Proto Labs Inc

Previous wording

We are one of the world’s largest, fastest and most comprehensive digital manufacturers of custom parts. Our vision is accelerating innovation by revolutionizing manufacturing. Our mission is to shape the future by bringing customer ideas to life across every stage of their product cycle. We accomplish this by offering a variety of manufacturing capabilities fulfilled through a combination of owned manufacturing factories and a worldwide network of premium manufacturing partners. Our automated quoting and manufacturing systems are highly integrated with our manufacturing and fulfillment systems, which allow us to offer a vast array of manufacturing technologies in a variety of materials across a continuum of lead times and prices. Our technology-enabled digital engineering and manufacturing applications enable us to produce commercial-grade plastic, metal, and liquid silicone rubber parts in as fast as one day.

Current wording

We are the world’s fastest manufacturing service enabling companies across every industry to streamline production of quality parts throughout the entire product life cycle. Our vision is accelerating innovation by revolutionizing manufacturing. Our mission is to shape the future by bringing customer ideas to life across every stage of their product cycle. We accomplish this by offering a variety of manufacturing capabilities fulfilled through a combination of owned manufacturing factories and a worldwide network of premium manufacturing partners. Our automated quoting and manufacturing systems are highly integrated with our manufacturing and fulfillment systems, which allow us to offer a vast array of manufacturing technologies in a variety of materials across a continuum of lead times and prices. Protolabs uses artificial intelligence (AI) in a number of different ways to improve our efficiency and the value we offer to customers, including: intelligent pricing and sourcing algorithms, automated quality inspection in injection molding, toolpath verification in CNC machining, software development, and various other AI end use cases. In the age of AI, we are well-positioned with our long history of leveraging technology to solve legacy manufacturing challenges and are deploying AI to power how we drive innovation to better serve our customers. AI is enabling us to move faster than ever before and continue to scale our business efficiently. Our technology-enabled digital engineering and manufacturing applications enable us to produce commercial-grade prototype and production plastic, metal, and liquid silicone rubber parts in as fast as one day.

Previous wording

Our customers conduct the majority of their business with us via our Internet-based eCommerce platform. We target our products to the millions of product developers and engineers who use three-dimensional computer-aided design (3D CAD) software to design products across a diverse range of end-markets, to the procurement and supply chain professionals seeking to easily and efficiently source custom parts on-demand, and to a wide variety of customers seeking to purchase custom parts. We believe our use of advanced technologies enable us to offer significant advantages at competitive prices to many customers and is the primary reason we have become a leading supplier of custom parts.

Current wording

Our customers conduct nearly all of their business with us over the Internet. We target our products to the millions of product developers and engineers who use three-dimensional computer-aided design (3D CAD) software to design products across a diverse range of end-markets, to the procurement and supply chain professionals seeking to easily and efficiently source custom parts on-demand, and to a wide variety of customers seeking to purchase custom parts. We believe our use of advanced technologies enable us to offer significant advantages at competitive prices to many customers and is the primary reason we have become a leading supplier of custom parts.

Previous wording

We have established our operations in the United States and Europe. On October 21, 2024, the Company's board of directors approved a plan related to the Company's manufacturing facilities in Germany. The plan includes the closure of the Company's prototype injection molding manufacturing facility in Eschenlohe, Germany, and the discontinuation of Direct Metal Laser Sintering 3D printing services through its 3D printing facility in Putzbrunn, Germany. The Company expects to substantially complete the plan during fiscal year 2025. The Company intends to continue offering all of its manufacturing services to customers across Europe, including injection molding and metal 3D printing. These services will be fulfilled through internal manufacturing facilities and a network of manufacturing partners.

Current wording

We have established our operations in the United States and Europe.

