Yoav Zeif

Thank you, Yonah. Good morning, everyone and thank you for joining us. Last quarter, we shared that we were taking decisive actions to better align our business with the realities of today's market. Importantly, beyond these actions, we remain agile, financially strong, and well positioned to benefit from the eventual turn in the cycle.
We are committed to the financial execution of our plan and have transformed the company by removing costs and streamlining the business to focus on the largest industry targets, where we see the most opportunity for growth, particularly in manufacturing applications across automotive, defense, aerospace, medical devices and dental.
For example, the F3300 our most recently launched technological innovation has generated excitement from the market and is expected to help us expand our presence in factory flow manufacturing across multiple industries. In dental where 3D printing is already a standard method, our proven TrueDent solution is highly regarded for its groundbreaking disruption in both cost and fit when it comes to dentures.
Additionally, our suite of specialized software offerings is starting to gain traction, which we believe will drive the increased high margin revenues in the coming years. Our key target industries demonstrate not just the greatest growth potential in our opinion, but also the most significant overall TAM for additive manufacturing and they are in the early stage of adoption.
Why we appreciate, that we now must deliver on the initiatives we have put in place in a sustained manner and that it will take time. We are pleased to share that we are already starting to realize benefits. Following 10 quarters of positive adjusted earnings per share as challenging market conditions persisted further, we incurred only minor losses on an adjusted basis in the first half of this year. Now, as a result of our transformative actions and without the tailwind of any market recovery to this point, we quickly return to profitability on an adjusted basis in the third quarter.
These results demonstrate our team's ability to execute a comprehensive undertaking, an attribute that continues to set Stratasys apart. Now let me dive a bit deeper into our results for the third quarter.
Our business continues to demonstrate its fundamental strength through improved margins and our ability to maintain a robust balance sheet. We were able to deliver our eighth quarter in a row of year over year growth from our recurring revenue consumable sales. And similar to the second quarter, the resilience in consumables was primarily driven by FDM technology utilization. This underscores two key takeaways the stability of our recurring revenue model and our customers accelerating transition from prototyping to manufacturing applications.
As customers increasingly leverage our solutions to optimize costs and enhance operational efficiency, we are well positioned to expand our manufacturing presence with upcoming product innovations. We believe our focus on furthering customer enablement through additive education and investment will make a big difference. As our customers enhance their understanding of how to fully utilize additive manufacturing design and workflow benefits in tandem with other traditional processes.
Our strategy for driving long term shareholder value centers on targeted innovation across materials, knowledge and workflow solutions in high growth target industries, that benefit from emerging megatrends. Those include addressing supply chain risks, onshoring, new mobility, customization, sustainability and the nonstop drive for greater efficiency and lower cost across the manufacturing spectrum. Through disciplined ongoing investment in technology and material development coupled with a focused approach to key end users, we are laying the foundation for strategy's next leg of growth, once the current down cycle inevitably subside.
During the third quarter, we achieved a number of milestones and new product introductions. We continue to drive demand for our new flagship F3300 industrial platform which we showcased at the International Manufacturing Technology show, in Chicago in September, designed for superior performance, the F3300 delivers high quality, durable thermoplastic path with unmatched accuracy. It delivers faster print speeds with industry leading repeatability and significantly reduces downtime making it the premier offering in its class.
We continue to generate interest in order for the F3300 and are already shipping system to key customers, leading companies across automotive, aerospace, and defense sectors along with commercial and industrial manufacturers.
During the third quarter, we launched our new Origin 2 printer along with the Origin Cure post-processing system, while our primary focus is on expanding additive manufacturing at scale, this solution helps a subset of our customers focus on the growing demand for injection molding, quality for short production runs. A great example of a target industry for this technology is connectors, where manufacturing costs are high and the production runs are in line with what this particular technology can deliver. This is one of many compelling opportunities for us and for our customers such as TE Connectivity who serve the aerospace, automotive and other sectors.
We also launched our Stratasys neo build processor for investment casting. A unique solution designed in collaboration with materialize to accelerate the production of high quality investment casting master patterns, developed for the Neo450, a Neo800 SLA printer, the neo build processor delivers up to 50% faster file processing and significantly enhanced print speeds, streamlining the 3D printing workflow for manufacturers and service bureaus in the aerospace and other demanding industries.
Given our focus on returning value to shareholders, in September, our Board of Directors approved a $50 million share repurchase plan, which we have already started to execute. We are committed to maximizing shareholder value while maintaining a strong balance sheet and are taking additional steps to unlock value including seeking to monetize certain high value assets.
I'd like to take a moment to provide additional details on the critical strategic initiatives that we have implemented recently. On last quarter's call, we unveiled a plan designed to reinforce our industry leadership and ensure sustainable profitability across market cycles. Our action plan centers on two critical objectives. Realigning our operational costs with current market dynamics through a work force reduction of 15% and intensifying our focus on accelerating customer adoption by eliminating implementation barriers. These measures aim to create a more resilient business model that consistently generates profits and positive cash flow.
Our implementation of the restructuring plan is ahead of pace. As evidenced by the improvement in operating margins that Eitan will discuss in a moment. We are on track to achieve our target of $40 million in annual cost savings starting in the first quarter of next year, while also enhancing our go to market strategy to focus on the highest growth product, materials and software solutions.
These actions are designed to help us align costs with current conditions, build a long term profitable, cash generating business and stay agile during downturns, while being ready to respond quickly when customer spending returns. Importantly, we are committed to delivering increased profitability and cash flow in 2025, that we discussed on our last call.
We are confident that once current headwinds subside, we knew the access to capital will spare customer spending to more accurately reflect the express high demand for our solutions.
Over to you, Eiten.

