Stratasys Ltd. (SSYS) Q3 2021 Earnings Report, Transcript and Summary

Greetings and welcome to Stratasys' Third Quarter 2021 Conference Call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Yonah Lloyd, Vice President of Investor Relations. Thank you. You may begin.

Good morning, everyone. And thank you for joining us to discuss our 2021 third quarter financial results. On the call with us today are our Chief Executive Officer, Dr. Yoav Zeif, and our Chief Financial Officer, Lilach Payorski. I remind you that access to today's call, including the slide presentation is available online at the web address provided in our press release. In addition, a replay of today's call, including access to the slide presentation will also be available, and can be accessed through the Investor Relations section of our website. Please note that some of the information you will hear during our discussion today will consist of forward-looking statements including, without limitation, those regarding our expectations as to our future revenue, gross margin, operating expenses, taxes and other future financial performance, and our expectations for our business outlook. All statements that speak to future performance, events, expectations, or results are forward-looking statements. Actual results or trends could differ materially from our forecast. For risks that could cause actual results to be materially different from those set forth in forward-looking statements, please refer to the risk factors discussed or referenced in Stratasys' Annual Report on Form 20-F for the 2020 year, which we filed with the SEC on March 1, 2021. Please also refer to our Operating and Financial Review and Prospects for the third quarter of 2021, as well as the press release that announces our earnings for the third quarter of 2021, which are attached as exhibits to 2 separate reports on Form 6-K that we are furnishing to the SEC today. In order to obtain updated information throughout the year concerning our quarterly results of operations, and the risks and other factors that most impact those results, please see the quarterly earnings press releases and our quarterly Operating and Financial Review and Prospects, each of which are attached as exhibits to reports on Form 6-K that we furnish to the SEC on a quarterly basis over the course of the year. Stratasys assumes no obligation to update any forward-looking statements or information which speak as of their respective dates. As in previous quarters, today’s call will include and non-financial measures. The non-GAAP financial measures should be read in combination with our metrics to evaluate our performance. Non-GAAP to GAAP reconciliations are provided in tables in our slide presentation and today’s press release. Now, I would like to turn the call over to our Chief Executive Officer, Dr. Yoav Zeif. Yoav?

Thank you Yonah. Good morning everyone and thank you for joining us. Today, additive manufacturing and Stratasys are at an inflection point. Industries around the world better understand the benefits, and are increasingly adding 3D printing to their production plans. This is thanks to a number of improvements, such as increased throughput capacity, a growing range of high-performance materials and consistent part quality. Additionally, there are compelling economic and sustainability advantages, and software workflow solutions that can support the shift from prototyping to manufacturing that is happening across industries. Parts can be lighter equally strong, less expensive and personalized. And when considering the supply chain challenges in the world today, our customers are increasingly looking to flexible, distributed additive manufacturing to overcome the logistics disruptions we are witnessing around the globe. In short, additive manufacturing is now viable for production of a wide range of end-use parts at volume scale, for global distribution. The investments we are making at Stratasys, along with the strategic initiatives we have undertaken, are steadily driving revenue growth. Just over a year ago, I laid out our strategy to become the first choice for polymer 3D printing, with a focus on the biggest addressable market, manufacturing. This quarter we truly accelerated execution of our strategy. We signed large-scale deals for manufacturing systems. We completed our acquisition of Xaar 3D. And we expect to see incremental upside as we prepare to launch 2 new mass production offerings, the Origin One and the H350. I will now walk you through the highlights of the quarter and some exciting recent achievements. Lilach will then provide financial details for the quarter and give an update on our outlook. The third quarter delivered revenue growth in all business lines and regions. Results were highlighted by top-line improvement of 24% year-over-year. This was driven by growth of approximately 35% in systems and 27% in consumables. Our Stratasys Direct service bureau is not yet at 2019 levels, but was up over 25% from Q3 last year and is expected to continue growing. And importantly, systems sales grew nearly 7% over Q3 of 2019, thanks in part to our manufacturing-focused systems. Systems sales typically lead to increased consumables and services that generate profitable revenue, as customers ramp up their utilization.

