
Weighted average ordinary shares outstanding. - basic and diluted (in Shares)	58,616	54,544
Comprehensive loss
Net loss	$ (18,911)	$ (21,788)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(961)	(1,954)
Unrealized gains (losses) on derivatives designated as cash flow hedges	2,173	822
Other comprehensive income (loss), net of tax	1,212	(1,132)
Comprehensive loss	(17,699)	(22,920)
Less: comprehensive loss attributable to non-controlling interests		(85)
Comprehensive loss attributable to Stratasys Ltd.	(17,699)	(22,835)
Products
Revenues
Revenues	90,324	83,172
Cost of revenues
Cost of revenues	46,920	39,248
Services
Revenues
Revenues	43,865	49,735
Cost of revenues
Cost of revenues	$ 31,692	$ 33,789

XML

Consolidated Statements of Changes in Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Ordinary Shares	Additional Paid-In Capital	Accumulated deficit	Accumulated Other Comprehensive Loss	Total
Balance at Dec. 31, 2019	$ 148	$ 2,706,894	$ (1,542,175)	$ (7,716)	$ 1,157,151
Balance (in Shares) at Dec. 31, 2019	54,441
Issuance of shares in connection with stock-based compensation plans	$ 1	29			30
Issuance of shares in connection with stock-based compensation plans (in Shares)	358
Stock-based compensation		4,907			4,907
Comprehensive income (loss)			(21,703)	(1,132)	(22,835)
Balance at Mar. 31, 2020	$ 149	2,711,830	(1,563,878)	(8,848)	1,139,253
Balance (in Shares) at Mar. 31, 2020	54,799
Balance at Dec. 31, 2020	$ 155	2,753,955	(1,985,896)	(8,846)	759,368
Balance (in Shares) at Dec. 31, 2020	56,617
Issuance of shares in connection with stock-based compensation plans	$ 2	2,881			2,883
Issuance of shares in connection with stock-based compensation plans (in Shares)	670
Stock-based compensation		7,205			7,205
Public offering of ordinary shares, net	$ 24	218,851			218,875
Public offering of ordinary shares, net (in Shares)	7,931
Deferred tax assets in connection with public offering expenses		1,156			1,156
Comprehensive income (loss)			(18,911)	1,212	(17,699)
Balance at Mar. 31, 2021	$ 181	$ 2,984,048	$ (2,004,807)	$ (7,634)	$ 971,788
Balance (in Shares) at Mar. 31, 2021	65,218

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Cash flows from operating activities
Net loss	$ (18,911)	$ (21,788)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	13,802	12,457
Stock-based compensation	7,205	4,907
Foreign currency transaction loss	4,181	3,428
Deferred income taxes	(1,774)	(409)
Share in losses of associated companies	1,118	838
Revaluation of investments	(3,670)
Other non-cash items, net	193	201
Change in cash attributable to changes in operating assets and liabilities:
Accounts receivable, net	2,620	16,541
Inventories	7,046	(5,659)
Other current assets and prepaid expenses	(3,775)	3,519
Other non-current assets	1,595	902
Accounts payable	10,197	(3,086)
Other current liabilities	6,453	9,047
Deferred revenues	(433)	(2,154)
Other non-current liabilities	(3,096)	(7,470)
Net cash provided by operating activities	22,751	11,274
Cash flows from investing activities
Cash paid for acquisitions, net of cash acquired	(6,356)
Purchase of property and equipment	(4,012)	(6,291)
Investments in short-term bank deposits	(109,000)
Proceeds from short-term bank deposits	27,000
Net proceeds from divestitures of subsidiaries and associated companies		1,000
Purchase of intangible assets	(278)	(413)
Other investing activities	(98)	206
Net cash used in investing activities	(92,744)	(5,498)
Cash flows from financing activities
Proceeds from public offering, net of issuance costs	218,875
Proceeds from exercise of stock options	2,883	30
Other financing activities	407
Net cash provided by financing activities	222,165	30
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(2,872)	(2,116)
Net change in cash, cash equivalents and restricted cash	149,300	3,690
Cash, cash equivalents and restricted cash, beginning of period	272,216	293,597
Cash, cash equivalents and restricted cash, end of period	421,516	297,287
Supplemental disclosures of cash flow information:
Transfer of inventory to fixed assets	884	832
Transfer of fixed assets to inventory	$ 210	$ 5

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Business Description and Basis of Presentation

3 Months Ended

Mar. 31, 2021

Organization Consolidation And Presentation Of Financial Statements Abstract

Business Description and Basis of Presentation

Note 1. Business Description and Basis of Presentation

Stratasys Ltd. (collectively with its subsidiaries, the “Company” or “Stratasys”) is a global leader in connected, polymer-based 3D printing solutions, across the entire manufacturing value chain. The Company leverages its competitive advantages, which include a broad set of best-in-class 3D printing platforms, software, a materials and technology partner ecosystem, innovative leadership, and global GTM infrastructure, in order to position itself to capture share in a significant and growing global marketplace, with a focus on manufacturing.  The Company’s approximately 1,600 granted and pending additive technology patents to date have been used to create models, prototypes, manufacturing tools, and production parts for a multitude of industries including aerospace, automotive, transportation, healthcare, consumer products, dental, medical, and education. Stratasys’ products and comprehensive solutions improve product quality, development time, cost, and time-to-market. The Company’s 3D ecosystem of solutions and expertise includes 3D printers, materials, software, expert services, and on-demand parts production.

The condensed consolidated interim financial information herein is unaudited; however, such information reflects all adjustments (consisting of normal, recurring adjustments), which are, in the opinion of management, necessary for a fair statement of results for the interim period. The condensed consolidated interim financial statements include the accounts of Stratasys Ltd. and its subsidiaries. All intercompany accounts and transactions, including profits from intercompany sales not yet realized outside the Company, have been eliminated in consolidation.

The Company's financial statements are prepared in conformity with U.S. generally accepted accounting principles (“GAAP”), which requires the Company to make estimates based on assumptions about current and, for some estimates, future economic and market conditions which affect reported amounts and related disclosures in its financial statements. Although the Company current estimates contemplate current and expected future conditions, as applicable, it is reasonably possible that actual conditions could differ from the Company expectations, which could materially affect its results of operations and financial position.

In particular, a number of estimates have been and will continue to be affected by the ongoing COVID-19 pandemic. The severity, magnitude and duration of, and recovery from, as well as the economic consequences of, the COVID-19 pandemic, remain uncertain, rapidly changing and difficult to predict. As a result, the accounting estimates and assumptions may change over time in response to COVID-19. Such changes could have an additional impact on the Company’s long-lived asset and intangible asset valuation; inventory valuation; assessment of the annual effective tax rate; and the allowance for expected credit losses and bad debt.

The results of operations for the three months ended March 31, 2021 are not indicative of results that could be expected for the entire fiscal year. Certain financial information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. The reader is referred to the audited consolidated financial statements and notes thereto for the year ended December 31, 2020, filed with the U.S. Securities and Exchange Commission (the “SEC”) as part of the Company’s Annual Report on Form 20-F for such year on March 1, 2021.

