Proto Labs - Q4 2025

Transcript

Operator (participant)

Greetings, and welcome to Protolabs' Fourth Quarter and Full Year 2025 Earnings Call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ryan Johnsrud, Investor Relations. Thank you. Please go ahead.

Ryan Johnsrud (Manager of Investor Relations)

Thank you, Donna. Good morning, everyone, and welcome to Protolabs' Fourth Quarter and Full Year 2025 Earnings Conference Call. I am joined today by Suresh Krishna, President and Chief Executive Officer, and Dan Schumacher, Chief Financial Officer. This morning, Protolabs issued a press release announcing its financial results for the fourth quarter and full year ended December 31st, 2025. The release is available on the company's website. In addition, a prepared slide presentation is available online at the web address provided in our press release. Our discussion today will include statements relating to future performance and expectations that are or may be considered forward-looking statements and subject to many risks and uncertainties that could cause actual results to differ materially from expectations.

Please refer to our earnings press release and recent SEC filings, including our annual report on Form 10-K, for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today. The results and guidance we will discuss include non-GAAP financial measures consistent with our past practice. Please refer to our press release and the accompanying slide presentation at the Investor Relations section of our company website for a complete reconciliation of GAAP to non-GAAP results. With that, I will now turn the call over to Suresh Krishna. Suresh?

Suresh Krishna (President and CEO)

Thanks, Ryan. Good morning, everyone, and thank you for joining our fourth quarter and full year earnings call. I am pleased to share our strong financial performance in 2025 and outline our strategic priorities as we move into 2026. Eight months into this role, I've spent significant time with customers, engineers, operators, and investors. What's become clear is that Protolabs has exceptional assets and market relevance, but in recent years, we haven't fully translated that into consistent execution. The results this quarter are an early indication of what's possible when we align execution around the right priorities. We finished the year with clear momentum, delivering double-digit year-over-year growth and another record revenue quarter. In constant currencies, fourth quarter revenue increased 11% and full-year revenue grew 6%, representing Protolabs' strongest quarterly and annual organic growth rates since 2018.

Revenues per customer grew 13% in 2025, demonstrating major success on a key priority. In addition, we delivered year-over-year growth in earnings and generated another strong cash flow, reinforcing the strength of our business model. This was fueled by exceptional demand for CNC machining and sheet metal, which both delivered double-digit growth in 2025. In fact, U.S. CNC revenue grew 25% in 2025. I'd like to thank Mark Dursa, our Senior Director of CNC Operations, and his team for their exceptional execution in delivering on robust CNC demand. Innovation-driven industries like drones, space exploration, satellites, and robotics continue to rely on Protolabs as a critical partner. We also see strong momentum in data centers, another high-growth market where Protolabs enables faster execution for customers like Amphenol and CommScope, leaders in data center infrastructure solutions.

These are well-funded and long-cycle markets where our digital manufacturing model creates a durable, competitive advantage and has us well positioned for 2026. Our financial results reflect Protolabs' progress in improving the customer experience, strengthening customer relationships, and executing with speed, focus, and discipline. As a result of our strong finish in 2025, we've entered 2026 from a position of strength with clear momentum and growing confidence in the opportunities ahead. Now, shifting to our long-term strategy. We have clarified our strategy to serve customers across the entire life cycle of a part, from prototype through production. This strategic direction is not new. However, what is new is the rigor, focus, and execution plan behind it. This approach reinforces our position as the world's fastest and most reliable provider of prototype parts, while deliberately building the capabilities required to be a trusted production supplier.