Eitan Zamir

Thank you, Yoav, and good morning, everyone. This quarter demonstrated the resilience of our operating model. A key differentiator relative to peers in our sector as well as the fast actions of our team as we delivered improved gross margins and bottom line profit despite year over year pressure on revenues. These results were takes in part to yet another quarter of year over year growth in consumable sales, and faster than anticipated progress on our cost control initiatives enabling us to increase our profitability expectations for the year.
Now let me get into the details of our numbers. For the third quarter, consolidated revenue was $140 million compared to $162.1 million in the same quarter in 2023, due to persistent softness in capital equipment spending. Product revenue in the third quarter was $94.1 million compared to $113.2 million in the same period last year. Within product revenue, system revenue was $31.7 million, a sequential improvement from the second quarter, yet of compared to the $51.5 million we produced in the same period last year.
Consumable revenue grew 1% to $62.4 million compared to the same period last year. As Yoav mentioned, this is our eighth straight quarter of year-over-year growth, our ability to consistently grow consumable sales, despite the changing backdrop, signals that the utilization rates of the systems we have sold remain robust.
It is important to note that we continue to expect consumable demand to be resilient for the foreseeable future, despite recent weakness in hardware sales as the installed base continues to be well utilized. Service revenue including Stratasys direct was $45.9 million compared to $48.9 million in the same period last year. Absent divestitures, service revenue was off a bit more than 0.5%. Within service revenue, customer support revenue was up 1.3% compared to the same period last year.
Now turning to growth margins. GAAP gross margin expanded to 44.8% for the quarter compared to 40.5% for the same period last year. Non-GAAP gross margin also grew to 49.6% for the quarter compared to 48.3% in the same period last year and it's the highest since Q4, 2019.
The improvement versus the prior year period was driven in part by a greater mix of consumables and higher margins at Stratasys direct due to divestitures. GAAP operating expenses were $88.2 million compared to $108.4 million during the same period last year. The improvement in expenses was primarily due to lower costs related to prospective and potential measures in acquisitions, defense against a hostile tender offer, proxy contest and related professional fees.
Non-GAAP operating expenses were $69.6 million compared to $74.2 million during the same period last year, due primarily to lower employee related costs including early benefits from the cost saving initiatives announced last quarter. Non-GAAP operating expenses were 49.7% of revenue for the quarter compared to 45.8% for the same period last year.
Regarding our consolidated earnings, GAAP operating loss for the quarter was $25.5 million compared to a loss of $42.8 million for the same period last year. Non-GAAP operating loss for the quarter was $0.1 million compared to operating income of $4.1 million for the same period last year. The change reflects the lower overall revenue offset somewhat by the improved growth margin and lower employee related costs.
GAAP net loss for the quarter was $26.6 million or $0.37 per diluted share, compared to a net loss of $47.3 million or $0.68 per diluted share for the same period last year. Non-GAAP net income for the quarter was $0.4 million or $0.01 per diluted share, compared to net income of $2.4 million or $0.04 per diluted share in the same period last year. Adjusted EBITDA was $5.1 million for the quarter compared to $9.8 million in the same period last year.
