Proto Labs Inc
For the period ended Mar 31, 2025. Filed May 2, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 2, 2025
PRLB$65.69+4.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001628280-24-046196
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-02.
0001628280-25-021822
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 83 previous paragraphs and 73 current paragraphs.
38 unchanged; 26 reworded; 9 added; 15 removed; 4 previous and 0 current paragraphs rearranged.
Tables are not compared: 7 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
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 report
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 report
The following table summarizes our unique customer contacts and revenue per customer contact:
Current report
1 Revenue per customer contact is calculated using the revenue recognized during the respective period divided by the actual number of customer contacts served during the same period. Customer contacts are product developers, engineers, procurement and supply chain professionals and other individuals who place an order, and that order is shipped and invoiced during the period. The Company believes revenue per customer contact is useful to investors in evaluating the underlying business trends and ongoing operating performance of the Company.
Current report
Cost of Revenue, Gross Profit and Gross Margin
Current report
Benefits or costs related to disposal and exit activities. Costs related to disposal and exit activities is driven by our decision to close certain manufacturing facilities in Germany. The expenses consist primarily of operating expenses, including employee severance, write-down of fixed assets and facility-related charges. Benefits may result from adjustments to initial estimates regarding the nature and timing of disposal and exit activities.
Current report
Cost of Revenue, Gross Profit and Gross Margin
Current report
Marketing and Sales. Our marketing and sales expenses increased $0.6 million during the three months ended March 31, 2025 compared to the same period in 2024 primarily due to increases in personnel and related costs of $0.4 million primarily due to merit increases and incentive compensation related to commissions and $0.2 million in marketing program costs.
Current report
Benefits related to exit and disposal. Our decision to exit and close certain operations in Germany resulted in less than $0.1 million in personnel and related cost benefits during the three months ended March 31, 2025. The benefit is the result of timing of employee separation payments and changes from estimated amounts accrued in 2024. We had no costs related to exit and disposal activities during the three months ended March 31, 2024.
Removed paragraphs (15)
Previous report
Closure of Japan business. Closure of Japan business expense is driven by our decision to close the Japan manufacturing facility and exit the Japan market. The expenses consist primarily of professional service costs.
Previous report
Marketing and Sales. Marketing and sales expenses increased $0.9 million, or 4.3%, during the three months ended September 30, 2024 compared to the same period in 2023. The increase in marketing and sales expenses was primarily driven by marketing demand generation costs increases of $0.4 million, other operating cost increases of $0.3 million and increases in personnel and related costs of $0.2 million due to additional headcount, partially offset by lower incentive compensation during the three months ended September 30, 2024 when compared to the same period in 2023.
Previous report
General and Administrative. Our general and administrative expenses decreased $0.8 million, or 4.7%, during the three months ended September 30, 2024 compared to the same period in 2023 primarily due to the three months ended September 30, 2023 including a $0.5 million reserve for specific receivables deemed to be uncollectible. Also contributing to the decrease during the three months ended September 30, 2024 compared to the same period in 2023 were decreases of $0.7 million in operating costs and $0.4 million in intangible amortization expense, partially offset by increases of $0.6 million in personnel and related costs and $0.2 million in professional services and other costs.
Previous report
Closure of Japan business. We had no expenses related to the closure of our Japan business during the three months ended September 30, 2024. Our decision to close our Japan business resulted in less than $0.1 million in professional services expenses during the three months ended September 30, 2023.
