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.

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.    

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:

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:

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 March 31, 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:

* 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.

Gross Profit

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

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

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.

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:

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.

Operating Loss

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

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:

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.

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:

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.

        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.

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:

Liquidity and Capital Resources

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

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 March 31, 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. 

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.

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;

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

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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;

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

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

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the impact of competition and new technologies;

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

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

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

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government regulations and approvals;

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litigation and regulatory proceedings;

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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.

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