We also improved our cash utilization during the quarter, as we only used $4.5 million of cash in our operations during the third quarter compared to $12.7 million in the same quarter last year. Year-to-date our operating cash flow remain positive. We ended the quarter with $144 million in cash, cash equivalent and short term deposits compared to $150.9 million at the end of the second quarter this year.
Our balance sheet remains strong and is expected to improve as the impact of our cost saving measures accelerates in the fourth quarter of this year and beyond, strengthening our ability to act on value enhancing opportunities. Now let me turn to our outlook for 2024.
We are reiterating our expectation that full year 2024 revenues will range between $570 million to $580 million. We are raising the margins and profit forecast. From a gross margin perspective, we now expect full year 2024 to be slightly higher than what we shared on our last call, in a range of 49% to 49.2%. For 2024, we expect our operating expenses to range between $276 million to $278 million.
We expect non-GAAP operating margins to range between 0.6% to 1.3% for the full year. We anticipate a GAAP net loss of $105 million to $90 million or $1.48 to $1.27 per diluted share. A non-GAAP net income of $2.1 million to $5 million or $0.03 to $0.07. Adjusted EBITDA is expected to be in the range of $25 million to $28 million for the year. Capital expenditures are expected to range between $15 million to $20 million for the year.
And while we are not providing a formal 2025 outlook, to Yoav's point on the actions we are taking to align the business to current conditions, we would expect to generate 8% EBITDA margin even if there was no revenue growth compared to 2024. And if we can achieve even slightly moderate revenue growth, given the operating leverage in the business, we could reach at least 10% EBITDA margin.
With that, let me turn the call back over to Yoav, for closing remarks.

Yoav Zeif

Thank you, Eitan. With our effective implementation of key initiatives to transform the company, since the end of the second quarter, we have streamlined operations, improved margins and tightened our focus to the most compelling use cases. We are enabling our customers to more easily ramp their adoption of additive manufacturing with enhanced go to market engagement and better education for their system users.
We are laser focused on delivering increased profitability while preserving our strong balance sheet. With our market leading systems, software and consumables, we are poised to outperform when capital spending returns. Stratasys has been a leader in additive manufacturing for decades and with the actions we have taken, we have repositioned the company to extend that leadership in the years ahead.
Our customers continue to expand the use of our systems and solutions through this turbulent point in the cycle, we are setting the stage for a return to significant growth, expanded profitability and value creation for our shareholders.
With that, let's open it up for question. Operator?

Question and Answer Session

Operator

(Operator Instructions)
Jim Ricchiuti, Needham & Company.

James Ricchiuti

Hi. Thank you. So if I look at the implied revenue guidance for Q4, which is up sequentially, your EPS guidance seems to suggest a break even -- kind of a break even quarter. And so my question is, are you anticipating some pullback in gross margins where we've obviously seen some nice improvement or maybe is there something else in OpEx higher trade show expense or some other factors. And then I have a quick follow up.