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New Accounting Pronouncements

3 Months Ended

Mar. 31, 2021

Accounting Standards Update and Change in Accounting Principle [Abstract]

New Accounting Pronouncements

Note 2. New Accounting Pronouncements

Accounting Pronouncements Adopted in 2021

In December 2019, the FASB issued new guidance to simplify the accounting for income taxes by removing certain exceptions to the general principles and simplification of areas such as franchise taxes, step-up in tax basis goodwill, separate entity financial statements and interim recognition of enactment of tax laws or rate changes The guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company adopted this guidance effective January 1, 2021, with no material impact on its consolidated financial statements.

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Certain Transactions

3 Months Ended

Mar. 31, 2021

Certain Transactions [Abstract]

Certain Transactions

Note 3. Certain Transactions

 Origin acquisition

 On December 31, 2020 (the “Origin transaction date”) the Company acquired 3D printing start-up Origin Laboratories Inc. (“Origin”) for an aggregate purchase price of $97.1 million (the “Origin transaction”), including cash and shares. The acquisition enables Stratasys to expand its leadership through innovation in the fast-growing mass production parts market with a next-generation photopolymer platform. Stratasys expects Origin’s proprietary Programmable PhotoPolymerization (P3) technology to be an important growth engine for the Company. The acquisition was aimed at fortifying the Company's leadership in polymers and production applications of 3D printing in industries such as dental, medical, tooling, and select industrial, defense, and consumer goods markets.

In exchange for 100% of the outstanding shares of Origin the Company issued 1,488 thousand ordinary shares, paid cash upon closing, and is obligated to pay additional payments (combination of cash and shares) subject to performance-based earn-outs over 3 years.

The Origin transaction is reflected in accordance with ASC Topic 805, “Business Combinations”, using the acquisition method of accounting with the Company as the acquirer.

The following table summarizes the fair value of the consideration transferred to Origin stockholders for the Origin transaction:

		U.S. $ in thousands
Cash payments	$	33,025
Issuance of ordinary shares to Origin stockholders		26,636
Contingent consideration at estimated fair value		37,400
Total consideration	$	97,061

 The fair value of the ordinary shares issued was determined based on the closing market price of the Company’s ordinary shares on the Origin transaction date.

In accordance with ASC Topic 805, the estimated contingent consideration as of the Origin transaction date was included in the purchase price. The total contingent payments could reach to a maximum aggregate amount of up to $40 million. Approximately 50% of the payments shall be settled in cash, and 50% shall be settled through the issuance of ordinary shares. The estimated fair value of the contingent consideration is based on management’s assessment of whether, and at what level, the financial metrics will be achieved, and the present value factors associated with the timing of the payments. This fair value measurement is based on significant unobservable inputs in the market and thus represents a Level 3 measurement within the fair value hierarchy. Changes in the fair value of contingent consideration will be recorded in Consolidated Statements of Operations and Comprehensive Loss. Refer to note 9. 

An additional payment of $6 million, which is subject to the founders' retention over 3 years, will be recorded as compensation expense over the retention period. Compensation expenses for the three-month period ended March 31, 2021 were approximately $1.1 million.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed, based on the information that is available as of March 31, 2021. Thus, the measurements of fair value reflected are subject to changes and such changes could be significant. The preliminary allocation of the purchase price to assets acquired and liabilities assumed is as follows:

		Allocation of Purchase Price
		(U.S. $ in thousands)
Cash and cash equivalents	$	2,083
Goodwill		36,379
Intangible assets		71,125
Other assets		4,364
Total assets acquired		113,951
Net deferred tax liabilities		14,007
Other labilities		2,883
Total liabilities assumed		16,890
Net assets acquired	$	97,061

The allocation of the purchase price to net assets acquired and liability assumed resulted in the recognition of an intangible asset related to developed technology of $71 million. This intangible asset has a useful-life of 10 years. The fair value estimate of the developed technology is determined using a variation of the income approach known as the “Multi-Period Excess Earnings Approach”. This valuation technique estimates the fair value of an asset based on market participants’ expectations of the cash flows an asset would generate over its remaining useful life. The net cash flows were discounted to present value.

Pro forma information giving effect to the acquisition has not been provided as the impact of the transaction for purposes of Stratasys' consolidation results of operations and financial condition would not be material.

  RPS acquisition

 On February 16, 2021 the Company acquired RP Support Limited (“RPS”), a provider of industrial stereolithography 3D printers and solutions. In exchange for 100% of the outstanding shares of RPS, the Company paid cash upon closing and is obligated to make additional payments (in cash), subject to performance-based criteria, via earn-out payments over two years.

  Marketable equity investment

The Company recognized in the first quarter of 2021 an income of $3.7 million for revaluation of an equity investment. In prior periods the investment was treated as a non-marketable equity investment without readily determinable FV. The entity has become public during the first quarter and accordingly the investment is now treated as a marketable equity investment.

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Revenues

3 Months Ended

Mar. 31, 2021

Revenue Recognition [Abstract]

Revenues

Note 4. Revenues

Disaggregation of Revenues

The following table presents the Company’s revenues disaggregated by geographical region (based on the Company's customers' locations) and revenue type for the three months ended March 31, 2021 and 2020:

	Three months ended March 31,
		2021		2020
	(U.S. $ in thousands)
Americas
Products	$	49,568	$	48,244
Service		32,545		38,329
Total Americas		82,113		86,573
EMEA
Products		22,501		20,747
Service		6,417		6,173
Total EMEA		28,918		26,920
Asia Pacific
Products		18,255		14,181
Service		4,903		5,233
Total Asia Pacific		23,158		19,414
Total Revenues	$	134,189	$	132,907

The following table presents the Company’s revenues disaggregated based on the timing of revenue recognition (at a specific point in time or over the course of time) for the three months ended March 31, 2021 and 2020:

	Three months ended March 31,
		2021		2020
	(U.S. $ in thousands)
Revenues recognized in point in time from:
Products	$	90,324	$	83,172
Services		10,601		10,644
Total revenues recognized in point in time		100,925		93,816
Revenues recognized over time from:
Services		33,264		39,091
Total revenues recognized over time		33,264		39,091
Total Revenues	$	134,189	$	132,907

Contract Assets and Contract Liabilities

Contract assets are recorded when the Company's right to consideration is conditional on constraints other than the passage of time. The Company had no material contract assets as of March 31, 2021 and December 31, 2020.

Contract liabilities include advance payments and billings in excess of revenue recognized, which are primarily related to advanced billings for service type warranty. Contract liabilities are presented under deferred revenues. The Company's deferred revenues as of March 31, 2021 and December 31, 2020 were as follows:

		March 31,	December 31,
		2021	2020
	U.S. $ in thousands
Deferred revenue*		63,487	63,392

*Includes $14.1 million and $14.2 million under long term deferred revenue in the Company's consolidated balance sheets as of March 31, 2021 and December 31, 2020, respectively.

