Executive Summary

Record revenue of $135.1M (+7.5% YoY) and non-GAAP EPS $0.41; both exceeded Wall Street consensus for Q2 2025 (Revenue $128.1M*, EPS $0.34*). Strength was led by CNC machining and U.S. demand, while injection molding and Europe were headwinds .
Gross margin held flat sequentially on a non-GAAP basis (44.8%), though down ~90 bps YoY, driven by mix shift to Network and mid-quarter tariff changes on aluminum/steel that temporarily compressed U.S. Network margins; pricing adjustments restored Network margins by June .
Q3 2025 guidance: revenue $130–$138M and non-GAAP diluted EPS $0.35–$0.43, with expected non-GAAP add-backs of ~$3.9M SBC and ~$0.9M amortization, and a non-GAAP tax rate of 24–25% .
Stock reaction catalyst: multi-faceted beat (headline revenue and EPS) with clear narrative on tariff mitigation and durable CNC demand in aerospace/defense; trajectory signals continued YoY growth at the Q3 guide midpoint and confidence in production-led strategy .

What Went Well and What Went Wrong

What Went Well

Record quarterly revenue ($135.1M) with U.S. growth +12% YoY; CNC machining set a company record (+20% YoY; +30% in U.S.), underscoring production traction in aerospace/defense .
Non-GAAP EPS $0.41 rose both sequentially and YoY, supported by higher-than-anticipated volume; adjusted EBITDA margin expanded to 14.6% .
CEO framing of strategic priorities and execution clarity: “Our priorities remain as follows: drive growth in our key performance indicators, expand production capabilities, and reinforce our core prototyping offer” .

What Went Wrong

Injection molding revenue declined 3–4% YoY; management cited prior-year large auto orders and ongoing medical sector weakness .
Non-GAAP gross margin down ~90 bps YoY due to higher Network mix and mid-quarter tariff impact on U.S. Network margins; Network margin landed at 29% in Q2 .
Europe remained soft (-15% YoY in constant currency) amid contracting manufacturing activity despite reorganization of go-to-market teams .

Financial Results

Headline Metrics vs Prior Periods and Estimates

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$121.8	$126.2	$135.1
GAAP Diluted EPS ($)	$(0.02)	$0.15	$0.18
Non-GAAP Diluted EPS ($)	$0.38	$0.33	$0.41
GAAP Gross Margin (%)	42.7%	44.1%	44.3%
Non-GAAP Gross Margin (%)	43.4%	44.8%	44.8%
Adjusted EBITDA ($USD Millions)	$16.9	$17.4	$19.7
Adjusted EBITDA Margin (%)	13.8%	13.8%	14.6%

Q2 vs Wall Street Consensus (S&P Global):

Metric	Q2 2025 Actual	Q2 2025 Consensus
Revenue ($USD Millions)	$135.1	$128.1*
Primary EPS ($)	$0.41	$0.34*

Values retrieved from S&P Global.*

Fulfillment Channel Mix

Metric	Q2 2024	Q2 2025
Digital Factories Revenue ($USD Millions)	$101.0 (calc; total-$24.6M Network)	$105.8
Protolabs Network Revenue ($USD Millions)	$24.6	$29.3

Note: Constant currency growth in Network +16% YoY; U.S. Network margin was temporarily impacted by tariffs mid-quarter but restored by June .

Service Line Breakdown

Service	Q2 2024 Revenue ($M)	Q2 2025 Revenue ($M)	YoY Change
Injection Molding	$49.08	$47.42	(3.4%)
CNC Machining	$51.24	$61.95	+20.9%
3D Printing	$21.28	$21.22	(0.3%)
Sheet Metal	$3.92	$4.30	+9.7%
Other	$0.11	$0.19	+69.7%
Total	$125.63	$135.06	+7.5%

KPIs and Cash

KPI	Q4 2024	Q1 2025	Q2 2025
Customer Contacts	21,558	21,627	21,775
Revenue per Contact ($)	$5,648	$5,836	$6,203
Cash & Investments ($M)	$120.9 (FY-end)	$116.3 (3/31)	$123.2 (6/30)
Cash from Operations ($M, quarter)	$16.9 (Q4 approximates; FY detail)	$18.4	$10.6