Eitan Zamir

Thanks. Thanks Jim for the question. So, let me help you maybe and everyone to think how to model Q4 and the full year. And as you probably saw, we've updated the annual 2024 EPS to $0.03 to $0.07. When you take the first nine month EPS and you deduct that from the annual EPS, you get to a Q4 that is in the range of positive $0.08 to positive $0.12 for Q4 only. So I'm not sure --

James Ricchiuti

Okay. Yoav, it's my mistake. I apologize. I may have just had some bad, but thank you for clarifying.

Eitan Zamir

No, no. For sure, but actually it tells me if that's okay to highlight that this is exactly the change we announced last quarter. We said that Q3 will start to benefit the savings, but Q4 is going to be significantly positively impacted by the restructuring and it is translated into that relatively high EPS level in Q4.

James Ricchiuti

No, thank you for clarifying that. Follow up question just relates to -- look I know you're not giving any kind of specific guidance beyond Q4. But the fact that you're showing some year over year improvement that you showed year over year improvement in Q4. Is there any reason that, that wouldn't be the case in Q1, from a year on year standpoint, obviously, there's going to be the normal seasonality sequentially from Q4 to Q1. But just wondering how we might be thinking about the early start to the new -- to next year. Just the market's still uncertain, I know. Thank you.

Eitan Zamir

Thanks Jame. And so as you noted, the -- actually as a -- to continue from my last answer when you take the actual three quarter and the full guidance on the revenue, basically, the derivative is Q4 that is between $148 million to $158 as you noted. This is a partially seasonality Q4 has been strong for us and for most of the industry over the years. So it's a seasonality, it's a pipeline that we see, but it's too early to say how the first half of 2025 would look like. And we're not guiding, of course yet, about 2025.

James Ricchiuti

Thank you.

Operator

Troy Jensen, Cantor Fitzgerald.

Troy Jensen

Hey, Yoav, congrats on the good cost cuts and good results here.

Yoav Zeif

Thank you.

Troy Jensen

Hey, so first of all guys just on the consumables, I know you've had, the great year over year growth, in consecutive quarters, but on a sequential basis, it's been down two quarters in a row and we're only at kind of -- I'd say the year over year growth rate is kind of declined from kind of 12% to 1%. So you can just talk about any concerns about going negative here in Q4 or what's going to get us back to kind of high single digit kind of growth in consumables.

Yoav Zeif

And Troy, thank you for the question. I think this is something that differentiates strategies. We have a very solid recurring revenue model. Very solid, which helps us, especially in those challenging times. If I look at consumer, first of all, the fact is that it grows year over year and this growth is a reflection of this solid revenue stream. One thing for sure, it is growing year over year.
And we can see it's a trend and it is supported by the fact that we are going to manufacturing, that we have a large install base and this installed base is growing year-over-year-over-year. And the fact that we are going to manufacturing support higher utilization and we are also selling more high end equipment that consume more faster.
So new system will always consume more than an old system. And this is a very healthy trend, quarter by quarter, it could be lumpy, but year over year, we are committed for growth and we are putting out new material regularly. So this is part of the ongoing business. Every quarter, we have more materials. On top of the fact that we have already the largest portfolio of materials.

Troy Jensen

That's right. Okay. All right. And just a second question, I believe last week, there was another round of workforce reductions. Curious is this a new initiative or was this kind of the continuation of what you guys said three months ago?

Yoav Zeif

I don't know, maybe you reduced the workforce. But we did not. We had one restructuring and of course, there are some ongoing regular course of business of people leaving and we are recruiting, but there was one restructuring, one move we executed, we executed it ahead of plan, which helps us already in Q3, although we didn't plan for it and it put us in a great position, both commercially, financially and in terms of the cash position that we finished the quarter better than we expected.

Troy Jensen

Thanks guys, good luck going forward.

Operator

Greg Palm, Craig-Hallum.