Importantly, this strategy builds from our core strengths rather than shifting away from them. Excellence in prototyping and leadership in digital manufacturing are the foundations of our competitive advantage, and they are the capabilities that enable us to expand credibly into production. Execution of this strategy is anchored by four strategic pillars. Number one, Elevate Customer Experience. Number two, Accelerate Innovation. Number three, Expand Production. And number four, Drive Operational Efficiency.... first, we are elevating the customer experience by removing friction, making it easier for customers to do business with Protolabs, and more efficient for our teams to serve them. Our strategy centers on deepening customer relationships and driving higher conversion, retention, and revenue per customer, ultimately improving unit economics and operating leverage. One tangible example is improvements to our e-commerce customer experience. Today, multiple factory and network storefronts create unnecessary friction.

A more unified experience will simplify the customer journey and allow our teams to support customers more consistently and efficiently. With this, with our second strategic pillar, Accelerate Innovation, we intend to return Protolabs to its legacy of rapid, differentiated innovation, expanding offerings across our core manufacturing services to drive outsized growth. As one of the earliest and largest digital manufacturers, Protolabs has unique assets that differentiate us, including over 60 patents and more than 60 trade secrets, a robust and growing CAD dataset, and deep experience applying automation and AI at scale. We are now translating these assets into a faster, more consistent cadence of customer-facing product and service launches through 2026 and beyond. Innovation, for us, means expanding manufacturing capabilities, improving speed and precision, enhancing quoting and manufacturability feedback, and deploying smarter pricing and sourcing algorithms, always grounded in customer needs and clear return on investment.

Next, Expand Production. We are currently, while we currently offer production, our capabilities and customer engagement have historically been weighted towards prototyping. We are now strengthening the capabilities and certifications needed for true production work, opening access to a much larger market opportunity as we scale. For Protolabs, expanding production requires a more deliberate customer-led approach, prioritizing the right customers, applications, and capabilities to unlock this opportunity. In January, we achieved ISO 13485 certification for our U.S. factory injection molding operation, a critical requirement for medical device production programs. We already support prototyping work for all major medical device companies, and this certification opens a substantial opportunity to expand into production over the coming years. Moving forward, we will continue to add certifications and other capabilities required for production expansion. Our fourth strategic pillar, Drive Operational Efficiency, enables profitable growth through improved productivity and cost discipline.

This pillar is critical. It funds investments across the first three, while acting as a force multiplier for profitability. This includes expanding factory and network gross margins, leveraging SG&A more effectively, simplifying how we operate, utilizing AI, and reallocating resources towards the highest priority initiatives. Each of our four strategic pillars reinforces the others, and collectively, they drive a more customer-centric, innovative, efficient, and scalable Protolabs. While this strategy defines our organic priorities, selective inorganic opportunities can further advance our progress. We will continue to evaluate acquisitions that strengthen our capabilities and align closely with our strategic framework. We will remain disciplined and focused on opportunities that create durable, long-term shareholder value. With our long-term strategy established, let's shift to 2026. We expect 2026 will be a year of transformation and growth, focused on execution.

We are making foundational, organizational, operational, and capability-building changes that position Protolabs for faster growth and improved profitability. The first change is getting the right talent in place and properly structured. Marc Kermisch, our Chief Technology and AI Officer, is leading a reorganization of our technology group into a domain-focused organization structure, which better aligns how we build technology with how Protolabs creates value for customers. Our product management teams are now part of Marc's technology organization, helping remove silos and Accelerate Innovation. The second change is focused on continuous improvement and quality. We are expanding our business operating system, which we call Proto Excellence, beyond our factory manufacturing operations and deploying it across the organization to drive productivity. We are also adding talent with significant manufacturing expertise to our quality team as we continue to build production capabilities.

The third change for 2026 is the establishment of a Global Capability Center or GCC in India. Protolabs India will be a strategic extension of our global operating model designed to scale innovation, strengthen delivery, and deepen our global engineering and digital capabilities. Protolabs India will serve as an integrated hub that complements our U.S. and European teams, tapping into India's deep technical talent. Ashish Sharma has been appointed to lead this effort. Ashish has built and scaled GCCs for several large industrial companies, and we are excited to have him on board.... Fourth, we are making important changes in Europe in 2026. Europe plays a critical role in Protolabs' future, but revenues have declined over the past two years amid macro uncertainty, as well as internal complexity that created friction for customers and employees. As a result, we are taking deliberate action to reset the business.