Revenue recognized in 2021 that was included in deferred revenue balance as of December 31, 2020 was $18.4 million for the three months ended March 31, 2021.

Remaining Performance Obligations

Remaining Performance Obligations (“RPO“) represent contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. As of March 31, 2021, the total RPO amounted to $89.7 million. The Company expects to recognize $74.9 million of this RPO during the next 12 months, $9.2 million over the subsequent 12 months and the remaining $5.6 million thereafter.

Incremental Costs of Obtaining a Contract

Sales commissions earned mainly by the Company’s sales agents are considered incremental costs of obtaining a contract with a customer, as the Company expects the benefit of those commissions to be longer than one year. The majority of the sales commissions are not subject to capitalization, as the commission expense is recognized as the related revenue is recognized. Sales commissions for initial contracts related to the service type warranty are deferred and then amortized on a straight-line basis over the expected customer relationship period if the Company expects to recover those costs. Amortization expense is included in selling, general and administrative expenses in the consolidated statements of operations. As of March 31, 2021 and December 31, 2020, the deferred commissions amounted to $5.3 million and $5.0 million, respectively.

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Inventories

3 Months Ended

Mar. 31, 2021

Inventory Disclosure [Abstract]

Inventories

Note 5. Inventories

Inventories consisted of the following:

		March 31,		December 31,
		2021		2020
	U.S. $ in thousands
Finished goods	$	52,845	$	61,297
Work-in-process		3,739		3,163
Raw materials		67,615		67,212
	$	124,199	$	131,672

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Goodwill and Other Intangible Assets

3 Months Ended

Mar. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Note 6. Goodwill and Other Intangible Assets

Goodwill

Changes in the carrying amount of the Company’s goodwill for the three months ended March 31, 2021 were as follows:

		U.S. $ in thousands
Goodwill as of January 1, 2021	$	35,694
Goodwill acquired*		1,716
Foreign currency translation adjustments and other		664
Goodwill as of March 31, 2021	$	38,074

*The goodwill was acquired as part of RPS acquisition. See Note 3.

 

During the third quarter of 2020, the Company had noted that indicators of potential impairment existed which required an interim goodwill impairment analysis for Stratasys-Objet reporting unit. These indicators included longer and deeper than expected reduction in the business, refinement to the company’s business focus into additional inorganic technologies and sustained decline in the Company’s market capitalization during the past two quarters, all, primarily as a result of the COVID-19 impact on the global economy and the Company’s business.

 

As a result of the factors discussed above, the Company revisited its assumptions supporting the cash flow projections for its Stratasys-Objet reporting unit, including: (i) the expected duration and depth of revenue reduction and certain revenue growth assumptions; (ii) the associated operating profit margins; and (iii) the long term growth rate. In estimating the discounted cash flow, the Company used the following key assumptions: the Company currently expects it will take approximately two years to regain the loss of revenue and return to its pre COVID-19 activity levels considering the impact of both volume and price with a similar effect on profitability. Following such period, the Company expects to return to similar growth rates as estimated in prior valuations. The Company assumes a long term terminal growth rate of 2.5%, which is lower than the 3.1% used in prior valuations. In addition, changes in business focus due to introduction of new technologies is expected to lower the total revenues related to the Stratasys-Objet reporting unit. The resulting cash flow amounts were discounted using the same discount rate of 13.5%.

 

Based on the revised cash flow projections, the value of the reporting unit had decreased below its carrying value, and the Company recorded in the third quarter of 2020, goodwill impairment charge of $386.2 million, the entire reporting unit’s goodwill.

Other Intangible Assets

Other intangible assets consisted of the following:

	March 31, 2021							December 31, 2020
		Carrying Amount,					Net		Carrying Amount,					Net
		Net of		Accumulated			Book		Net of		Accumulated			Book
		Impairment		Amortization			Value		Impairment		Amortization			Value
	U.S. $ in thousands
Developed technology	$	365,207	$	(265,352	)	$	99,855	$	357,863	$	(260,123	)	$	97,740
Patents		17,894		(8,812	)		9,082		17,699		(8,487	)		9,212
Trademarks and trade names		26,031		(21,397	)		4,634		26,036		(21,114	)		4,922
Customer relationships		100,883		(82,835	)		18,048		101,107		(81,413	)		19,695
Capitalized software development costs		7,410		(7,410	)		-		7,410		(7,410	)		-
	$	517,425	$	(385,806	)	$	131,619	$	510,115	$	(378,547	)	$	131,569

Amortization expenses relating to intangible assets for the three-month period ended March 31, 2021 and 2020 were approximately $7.5 million and $6.2 million, respectively.

As of March 31, 2021, the estimated amortization expenses relating to intangible assets for each of the following future periods were as follows:

		Estimated
		amortization expense
		(U.S. $ in thousands)
Remaining 9 months of 2021	$	22,840
2022		28,662
2023		14,081
2024		10,185
2025 and thereafter		55,851
Total		131,619

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Net Loss Per Share

3 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

Net Loss Per Share

Note 7. Net Loss Per Share

The following table presents the numerator and denominator of the basic and diluted net loss per share computations for the three months ended March 31, 2021 and 2020:

	Three Months Ended March 31,
		2021			2020
	In thousands, except per share amounts
Numerator:
Net loss attributable to Stratasys Ltd. for basic and diluted loss per share		(18,911	)		(21,703	)
Denominator:
Weighted average shares - for basic and diluted net loss per share		58,616			54,544
Net loss per share attributable to Stratasys Ltd.
Basic and diluted	$	(0.32	)	$	(0.40	)

The computation of diluted net loss per share excluded share awards of 5.4 million shares and 5.3 million shares for the three months ended March 31, 2021 and 2020, respectively, because their inclusion would have had an anti-dilutive effect on the diluted net loss per share.

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Income Taxes

3 Months Ended

Mar. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Note 8. Income Taxes

The Company had income tax benefit of $0.9 million for the three-month period ended March 31, 2021 compared to income tax expenses of $0.2 million for the three-month period ended March 31, 2020. The Company’s effective tax rate as of March 31, 2021 was primarily impacted by the geographic mix of its earnings and losses, as well as a valuation allowance on losses of the Company's US subsidiaries. 

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Fair Value Measurements

3 Months Ended

Mar. 31, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 9. Fair Value Measurements

Financial instruments measured at fair value

The following table summarizes the Company’s financial assets and liabilities that are carried at fair value on a recurring basis, in its consolidated balance sheets:

	March 31, 2021					December 31, 2020
		Level 2			Level 3		Level 2			Level 3
	(U.S. $ in thousands)
Assets:
Foreign exchange forward contracts not designated as hedging instruments	$	41			-	$	56			-
Foreign exchange forward contracts designated as hedging instruments		754			-		793			-
Liabilities:
Foreign exchange forward contracts not designated as hedging instruments		(252	)		-		(1,098	)		-
Foreign exchange forward contracts designated as hedging instruments		(140	)		-		(1,584	)		-
Contingent consideration		-			40,234		-			37,400
	$	403		$	40,234	$	(1,833	)	$	37,400

The Company’s foreign exchange forward contracts are classified as Level 2, as they are not actively traded and are valued using pricing models that use observable market inputs, including interest rate curves and both forward and spot prices for currencies (Level 2 inputs).