Previous report
Comparison of Nine Months Ended September 30, 2024 and 2023
Previous report
Revenue
Previous report
Our revenue increased $0.3 million, or 0.1%, for the nine months ended September 30, 2024 compared to the same period in 2023. By reportable segment, revenue in the United States increased $1.6 million, or 0.5%, for the nine months ended September 30, 2024 compared to the same period in 2023. Revenue in Europe decreased $1.3 million, or 1.6%, for the nine months ended September 30, 2024 compared to the same period in 2023. Revenue generated from Protolabs Network was $73.9 million and $60.1 million for the nine months ended September 30, 2024 and 2023, respectively. International revenue was positively impacted by $1.4 million during the nine months ended September 30, 2024 compared to the same period in 2023 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 report
By product line, our revenue increase was driven by a 3.5% increase in CNC Machining revenue and a 0.5% increase in 3D Printing revenue, which was partially offset by a 2.5% decrease in Injection Molding revenue, a 10.1% decrease in Sheet Metal revenue and a 12.3% decrease in Other Revenue in each case for the nine months ended September 30, 2024 compared to the same period in 2023.
Previous report
Cost of Revenue. Cost of revenue decreased $4.8 million, or 2.2%, for the nine months ended September 30, 2024 compared to the same period in 2023, while revenue increased 0.1% for the nine months ended September 30, 2024 compared to the same period in 2023. The decrease in cost of revenue of $4.8 million was driven by reductions in headcount and overtime leading to lower personnel and related costs of $3.8 million primarily in our digital manufacturing factory business during the nine months ended September 30, 2024 compared to the same period in 2023. The cost reductions in our digital manufacturing factory business were the result of focused management of resources aligned to order volumes, partially supported by increased automation. Also contributing to the decrease in cost of revenue during the nine months ended September 30, 2024 compared to the same period in 2023 were decreases in order volumes fulfilled through our factories as customer orders fulfilled through our network increased. This resulted in a reduction in raw materials and production costs of $1.9 million, which were partially offset by increases in equipment and facility-related costs of $0.9 million.
Previous report
Gross Profit and Gross Margin. Gross profit increased from $166.2 million in the nine months ended September 30, 2023 to $171.2 million in the nine months ended September 30, 2024. Gross margin increased from 43.9% in the nine months ended September 30, 2023 to 45.2% in the nine months ended September 30, 2024.
Previous report
Marketing and Sales. Marketing and sales expenses increased $3.2 million, or 4.9%, during the nine months ended September 30, 2024 compared to the same period in 2023. The increase was driven by increases in personnel and related costs of $1.4 million, marketing demand generation costs increases of $1.1 million and other operating costs increases of $0.7 million during the nine months ended September 30, 2024 when compared to the same period in 2023.
Previous report
General and Administrative. Our general and administrative expenses decreased $0.5 million, or 1.1%, during the nine months ended September 30, 2024 compared to the same period in 2023 primarily due to decreases in intangible amortization costs of $1.1 million, other operating costs of $0.9 million and administrative costs of $0.9 million, partially offset by increases in personnel and related costs of $1.5 million, in stock-based compensation of $0.8 million and in professional services of $0.7 million. In addition, the nine months ended September 30, 2023 included a $0.5 million reserve for specific receivables deemed to be uncollectible.
Previous report
Closure of Japan business. We had no expenses related to the closure of our Japan business during the nine months ended September 30, 2024. During the nine months ended September 30, 2023, we recognized $0.2 million in professional services expenses related to the closure.
Previous report
Other income (loss), net. We recognized other income, net of $3.5 million for the nine months ended September 30, 2024, an increase of $5.3 million compared to other loss, net of $1.8 million for the nine months ended September 30, 2023. Other income, net for the nine months ended September 30, 2024 primarily consisted of $3.9 million in interest income on investments and other income, partially offset by $0.4 million of foreign currency losses. Other loss, net for the nine months ended September 30, 2023 primarily consisted of a $3.9 million foreign currency translation loss from the substantial completion on the closure of our Japan business, which was partially offset by $2.1 million in interest income on investments and other income.
Previous report
Provision for Income Taxes. Our effective tax rate of 31.9% for the nine months ended September 30, 2024 decreased 11.3% compared to 43.2% for the same period in 2023. The decrease in the effective tax rate was primarily due to the prior year one-time tax impact of the foreign currency translation loss from the substantial completion on the closure of our Japan business. Our income tax provision of $8.0 million for the nine months ended September 30, 2024 increased $0.2 million compared to our income tax provision of $7.8 million for the nine months ended September 30, 2023.