Thank you, Yoav, and good morning everyone. We are pleased with the third quarter results that demonstrate our continued strength in growing our market, while also generating operating profit and cash. The revenue growth, driven by 30.3% growth in our products sales is indicative of the inflection point we are experiencing. For the quarter, total revenue was $159 million, up 24.3% versus the prior-year quarter. We saw increased performance across all revenue streams, and particularly encouraging systems growth of 6.7% over Q3 of 2019. Improvement in the pace of our consumables sales was another key contributor. There was also strong performance from our manufacturing business, with particular improvement from automotive and industrials in Europe.

Thank You, Lilach. Last month, Gartner predicted that by 2025 over 50% of all discrete manufacturers will be using 3D printers for the products they sell or service, up from 10% in 2019. That’s why Stratasys is laser-focused on being the leader in polymer additive manufacturing as the industry continues to shift to additive manufacturing for end-use parts production. To achieve that mission, we now have solutions for every step in the product lifecycle chain design, prototyping, tooling, molds all the way to end-use production at scale. There is no single, comprehensive solution for every manufacturing application. Therefore, it is important to use the best technology for each specific manufacturing challenge. But manufacturers are also looking for efficiencies, where systems can interface and network with each other, as well as with their existing infrastructure. Only Stratasys provides the full range of best-in-class technologies for polymer 3D printing, offering our customers the ability to choose the best fit for their applications. Our exceptional portfolio of hardware and materials, software platform and partnership ecosystem, together with industry-leading global expertise, sets us apart and allows our customers to achieve a powerful and efficient production environment. As I said earlier, Stratasys is truly at an inflection point. And we are quite excited for the coming years. The investments we are making, coupled with our fortress balance sheet, position us to build long-term value for all of our stakeholders. With that let’s open it up for questions, Operator?

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first questions come from the line of Greg Palm with Craig-Hallum. Please proceed with your questions.

Great. Thanks for taking the questions and congrats on the good results here.

Thank you.

I wanted to maybe start with the revenue guide. It's a pretty specific number in a pretty uncertain environment. So maybe help us understand some of the assumptions behind that. Are you expecting that some of that contract with the U.S. Navy that I think the first 8 of those were maybe expected to ship in Q4? So is that included? But just maybe a few assumptions behind the actual revenue guide would be helpful.

Good morning, Greg. Yes, I will be happy to share with you some of the assumptions that we have. So first of all, you touch about the U.S. Navy. Yes, some of the U.S. Navy is part of the backlog. And it's part of the expectation for Q4. But as been discussed, this is a multi-year deal. And we're going to see some of this impact in the H2. What we provided for Q4 is basically 16% higher than last year. And specifically, we are anticipated a nice growth in our systems relatively to Q4 last year, as well as the Q4 in 2019. So we basically expected to see growth almost in all of our streams, all of our platforms. The continued trend, the strong trend that we saw at manufacturing platforms and offerings. We also expected to see growth coming from the consumables, as we see consumables pace picking up compared to last year as well as compared to 2019. We are expect that most of the growth will come still from organic growth. And this is why we definitely encouraged by that. To remind you that our P3 platform as well as SAF will introduce in the coming few months and will impact 2021 just a little bit. And the majority of the same impact will be in 2022.

Okay. That's really helpful. And that was going to lead me to my follow up, which was diving into contribution from new products. So it doesn't sound like you have or at least you're expecting significant contribution from RPS Origin H350 in this year. So is that the sense? And we should really be thinking about the ramp up happening over calendar ’22?

Hi, Greg. Thank you for the question. And thank you for investing so much in studying this industry as well. Yes, the answer is yes. We’ll not have significant impact of the 2 new technologies. We have one technology out there already, the RPS SLA which have really, really good traction. As for the other 2, we are going to have some sales. Practically we'll have the SAF outside there. Both of them are in beta stage. SAF is already a few months into beta and we are going to have it outside at the end of this year. And we are now shipping an extensive beta program for the P3. And we are very, very optimistic about it, but the significant impact will come definitely in 2022. And of course we're looking forward to share more about those 2 exciting technologies.

Interesting. Okay, I'll leave it there. Thanks.

Thank you. Our next questions come from a line of Troy Jensen with Lake Street Capital Markets. Please proceed with your questions.