Previous wording

Our primary manufacturing product lines currently include Injection Molding, CNC Machining, 3D Printing and Sheet Metal. We continually seek to expand the range of sizes and geometric complexity of the parts we can make with these processes, to extend the variety of materials we are able to support, and to identify additional manufacturing processes to which we can apply our technology or incorporate into our manufacturing network in order to better serve the evolving preferences and needs of our customers. With the addition of the Protolabs Network in 2021, our global network of premium manufacturing partners significantly expands the breadth and depth of our manufacturing capabilities, enabling us to offer customers a wider variety of lead times and pricing options, and an expanded envelope of parts (complexity, size, etc.).

Current wording

Our primary manufacturing product lines currently include Injection Molding, CNC Machining, 3D Printing and Sheet Metal. We continually seek to expand the range of sizes and geometric complexity of the parts we can make with these processes, to extend the variety of materials we are able to support, and to identify additional manufacturing processes to which we can apply our technology or incorporate into our manufacturing network in order to better serve the evolving preferences and needs of our customers.

Previous wording

Our operations are comprised of two geographic operating segments in the United States and Europe. On October 21, 2024, the Company's board of directors approved a plan related to the Company's manufacturing facilities in Germany. The plan includes the closure of the Company's prototype injection molding manufacturing facility in Eschenlohe, Germany, and the discontinuation of Direct Metal Laser Sintering 3D printing services through its 3D printing facility in Putzbrunn, Germany. The Company expects to substantially complete the plan during fiscal year 2025. The Company intends to continue offering all of its manufacturing services to customers across Europe, including injection molding and metal 3D printing. These services will be fulfilled through internal manufacturing facilities and a network of manufacturing partners.

Current wording

Our operations are comprised of two geographic operating segments in the United States and Europe.

Previous wording

Revenue is derived from the sale or parts fulfilled through our owned manufacturing factories and worldwide network of premium manufacturing partners. Our product lines consist of Injection Molding, CNC Machining, 3D Printing and Sheet Metal. Injection Molding revenue consists of sales of custom injection molds and injection-molded parts. CNC Machining revenue consists of sales of CNC-machined custom parts. 3D Printing revenue consists of sales of 3D-printed parts. Sheet Metal revenue consists of sales of fabricated sheet metal custom parts. Our revenue is generated from a diverse customer base and our historical and current efforts to increase revenue have been directed at gaining new customers and selling to our existing customer base by increasing marketing and selling activities, including:

Current wording

Revenue is derived from the sale or parts fulfilled through our owned manufacturing factories and worldwide network of premium manufacturing partners. Our product lines consist of Injection Molding, CNC Machining, 3D Printing and Sheet Metal. Injection Molding revenue consists of sales of custom injection molds and injection-molded parts. CNC Machining revenue consists of sales of CNC-machined custom parts. 3D Printing revenue consists of sales of 3D-printed parts. Sheet Metal revenue consists of sales of fabricated sheet metal custom parts.

Previous wording

Stock-based compensation expense included in the statements of operations data above for the three and nine months ended September 30, 2025 and 2024 were as follows:

Current wording

Stock-based compensation expense included in the statements of operations data above for the three months ended March 31, 2026 and 2025 were as follows:

Previous wording

Our revenue increased $9.7 million, or 7.8%, for the three months ended September 30, 2025 compared to the same period in 2024. The growth in revenue was primarily driven by an increase in average order value for our larger United States customers in the three months ended September 30, 2025 compared to the same period in 2024. By reportable segment, revenue in the United States increased $9.8 million, or 9.8%, for the three months ended September 30, 2025 compared to the same period in 2024. Revenue in Europe decreased less than $0.1 million, or 0.2%, for the three months ended September 30, 2025 compared to the same period in 2024. International revenue was favorably impacted by $1.2 million during the three months ended September 30, 2025 compared to the same period in 2024 as a result of foreign currency movements, primarily due to the strengthening of the British Pound and Euro relative to the United States Dollar.