We are implementing new go-to-market strategies that and a renewed customer focus to re-accelerate revenue growth, aligning our cost structure with current revenue levels and improving productivity. We believe our addressable market size in Europe is similar to the U.S. Europe is not a growth drag structurally, it is an execution opportunity. Our strategic reset actions in 2026 are designed to stabilize margins and reset the cost base, positioning the region for growth and profitability. While 2026 is a year of transformation, it is also a year of acceleration. Here are a few initiatives that we expect will drive growth in 2026. On elevating the customer experience in Q1, we plan to launch ProDesk, a customer-facing experience designed to improve customers engaged with Protolabs across ordering, collaboration, and service.

ProDesk is an important first step in improving the e-commerce experience through better user experience and functionality, while we continue to work towards a more fully unified platform over time. This initial launch is focused on removing friction today and setting the foundation for broader e-commerce simplification in the future. On accelerating innovation, we already released a few capability expansions late in 2025: advanced CNC machining and expanded metal 3D printing. The pace of releases will continue in 2026, including improvements to our quoting experience and manufacturability software, expansions of our factory capabilities, additional secondary services, and more. As for expanding production, we will focus our efforts in 2026 on our largest and most strategic customers in aerospace and defense and medical, applying what we learn and scaling best practices across our customer base over time.

We currently have two leading medical device customers in a pilot program, leveraging our new injection molding certifications and capabilities, including traceability, process validation, and automated inspection to support high-precision production volumes. As you can see, we are making step changes in 2026 to achieve our four long-term strategic pillars. As a result of strong momentum exiting 2025 and the progress on key growth initiatives, we expect growth in 2026 to accelerate relative to 2025. Importantly, while 2026 reflects a year of transformation and measured acceleration, the structural changes we are making are designed to position Protolabs for a return to sustained double-digit revenue growth. Our path to double-digit growth is driven by three levers. First, improving conversion and retention through an improved customer experience and accelerated innovation. Second, growing revenue per customer, in part by expanding in production.

And third, continuing to accelerate penetration in high-growth verticals like aerospace, defense, medical, robotics, and data centers. Taken together, our long-term strategy and transformational work underway in 2026 positions Protolabs for sustained revenue growth and operating leverage over the long term, reinforcing our position as a leader in cash flow generation in our industry. We believe our strategic framework will translate into measurable financial progress over the next several years, beginning in 2026. As outlined above, Protolabs has a credible path to $1 billion in annual revenue over time while delivering meaningful operating margin expansion. I'm proud of what the team accomplished in 2025, and encouraged by the momentum we enter into 2026, and confident in our ability to execute with speed, discipline, and innovation as we deliver long-term value to our customers and shareholders.

With that, I'll turn it over to Dan to walk through the financials. Dan?

Dan Schumacher (CFO)

Thanks, Suresh, and good morning. I'll start with a brief overview of our fourth quarter and full year results, followed by our outlook for 2026. Fourth quarter revenue was a company record, $136.5 million, up 11% year-over-year in constant currencies. This is also the first time since 2017 that we grew revenue sequentially in the fourth quarter. Fourth quarter revenue in the U.S. grew 15.9% year-over-year, while Europe declined 8.1% in constant currencies. CNC revenue in the U.S. grew 35% in the fourth quarter. Revenue fulfilled through Protolabs Network was $30.5 million, up 11.2% in constant currencies.