Contingent consideration represents liabilities recorded at fair value in connection with acquisitions, and thus represents a Level 3 measurement within the fair value hierarchy (refer to Note 3).

Other financial instruments consist mainly of cash and cash equivalents, short-term deposits, current and non-current receivables, accounts payable and other current liabilities. The fair value of these financial instruments approximates their carrying values.

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Derivative instruments and hedging activities

3 Months Ended

Mar. 31, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative instruments and hedging activities

Note 10. Derivative instruments and hedging activities

Since the Company conducts its operations globally, it is exposed to global market risks and to the risk that its earnings, cash flows and equity could be adversely impacted by fluctuations in foreign currency exchange rates. The Company enters into transactions involving foreign currency exchange derivative financial instruments. The Company manages its foreign currency exposures on a consolidated basis, which allows the Company to net exposures and take advantage of any natural hedging. The transactions are designed to manage the Company’s net exposure to foreign currency exchange rates and to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates. The Company does not enter into derivative transactions for trading purposes.

The Company is primarily exposed to foreign exchange risk with respect to recognized assets and liabilities and forecasted transactions denominated in the New Israeli Shekel (“NIS”), Euro, GBP, Korean Won, Chinese Yuan and the Japanese Yen. The gains and losses on the hedging instruments partially offset losses and gains on the hedged items. Financial markets and currency volatility may limit the Company’s ability to hedge these exposures. These contracts mature through December 2021.

The following table summarizes the consolidated balance sheets classification and fair values of the Company’s derivative instruments:

		Fair Value						Notional Amount
			March 31,			December 31,			March 31,		December 31,
	Balance sheet location		2021			2020			2021		2020
		U.S. $ in thousands
Assets derivatives -Foreign exchange contracts, not designated as hedging instruments	Other current assets	$	41		$	56		$	10,981	$	36,882
Assets derivatives -Foreign exchange contracts, designated as cash flow hedge	Other current assets		754			793			50,316		10,417
Liability derivatives -Foreign exchange contracts, not designated as hedging instruments	Accrued expenses and other current liabilities		(252	)		(1,098	)		44,078		37,999
Liability derivatives -Foreign exchange contracts, designated as hedging instruments	Accrued expenses and other current liabilities		(140	)		(1,584	)		18,473		50,186
		$	403		$	(1,833	)	$	123,848	$	135,484

Foreign exchange contracts not designated as hedging instruments

As of March 31, 2021, the notional amounts of the Company’s outstanding exchange forward contracts, not designated as hedging instruments, were $55.1 million, and were used to reduce foreign currency exposures. With respect to such derivatives, gains of $2.2 million and of $1.5 million were recognized under financial income (expenses), net for the three-month period ended March 31, 2021 and 2020, respectively. Such gains or losses partially offset the foreign currency revaluation changes of the balance sheet items. These foreign currencies revaluation changes are also recognized under financial income (expenses), net.

Cash Flow Hedging - Hedges of forecasted foreign currency payroll and other operating expenses

As of March 31, 2021, the Company had in effect foreign exchange forward contracts, designated as cash flow hedges for accounting purposes, for the conversion of $29.3 million into NIS. The Company uses short-term cash flow hedge contracts to reduce its exposure to variability in expected future cash flows resulting mainly from payroll costs and other operating expenses denominated in NIS. The changes in fair value of those contracts are included in the Company’s accumulated other comprehensive loss.

Cash Flow Hedging - Hedges of forecasted foreign currency revenue

As of March 31, 2021, the Company had in effect foreign exchange forward contracts, designated as cash flow hedges for accounting purposes, for the conversion of 33.0 million Euro into U.S. dollars. The Company transacts business in U.S. dollars and in various other currencies. The Company may use foreign exchange or forward contracts to hedge certain cash flow exposures resulting from changes in these foreign currency exchange rates. These foreign exchange contracts, carried at fair value, have maturities of up to twelve months. The Company enters into these foreign exchange contracts to hedge a portion of its forecasted foreign currency denominated revenue in the normal course of business and accordingly, they are not speculative in nature.

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Equity

3 Months Ended

Mar. 31, 2021

Stockholders' Equity Note [Abstract]

Equity

Note 11. Equity

a. Stock-based compensation plans

Stock-based compensation expenses for equity-classified stock options, restricted share units (“RSUs”) and performance-based restricted share units (”PSUs”) were allocated as follows:

	Three Months Ended
	March 31,
		2021		2020
	U.S $ in thousands
Cost of sales	$	634	$	402
Research and development, net		1,424		1,556
Selling, general and administrative		5,147		2,949
Total stock-based compensation expenses	$	7,205	$	4,907

A summary of the Company’s stock option activity for the three months ended March 31, 2021 is as follows:

		Number of Options			Weighted Average Exercise Price
Options outstanding as of January 1, 2021	$	2,102,529		$	28.06
Granted		46,366			3.15
Exercised		(137,220	)		21.01
Forfeited		(13,439	)		36.26
Options outstanding as of March 31, 2021		1,998,236			27.91
Options exercisable as of March 31, 2021	$	1,619,049		$	30.82

As of March 31, 2021, the unrecognized compensation cost of $3.4 million related to all unvested, equity-classified stock options is expected to be recognized as an expense over a weighted-average period of 3.3 years.

A summary of the Company’s RSUs and PSUs activity for the three months ended March 31, 2021 is as follows:

		Number of RSUs and PSUs			Weighted Average Grant Date Fair Value
Unvested as of January 1, 2021	$	2,801,116		$	21.08
Granted		1,201,186			34.62
Vested		(533,533	)		22.56
Forfeited		(110,731	)		20.69
Unvested as of March 31, 2021	$	3,358,038		$	25.70

The fair value of RSUs and PSUs is determined based on the quoted price of the Company’s ordinary shares on the date of the grant.

As of March 31, 2021, the unrecognized compensation cost of $76 million related to all unvested, equity-classified RSUs and PSUs is expected to be recognized as expense over a weighted-average period of 2.7 years.

b. Accumulated other comprehensive loss

The following tables present the changes in the components of accumulated other comprehensive income (loss), net of taxes, for the three months ended March 31, 2021 and 2020, respectively:

	Three Months Ended March 31, 2021
		Net Unrealized Gain (Loss) on Cash Flow Hedges			Foreign Currency Translation Adjustments			Total
	U.S. $ in thousands
Balance as of January 1, 2021	$	(1,673	)	$	(7,173	)	$	(8,846	)
Other comprehensive income (loss) before reclassifications		1,607			(961	)		646
Amounts reclassified from accumulated other comprehensive loss		566			-			566
Other comprehensive income (loss)		2,173			(961	)		1,212
Balance as of March 31, 2020	$	500		$	(8,134	)	$	(7,634	)

	Three Months Ended March 31, 2020
		Net Unrealized Gain (Loss) on Cash Flow Hedges			Foreign Currency Translation Adjustments			Total
	U.S. $ in thousands
Balance as of January 1, 2020	$	(10	)	$	(7,706	)	$	(7,716	)
Other comprehensive income (loss) before reclassifications		849			(1,954	)		(1,105	)
Amounts reclassified from accumulated other comprehensive loss		(27	)		-			(27	)
Other comprehensive income (loss)		822			(1,954	)		(1,132	)
Balance as of March 31, 2020	$	812		$	(9,660	)	$	(8,848	)

c. Public offering of ordinary shares

During March 2021, the Company completed a capital raise of $218.9 million, net of underwriting discounts and offering expenses. The total number of shares sold by the Company in the public offering was 7,931,034.