Reworded paragraphs (26)
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 empower companies to bring new ideas to market by offering the fastest and most comprehensive digital manufacturing service in the world. 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. We utilize injection molding, computer numerical control (CNC) machining, 3D printing and sheet metal fabrication to manufacture custom parts for our customers.
Current 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.
Previous 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, and to a wide variety of customers seeking to purchase custom made parts. We believe our use of advanced technology enables 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 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.
Previous wording
We have established our operations in the United States and Europe. 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. 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.).
Previous wording
Our operations are comprised of two geographic operating segments in the United States and Europe. On May 27, 2022, the Company's board of directors approved a plan for the closure of our manufacturing facility in Japan and announced an intention to cease operations in the region. The Company dissolved its Japan operations in December 2023. Revenue is derived from our Injection Molding, CNC Machining, 3D Printing and Sheet Metal product lines. 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. 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:
Previous wording
Cost of revenue consists primarily of raw materials, costs to procure parts through our network of premium manufacturing partners, equipment depreciation, employee compensation including benefits and stock-based compensation, facilities costs and overhead allocations associated with the manufacturing process for molds and customer parts. We expect our personnel-related costs to increase in order to retain and attract top talent and remain competitive in the market. Overall, we expect cost of revenue to increase in absolute dollars.
Current wording
Cost of revenue consists primarily of raw materials, equipment depreciation, employee compensation including benefits and stock-based compensation, facilities costs, overhead allocations associated with the manufacturing process for molds and custom parts, and costs to procure parts through our network of premium manufacturing partners. We expect our personnel-related costs to increase in order to retain and attract top talent and remain competitive in the market. Overall, we expect cost of revenue to increase in absolute dollars.
Previous wording
We define gross profit as our revenue less our cost of revenue, and we define gross margin as gross profit expressed as a percentage of revenue. Our gross profit and gross margin are affected by many factors, including our mix of revenue by product line, pricing, sales volume, manufacturing costs, the costs associated with increasing production capacity, the mix between domestic and foreign revenue sources, the mix between revenue produced in our internal manufacturing operations and outsourced to our external manufacturing partners, and foreign currency exchange rates.
Current wording
We define gross profit as our revenue less our cost of revenue, and we define gross margin as gross profit expressed as a percentage of revenue. Our gross profit and gross margin are affected by many factors, including our mix of revenue produced in our internal manufacturing operations and outsourced to our external manufacturing partners, pricing, sales volume, manufacturing costs, the costs associated with increasing production capacity, the mix between domestic and foreign revenue sources, the mix of revenue by product line, and foreign currency exchange rates.
Previous wording
Stock-based compensation expense included in the statements of operations data above for the three and nine months ended September 30, 2024 and 2023 were as follows:
Current wording
Stock-based compensation expense included in the statements of operations data above for the three months ended March 31, 2025 and 2024 were as follows:
Previous wording
Our revenue decreased $5.1 million, or 3.9%, for the three months ended September 30, 2024 compared to the same period in 2023. The decline in revenue was primarily driven by a decrease in larger quantity part orders, which were particularly strong in the three months ended September 30, 2023. By reportable segment, revenue in the United States decreased $4.4 million, or 4.2%, for the three months ended September 30, 2024 compared to the same period in 2023. Revenue in Europe decreased $0.7 million, or 2.7%, for the three months ended September 30, 2024 compared to the same period in 2023. Revenue generated from the Protolabs Network was $25.3 million and $22.6 million for the three months ended September 30, 2024 and 2023, respectively. International revenue was positively impacted by $0.5 million during the three months ended September 30, 2024 compared to the same period in 2023 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 decreased $1.7 million, or 1.3%, for the three months ended March 31, 2025 compared to the same period in 2024. The decline in revenue was primarily driven by the leap year in 2024, resulting in a decrease in the number of operating days in the three months ended March 31, 2025 compared to the same period in 2024. By reportable segment, revenue in the United States decreased $1.2 million, or 1.2%, for the three months ended March 31, 2025 compared to the same period in 2024. Revenue in Europe decreased $0.5 million, or 1.8%, for the three months ended March 31, 2025 compared to the same period in 2024. International revenue was negatively impacted by $0.5 million during the three months ended March 31, 2025 compared to the same period in 2024 as a result of foreign currency movements, primarily due to the weakening of the British Pound and Euro relative to the United States Dollar.