Yeah, well, first of all, congrats on just a great quarter. I guess my first question is going to go to you, Yoav. Specifically on the H350, it's our belief that HP discontinued their 540 and their 580 product line. And they're just going with the production model 5200 going forward. So I guess I'd love to hear your thoughts just on the opportunity in the mid-range for high speed sintering Do you guys need to have a larger format one in the market too, to compete more against with HP’s doing that with the 52. And then also post processing, Yoav. That’s one thing that I hear about that seems like HP may have thought of better so far for the high speed sintering. But go ahead, please.

Thank you, Troy, as always, great questions. So first of all, we have our own program. And H350 is only the first machine or system in a line of products. So let me be very clear here. We are very optimistic. We think that the SAF technology, it's a transformation. The whole HSS is transforming powder bed fusion practically. Because it gets us closer into real manufacturing. And we see it every day, because already our beta sites are producing end-use part to end customers. And they are very happy. Now, if I will relate specifically to the HP announcement, I think it's a good announcement for us overall, because there is a segment that will be very happy to adopt our new technology, the SAF technology. And the fact that we will be in this kind of mid-range will give us a lot of points. On top of it, we are good enough – I want to be here also very clear. We are good enough in terms of cost of part, quality of the part, accuracy, to compete also with the largest system that we also will have in the future.

All right, perfect. And just my follow up to, you guys talked about this other leading global OEM win in the quarter. Made it sound like it was a repeat customer. Is this the same customer that was announced like a year and a half ago like do you remember, kind of a big, chunky order also?

We cannot share the name. I'm sure you understand it. I can only share that this is what we dream of to be an --

Understood. You can’t state the name. You can’t say the same, but can you just confirm it’s a same guy?

I cannot relate to it. I can only say that this is what we dream of. Because when we are talking about manufacturing, it's about this relationship and partnership. With a major OEM we really can rollout global distributed manufacturing with the same practices with a playbook. And this is exactly what we are doing. And I think this would be a great example for many other OEMs as well. And the fact that they are repeating, it's a repeating purchase. It just proven our point that those large OEM are looking for an established player that can deliver that has a certification and can support them globally. And we try to be humble, but this is Stratasys.

I completely agree. Congrats. Good luck going forward. And I'll see you in Germany.

Thank you. Our next question is come from the line of Jared Maymon with Berenberg Capital Markets. Please proceed with your questions.

Hey, good morning, guys. And nice job executing during the quarter. First question for me, you guys have made some great moves in the last year or so to expand the number of technologies and processes that you offer. So from here, I'm wondering, kind of is your plan to buckle down and focus on developing and scaling those technologies in the consumables for those technologies? Or do you think there's some more room to go for adding additional processes and in technologies in the near to mid-term?

Hi, Jared. Thank you for the question. We have more than $500 million in the bank. We have very clear strategy. We know where we are going. It's a growth strategy. And in order to accelerate the growth, we'll first of all make sure that those technologies are best-in-class and leading each one of the segments we are competing in. So this is number one priority. Then we will use our cash to accelerate and to have some technological shortcuts which, we identify many of those. And we believe that we will be able to accelerate this growth strategy. On top of it, of course, this is the whole essence of what we are doing. We are bringing to our customer the full package. And the full package includes the technology, the system, the material. So we invest a lot in material, and we developed many, many more materials in many different ways. And also, we are extending our service to fit what the manufacturer expect from us. And on top of it, we'll make sure that all this is being connected through what we called our -- the base. The foundation is our software platform. We tie everything through the software platform. And we believe that we'll kind of make the offering perfect, suitable beneficial for our manufacturing customers. So this is the strategy. And we will combine it with very extensive R&D in each one of the groups that are developing this technology, plus expansion through materials and software and service. Some of them are organic, and some of them are inorganic.

Got it. Thanks. And then there was a service bureau that reported disappointing results last week. They attributed that largely to supply constraints, particularly around labor and logistics. So I'm wondering, given that that they're -- they have a big additive business, did you guys see similar headwinds across the business? And then particularly in SDM, did you see those same labor and logistics headwinds there?