Non-GAAP gross margin was 44.8%, up 140 basis points year-over-year, as volume growth in the U.S. factories generated higher gross margins. Fourth quarter non-GAAP operating expenses were $48.7 million, up $5.2 million compared to the prior year, driven by higher incentive compensation, commissions, and medical expenses.... On a percent of revenue basis, fourth quarter operating expenses were down 10 basis points year-over-year. Non-GAAP earnings per share were $0.44, above our guidance range and up $0.06 year-over-year, due to the increased volume and factory gross margin improvements, partially offset by a higher tax rate. Now on to our full-year 2025 financial highlights. Revenue was a record $533.1 million, up 5.7% in constant currencies.

Factory revenue grew 3.7%, and Protolabs Network revenue grew 13.8%. 2025 revenue in the U.S. grew 9.1% year-over-year, while Europe revenue declined 7% in constant currencies. As Suresh discussed, we have focused efforts planned for 2026 to reset our European operation, generating efficiencies and returning the region to growth. In 2025, CNC machining revenue grew 16.7% year-over-year in constant currencies. Strong demand in the U.S. for CNC parts in drones, satellites, and rockets drove this outstanding performance. In the U.S., CNC grew 25% year-over-year. Injection molding revenue declined 1.9%. The service was negatively impacted by weakness in medical device and lower prototyping demand.

3D printing declined 4.7% year-over-year due to weak prototype demand for 3D printed plastic parts in older technologies. However, we are seeing strength in metal 3D printing. DMLS revenue in the U.S. grew double digits. Sheet metal grew 12% year-over-year. This service also benefited from strong demand in U.S. and aero- in U.S. aerospace and defense. Full year 2025 non-GAAP gross margin was 45.1%, compared to 45.2% in 2024. Our gross margin is unmatched in digital manufacturing, a testament to the strength of our combined factory and network fulfillment model. Factory non-GAAP gross margin was 49%, up 70 basis points year-over-year. I'd like to commend our factory operations and continuous improvement teams for their factory productivity improvements in 2025.

Network non-GAAP gross margin was 31%, down 190 basis points year-over-year, largely due to inefficiencies related to tariffs. 2025 non-GAAP operating expenses were $193.3 million, or 36.3% of revenue, up slightly from 36% of revenue in 2024. As we said, throughout 2025, the majority of the SG&A increase was in variable expenses tied to revenue growth, including incentive, compensation, and commissions. However, there is significant opportunity for leverage on our operating costs as we scale. Suresh already outlined a number of transformational initiatives in 2026 meant to drive efficiencies and productivity. We expect efforts within our operational efficiency pillar to generate operating leverage in the long term. Non-GAAP earnings per share were $1.66, up $0.03 year-over-year.

We generated $74.5 million in cash from operations in 2025, as Protolabs continues to lead the digital manufacturing industry in cash generation. We returned $43 million to shareholders in the form of repurchases. On December 31, 2025, we had $142.4 million of cash and investments on our balance sheet and zero debt. Turning to our forward outlook. We have momentum in the business, and we are actively laying the foundation to invest in our strategic pillars and grow the business to $1 billion in revenue. Our focus on long-term margin expansion will be driven by revenue growth, factory utilization and productivity, network margin refinement, and SG&A leverage. As these drivers scale, we believe Protolabs has a path to expand operating margins while continuing to lead the industry in cash generation.

As Suresh mentioned, 2026 is a year of transformation and acceleration for Protolabs. With that said, we anticipate full year 2026 GAAP revenue growth of 6%-8%. As is our standard practice, we will provide both revenue and earnings guidance for the first quarter of 2026, outlined on slide 19. We expect revenue between $130 million and $138 million. At the midpoint, this implies 6% revenue growth year-over-year. We expect foreign currency to have a $2.1 million favorable impact on revenue compared to the first quarter of 2025. Our earnings guidance incorporates the following assumptions for the first quarter of 2026.

Non-GAAP add backs will include stock-based compensation expense of approximately $3.6 million, amortization expense of $900,000, and transformation and restructuring costs of $700,000. A non-GAAP effective tax rate between 24%-25%. In summary, we expect first quarter of 2026 non-GAAP earnings per share between $0.36-$0.44. That concludes our prepared remarks. Please open the line for questions.