Previous wording
During the three months ended September 30, 2024, we served 22,511 unique customer contacts, which is a decrease of 2.5% from the same period in 2023. Our customer contacts served decreased at a rate less than our decrease in revenue. This was primarily due to our mix of customers served in the quarter as compared to the same period in 2023 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.
Current wording
During the three months ended March 31, 2025, we served 21,627 unique customer contacts, which is a decrease of 3.7% from the same period in 2024. Our customer contacts served decreased at a rate higher than our decrease in revenue. 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 2.5% for the three months ended March 31, 2025 compared to the same period in 2024.
Previous wording
By product line, our revenue decrease was driven by a 9.4% decrease in Injection Molding revenue, a 12.8% decrease in Sheet Metal revenue and a 0.9% decrease in 3D Printing revenue, which was partially offset by a 0.8% increase in CNC Machining revenue and a 49.5% increase in Other Revenue, in each case for the three months ended September 30, 2024 compared to the same period in 2023.
Current wording
By product line, our revenue decrease was driven by a 7.5% decrease in Injection Molding revenue and a 6.4% decrease in 3D Printing revenue, partially offset by a 5.8% increase in CNC Machining revenue, an 18.5% increase in Sheet Metal revenue and a 46.3% increase in Other Revenue, in each case for the three months ended March 31, 2025 compared to the same period in 2024.
Previous wording
Cost of Revenue. Cost of revenue decreased $3.0 million, or 4.2%, for the three months ended September 30, 2024 compared to the same period in 2023, while revenue decreased 3.9% for the three months ended September 30, 2024 compared to the same period in 2023. The decrease in the cost of revenue of $3.0 million was primarily driven by lower revenue volumes in our factory business, which resulted in decreases of $1.6 million in raw materials and production costs, and $1.4 million in personnel and related costs as we aligned staffing to order volumes during the three months ended September 30, 2024 compared to the same period in 2023. The cost reductions in our digital manufacturing factory business were primarily the result of focused management of resources aligned to order volumes, partially supported by increased automation.
Current wording
Cost of Revenue. Cost of revenue increased $0.1 million, or 0.1%, for the three months ended March 31, 2025 compared to the same period in 2024, while revenue decreased 1.3% for the three months ended March 31, 2025 compared to the same period in 2024. The increase in the cost of revenue of $0.1 million was primarily driven by increases of $0.4 million in personnel and related costs during the three months ended March 31, 2025 compared to the same period in 2024, partially offset by decreases in equipment and facility-related costs of $0.3 million.
Previous wording
Gross Profit and Gross Margin. Gross profit decreased from $59.3 million in the three months ended September 30, 2023 to $57.2 million in the three months ended September 30, 2024. Gross margin increased from 45.4% in the three months ended September 30, 2023 to 45.6% in the three months ended September 30, 2024.
Current wording
Gross Profit and Gross Margin. Gross profit decreased $1.8 million, or 3.1% for the three months ended March 31, 2025 compared to the same period in 2024. Gross margin decreased from 44.9% in the three months ended March 31, 2024 to 44.1% in the three months ended March 31, 2025.
Previous wording
Operating Expenses, Other (Loss) Income, net and Provision for Income Taxes
Current wording
Operating Expenses, Other Income, net and Provision for Income Taxes
Previous wording
Research and Development. Our research and development expenses decreased $0.3 million, or 3.3%, during the three months ended September 30, 2024 compared to the same period in 2023 primarily due to decreases in personnel and related costs of $0.9 million primarily due to lower incentive compensation, partially offset by increases of $0.4 million of other operating costs and $0.2 million in professional services .