So let me relate first, by the way, now, remember that I didn't answer Troy’s question about post processing in HSS, we are developing it, Troy, and we are going to introduce it in the coming year. So it's there. We are investing in it. It's integral part of our workflow. Now, back to your question I’m sorry. SDM. Definitely, we are seeing an improvement there. And meaningful improvements a year-over-year growth of over 25% in Q3, 2021 versus Q3 2020. We have the highest hand of the service bureau industry. We are working with the top customers, mainly in aerospace and automotive. And yes, we are seeing progress over the last few months, versus a very big hit that we experienced during the pandemic. About headwind for SDM of logistics and supply chain, it was not meaningful in SDM in our service bureau. But we definitely have like any other industrial company on Earth, we have challenges of logistics and supply chain in our overall business. It's a daily fight. I want to thank my operations team for really doing amazing things. So creative, and we are successfully delivering. We didn't have any delivery issues. But every day is a challenge. And definitely there is uncertainty there. Having said that, we are one of those privileged industries that are not only suffering from the supply chain challenges, but also enjoying the long-term because this is what brings to life the whole essence and the power of additive manufacturing. You want no more offshoring, you want to have digital inventory, you want to produce near the customer. And we see it every day in the level of engagement we have with the largest OEMs on Earth. So, we fight every day, but we see the light and we see that the world of manufacturing is going to change and be much more digitalized than what we see now.

Thanks, Yoav.

Thank you. Our next questions come from the line of Shannon Cross with Cross Research. Please proceed with your question.

Thank you very much. I wanted to dig a little bit more into the conversations that you had with customers at Rapid. I know, you mentioned that you signed more. It definitely seemed to us that the people who bothered to show up in Chicago were ones that were really, really interested in 3D printing. But I'm wondering have you seen any change in the timing that they have in terms of the intensity of what they're looking at, the projects that they're focused on? Because it does seem like there's an inflection going on for your company, as well as for the industry. So I'm just kind of curious as to what you heard. Thank you.

Thank you, Shannon. And thank you for coming to our booth in Rapid. You're very brave. Well done. Yes, it was a great opportunity to meet many manufacturers that understand, really reading the global map and understand that they need to move forward and to have a change. And we see a completely different level of engagement. I would say that it's being reflected in two… kind of two horizons. Difference one is the timeline. And you can see it here with our Navy deal, for example, with our OEM deal. Suddenly, people -- the cycle is shorter, it's still long, but it shorter. Because we're talking about long deals that involves service and software and material and support, but it’s shorter. Definitely the timeline is shorter, still long but shorter. And the second big difference is the level of engagement. So we used to engage with technicians, engineers, like those champions that drive change or the change agents within organization. Following the Rapid-TCT meetings, I had the whole visit in the aerospace hub in Denver. And the level of people that I met within the organization CEOs, C-suite executives - it’s completely different than what we used to have in the past which means that we have more challenges, because we need to make sure that we are delivering value and on time. But it means that it's much more -- those organizations are much more serious about 3D printing, which is great from our perspective.

Thank you. That's helpful. And then I guess the other question I have from an inventory perspective. Can you talk a bit about any backlogs challenges you have? I mean, clearly your inventory continues to come down. Just where you sort of sat at the end of the quarter? And maybe if you saw linearity during the quarter as well in terms of demand and bookings and signings? Thank you.

Yes. Hi, good morning, Shannon. So from inventory perspective, as others OEM and the manufacturers we do suffer from a raw material shortage for sure. But the most important thing is, is really meeting the customer demand. So we are constantly increasing our inventory level, even though we see that at the end of the quarter is actually went down compared to last quarter. But we are proactively taking steps in buying raw material for 6 or 9 or even 12 months ahead, to make sure that we're going to meet customer demand and to meet the up demand that we see. So we working very intensively in making it happen. Of course, we try to mitigate the issues of sea and air delays in our planning process. And we continue to evaluate a wider array of shipping options to ensure we can deliver goods in a minimal business impact. It may come with cost associated with that. But the objective is clear. Meeting the customer demands. We're happy to report that so far, we're able to do that. And we have a good backlog going into Q4 and we do everything we can in order to meet the demand.

Great, thank you very much.

Thank you. Our next question is coming from the line of Paul Chung with JP Morgan. Please proceed with your questions.

Hi. Thanks for taking my questions and great quarter. So just on margins, can you quantify the component inflation and kind of freight costs hitting 3Q and 4Q? Just want to get a sense for kind of your normalized gross margins as we head into ‘22. Can you kind of rebound back to the fiscal year ‘19 levels in the low-50s next year?