Current wording

Our revenue increased $13.1 million, or 10.4%, for the three months ended March 31, 2026 compared to the same period in 2025. The growth in revenue was primarily driven by an increase in CNC revenue in the United States from key growth industries, primarily aerospace and defense, and market dynamics that have driven increases in price. By reportable segment, revenue in the United States increased $11.9 million, or 11.8%, for the three months ended March 31, 2026 compared to the same period in 2025. Revenue in Europe increased $1.3 million, or 4.9%, for the three months ended March 31, 2026 compared to the same period in 2025. International revenue was favorably impacted by $2.2 million during the three months ended March 31, 2026 compared to the same period in 2025 as a result of foreign currency movements, primarily due to the strengthening of the British Pound and Euro relative to the United States Dollar.

Previous wording

During the three months ended September 30, 2025, we served 21,252 unique customer contacts, which is adecrease of 5.6% from the same period in 2024. During the three months ended September 30, 2025, our customer contacts served decreased while our revenue grew. This was primarily due to our mix of customers served in the quarter as compared to the same period in 2024 and our strategic focus to earn larger orders from our customers as we strive to be their supplier of choice by serving their custom parts needs through the comprehensive offer of our factory and the Protolabs Network. Our revenue per customer contact grew 14.1% for the three months ended September 30, 2025 compared to the same period in 2024.

Current wording

During the three months ended March 31, 2026, we served 19,826 unique customer contacts, which is adecrease of 8.3% from the same period in 2025. During the three months ended March 31, 2026, our customer contacts served decreased while our revenue grew. This was primarily due to our mix of customers served in the quarter as compared to the same period in 2025 and our focus on larger, more strategic customers as we strive to be their supplier of choice by serving their custom parts needs through our comprehensive offer. Our revenue per customer contact grew 20.4% for the three months ended March 31, 2026 compared to the same period in 2025.

Previous wording

By product line, our revenue increase was driven by a 18.2% increase in CNC Machining revenue, a 2.0% increase in Injection Molding revenue and a 13.9% increase in Sheet Metal revenue, partially offset by a 6.3% decrease in 3D Printing revenue and a 25.6% decrease in Other Revenue, in each case for the three months ended September 30, 2025 compared to the same period in 2024.

Current wording

By product line, our revenue increase was driven by a 19.7% increase in CNC Machining revenue, a 4.8% increase in Injection Molding revenue, a 1.3% increase in 3D Printing revenue, and a 3.3% increase in Sheet Metal revenue, in each case for the three months ended March 31, 2026 compared to the same period in 2025.

Previous wording

Cost of Revenue. Cost of revenue increased $5.7 million, or 8.3%, for the three months ended September 30, 2025 compared to the same period in 2024, while revenue increased 7.8% for the three months ended September 30, 2025 compared to the same period in 2024. The increase in the cost of revenue of $5.7 million was primarily driven by higher revenue volumes resulting in increases of $4.4 million in raw material and production and fulfillment related costs, and $2.0 million in personnel and related costs, primarily due to incentive compensation related to our annual short-term incentive compensation plan, contract labor and overtime, during the three months ended September 30, 2025 compared to the same period in 2024, partially offset by decreases in equipment and facility-related costs of $0.7 million.

Current wording

Cost of Revenue. Cost of revenue increased $5.2 million, or 7.4%, for the three months ended March 31, 2026 compared to the same period in 2025, while revenue increased 10.4% for the three months ended March 31, 2026 compared to the same period in 2025. The increase in the cost of revenue of $5.2 million was primarily driven by higher revenue volumes resulting in increases of $3.9 million in raw material and production and fulfillment related costs, and $1.7 million in personnel and related costs, primarily due to increases in head count and overtime costs and contract labor to meet increased order volume, during the three months ended March 31, 2026 compared to the same period in 2025, partially offset by decreases in equipment and facility-related costs of $0.4 million.