       A deferred tax asset in an amount of $1.2 million was recorded in respect of a tax benefit, arising from the underwriting discounts and offering expenses, as an increase to Additional Paid-In Capital.

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Contingencies

3 Months Ended

Mar. 31, 2021

Loss Contingency [Abstract]

Contingencies

Note 12. Contingencies

Legal proceedings

The Company is a party to various legal proceedings from time to time, the outcome of which, in the opinion of management, will not have a significant effect on the financial position, profitability or cash flows of the Company.

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Certain Transactions (Tables)

3 Months Ended

Mar. 31, 2021

Certain Transactions [Abstract]

Schedule of fair value of the consideration transferred to Origin stockholders for the Origin transaction

		U.S. $ in thousands
Cash payments	$	33,025
Issuance of ordinary shares to Origin stockholders		26,636
Contingent consideration at estimated fair value		37,400
Total consideration	$	97,061

Schedule of preliminary allocation of the purchase price to assets acquired and liabilities

		Allocation of Purchase Price
		(U.S. $ in thousands)
Cash and cash equivalents	$	2,083
Goodwill		36,379
Intangible assets		71,125
Other assets		4,364
Total assets acquired		113,951
Net deferred tax liabilities		14,007
Other labilities		2,883
Total liabilities assumed		16,890
Net assets acquired	$	97,061

XML

Revenues (Tables)

3 Months Ended

Mar. 31, 2021

Disaggregation of Revenue [Line Items]

Schedule of disaggregation of revenues

	Three months ended March 31,
		2021		2020
	(U.S. $ in thousands)
Americas
Products	$	49,568	$	48,244
Service		32,545		38,329
Total Americas		82,113		86,573
EMEA
Products		22,501		20,747
Service		6,417		6,173
Total EMEA		28,918		26,920
Asia Pacific
Products		18,255		14,181
Service		4,903		5,233
Total Asia Pacific		23,158		19,414
Total Revenues	$	134,189	$	132,907

Schedule of disaggregated based on the timing of revenue recognition

	Three months ended March 31,
		2021		2020
	(U.S. $ in thousands)
Revenues recognized in point in time from:
Products	$	90,324	$	83,172
Services		10,601		10,644
Total revenues recognized in point in time		100,925		93,816
Revenues recognized over time from:
Services		33,264		39,091
Total revenues recognized over time		33,264		39,091
Total Revenues	$	134,189	$	132,907

Schedule of changes in deferred revenue

		March 31,	December 31,
		2021	2020
	U.S. $ in thousands
Deferred revenue*		63,487	63,392

*Includes $14.1 million and $14.2 million under long term deferred revenue in the Company's consolidated balance sheets as of March 31, 2021 and December 31, 2020, respectively.

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Inventories (Tables)

3 Months Ended

Mar. 31, 2021

Inventory Disclosure [Abstract]

Schedule of Inventories

		March 31,		December 31,
		2021		2020
	U.S. $ in thousands
Finished goods	$	52,845	$	61,297
Work-in-process		3,739		3,163
Raw materials		67,615		67,212
	$	124,199	$	131,672

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Goodwill and Other Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of changes in the carrying amount of goodwill

		U.S. $ in thousands
Goodwill as of January 1, 2021	$	35,694
Goodwill acquired*		1,716
Foreign currency translation adjustments and other		664
Goodwill as of March 31, 2021	$	38,074

*The goodwill was acquired as part of RPS acquisition. See Note 3.

 

Schedule of other intangible assets

	March 31, 2021							December 31, 2020
		Carrying Amount,					Net		Carrying Amount,					Net
		Net of		Accumulated			Book		Net of		Accumulated			Book
		Impairment		Amortization			Value		Impairment		Amortization			Value
	U.S. $ in thousands
Developed technology	$	365,207	$	(265,352	)	$	99,855	$	357,863	$	(260,123	)	$	97,740
Patents		17,894		(8,812	)		9,082		17,699		(8,487	)		9,212
Trademarks and trade names		26,031		(21,397	)		4,634		26,036		(21,114	)		4,922
Customer relationships		100,883		(82,835	)		18,048		101,107		(81,413	)		19,695
Capitalized software development costs		7,410		(7,410	)		-		7,410		(7,410	)		-
	$	517,425	$	(385,806	)	$	131,619	$	510,115	$	(378,547	)	$	131,569

Schedule of estimated amortization expense relating to intangible assets

		Estimated
		amortization expense
		(U.S. $ in thousands)
Remaining 9 months of 2021	$	22,840
2022		28,662
2023		14,081
2024		10,185
2025 and thereafter		55,851
Total		131,619

XML

Net Loss Per Share (Tables)

3 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

Schedule of Basic and Diluted Loss Per Share

	Three Months Ended March 31,
		2021			2020
	In thousands, except per share amounts
Numerator:
Net loss attributable to Stratasys Ltd. for basic and diluted loss per share		(18,911	)		(21,703	)
Denominator:
Weighted average shares - for basic and diluted net loss per share		58,616			54,544
Net loss per share attributable to Stratasys Ltd.
Basic and diluted	$	(0.32	)	$	(0.40	)

XML

Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2021

Fair Value Disclosures [Abstract]

Schedule of assets and liabilities carried at fair value on a recurring basis

	March 31, 2021					December 31, 2020
		Level 2			Level 3		Level 2			Level 3
	(U.S. $ in thousands)
Assets:
Foreign exchange forward contracts not designated as hedging instruments	$	41			-	$	56			-
Foreign exchange forward contracts designated as hedging instruments		754			-		793			-
Liabilities:
Foreign exchange forward contracts not designated as hedging instruments		(252	)		-		(1,098	)		-
Foreign exchange forward contracts designated as hedging instruments		(140	)		-		(1,584	)		-
Contingent consideration		-			40,234		-			37,400
	$	403		$	40,234	$	(1,833	)	$	37,400

XML

Derivative instruments and hedging activities (Tables)

3 Months Ended

Mar. 31, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of balance sheet classification and fair values of derivative instruments