Greg Palm

Yeah, thanks for taking the questions and congrats on the better results here. Maybe just to start thinking back on in the last 18, 24 months in this cycle, just thinking about, just software manufacturing, policy uncertainty, you've had inflation, interest rates, all that stuff that we've talked about. Any way to kind of rake order, the importance of some or all of those.
And I guess what I'm -- where I'm going with, this is even an environment where maybe rates don't come down, if we've got at least sort of policy certainty in a little bit sort of better manufacturing activity, does that give you more confidence that, maybe you can see some of this pent up demand sort of flush through the pipeline, just kind of curious to get, sort of your broader thoughts going into 2025.

Yoav Zeif

So great question. Thank you for the question. As you said, it's all about the current macro environment in high cost capital environment. Our customers don't have the urgency to invest in new innovative technologies and that's what we are facing. This is reality.
So the macro is the main issue, no doubt.
But still there are significant lights out there, lights out there like the utilization of our equipment and our machines. So we see that this technology is needed and quarter after quarter, it is more important for our customers and we use this time to strengthen already the best portfolio in the industry and to make sure that we will be ready when the positive turn will come.
And what we believe as you mentioned, this is a cycle but the mega trends are there and we are talking about the same mega trends for years, but we are more focused now on capturing the benefits from them. We are talking about the need for resilient and agile supply chain. We are talking about onshoring especially now with the new geopolitical environment. We are talking of localization of manufacturing, new mobility trends, customization especially in medical and dental. Dental. For us is a huge thing, especially with our denture. We're talking about overall digitalization of manufacturing. Those megatrends are there no matter what is the level of the interest rate.
So I believe, we believe it's only a matter of time and we just need to be ready when the market will change, will turn, we are investing to increase enablement, education, to increase the use of our technologies in proven use cases. And when I'm saying proven use cases, I mean a use case where we know that additive, especially our solution is better than the traditional one. We have a great ROI, but there is no appetite from the customers now to adopt it because of the macro environment.
And we have many examples, mainly in aerospace, in automotive tooling. For example, we have an automotive tooling player that has tens of our machines, a North American player, he has tens of our machines. But you know how much of his overall tooling spend is going to additive only less than 1% and tooling is a $12 billion addressable market.
And when we are talking with our customer and we asked them, what is the potential of additive, they said 25$ to 27% and now we are in 1%. So when macro we have a better macro condition, I believe in an upside actually, you know what a tremendous upside.

Greg Palm

Got it. Yeah, that's helpful. If I could just shift gears on the gross margin guidance specifically, I guess I appreciate, I think a lot of us appreciate the conservatism. I think the implied guide for gross margin for the year means that Q4 gross margins going to be flat to down on obviously much higher revenue levels than what you just put up and maybe a little bit of benefit from restructuring. So I guess, is there a mix issue relative to Q3 or is it just more out of conservatism?

Eitan Zamir

Thank you for the question. So the -- first of all, the Q4 growth margin at least based on our forecast is going to be slightly higher than Q3. That's why the full year total guidance will be between 49% to 49.2%, but we have confidence in the ability to achieve it. And we plan, we expect to sell more hardware in Q4. So to your point, you mentioned that, that will impact the mix, however, we are very excited about the ability to grow hardware in this environment.
So it's a matter of mix. We're moving step by step and increasing and improving our growth margin. The 49.6% that we had this quarter is the highest gross margin since Q4 2019. So almost a record for the -- almost for the last five years. And in general, you can see that from the last few quarters, our growth margin is strong, is stable and we believe that with the restructuring and with all the other things that we're doing, we will continue to improve it and increase it in the near future.

Greg Palm

Okay. Yeah, it's a good point. And I guess just last one, maybe a clarification. Did you say you've already started buying back stock? I thought, I kind of heard that and just kind of curious to hear what your thoughts around of sort of the pace and usage of that authorization.