Previous wording

Gross Profit and Gross Margin. Gross profit increased $4.1 million, or 7.1%, for the three months ended September 30, 2025 compared to the same period in 2024. Gross margin decreased from 45.6% in the three months ended September 30, 2024 to 45.3% in the three months ended September 30, 2025.

Current wording

Gross Profit and Gross Margin. Gross profit increased $7.9 million, or 14.2%, for the three months ended March 31, 2026 compared to the same period in 2025. Gross margin increased to 45.6% in the three months ended March 31, 2026 from 44.1% in the same period in 2025.

Previous wording

Marketing and Sales. Our marketing and sales expenses increased $2.0 million during the three months ended September 30, 2025 compared to the same period in 2024 primarily due to increases in personnel and related costs of $1.6 million, primarily due to incentive compensation related to our annual short-term incentive compensation plan and commissions and merit increases, and $0.4 million in marketing program costs.

Current wording

Marketing and Sales. Our marketing and sales expenses increased $1.0 million during the three months ended March 31, 2026 compared to the same period in 2025 primarily due to increases in personnel and related costs of $0.7 million and $0.3 million in marketing program costs.

Previous wording

Research and Development. Our research and development expenses increased $0.9 million, or 9.5%, during the three months ended September 30, 2025 compared to the same period in 2024 primarily due to increases in personnel and related costs of $1.2 million, primarily due to incentive compensation related to our annual short-term incentive compensation plan, partially offset by decreases of $0.2 million in operating costs and $0.1 million in professional services.

Current wording

Research and Development. Our research and development expenses decreased $0.1 million, or 0.7%, during the three months ended March 31, 2026 compared to the same period in 2025 primarily due to decreases in personnel and related costs of $0.3 million and $0.1 million in professional services, partially offset by increases of $0.3 million in operating costs.

Previous wording

General and Administrative. Our general and administrative expenses increased $0.9 million, or 5.6%, during the three months ended September 30, 2025 compared to the same period in 2024 primarily due to increases of $0.8 million in personnel and related costs, primarily related to incentive compensation related to our annual short-term incentive compensation plan, $0.4 million in administrative costs and $0.4 million in professional services, partially offset by decreases of $0.7 million in stock-based compensation.

Current wording

General and Administrative. Our general and administrative expenses increased $0.2 million, or 1.0%, during the three months ended March 31, 2026 compared to the same period in 2025 primarily due to increases in personnel and related costs of $0.5 million and $0.4 million in professional services, partially offset by decreases of $0.4 million in stock-based compensation, and $0.3 million in administrative costs.

Previous wording

Costs related to exit and disposal. Our decision to exit and close certain operations in Germany resulted in less than a $0.1 million expense primarily related to professional services during the three months ended September 30, 2025. We had no costs related to exit and disposal activities during the three months ended September 30, 2024.

Current wording

Costs related to exit and disposal. We had no costs related to exit and disposal activities during the three months ended March 31, 2026. Our decision to exit and close certain operations in Germany resulted in less than a $0.1 million in personnel and related cost benefits during the three months ended March 31, 2025.

Previous wording

Other income, net. We recognized other income, net of $1.4 million for the three months ended September 30, 2025, an increase of $0.2 million compared to other income, net of $1.3 million for the three months ended September 30, 2024. Other income, net for the three months ended September 30, 2025 primarily consisted of $1.2 million in interest income on investments and $0.2 million of other income. Other income, net for the three months ended September 30, 2024 primarily consisted of $1.3 million in interest income on investments and other income.

Current wording

Other income, net. We recognized other income, net of $1.5 million for the three months ended March 31, 2026 and the same period in 2025. Other income, net for the three months ended March 31, 2026 primarily consisted of $1.2 million in interest income on investments and $0.3 million of other income. Other income, net for the three months ended March 31, 2025 primarily consisted of $1.4 million in interest income on investments and other income.