		Fair Value						Notional Amount
			March 31,			December 31,			March 31,		December 31,
	Balance sheet location		2021			2020			2021		2020
		U.S. $ in thousands
Assets derivatives -Foreign exchange contracts, not designated as hedging instruments	Other current assets	$	41		$	56		$	10,981	$	36,882
Assets derivatives -Foreign exchange contracts, designated as cash flow hedge	Other current assets		754			793			50,316		10,417
Liability derivatives -Foreign exchange contracts, not designated as hedging instruments	Accrued expenses and other current liabilities		(252	)		(1,098	)		44,078		37,999
Liability derivatives -Foreign exchange contracts, designated as hedging instruments	Accrued expenses and other current liabilities		(140	)		(1,584	)		18,473		50,186
		$	403		$	(1,833	)	$	123,848	$	135,484

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Equity (Tables)

3 Months Ended

Mar. 31, 2021

Stockholders' Equity Note [Abstract]

Schedule of stock-based compensation expenses

	Three Months Ended
	March 31,
		2021		2020
	U.S $ in thousands
Cost of sales	$	634	$	402
Research and development, net		1,424		1,556
Selling, general and administrative		5,147		2,949
Total stock-based compensation expenses	$	7,205	$	4,907

Schedule of stock option activity

		Number of Options			Weighted Average Exercise Price
Options outstanding as of January 1, 2021	$	2,102,529		$	28.06
Granted		46,366			3.15
Exercised		(137,220	)		21.01
Forfeited		(13,439	)		36.26
Options outstanding as of March 31, 2021		1,998,236			27.91
Options exercisable as of March 31, 2021	$	1,619,049		$	30.82

Schedule of RSUs and PSUs activity

		Number of RSUs and PSUs			Weighted Average Grant Date Fair Value
Unvested as of January 1, 2021	$	2,801,116		$	21.08
Granted		1,201,186			34.62
Vested		(533,533	)		22.56
Forfeited		(110,731	)		20.69
Unvested as of March 31, 2021	$	3,358,038		$	25.70

Schedule of accumulated other comprehensive income (loss)

	Three Months Ended March 31, 2021
		Net Unrealized Gain (Loss) on Cash Flow Hedges			Foreign Currency Translation Adjustments			Total
	U.S. $ in thousands
Balance as of January 1, 2021	$	(1,673	)	$	(7,173	)	$	(8,846	)
Other comprehensive income (loss) before reclassifications		1,607			(961	)		646
Amounts reclassified from accumulated other comprehensive loss		566			-			566
Other comprehensive income (loss)		2,173			(961	)		1,212
Balance as of March 31, 2020	$	500		$	(8,134	)	$	(7,634	)

	Three Months Ended March 31, 2020
		Net Unrealized Gain (Loss) on Cash Flow Hedges			Foreign Currency Translation Adjustments			Total
	U.S. $ in thousands
Balance as of January 1, 2020	$	(10	)	$	(7,706	)	$	(7,716	)
Other comprehensive income (loss) before reclassifications		849			(1,954	)		(1,105	)
Amounts reclassified from accumulated other comprehensive loss		(27	)		-			(27	)
Other comprehensive income (loss)		822			(1,954	)		(1,132	)
Balance as of March 31, 2020	$	812		$	(9,660	)	$	(8,848	)

XML

Certain Transactions (Details) - USD ($) $ in Millions	1 Months Ended		3 Months Ended
	Feb. 16, 2021	Dec. 31, 2020	Mar. 31, 2021
Certain Transactions [Abstract]
Aggregate purchase price		$ 97.1
Exchange agreement description			In exchange for 100% of the outstanding shares of Origin the Company issued 1,488 thousand ordinary shares, paid cash upon closing, and is obligated to pay additional payments (combination of cash and shares) subject to performance-based earn-outs over 3 years.
Contingent Consideration, description			The total contingent payments could reach to a maximum aggregate amount of up to $40 million. Approximately 50% of the payments shall be settled in cash, and 50% shall be settled through the issuance of ordinary shares.
Additional payment amount			$ 6.0
Retention period			3 years
Compensation expenses			$ 1.1
Intangible asset			$ 71.0
Intangible asset useful-life			10 years
Exchange for outstanding shares, percentage	100.00%
Based earnouts over term	2 years
Changes in fair value of equity investment			$ 3.7

XML

Certain Transactions (Details) - Schedule of fair value of the consideration transferred to Origin stockholders for the Origin transaction $ in Thousands	3 Months Ended
	Mar. 31, 2021 USD ($)
Schedule of fair value of the consideration transferred to Origin stockholders for the Origin transaction [Abstract]
Cash payments	$ 33,025
Issuance of ordinary shares to Origin stockholders	26,636
Contingent consideration at estimated fair value	37,400
Total consideration	$ 97,061

XML

Certain Transactions (Details) - Schedule of preliminary allocation of the purchase price to assets acquired and liabilities $ in Thousands	Mar. 31, 2021 USD ($)
Schedule of preliminary allocation of the purchase price to assets acquired and liabilities [Abstract]
Cash and cash equivalents	$ 2,083
Goodwill	36,379
Intangible assets	71,125
Other assets	4,364
Total assets acquired	113,951
Net deferred tax liabilities	14,007
Other labilities	2,883
Total liabilities assumed	16,890
Net assets acquired	$ 97,061

XML

Revenues (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Revenue Recognition [Abstract]
Long term deferred revenue	$ 14.1	$ 14.2
Revenue recognized	18.4
Remaining performance obligations	89.7
Expected remaining performance obligations recognized during next 12 months	74.9
Expected remaining performance obligations recognized over subsequent 12 months	9.2
Expected remaining performance obligations recognized remainder thereafter	5.6
Deferred sales commissions	$ 5.3	$ 5.0

XML

Revenues (Details) - Schedule of disaggregation of revenues - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Revenues (Details) - Schedule of disaggregation of revenues [Line Items]
Total Revenues	$ 134,189	$ 132,907
Americas [Member]
Revenues (Details) - Schedule of disaggregation of revenues [Line Items]
Total Revenues	82,113	86,573
EMEA [Member]
Revenues (Details) - Schedule of disaggregation of revenues [Line Items]
Total Revenues	28,918	26,920
Asia Pacific [Member]
Revenues (Details) - Schedule of disaggregation of revenues [Line Items]
Total Revenues	23,158	19,414
Product [Member]
Revenues (Details) - Schedule of disaggregation of revenues [Line Items]
Total Revenues	90,324	83,172
Product [Member] | Americas [Member]
Revenues (Details) - Schedule of disaggregation of revenues [Line Items]
Total Revenues	49,568	48,244
Product [Member] | EMEA [Member]
Revenues (Details) - Schedule of disaggregation of revenues [Line Items]
Total Revenues	22,501	20,747
Product [Member] | Asia Pacific [Member]
Revenues (Details) - Schedule of disaggregation of revenues [Line Items]
Total Revenues	18,255	14,181
Service [Member]
Revenues (Details) - Schedule of disaggregation of revenues [Line Items]
Total Revenues	43,865	49,735
Service [Member] | Americas [Member]
Revenues (Details) - Schedule of disaggregation of revenues [Line Items]
Total Revenues	32,545	38,329
Service [Member] | EMEA [Member]
Revenues (Details) - Schedule of disaggregation of revenues [Line Items]
Total Revenues	6,417	6,173
Service [Member] | Asia Pacific [Member]
Revenues (Details) - Schedule of disaggregation of revenues [Line Items]
Total Revenues	$ 4,903	$ 5,233