Eitan Zamir

Sure. We started to purchase shares in Q4 and we will update you as part of the Q4 results. That's going to be part of our, of course financial reporting process. But we do that gradually and we find the right balance between the purchase of shares and securing our cash position. But to your question, we've started the process. Yeah.

Greg Palm

Understood. Okay, I will leave it there. Best of luck. Thanks.

Operator

(Operator Instructions)
Brian Drab, William Blair.

Brian Drab

Thank you. I don't know if you made any comments on the on the 3300, but can you update us on how that rollout is going, I think on the second quarter, you said you're hoping to sell a few more of those in the second half of the year than the first half. Thanks.

Yoav Zeif

Thank you, Brian for the question. In two words, it's going well. Going well. This is our flagship in industrial solution. It's a whole platform starting with F3300. And it definitely -- and we hear it from our customers deliver superior performance for industrial uses. So we have sold, we shipped to a variety of markets, the first customers are highly trusted one, very professional like Toyota, BAE Systems, Nissan and many others.
And definitely there will be kind of a flywheel effect, because when those customers are buying a machine and adopt it, it's a trigger for others because they want to stay competitive and this machine delivers, double the speed of any other machine on this segment. So it's going well, we have a nice pipeline and backlog and we are very optimistic and we keep investing in expanding this platform.

Brian Drab

Okay. Thank you. And then just one other question for now, I mean, clearly the election results are very recent but the discussions around the potential outcome and tariffs and that have been ongoing for months. So I'm just curious how you think about the opportunity for onshoring and focus on US manufacturing to help Stratasys and have you had any discussions with customers that are, where you actually see kind of the wheels in motion of some of these customers may be making moves and what end markets might you benefit in this kind of scenario? Thanks.

Yoav Zeif

Thank you. Great question. No doubt that the latest results support the megatrends, those megatrends that I already mentioned about the localized manufacturing, onshoring, it is clear that this is a tailwind for us. I didn't -- I don't want to share anything from customers now. But just a year ago, I participated in a conference of CEO's and discussing the impact of the US, China relationship. And it was clear there that additive has what to offer in this decoupling from China. And I guess now and I'm not getting into politics, it's even strengthening this topic. So yeah, we are optimistic.

Brian Drab

Okay. Thank you very much.

Operator

Jacob Stephan, Lake Street Capital.

Jacob Stephan

Hey guys, thanks for taking the questions. I'll kind of ask the a similar broader macro question in a little bit different way. But, obviously we've had two rate cuts since you last reported the change in administration. And, there's also been an acquisition of one of your competitors. I'm just curious, maybe you could kind of help us, I guess, quantify or, qualitatively maybe, how are you seeing demand trends in some of your newer product lines with the Origin 2 and maybe Neo and maybe contrast that to the H350?

Yoav Zeif

I would say -- thank you for the question. I would say that demand is there, in some cases, we have more leads depends on the country and the technology and the use case. In some cases, we have even more leads than we had in the past before the downturn, which is unbelievable. The problem is not the leads or the engagement or the interest. The problem is that pay cycles. It takes customer much more to make a decision. As I said, there is no agency here now to adopt new technologies and invest capital. So the demand -- that's what we always say, the pent up demand is there. So --

Jacob Stephan

Got it.

Yoav Zeif

We believe that those mega trends plus the changes in the market. And you mentioned very important two changes. One is the election and the economic atmosphere and the other one is the fact that there was excess supply in additive manufacturing which was not sustainable and how many companies are pushed out of the market and it's healthy. It's a process of being more mature as an industry and focusing on what is important to our customers and that's what we are doing.
I'll give you an example, we are focused on automotive. So we are going to the most difficult customers that have the highest requirement, for example, Formula 1 customers or motor racing customers. And we prove the point that our technologies like wind tunnel where we are already more than 60% of the Formula 1 with this or end use parts for automotive and short run automotive producers in car racing. Once you prove it there, it's only a matter of time when we'll open up to the mass manufacturing and we shift our focus from proven the use cases and the advantage of these use cases to mass production.