Current wording
Research and Development. Our research and development expenses decreased $0.6 million, or 5.0%, during the three months ended March 31, 2025 compared to the same period in 2024 primarily due to decreases in personnel and related costs of $0.4 million primarily due largely to lower contract labor spend and $0.4 million in professional services, partially offset by increases of $0.2 million in operating costs.
Previous wording
Research and Development. Our research and development expenses increased $1.0 million, or 3.1%, during the nine months ended September 30, 2024 compared to the same period in 2023 primarily due to increases of $0.9 million in other operating costs, $0.4 million in professional services and $0.2 million in administrative costs, partially offset by decreases in personnel and related costs of $0.5 million primarily due to lower incentive compensation.
Current wording
General and Administrative. Our general and administrative expenses increased $0.5 million, or 3.3%, during the three months ended March 31, 2025 compared to the same period in 2024 primarily due to by increases of $1.0 million in administrative costs, partially offset by decreases in personnel and related costs of $0.2 million primarily due to lower headcount and $0.3 million in stock based compensation.
Previous wording
Other income, net. We recognized other income, net of $1.3 million for the three months ended September 30, 2024, an increase of $1.0 million compared to other income, net of $0.3 million for the three months ended September 30, 2023. 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. Other income, net for the three months ended September 30, 2023 primarily consisted of $0.5 million in interest income on investments and other income, partially offset by $0.2 million of foreign currency losses.
Current wording
Other income, net. We recognized other income, net of $1.5 million for the three months ended March 31, 2025, an increase of $0.6 million compared to other income, net of $0.9 million for the three months ended March 31, 2024. 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. Other income, net for the three months ended March 31, 2024 primarily consisted of $1.1 million in interest income on investments and other income, partially offset by $0.2 million of foreign currency losses.
Previous wording
Provision for Income Taxes. Our effective tax rate of 27.1% for the three months ended September 30, 2024 increased 1.2% compared to 25.9% for the same period in 2023. The increase in the effective tax rate was primarily due to a reduction in expenditures that qualify for the research and development credit. Our income tax provision of $2.7 million for the three months ended September 30, 2024 decreased $0.1 million as compared to our income tax provision of $2.8 million for the same period in 2023.
Current wording
Provision for Income Taxes. Our effective tax rate of 39.9% for the three months ended March 31, 2025 increased 8.1% compared to 31.8% for the same period in 2024. The increase in the effective tax rate was primarily due to a one-time release of tax reserves arising from a successful audit closure in 2024, that did not repeat in 2025. Our income tax provision of $2.4 million for the three months ended March 31, 2025 decreased $0.1 million as compared to our income tax provision of $2.5 million for the same period in 2024.
Previous wording
The following table summarizes our cash flows during the nine months ended September 30, 2024 and 2023:
Current wording
The following table summarizes our cash flows during the three months ended March 31, 2025 and 2024:
Previous wording
Historically, we have primarily financed our operations and capital expenditures through cash flow from operations. We had cash and cash equivalents of $87.9 million as of September 30, 2024, an increase of $4.1 million from December 31, 2023. The increase in our cash was primarily due to cash provided by operating activities of $60.5 million and proceeds from call redemptions and maturities of marketable securities of $15.7 million, which were partially offset by $8.3 million for purchases of property, equipment and other capital assets, $18.1 million for purchases of marketable securities and $46.0 million in repurchases of common stock.
Current wording
Historically, we have primarily financed our operations and capital expenditures through cash flow from operations. We had cash and cash equivalents of $82.7 million as of March 31, 2025, a decrease of $6.4 million from December 31, 2024. The decrease in our cash was primarily due to $1.3 million for purchases of property, equipment and other capital assets, $6.6 million for purchases of marketable securities and $20.9 million in repurchases of common stock, which were partially offset by cash provided by operating activities of $18.4 million and proceeds from call redemptions and maturities of marketable securities of $4.9 million.