Operator (participant)

Thank you. The floor is now open for questions. If you would like to ask a question, please press star one on your telephone keypad at this time. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. Again, that's star one to register a question at this time. Our first question today is coming from Greg Palm of Craig-Hallum. Please go ahead.

Greg Palm (Senior Research Analyst)

Hey, yeah, good morning. I wanted to maybe start off with a little bit more color on Q4. And by the way, congrats on a great finish to the year and a really improved year overall. But as you kind of mentioned, you know, first time in a long time where revenues actually grew sequentially from Q3 to Q4, and I guess I'll sort of ask the same question. I can't recall you ever sequentially declining from Q4 to Q1, but obviously that's what the midpoint implies. So how much of that is conservatism? What exactly did you see in Q4? Was there some pull forward or revenues? And maybe just a little bit more color on what you've seen quarter to date.

Dan Schumacher (CFO)

Yeah. Thanks, Greg. And thanks for the congratulations. You know, you've followed us for some time. I've talked about this in the past. As you go into the fourth quarter, it ends up being quite unpredictable in terms of when customers will have projects. And what we saw is, like, through November and December, continued, you know, good order volumes driven by, you know, our engagement with customers in those key industries. And so that resulted in the results that you see. As we started in January, it was a more normalized start to the year, where it's softer as people are coming back from the holidays, and we've seen order rates improve from that point.

So it hasn't been since 2017 that we've seen that, where in the fourth quarter, people continue to order right to the end of the year, but we do see some normalization now starting in January.

Greg Palm (Senior Research Analyst)

Okay, that's fair, fair enough. And then, you know, just in terms of end markets, applications, you—I think you've talked about a few of them that you've been sort of seeing, you know, a lot of growth in, in recent history. But can you just maybe go into a little bit more detail, you know, whether, you know, A and D, so that, you know, the drones and satellites, you know, space. But, you know, are you... You know, presumably some of these end markets are accelerating, but just give us a little bit more color, exactly what you're seeing.

Suresh Krishna (President and CEO)

Yeah. Thanks, Greg. We are absolutely seeing innovation-led growth in these markets, and as you know, we are the default go-to place for prototyping for innovation. We are absolutely well positioned to leverage all of these growth markets that are well-funded, long cycle innovations starting now, and we serve almost all of these industries. So we feel pretty good about where we are positioned to serve the innovation-led growth in the U.S. right now.

Greg Palm (Senior Research Analyst)

Okay. And lastly, you know, appreciate some of the commentary on the strategic pillars. You know, I'm curious, you know, how much or what can sort of be done near term versus midterm versus long term? And, I mean, do you think you're starting to see some of the results from some of these strategic initiatives already, or is this more of a sort of to-come kind of thing?

Suresh Krishna (President and CEO)

Yeah, Greg, we are just starting this now, and we will see acceleration in the outer years. This is a year of transformation. We are putting things in place, and we are getting organized.

Greg Palm (Senior Research Analyst)

Okay. Keep it up. Best of luck. Thanks.

Suresh Krishna (President and CEO)

Thank you.

Dan Schumacher (CFO)

Thanks, Greg.

Operator (participant)

Thank you. Our next question is coming from Troy Jensen of Cantor Fitzgerald. Please go ahead.

Troy Jensen (Managing Director)

Hey, gentlemen, congrats on the great results.

Dan Schumacher (CFO)

Thanks, Troy.

Troy Jensen (Managing Director)

Maybe just a couple questions. Hey, just a couple questions for me. Can you talk about just unique developers? It was down here, lowest we've seen in a bit. Is this a conscious decision to shed less profitable, or can you just touch on the UDPs, please?