Previous wording

Provision for Income Taxes. Our effective tax rate of 29.6% for the three months ended September 30, 2025 increased 2.5% compared to 27.1% for the same period in 2024. The increase in the effective tax rate was primarily due to an increase in losses in jurisdictions that are not eligible for tax benefits due to valuation allowances. Our income tax provision of $3.0 million for the three months ended September 30, 2025 increased $0.3 million as compared to our income tax provision of $2.7 million for the same period in 2024.

Current wording

Provision for Income Taxes. Our effective tax rate of 28.3% for the three months ended March 31, 2026 decreased 11.6% compared to 39.9% for the same period in 2025. The decrease in the effective tax rate was primarily due to an increase in tax benefits from the vesting of restricted stock and the exercise of stock options, as well as a one-time tax benefit related to the successful closure of a state income tax audit. Our income tax provision of $3.2 million for the three months ended March 31, 2026 increased $0.8 million as compared to our income tax provision of $2.4 million for the same period in 2025.

Previous wording

The following table summarizes our cash flows during the nine months ended September 30, 2025 and 2024:

Current wording

The following table summarizes our cash flows during the three months ended March 31, 2026 and 2025:

Previous wording

Historically, we have primarily financed our operations and capital expenditures through cash flow from operations. We had cash and cash equivalents of $104.4 million as of September 30, 2025, an increase of $15.4 million from December 31, 2024. The increase in our cash was primarily due to cash provided by operating activities of $58.1 million, proceeds from call redemptions and maturities of marketable securities of $11.7 million, issuances of common stock from equity plans of $4.2 million and from the sale of equipment of $0.8 million, partially offset by $36.7 million in repurchases of common stock, $13.6 million for purchases of marketable securities, $6.8 million for purchases of property, equipment and other capital assets and $3.1 million of shares repurchased for tax obligations.

Current wording

Historically, we have primarily financed our operations and capital expenditures through cash flow from operations. We had cash and cash equivalents of $124.0 million as of March 31, 2026, an increase of $13.1 million from December 31, 2025. The increase in our cash was primarily due to cash provided by operating activities of $17.5 million, which were partially offset by net purchases of marketable securities of $2.5 million and net purchases of property, equipment and other capital assets of $2.3 million.

Previous wording

Cash flows from operating activities were $58.1 million during the nine months ended September 30, 2025 and primarily consisted of net income of $15.2 million, adjusted for certain non-cash items, including depreciation and amortization of $25.7 million, stock-based compensation expense of $11.9 million, deferred taxes of $2.4 million, changes in operating assets and liabilities and other items totaling $2.4 million, and an impairments on a leased facility and fixed assets of $0.4 million. Cash flows from operating activities were $60.5 million during the nine months ended September 30, 2024 and primarily consisted of net income of $17.0 million, adjusted for certain non-cash items, including depreciation and amortization of $27.0 million, stock-based compensation expense of $12.7 million and changes in operating assets and liabilities and other items totaling $9.6 million and a non-cash impairment of equipment of equipment of $0.3 million, which were partially offset by deferred taxes of $6.1 million.

Current wording

Cash flows from operating activities were $17.5 million during the three months ended March 31, 2026 and primarily consisted of net income of $8.1 million, adjusted for certain non-cash items, including depreciation and amortization of $8.1 million, stock-based compensation expense of $3.2 million and increases in deferred taxes of $2.4 million, which were partially offset by changes in operating assets and liabilities and other items totaling $4.1 million, and a gain on disposal of property and equipment of $0.1 million. Cash flows from operating activities were $18.4 million during the three months ended March 31, 2025 and primarily consisted of net income of $3.6 million, adjusted for certain non-cash items, including depreciation and amortization of $8.7 million, stock-based compensation expense of $4.0 million and changes in operating assets and liabilities and other items totaling $3.4 million and an impairment of leased facility of $0.2 million, which were partially offset by deferred taxes of $1.6 million.