Jacob Stephan

Okay, thank you. And then maybe just switching to the restructuring initiative, appreciate all the color on that, but now that you're kind of a few months into it. And it's tracking well ahead of expectations. Are you seeing any other areas where maybe you can take additional cost offs with -- without any additional layoffs or do you feel like this, the $40 million is kind of the only significant change you'll make? Thanks.

Eitan Zamir

Thanks Jacob for the question. So first of all, we were always focused on efficiency and very tightly monitor our costs. And the restructuring plan has a significant head count related savings, but there are also other savings. As we mentioned also in the last quarter of earning call. This restructuring plan was driven by a strategic change or update. So there are projects that are no longer part of our strategy and we were canceled and we shut down certain locations. There are different cost savings that are non headcount related and we're very focused on completing these areas. And that's why we said that we expect only at the beginning of next year to achieve the fully annualized impact of the $40 million that we promised the market.
And as you mentioned, we're ahead of the plan and it helps us to shift to profitability origin in Q3, which is better than we promised last quarter and expected significant savings will be realized in Q4. That's why we have confidence on the ability to deliver significant EPS in Q4. That will of course, will be translated to positive cash flow once those are materialized to a significant cash flow impact in 2025 which is important. And that will put us in the best commercial and financial position in the market.
And as we mentioned earlier and also last quarter, once the $40 million annualized savings are achieved, that will be translated into 8% EBITDA, assuming that there is no change in the revenue levels. And if revenue levels will increase, that could get us very quickly to double digit of EBITDA which is very meaningful and critical for us and of course for the market.

Jacob Stephan

Appreciate it, guys. Thanks.

Operator

Alek Valero, Loop Capital Markets.

Alek Valero

Hey guys. Thank you for taking my question and congrats on the results. I actually have a quick follow up on the annual cost savings. So, I believe you guys mentioned in your previous earnings call that you have a target of 15% headcount reduction by the end of this year. I guess my question is like you mentioned, you're ahead of plan. So I understand that, but any -- can you give any sort of like on like how much percent there is left for this year?

Eitan Zamir

Thank you, Alek. So maybe I'll elaborate a little bit about the -- what does it mean to be ahead of plan, okay? So first of all, out of the $40 million -- as I mentioned earlier, out of the $40 million saving target, significant portion is headcount. But again, there are many other initiatives that are non headcount related. Again, few examples is closing a certain locations. We're a global company that acquired a few businesses in the last few years (technical difficulty) and there are a few other examples, but again, I want to emphasize it's not only a head count related. So when we say that we are ahead of the plan and of course, you've experienced many companies that announced restructuring.
We're actually quite proud about our ability to execute what we've announced on August 29 on the second quarter earning call to be able to very quickly execute this plan and to achieve some of the savings already in Q3, which means a one month after we announced it as part of the Q2 earning call. That's something that we're very proud of and of course, came with a lot of effort, but it's still only a small part of the annual target saving. That's why in Q4, we are certain, we have much more confidence on the ability to achieve much bigger significant portion of the annual annualized level and to generate those high EPS that I mentioned earlier.

Alek Valero

Yeah, that's super helpful. Thank you for that. Just as a quick follow up, change it up a bit here. Can you guys maybe say like a few key milestones that we should look out for TrueDent that moving into next quarter and beyond?