Hey, Paul, good morning. So yeah, our gross margin has been pressured by the global logistics constraints, as well as raw material. First of all, we are definitely very happy to see the sequential improvement over the quarters. And we believe that these trends will continue as we are going to continue to see hardware and consumables in the mix. We see we saw this impacting this quarter and also as compared to last year. If you compare to 2019, the impact of a logistic costs as well as the raw materials is probably closer to the 2 percentage difference. At the same time, we are still not in a full capacity from production level. We still have a shortage in raw material. So this is also impact our level of production, as well as investing in the ramp up of our production lines addressing the new platform. So we still have a gap, obviously compared for 2019. We believe that when the market recovery, but it's not going to be a short term in terms of I'm talking about from logistics and raw material shortage, no one expected that next quarter, this is what's going to be the picture. It’s going to be probably for the coming few quarter, we will be able to leverage a better gross margin as the global economic improved. At the same time, we are working also on improving cost on our new platform as part of the product lifecycle. And at that point, we are yet to provide guidance for 2022 in terms of our gross margin. With that we believe that for Q4, specifically, our gross margin level will stay relatively similar to what we saw in Q3.

Got you. And then just on quarterly OpEx. You’re going to see a step up to the $80 million run-rate moving forward. So is that the right way to think about quarterly OpEx moving forward? And then soon Xaar revenue contribution is minimal. But how do we think about how that business scales over time as well?

Pau, can you please repeat your question, please?

Yeah. So just on the quarterly OpEx levels, we saw -- we're going to see a step up to $80 million. Is that the new run-rate moving forward? Is that the right way to think about it?

Yeah. We are increasing OpEx in Q4, and definitely compared to last year. And this is basically because of the return to 5-days workweek. The higher expenses as the market recovered, we see a higher commission due to higher revenue. And we also include additional operating costs associated with inclusion of our new business. RPS, Origin, and now in Q4, we also adding Xaar, this is all part of our strategic investment going forward. I just want to remind you that 2021 it is a year of investment, it is year of investment. And we believe we will continue to invest but we are committed to show improvement in profitability in the near future.

Great. And then lastly on cash flow, you've been positive for last 5 quarters, so very good job there. So can we end fiscal year ‘21 in kind of positive territory? Are there any working cap things we need to see like inventory investment or maybe reversals, accounts payable that might weigh on 4Q? Thank you.

Yeah. As we look to the fourth quarter of 2021, we are not providing guidance on the operating cash flow. But in 2021 we have stated that we expected the majority of our growth to occur in the second half of the year. And this is what we are delivering. So much of the cash flow benefit will come in 2022 and beyond. The preparation for the launch of the 3 significant NPI we recently introduced coupled with the safety stock, we are building to mitigate the raw material shortage is expected to increase our inventory level and related payments in the next few quarters, which will increase our operating cash outflow, with a certain lag in the cash inflow from collection after we start selling. Okay. I just want to point out there's nothing out of the ordinary expected for Q4.

Thank you. Our next question is come from the line of Wamsi Mohan with Bank of America. Please proceed with your questions. Q –John Lee: Hello, thank you for taking my question. This is John on behalf of Wamsi. I just want to come back to the guide. You mentioned acceleration and revenue in ’22 and beyond. Could you just provide more color regarding maybe like the magnitude and the key drivers, whether it's coming from products, services or even in certain end markets? And from that guide, how much it's predicated on the economic recovery? Thanks.