Previous wording

Cash flows from operating activities decreased $2.5 million during the nine months ended September 30, 2025 compared to the same period in 2024, primarily due to changes in operating assets and liabilities and other items totaling $7.3 million, decreases in net income of $1.8 million, decreases in depreciation and amortization of $1.3 million, and decreases in stock-based compensation of $0.8 million, which were partially offset by increases in deferred taxes of $8.5 million and other property and equipment adjustments of $0.2 million.

Current wording

Cash flows from operating activities decreased $0.8 million during the three months ended March 31, 2026 compared to the same period in 2025, primarily due to changes in operating assets and liabilities and other items totaling $7.9 million, decreases in stock-based compensation of $0.8 million, and decreases in depreciation and amortization of $0.6 million, which were partially offset by increases in net income of $4.5 million and increases in deferred taxes of $3.9 million.

Previous wording

Cash used in investing activities was $10.7 million during the nine months ended September 30, 2024, consisting of $8.3 million for net purchases of property, equipment and other capital assets and $2.4 million of purchases of marketable securities, net of proceeds from call redemptions and maturities.

Current wording

Cash used in investing activities was $4.8 million during the three months ended March 31, 2026, consisting of $2.5 million of net purchases of marketable securities and $2.3 million for net purchases of property, equipment and other capital assets.

Previous wording

Cash used in investing activities was $7.8 million during the nine months ended September 30, 2025, consisting of $6.0 million for net purchases of property, equipment and other capital assets and $1.8 million of purchases of marketable securities, net of proceeds from call redemptions and maturities.

Current wording

Cash used in investing activities was $2.9 million during the three months ended March 31, 2025, consisting of $1.3 million for net purchases of property, equipment and other capital assets and $1.6 million of purchases of marketable securities, net of proceeds from call redemptions and maturities.

Previous wording

Cash used in financing activities was $46.0 million during the nine months ended September 30, 2024, consisting of $46.0 million in repurchases of common stock, $1.9 million in purchases of shares withheld for tax obligations associated with equity transactions and $0.2 million for repayments of finance lease obligations, which were partially offset by $2.1 million in proceeds from issuance of common stock from equity plans.

Current wording

Cash provided by financing activities was $0.7 million during the three months ended March 31, 2026, consisting of $3.6 million in proceeds related to equity plans, which were partially offset by $2.9 million in purchases of shares withheld for tax obligations associated with equity transactions and $0.1 million for repayments of finance lease obligations.

Previous wording

Cash used in financing activities was $35.9 million during the nine months ended September 30, 2025, consisting of $36.7 million in repurchases of common stock, $3.1 million in purchases of shares withheld for tax obligations associated with equity transactions and $0.2 million for repayments of finance lease obligations, which were partially offset by $4.2 million in proceeds related to equity plans.

Current wording

Cash used in financing activities was $21.9 million during the three months ended March 31, 2025, consisting of $20.9 million in repurchases of common stock, $1.2 million in purchases of shares withheld for tax obligations associated with equity transactions and $0.1 million for repayments of finance lease obligations, which were partially offset by $0.3 million in proceeds related to the exercise of non-qualified stock options.

Previous wording

We have adopted various accounting policies to prepare the Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The preparation of these financial statements requires us to make estimates, judgements and assumptions. Our significant accounting policies and estimates are disclosed in Note 2 to the Consolidated Financial Statements included Part II, Item 8 in our Annual Report on Form 10-K for the year ended December 31, 2024. There were no material changes to our critical accounting policies and estimates during the nine months ended September 30, 2025.

Current wording

We have adopted various accounting policies to prepare the Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The preparation of these financial statements requires us to make estimates, judgments and assumptions. Our significant accounting policies and estimates are disclosed in Note 2 to the Consolidated Financial Statements included Part II, Item 8 in our Annual Report on Form 10-K for the year ended December 31, 2025. There were no material changes to our critical accounting policies and estimates during the three months ended March 31, 2026.