Yoav Zeif

That's a great question. We are very proud in our TrueDent solution. It's so unique that we are going and when we are meeting dentists, they are amazed from what you can do. This is an anecdote, you can reduce the number of visits with the dentist from six to eight to two and still the customer or the patients will feel more comfortable with the new dentures. Practically, this is the spearheads of restorative dental. We are the first one, the best and the most aesthetic mono block dentures in the market.
So I want to thank our teams. By the way, I want to thank our teams also for their structuring. This is a record execution, what they have performed. But when I'm talking about the milestone, you need to look at two things that we are doing. It's the penetration to clinics and the regional penetration. Those are two axis that we have. So one important milestone that we will take it from North America, US to EMEA and APAC and this is very soon.
The second thing is that when we are talking about penetrating dentists, it's about creating credibility and education with the leading institutions and labs, starting with the US and moving to Europe and that's what we are doing and you will see it step by step. We are showing the solution -- and we are improving the solution all the time by the way in terms of aesthetic and translucency, it's getting better and better every day. We are going to present it in the IDS show, in late March, which is the biggest dental show in the world like 180,000 participants in Germany.
And we expect to see more regions, more clinics, credibility of being -- having credentials from the top dentist institutions and then getting also to many different bodies that adopt dentures. For example, we have interaction with the government, for example, for the army, this is just as an example. But in short, we go to more regions to get the certification and we are opening up more clinics through new credentials.

Alek Valero

Awesome. Thanks so much for that guys. Appreciate it.

Operator

(multiple speaker) Thank you. Next question -- please proceed.

Yoav Zeif

Go ahead.

Operator

Our next question is --

Yoav Zeif

Sorry, one more thing. So this is about our dentures. Another super important use case for us is government and defense. This is a growing segment and we keep growing. Some may say unfortunately, but it keep going. We are very strong there. We are the leader in aerospace and defense and there are strong milestones that we put in front of us in terms of opening up new applications in defense and you will see it as well.

Operator

Jim Ricchiuti, Needham & Company.

James Ricchiuti

You've actually touched on -- I think the question I'm going to ask just with respect to where you're seeing some of the early signs of recovery. You're highlighting, I think some at least you sound encouraged by what you're seeing in dental. You seem to be more optimistic clearly on the aerospace and defense I don't know if you're already seeing that translate into systems demand.
But just I'm trying to get a sense of your end markets. Where might you see or you seeing more signs of recovery and maybe conversely, just from an investment standpoint, where customers in some other verticals maybe automotive, still a little bit more cautious.

Yoav Zeif

I would say in this order, government and defense, aerospace, automotive tooling, dental and medical.

James Ricchiuti

Okay. Helpful. Geographically, any demand, any changes in demand trends that you saw in the quarter?

Yoav Zeif

Not really. Not really like it started in the US and it moved to EMEA and APAC but currently it's a soft hardware market.

James Ricchiuti

Okay. And maybe if I could slip one final one in. Just you seem to be seeing some nice progress with GrabCAD Print Pro, I'm wondering is there any way to think about the revenue contribution in this area of the business as we look out over the next year.

Eitan Zamir

Jim, that's a good question. We have put a lot of efforts around our software solution. As you mentioned, revenue is increasing and growing significantly. I'll just remind everyone that software is coming with the highest growth margin out of the different streams and the attachment rate is very promising and we're very proud of and when it becomes a big enough, of course, we will provide more granular data around the revenue but, the progress and the trend is very promising and we're very excited about it.

Yoav Zeif

Let me even be -- may I Eitan?

Eitan Zamir

Yeah.

Yoav Zeif

Let me be even more specific. We are selling software and there is a growth year-over-year in our sales. And as you know, software is a great way to lock in customers for the long term because those are recurring revenues and you push more features and you have direct relationship with the customers. And the nice thing that we are selling more GrabCADs mainly the pro and the premium solutions of GrabCAD, we have Print Pro and Streamline Pro. There is a demand. We are selling more. I meet many customer every week, every quarter and the nice thing and for me, it was like, wow, we have a great software when they asked me, can you put your software on other OEM players? And this is a great proof point, how good is our software solution.

James Ricchiuti

Got it. Thank you. Congratulations on the quarter. Thanks.

Eitan Zamir

Thank you.

Operator

Thank you. We reached end of our question and answer session. I'd like to turn the floor back over for any further or closing comments.

Yoav Zeif

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

Operator

Thank you. It does include today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.