XML

Revenues (Details) - Schedule of disaggregated based on the timing of revenue recognition - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Revenues (Details) - Schedule of disaggregated based on the timing of revenue recognition [Line Items]
Total Revenues	$ 134,189	$ 132,907
Products [Member]
Revenues (Details) - Schedule of disaggregated based on the timing of revenue recognition [Line Items]
Total Revenues	90,324	83,172
Services [Member]
Revenues (Details) - Schedule of disaggregated based on the timing of revenue recognition [Line Items]
Total Revenues	43,865	49,735
Revenues recognized in point in time [Member]
Revenues (Details) - Schedule of disaggregated based on the timing of revenue recognition [Line Items]
Total Revenues	100,925	93,816
Revenues recognized in point in time [Member] | Products [Member]
Revenues (Details) - Schedule of disaggregated based on the timing of revenue recognition [Line Items]
Total Revenues	90,324	83,172
Revenues recognized in point in time [Member] | Services [Member]
Revenues (Details) - Schedule of disaggregated based on the timing of revenue recognition [Line Items]
Total Revenues	10,601	10,644
Revenues recognized over time [Member]
Revenues (Details) - Schedule of disaggregated based on the timing of revenue recognition [Line Items]
Total Revenues	33,264	39,091
Revenues recognized over time [Member] | Services [Member]
Revenues (Details) - Schedule of disaggregated based on the timing of revenue recognition [Line Items]
Total Revenues	$ 33,264	$ 39,091

XML

Revenues (Details) - Schedule of changes in deferred revenue - USD ($) $ in Thousands		Mar. 31, 2021	Dec. 31, 2020
Schedule of changes in deferred revenue [Abstract]
Deferred revenue	[1]	$ 63,487	$ 63,392

[1] Includes $14.1 million and $14.2 million under long term deferred revenue in the Company's consolidated balance sheets as of March 31, 2021 and December 31, 2020, respectively.

XML

Inventories (Details) - Schedule of Inventories - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Schedule of Inventories [Abstract]
Finished goods	$ 52,845	$ 61,297
Work-in-process	3,739	3,163
Raw materials	67,615	67,212
Total Inventory	$ 124,199	$ 131,672

XML

Goodwill and Other Intangible Assets (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Sep. 30, 2020
Goodwill and Other Intangible Assets (Details) [Line Items]
Goodwill impairment charge			$ 386.2
Amortization of intangible assets	$ 7.5	$ 6.2
Stratasys-Objet reporting unit [Member]
Goodwill and Other Intangible Assets (Details) [Line Items]
Regain the loss of revenue	2 years
Discount rate	13.50%
Minimum [Member] | Stratasys-Objet reporting unit [Member]
Goodwill and Other Intangible Assets (Details) [Line Items]
Growth rate	2.50%
Maximum [Member] | Stratasys-Objet reporting unit [Member]
Goodwill and Other Intangible Assets (Details) [Line Items]
Discount rate	3.10%

XML

Goodwill and Other Intangible Assets (Details) - Schedule of changes in the carrying amount of goodwill $ in Thousands	3 Months Ended
	Mar. 31, 2021 USD ($)
Schedule of changes in the carrying amount of goodwill [Abstract]
Goodwill as of January 1, 2021	$ 35,694
Goodwill acquired	1,716	[1]
Foreign currency translation adjustments	664
Goodwill as of March 31, 2021	$ 38,074

[1] The goodwill was acquired as part of RPS acquisition. See Note 3.

XML

Goodwill and Other Intangible Assets (Details) - Schedule of other intangible assets - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Goodwill and Other Intangible Assets (Details) - Schedule of other intangible assets [Line Items]
Carrying Amount, Net of Impairment	$ 517,425	$ 510,115
Accumulated Amortization	(385,806)	(378,547)
Net Book Value	131,619	131,569
Developed technology [Member]
Goodwill and Other Intangible Assets (Details) - Schedule of other intangible assets [Line Items]
Carrying Amount, Net of Impairment	365,207	357,863
Accumulated Amortization	(265,352)	(260,123)
Net Book Value	99,855	97,740
Patents [Member]
Goodwill and Other Intangible Assets (Details) - Schedule of other intangible assets [Line Items]
Carrying Amount, Net of Impairment	17,894	17,699
Accumulated Amortization	(8,812)	(8,487)
Net Book Value	9,082	9,212
Trademarks and trade names [Member]
Goodwill and Other Intangible Assets (Details) - Schedule of other intangible assets [Line Items]
Carrying Amount, Net of Impairment	26,031	26,036
Accumulated Amortization	(21,397)	(21,114)
Net Book Value	4,634	4,922
Customer relationships [Member]
Goodwill and Other Intangible Assets (Details) - Schedule of other intangible assets [Line Items]
Carrying Amount, Net of Impairment	100,883	101,107
Accumulated Amortization	(82,835)	(81,413)
Net Book Value	18,048	19,695
Capitalized software development costs [Member]
Goodwill and Other Intangible Assets (Details) - Schedule of other intangible assets [Line Items]
Carrying Amount, Net of Impairment	7,410	7,410
Accumulated Amortization	(7,410)	$ (7,410)
Net Book Value

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Goodwill and Other Intangible Assets (Details) - Schedule of estimated amortization expense relating to intangible assets $ in Thousands	Mar. 31, 2021 USD ($)
Schedule of estimated amortization expense relating to intangible assets [Abstract]
Remaining 9 months of 2021	$ 22,840
2022	28,662
2023	14,081
2024	10,185
2025 and thereafter	55,851
Total	$ 131,619

XML

Net Loss Per Share (Details) - shares shares in Millions	3 Months Ended	9 Months Ended
	Mar. 31, 2021	Sep. 30, 2020
Earnings Per Share [Abstract]
Antidilutive securities excluded from computation of net loss per share	5.4	5.3

XML

Net Loss Per Share (Details) - Schedule of Basic and Diluted Loss Per Share - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Numerator:
Net loss attributable to Stratasys Ltd. for basic and diluted loss per share	$ (18,911)	$ (21,703)
Denominator:
Weighted average shares - for basic and diluted net loss per share	58,616	54,544
Net loss per share attributable to Stratasys Ltd.
Basic and diluted	$ (0.32)	$ (0.40)

XML

Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Income Tax Disclosure [Abstract]
Income tax expense (benefits)	$ 0.9	$ 0.2