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($M)	Q3 2025	n/a	$130–$138	New
GAAP Diluted EPS ($)	Q3 2025	n/a	$0.17–$0.25	New
Non-GAAP Diluted EPS ($)	Q3 2025	n/a	$0.35–$0.43	New
Non-GAAP Add-backs ($M)	Q3 2025	n/a	SBC ≈$3.9; Amort ≈$0.9	New
Non-GAAP Tax Rate (%)	Q3 2025	n/a	24–25%	New
FX Tailwind ($M)	Q3 2025	n/a	≈$0.4 vs Q3’24	New
Revenue ($M)	Q2 2025	$124–$132	Actual $135.06	Raised vs guide (actual beat)
Non-GAAP Diluted EPS ($)	Q2 2025	$0.30–$0.38	Actual $0.41	Raised vs guide (actual beat)

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024 & Q1 2025)	Current Period (Q2 2025)	Trend
Production push and CNC strength	CNC +6% YoY in Q1; production momentum, pivot beyond prototyping	CNC record +20% YoY; +30% in U.S.; robust A&D demand	Strengthening
Tariffs & pricing algorithms	Positioning advantage via flexible network; minimal raw material cost impacts	Mid-quarter aluminum/steel tariffs hit U.S. Network margins; pricing/fulfillment adjustments restored margins by June	Resolved near-term; process resilience
Regional trends (U.S. vs Europe)	U.S. down slightly in Q1; Europe flat cc; German facility closure to streamline ops	U.S. +12% YoY; Europe -15% cc; reorganized EU GTM early Q2	Divergent; Europe weak
Medical & regulatory	Notable production certifications; portfolio reshaping	ISO 13485 certification for Raleigh metal 3D printing (June) to accelerate medical implants/devices	Positive
Network margins & backlog visibility	Network margin ~31% in Q1	Network margin 29%; ~20–30 days backlog for Network; 15% of business has longer visibility	Slight pressure, visibility clarified
Share repurchase/cash generation	New $100M buyback; strong FCF	Ongoing buybacks ($3.1M Q2); strong cash and zero debt	Continuing

Management Commentary

CEO strategy and priorities: “Our priorities remain as follows: drive growth in our key performance indicators, expand production capabilities, and reinforce our core prototyping offer” .
Tariff handling and customer experience: “Our AI-driven pricing and fulfillment systems enable us to adapt in real time… We honor the price we give a customer” .
Demand drivers: “We continue to see very strong demand from aerospace and defense customers, specifically in high requirement parts” .
Medical expansion: “Metal 3D printing service in Raleigh… received ISO 13485 certification… will help accelerate our growth in medical” .
CFO on Q3: “We expect revenue between $130 million and $138 million… non-GAAP add-backs… SBC ≈$3.9M and amortization ≈$0.9M… non-GAAP effective tax rate between 24% and 25%” .

Q&A Highlights

CNC growth broad-based across factory and network; U.S. CNC +30% YoY; larger accounts contributed meaningfully .
Injection molding softness tied to prior-year auto orders and current medical weakness; majority fulfilled via factory (Network small) .
Tariffs: aluminum/steel tariffs applied regardless of source country; Network backlog (~30 days) created lag before pricing/fulfillment changes restored margins; Network margin 29% in Q2; A&D mix >20% .
Seasonality: Expect typical Q4 down slightly vs Q3 due to holidays; midpoint Q3 guide reflects continued strength .

Estimates Context

Q2 2025: PRLB beat consensus revenue ($135.1M vs $128.1M*) and EPS ($0.41 vs $0.34*); 5 estimates on both metrics . Values retrieved from S&P Global.*
Q3 2025: Guidance revenue $130–$138M vs consensus $133.8M*; guidance non-GAAP EPS $0.35–$0.43 vs consensus $0.39* . Values retrieved from S&P Global.*

Key Takeaways for Investors

Beat and raise dynamic: headline revenue and EPS beats vs consensus; Q3 guide midpoint implies ~6% YoY cc growth, supporting near-term momentum .
Mix and margin: Expect ongoing gross margin sensitivity to Network mix; mitigation capabilities (pricing/fulfillment algorithms) proved effective against tariff shocks .
End-market exposure: Aerospace/defense demand is a core driver (A&D >20% of mix); injection molding likely to recover with medical or auto order normalization .
Regional risk: Europe contraction persists; watch execution of reorganized GTM to stabilize demand and margins .
Production strategy: ISO 13485 expands medical opportunities; production-led growth via factory and network should sustain revenue per contact and combined-offer adoption .
Capital allocation/cash: Strong cash generation with zero debt and continued buybacks provide downside protection and dry powder for growth .
Trading setup: Near-term catalysts include continued CNC strength, medical certification ramp, and evidence of European stabilization; risks include tariff volatility and prototyping softness impacting 3D Printing .

Notes: All company data cited from primary documents. Consensus values marked with an asterisk are retrieved from S&P Global.*

Proto Labs Inc (PRLB)·Q2 2025 Earnings Summary