Okay, thank you. Thank you, John, and send our regards to Wamsi. We are still working under the same assumption, but just in an accelerated mode. So we have the same underlying very strong driver that boosts 3D printing forward, like the one that we already mentioned. The supply chain issues but really, this is this is the perfect storm for us in terms of engagement, like I mentioned to Shannon. The fact that people are changing the way they manufacture in terms of geometries, and new technologies that are out there that we can provide those new parts and new products that are needed. They're like moving from metals to composites, for example that's a very, very strong trend that we see out there. And the last one is the overall move into manufacturing, which is more customized and more personalized. And just to share with you an anecdote about those drivers, I met a customer lately in the aerospace. And I spent like half a day there. And I asked them, okay, you're using our F900. This is the one by the way that we sold in the Navy deal. And they're using it for end use parts. Very high-end customized. One of the customer uses for end-use parts and other for jigs and fixtures for aerospace -- for space to be more precise. And I asked him, what is the ROI on our F900? And they told me it's between 4 to 6 months. When I'm buying here in Stratasys equipment for production, it take us -- we are happy with 4 to 5 years. And this is 4 to 6 months. I think this is the biggest example or reflection of what we are experiencing now. And our customers are so advanced, much more advanced than us in many cases, in some applications to take this forward. And we practically build a strategy that addresses exactly those needs, one-to-one. For each application, you need a different technology. We have all the needed technologies that will fit those challenges in polymers, done. Then they need a variety of materials. We have those variety of materials, and we are working on it. And we certify it, we make sure that it delivers the promise. Then the last thing is software. We need those software that will carry the user from their design, the early design and the conceptual design to the manufacturing and the production through this all thread through a software platform. Those are the growth engine. We have 3 new technologies. We have the basic core technologies of FDM and PolyJet, the best in the world, we have software, and we have material. And you put all these with service that we can support 24/7 because we have such a big service organization. And this is the catalyst. And we will see this really coming to life next year. The details of course, this is the high level. The details, we'll be happy to share in our next call. Q –John Lee: Got it. Thank you and if I could squeeze in a quick follow up. So in regards to the new products coming into the market in ’22. Just wondering if we were to think about the contribution from these products relative to 2021? How much growth do you expect them to contribute? Thank you.

Great question. But you know that our policy is not to share these type of details in 2021. We get to the call in ’22 - 2022 -- early-2022. And we will be happy to discuss it. Q –John Lee: Got it. Thank you.

Thank you. Our next question is come from the line of Jim Ricchiuti with Needham & Company. Please proceed with your questions.

Hi, good afternoon. Congratulations on the quarter. And maybe this just as a follow up to the prior question. And you may not be able to answer it. But if we think about the newer products, the H350, the P3? And I realized you can't give the granular but can you tell us if you anticipate those products ramping in the earlier part of ‘22? Or is this is the expectation that your optimism to scale up in that takes place more in the second half?

We are now in the process of closing our budget or AOP for next year. So even if I want to give you the exact numbers, I don't know them yet. So we are very authentic on this one. We have beta sites, many beta sites with H350. We are on the verge of launching it, the beta sites are very happy. They are producing end-use parts to end customers very large OEMs by the way. We get very good feedback from the end user. So from the automotive company, from the consumer goods companies, from the aerospace companies that are using our parts. This is very encouraging. We are going to launch it, we’ll ramp it up next year. And I believe it will be a significant revenue stream next year and definitely as a product line in the next 5-6 years.

That's helpful. If I could, just on the Stratasys direct business. You're seeing what appears to be a nice recovery there. And presumably some of that is just the industry recovery. But I'm wondering if you're also potentially taking some share there? Or is this just a case of a broader industry recovery that you're benefiting from?

So first of all, it's really a very nice recovery 25% year-over-year and also we see very good booking data which is great. In terms of are we gaining share or not, I believe it's less gaining shares because we are in a very unique high-end luxury -- I would say a metaphor -- using a metaphor in the “luxury goods” of this space of this industry. We are working with the highest quality certified parts, not many we are not in the quick part business. So not many service bureaus out there are really competing with us. So we are very dependent on the aerospace, automotive, high-end. When they are going up, we have our fair share and more.

So the key drivers here are aerospace, space and auto and just your strong position in those key verticals with the advanced equipment you have. Is that a way to think about what's happening there?

Yes.

Thank you.

Thank you. Our next questions come from the line of Brian Drab. Please proceed with your questions.

Hi, thanks for taking my questions. I just wanted to ask about OpEx again. And see if you could give -- I don't know how to ask this question in a way that you'll answer it. But for 2022, I'm just wondering, can you give any guidance around directionally around OpEx? You mentioned 2021 an investment year, but I would assume 2022 continues to be an investment year and then more trade shows more travel and entertainment or et cetera type expenses coming back. So I'm just -- the street is now modeling up like 6% growth in OpEx for 2022. And I'm just having flashbacks from like 2013-2014 when things were starting -- really seemed like they were going well and everything is picking up and then OpEx was up like $100 million plus the next year. So can you just give us some comfort that, is OpEx going to grow in line with like an expected revenue growth? Or does OpEx grow slower than revenue in 2022? Is $80 million the right kind of run-rate to think about? Or is it higher than that? Like any sense for that? Because I think is the biggest variable in the model right now?