XML

Fair Value Measurements (Details) - Schedule of assets and liabilities carried at fair value on a recurring basis - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Fair Value, Inputs, Level 2 [Member]
Assets:
Foreign exchange forward contracts not designated as hedging instruments	$ 41	$ 56
Foreign exchange forward contracts designated as hedging instruments	754	793
Liabilities:
Foreign exchange forward contracts not designated as hedging instruments	(252)	(1,098)
Foreign exchange forward contracts designated as hedging instruments	(140)	(1,584)
Contingent consideration
Foreign exchange forward contracts fair value	403	(1,833)
Fair Value, Inputs, Level 3 [Member]
Assets:
Foreign exchange forward contracts not designated as hedging instruments
Foreign exchange forward contracts designated as hedging instruments
Liabilities:
Foreign exchange forward contracts not designated as hedging instruments
Foreign exchange forward contracts designated as hedging instruments
Contingent consideration	40,234	37,400
Foreign exchange forward contracts fair value	$ 40,234	$ 37,400

XML

Derivative instruments and hedging activities (Details) $ in Thousands, € in Millions, ₪ in Millions	3 Months Ended
	Mar. 31, 2021 USD ($)	Mar. 31, 2020 USD ($)	Mar. 31, 2021 ILS (₪)	Mar. 31, 2021 EUR (€)	Dec. 31, 2020 USD ($)
Derivative instruments and hedging activities (Details) [Line Items]
Notional amount of derivative asset	$ 55,100
Gain (Loss) on derivative instrument	2,200	$ 1,500
Designated as Hedging Instrument [Member] | Other Current Assets [Member] | Foreign Exchange Contract [Member]
Derivative instruments and hedging activities (Details) [Line Items]
Notional amount of derivative asset	$ 50,316				$ 10,417
Designated as Hedging Instrument [Member] | Other Current Assets [Member] | Conversion To NIS [Member] | Foreign Exchange Contract [Member]
Derivative instruments and hedging activities (Details) [Line Items]
Notional amount of derivative asset | ₪			₪ 29.3
Designated as Hedging Instrument [Member] | Other Current Assets [Member] | Conversion To Euro [Member] | Foreign Exchange Contract [Member]
Derivative instruments and hedging activities (Details) [Line Items]
Notional amount of derivative asset | €				€ 33.0

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Derivative instruments and hedging activities (Details) - Schedule of balance sheet classification and fair values of derivative instruments - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Derivatives, Fair Value [Line Items]
Notional amount of derivative asset	$ 55,100
Fair value	403	$ (1,833)
Notional amount	123,848	135,484
Not designated as hedging instruments [Member] | Other current assets [Member] | Foreign exchange contracts [Member]
Derivatives, Fair Value [Line Items]
Fair value derivative asset	41	56
Notional amount of derivative asset	10,981	36,882
Not designated as hedging instruments [Member] | Accrued expenses and other current liabilities [Member] | Foreign exchange contracts [Member]
Derivatives, Fair Value [Line Items]
Fair value derivative liability	(252)	(1,098)
Notional amount of derivative liability	44,078	37,999
Designated as hedging instruments [Member] | Other current assets [Member] | Foreign exchange contracts [Member]
Derivatives, Fair Value [Line Items]
Fair value derivative asset	754	793
Notional amount of derivative asset	50,316	10,417
Designated as hedging instruments [Member] | Accrued expenses and other current liabilities [Member] | Foreign exchange contracts [Member]
Derivatives, Fair Value [Line Items]
Fair value derivative liability	(140)	(1,584)
Notional amount of derivative liability	$ 18,473	$ 50,186

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Equity (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2021 USD ($) shares
Equity (Details) [Line Items]
Public offering of ordinary shares, net	$ 218,875
Deferred tax assets in connection with public offering expense	$ 1,156
Ordinary Shares [Member]
Equity (Details) [Line Items]
Sale of public offering shares (in Shares) | shares	7,931,034
Stock Option [Member]
Equity (Details) [Line Items]
Unrecognized compensation cost	$ 3,400
Weighted-average period	3 years 3 months 18 days
RSUs and PSUs [Member]
Equity (Details) [Line Items]
Unrecognized compensation cost	$ 76,000
Weighted-average period	2 years 8 months 12 days

XML

Equity (Details) - Schedule of stock-based compensation expenses - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expenses	$ 7,205	$ 4,907
Cost of sales [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expenses	634	402
Research and development, net [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expenses	1,424	1,556
Selling, general and administrative [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expenses	$ 5,147	$ 2,949

XML

Equity (Details) - Schedule of stock option activity shares in Thousands	3 Months Ended
	Dec. 31, 2021 $ / shares shares
Stockholders' Equity Note [Abstract]
Number of Options, Options outstanding | shares	2,102,529
Weighted Average Exercise Price, Options outstanding | $ / shares	$ 28.06
Number of Options, Granted | shares	46,366
Weighted Average Exercise Price, Granted | $ / shares	$ 3.15
Number of Options, Exercised | shares	(137,220)
Weighted Average Exercise Price, Exercised | $ / shares	$ 21.01
Number of Options, Forfeited | shares	(13,439)
Weighted Average Exercise Price, Forfeited | $ / shares	$ 36.26
Number of Options, Options outstanding | shares	1,998,236
Weighted Average Exercise Price, Options outstanding | $ / shares	$ 27.91
Number of Options, Options exercisable | shares	1,619,049
Weighted Average Exercise Price, Options exercisable | $ / shares	$ 30.82

XML

Equity (Details) - Schedule of RSUs and PSUs activity - Restricted and Phantom Share Units [Member] shares in Thousands	3 Months Ended
	Mar. 31, 2021 $ / shares shares
Equity (Details) - Schedule of RSUs and PSUs activity [Line Items]
Number of RSUs and PSUs, Unvested | shares	2,801,116
Weighted Average Grant Date Fair Value, Unvested | $ / shares	$ 21.08
Number of RSUs and PSUs, Granted | shares	1,201,186
Weighted Average Grant Date Fair Value, Granted | $ / shares	$ 34.62
Number of RSUs and PSUs, Vested | shares	(533,533)
Weighted Average Grant Date Fair Value, Vested | $ / shares	$ 22.56
Number of RSUs and PSUs, Forfeited | shares	(110,731)
Weighted Average Grant Date Fair Value, Forfeited | $ / shares	$ 20.69
Number of RSUs and PSUs, Unvested | shares	3,358,038
Weighted Average Grant Date Fair Value, Unvested | $ / shares	$ 25.70

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Equity (Details) - Schedule of accumulated other comprehensive income (loss) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance	$ (8,846)	$ (7,716)
Other comprehensive income (loss) before reclassifications	646	(1,105)
Amounts reclassified from accumulated other comprehensive loss	566	(27)
Other comprehensive income (loss)	1,212	(1,132)
Balance	(7,634)	(8,848)
Net Unrealized Gain (Loss) on Cash Flow Hedges [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance	(1,673)	(10)
Other comprehensive income (loss) before reclassifications	1,607	849
Amounts reclassified from accumulated other comprehensive loss	566	(27)
Other comprehensive income (loss)	2,173	822
Balance	500	812
Foreign Currency Translation Adjustments [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance	(7,173)	(7,706)
Other comprehensive income (loss) before reclassifications	(961)	(1,954)
Amounts reclassified from accumulated other comprehensive loss
Other comprehensive income (loss)	(961)	(1,954)
Balance	$ (8,134)	$ (9,660)