Previous wording
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, changes in operating assets and liabilities and other items totaling $9.6 million and a non-cash impairment of equipment of $0.3 million, which were partially offset by deferred taxes of $6.1 million. Cash flows from operating activities were $56.0 million during the nine months ended September 30, 2023 and primarily consisted of net income of $10.2 million, adjusted for certain non-cash items, including depreciation and amortization of $28.2 million, stock-based compensation expense of $11.8 million, foreign currency translation loss of $3.9 million, interest on finance lease obligations of $0.9 million and changes in operating assets and liabilities and other items totaling $10.6 million, which were partially offset by deferred taxes of $9.2 million and a gain on the disposal of property and equipment of $0.5 million.
Current wording
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, changes in operating assets and liabilities and other items totaling $3.4 million and an impairment of a leased facility of $0.2 million, which were partially offset by deferred taxes of $1.6 million. Cash flows from operating activities were $21.3 million during the three months ended March 31, 2024 and primarily consisted of net income of $5.3 million, adjusted for certain non-cash items, including depreciation and amortization of $9.1 million, stock-based compensation expense of $4.3 million and changes in operating assets and liabilities and other items totaling $4.9 million, which were partially offset by deferred taxes of $2.2 million.
Previous wording
Cash flows from operating activities increased $4.5 million during the nine months ended September 30, 2024 compared to the same period in 2023, primarily due to increases in net income of $6.8 million, deferred taxes of $3.1 million, stock-based compensation of $0.9 million and other non-cash property and equipment adjustments of $0.7 million, which were partially offset by decreases in depreciation and amortization of $1.2 million, changes in operating assets and liabilities totaling $1.0 million, and interest on finance lease obligations of $0.8 million. The nine months ended September 30, 2023 also included a $3.9 million non-cash foreign currency loss.
Current wording
Cash flows from operating activities decreased $3.0 million during the three months ended March 31, 2025 compared to the same period in 2024, primarily due to decreases in depreciation and amortization of $0.4 million, decreases in stock-based compensation of $0.3 million, decreases in net income of $1.7 million and changes in operating assets and liabilities totaling $1.5 million, which were partially offset by increases in deferred taxes of $0.7 million, and other property and equipment adjustments of $0.2 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 $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 provided by investing activities was $9.9 million during the nine months ended September 30, 2023, consisting of $19.1 million in proceeds from call redemptions and maturities of marketable securities, which were partially offset by $9.2 million for net purchases of property, equipment and other capital assets.
Current wording
Cash provided by investing activities was $4.4 million during the three months ended March 31, 2024, consisting of $7.0 million in proceeds from call redemptions and maturities of marketable securities, which were partially offset by $2.6 million for net purchases of property, equipment and other capital assets.
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 purchases of shares under the Employee Stock Purchase Plan.
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 the exercise of non-qualified stock options.
Previous wording
Cash used in financing activities was $38.7 million during the nine months ended September 30, 2023, consisting of $39.1 million in repurchases of common stock, $1.4 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 $2.0 million in proceeds from purchases of shares under the Employee Stock Purchase Plan.
Current wording
Cash used in financing activities was $16.6 million during the three months ended March 31, 2024, consisting of $16.0 million in repurchases of common stock, $0.5 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
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, 2023. There were no material changes to our critical accounting policies and estimates during the nine months ended September 30, 2024.
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, 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 three months ended March 31, 2025.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
Revenue by reportable segment and the related changes for the nine months ended September 30, 2024 and 2023 were as follows:
Previous report — wording carried elsewhere
During the nine months ended September 30, 2024, we served 43,671 unique product developers and engineers, a decrease of 4.4% from the same period in 2023. Our customer contacts served decreased compared to an increase in revenue. This was primarily due to 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.
Previous report — wording carried elsewhere
Revenue by product line and the related changes for the nine months ended September 30, 2024 and 2023 were as follows:
Previous report — wording carried elsewhere
Operating Expenses, Other Income (Loss), net and Provision for Income Taxes