Suresh Krishna (President and CEO)

Yeah, Troy, you know, we, we are absolutely focused on increasing revenue per contact, and we saw acceleration in Q4 with revenue per contact up almost 23%. Having said that, we are also focused on driving more contacts, so, we are aware that we have to grow both. But our focus has been to get more share of wallet from our existing customers, and that is borne by the facts of how Q4 performed. In fact, all of 2025 performed, where we were up 13% year-over-year on revenue per contact.

Troy Jensen (Managing Director)

All right. All right, fair. So just different question here. Can you talk... there's been chatter, or just I know the administration's really kind of been pushing U.S. supply chains for defense. And I've just heard chatter that they're out and even kind of talking to the machine shop, builders of the world. But, anything that you guys can talk about here, this kind of reshoring or this, U.S.-based supply for defense? Is this something that you've had discussions with or talked to administration about?

Suresh Krishna (President and CEO)

... And I, you can, as you can see from our results, I mean, we are, we have good exposure to aerospace and defense, good exposure to all the growth areas within aerospace and defense. That includes drone, satellites, rockets, robotics, and we are seeing good growth from all of those end markets.

Troy Jensen (Managing Director)

Okay. But not specifically, just defense really pushing you as reshoring into supply chains? Just more broad-based.

Suresh Krishna (President and CEO)

Yeah, I think, you know, I don't know how much specifics we can give you, but we have good exposure to all of these companies, and we are a preferred supplier to them when it comes to driving innovation.

Troy Jensen (Managing Director)

Okay. All right, guys, keep up the good work.

Dan Schumacher (CFO)

Thanks, Troy.

Operator (participant)

Thank you. Our next question is coming from Brian Drab of William Blair. Please go ahead.

Brian Drab (Co-Group Head of Industrials)

Since Troy's trying to get you to talk about all your defense work, I thought maybe I'd ask you to reveal all 63 secrets that you mentioned on the call.

Can we talk through those?

Dan Schumacher (CFO)

No, they're a secret for a reason, Brian.

Brian Drab (Co-Group Head of Industrials)

I hadn't heard that stat before, 63 secrets. I thought that was interesting. The injection molding business has been pretty steady here the last couple quarters, but you know, this is obviously you know, still one of the keys to the growth going forward, is to reaccelerate growth in injection molding. I know that you've done some work around automation and you're working with enterprise customers, different verticals. But like, what, as you think about that 6%-8% growth, which would be outstanding for 2026 for the overall company, you know, what kind of visibility do you have to the injection molding business contributing to that type of growth?

I'm wondering if you just, if you have some better visibility related to production programs with some customers or, you know, any, any color around that visibility would be great?

Suresh Krishna (President and CEO)

Yeah, Brian, thanks. Yeah, we have acknowledged in the past that prototyping in injection molding is down, and it remains down, so hence our pivot towards production in injection molding in particular, while we are going after production in all our service lines. Getting the ISO 13485 certification for medical industry, which allows us to do traceability, process validation, and inspection, helps us pivot to more production in injection molding. We are in pilot with two medical device manufacturers right now for high precision, higher volume production parts for injection molding. And, as that scales, we will be able to bring in more customers into that fold and thereby expand our injection molding revenues year-over-year.

Brian Drab (Co-Group Head of Industrials)

Do you think that it's possible that injection molding grows at a comparable rate to CNC machining in 2026?

Suresh Krishna (President and CEO)

We're not giving guidance as it relates to service at this point.

Brian Drab (Co-Group Head of Industrials)

Fair. Fair. Okay. And then you launched these advanced CNC capabilities in October, and I'm just wondering, is that still very early in the ramp or did that affect, do you think, some of the CNC order activity in the fourth quarter?

Suresh Krishna (President and CEO)

Yeah, it's... While it's early, it's performing well for us. We are only a few months in, but we are seeing significant excitement and customers wanting to use that service. It's something they've been asking us for a long time. When I talk about friction, it's these kinds of things where customers want something from us, and we are not responding, and we are able to do that now, and we are seeing a good lift for these services.