Yeah, good morning, Brian. You definitely can appreciate it at this stage of it -- you probably can appreciate that at this stage, we are not specifically providing guidance on 2022. And we will come back in the end of February to address it. But for sure, I can share with you in terms of directionally the way we view our business model. We definitely looking to see the OpEx as a percentage of a revenue is going down. We already demonstrate this even in this quarter. And definitely, directionally this is what we are planning into. We are committed to steadily improve our profitability. And we'll see the impact over time in terms of how much of that will be in ’22 and how much will be a more than long term it move further to details. It's true that this year 2021 was the year of investment. We include 3 new platform as part of our broadened portfolio. And we are planning to invest in broadening those technologies also in the future. But all along, we are planning to see a leverage model as part of our business model.

Okay, thank you. Thanks. And then I don't know if you said this, but how much did acquisitions within the last 12 months contribute to revenue in the third quarter, whether it's RPS and Origin, et cetera.

Brian, as I comment before, in Q3 or in the last 3 quarter we didn't see yet the impact of P3 and SAF? We had some impact definitely a very nice impact of RPS. We're very encouraged by the reception of this product in our market in our customers. It open for us a new market new application. We are not providing specifics on each of the -- on the specific numbers on this opportunity. But definitely, it was a growth driver as well as -- like I said the door opening. So the majority ---

Sorry, you can't give a collective. Sorry, Lilach, you can't collectively though give the contribution from acquisitions just so we can -- and maybe a foreign exchange just so we can have an organic revenue growth number to put in the model. I'm asking like the dollars from total -- from acquisitions dollars swing from FX just so we can get the exact organic revenue growth, which I'm sure was a nice number. I'm just trying to get to the number.

We are not providing the specific dollar value associated with our acquisition of RPS. But definitely, it was a good traction. And the most important thing is, apart from just say, how much in this specific quarter, I think the most important thing takeaway to take from RPS is how it's actually open for us market. And the opportunity and the demand and the discussion that we are having around this product is so significant. And this is what the essence of what we need to be focused on. If you ask me specifically about FX that we can see the numbers of so the impact compared to 2020 it's about $2.8 million between Q3, ‘21 to Q3, ’20.

As a positive. You mean, added to revenue?

Yes, it is

Thank you. Our next question is comes from the line of Greg Palm with Craig-Hallum. Please proceed with your questions.

All right. I'm just going to ask, one more follow up and just try to take a stab. I know you're not guiding for fiscal ‘22. But I guess if we think about guidance for this year, which you've said includes very little contribution from the 3 new products. It assumes revenues down about 5% from the 2019 levels. So $605 million versus the 636. So I guess what I'm trying to figure out is based on your visibility into next year, would you expect your core business, so mostly FDM, PolyJet. So excluding the contribution from the 3 new products, would that have increased to pre-COVID or 2019 revenue levels next year if you're following the thought pattern there?

Hi, Greg. Simple answer, yes, we expect it to grow. And you can see it also here, most of our growth came from the core businesses. We enter new application, we came with the full solution approach and it works. And we took them to manufacturing and we'll keep doing it.

Okay. So that would get you to at least 5% growth. And then if we layer on whatever we think is contribution from new products. I mean, my assumption is, you'd probably be disappointed if you weren't growing somewhere in the double-digits next year. Is that at least a fair characterization?

You know that we are not providing guidelines now. We are optimistic, we are growing with all business lines, with the core with acquisitions. And we didn't really put into the market the new 2 most promising technologies that we have. So I'm optimistic. We keep working out, keep sweating and make sure that we will be the leader in polymer 3D printing with the full package and solution.

All right. Fair enough. I totally understand. I thought I'd take a stab anyways. Thanks and good luck.

Thank you. There are no further questions at this time. I would like to turn the call back over to management for any closing comments.

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

Thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time. Have a great day.