Brian Drab (Co-Group Head of Industrials)

Okay, and then my last question for now is just on India. Should I be thinking about that as an opportunity to expand the network side of your business, which, you know, serving customers globally? Or, and I think you mentioned, I may have just missed it, or is it more focused on, you know, customers with serving customers within India and the surrounding region?

Suresh Krishna (President and CEO)

Yeah, so we have been in India for some time with manufacturing partners that support our network business. By putting in a center in India, we are looking to expand how we can leverage India's technical talent to help us advance our innovation agenda, our AI agenda, and accelerate that with speed. We are expanding India for supporting our global business.

Brian Drab (Co-Group Head of Industrials)

So, what type of people are in this facility then? Is it software engineers or CNC machinists or what? You know, can you just elaborate on that a little bit?

Suresh Krishna (President and CEO)

Yeah, we will share more as we build it out.

Brian Drab (Co-Group Head of Industrials)

Okay.

Suresh Krishna (President and CEO)

We just started this in the beginning of the year. As I said, we already had a presence with supplier quality engineers, supplier development engineers, working with our manufacturing partners and making them capable to supply global customers in Europe and U.S. By putting in a head who has helped build global capability centers, we can add more capability in our India office to support our entire business.

Brian Drab (Co-Group Head of Industrials)

Okay, perfect. Thank you.

Operator (participant)

Thank you. Our next question is coming from Jim Ricchiuti of Needham & Company. Please go ahead.

Jim Ricchiuti (Senior Analyst)

... Hi, good morning. Yeah, I'm wondering, is the, is this decision to share, full year growth targets with us today, is that, is that a function of, what you're seeing in terms of opportunity? I'm not gonna call it predictable demand, because I don't think that's something necessarily that characterizes your business. But I'm wondering, you know, are you seeing this opportunity, a better view of this opportunity in several of the key markets you've identified? Or is it, or is it just, is this accelerating growth due to, you know, just greater confidence in the, the changes you're making and the potential for that to provide more immediate benefits? I'm not sure if that question is confusing. I'm just trying to get a sense, because normally you guys have not talked about, full year revenue growth.

Dan Schumacher (CFO)

So, Jim, we just had a quarter in which we had 11% growth year-over-year, and Suresh just laid out some transformational changes that we're going through. So it’s a year of, you know, quite a bit of change for us. I don't have better visibility to what the full year is, but I thought it would be helpful to share with you and the investors where we're thinking about for the full year in terms of growth.

Jim Ricchiuti (Senior Analyst)

That's very helpful, and I think appreciated. The other question I had is, given all the changes you're making, what are some of the puts and takes on the investments required? Do you anticipate additional investments as you go through the year to potentially, you know, lay the foundation for stronger growth, or is this also gonna be a reallocation of resources?

Dan Schumacher (CFO)

It's gonna be a reallocation of resources. We are driving initiatives. You can see some of the we had a transformational charge in the fourth quarter. We've got one in the first quarter. So we are looking at eliminating costs in certain areas, but reinvesting them into others. So, you know, from a full year perspective, I would not expect us to be expanding margin. What we're gonna be doing is we're gonna be looking to lower costs, but at the same time reinvest that cost to drive some of the transformational change that Suresh talked about and start to really moving growth.

Jim Ricchiuti (Senior Analyst)

Got it, and just one quick follow-up. I may have missed it. Did you provide the network gross margin in the quarter? I think they were lower for the year, but I wasn't quite sure. You may have mentioned that I missed it.

Dan Schumacher (CFO)

Net margin in the quarter was 30.3%.

Jim Ricchiuti (Senior Analyst)

Thank you, and I'll add my congratulations. Real nice finish to the year. Thank you.

Dan Schumacher (CFO)

Thank you, Jim.

Operator (participant)

Thank you. Ladies and gentlemen, this brings us to the end of our question and answer session and today's conference. We would like to thank you for your participation and interest in Protolabs. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.