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Proto Labs Inc (PRLB)·Q3 2025 Earnings Summary

Executive Summary

  • Record Q3 revenue of $135.4M (+7.8% YoY) with non-GAAP EPS $0.47; both exceeded S&P Global consensus: revenue $133.8M*, EPS $0.392*. Strength skewed to U.S. CNC and sheet metal, while Europe remained soft. Non-GAAP gross margin expanded sequentially by 110 bps to 45.9% on factory and network improvements .
  • Q4 outlook: revenue $125–$133M and non-GAAP EPS $0.30–$0.38; GAAP EPS $0.12–$0.20. Management expects ~+$1.5M FX tailwind vs 4Q24, SBC add-back ~$3.9M and amortization ~$0.9M; non-GAAP tax rate 23–24% .
  • Mix and execution tailwinds: CNC +18.2% YoY (U.S. CNC +24% YoY), sheet metal +13.9% YoY; network margin execution improved despite higher tariffs, contributing ~80 bps of the sequential gross margin lift and network GM ~33% in Q3 .
  • Strategic catalysts: expanded advanced CNC capabilities (tighter tolerances, finishes, documentation) with e-commerce flow and ITAR/AS9100 compliance; CEO emphasized “accelerated growth” narrative and expanding factory CNC capacity to meet demand .

What Went Well and What Went Wrong

What Went Well

  • Record revenue with sequential margin expansion: “record quarterly revenues and exceeded earnings expectations,” with non-GAAP gross margin up 110 bps QoQ to 45.9% on factory and network improvements .
  • CNC and U.S. strength: CNC revenue +18.2% YoY (constant currency +17%); U.S. revenue +10% YoY; U.S. CNC +24% YoY. Management highlighted A&D (drones, satellites, space) and robotics/semis as key drivers .
  • Share-of-wallet gains: revenue per customer contact rose 14.1% YoY to $6,370; customers using both factory and network in the last 12 months up 35% vs prior quarter. CEO: “deepening customer relationships… expanding CNC capacity” .
  • Cash generation and balance sheet: Q3 cash from operations $29.1M; cash and investments $138.4M; CFO reiterated zero debt .

What Went Wrong

  • Europe and 3D printing softness: Europe revenue declined 5% in constant currency; 3D printing -6.3% YoY (cc -7.1%), primarily on weak European demand .
  • Network tariff headwinds (managed but present): tariff costs remained up; while pricing/sourcing algorithm changes improved network margins QoQ, network GM was ~33%, below factory levels .
  • YoY margin compression vs prior year: Adjusted EBITDA margin 15.6% vs 17.4% in Q3’24; GAAP gross margin 45.3% vs 45.6% in Q3’24; non-GAAP operating margin 10.0% vs 10.9% .

Financial Results

Headline results time series (oldest → newest)

MetricQ3 2024Q2 2025Q3 2025
Revenue ($M)125.619 135.063 135.366
GAAP Diluted EPS ($)0.29 0.18 0.30
Non-GAAP Diluted EPS ($)0.47 0.41 0.47
GAAP Gross Margin (%)45.6% 44.3% 45.3%
Non-GAAP Gross Margin (%)46.2% 44.8% 45.9%
GAAP Operating Margin (%)6.8% 3.7% 6.5%
Non-GAAP Operating Margin (%)10.9% 8.6% 10.0%
Adjusted EBITDA Margin (%)17.4% 14.6% 15.6%
Net Income Margin (%)5.7% 3.3% 5.3%

Q3 2025 actual vs S&P Global consensus

MetricActualConsensus*Surprise
Revenue ($M)135.366 133.833*+$1.533M / +1.1%
Non-GAAP EPS ($)0.47 0.392*+$0.078 / +19.9%

Values marked with * retrieved from S&P Global.

Service line revenue (Q3 YoY)

Service Line ($M)Q3 2024Q3 2025YoY %
Injection Molding46.831 47.770 2.0%
CNC Machining53.327 63.043 18.2%
3D Printing21.437 20.082 -6.3%
Sheet Metal3.743 4.262 13.9%
Other0.281 0.209 -25.6%
Total125.619 135.366 7.8%

Geography (Q3 YoY; GAAP)

Region ($M)Q3 2024Q3 2025YoY %
United States99.571 109.361 9.8%
Europe26.048 26.005 -0.2%
Total125.619 135.366 7.8%

KPIs and cash

KPIQ3 2024Q2 2025Q3 2025
Customer contacts (#)22,511 21,775 21,252
Revenue per customer contact ($)5,580 6,203 6,370
Revenue fulfilled via Digital Factories ($M)——105.3
Revenue fulfilled via Protolabs Network ($M)—29.3 30.1
Adjusted EBITDA ($M)21.86 19.69 21.13
Cash from operations ($M)——29.1
Cash and investments ($M)—123.2 (6/30/25) 138.4 (9/30/25)

Note: CFO stated zero debt on the balance sheet .

Guidance Changes

Current guidance (Q4 2025)

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)Q4 2025N/A125–133 New
GAAP Diluted EPS ($)Q4 2025N/A0.12–0.20 New
Non-GAAP Diluted EPS ($)Q4 2025N/A0.30–0.38 New
FX impact on revenueQ4 2025N/A+$1.5M vs 4Q24 New
SBC add-back ($M)Q4 2025N/A~3.9 New
Amortization add-back ($M)Q4 2025N/A~0.9 New
Non-GAAP effective tax rateQ4 2025N/A23–24% New

Prior quarter guidance vs actual (Q3 2025)

MetricPeriodGuidance (issued 7/31)ActualResult
Revenue ($M)Q3 2025130–138 135.366 Delivered near top end
GAAP Diluted EPS ($)Q3 20250.17–0.25 0.30 Above range
Non-GAAP Diluted EPS ($)Q3 20250.35–0.43 0.47 Above range

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1–Q2 2025)Current Period (Q3 2025)Trend
AI/Technology initiativesNo explicit AI leadership item in Q1/Q2 materials reviewed Appointed Chief Technology & AI Officer; plan to further embed AI/automation across operations Increasing emphasis
Supply chain/TariffsQ1: “well positioned” amid evolving tariff landscape Tariff costs still up; pricing/sourcing changes improved network margins QoQ Managed headwind
Product performance (CNC)Q2 CNC +20.9% YoY CNC +18.2% YoY; expanding factory CNC capacity Strong, sustained
Product performance (Injection Molding)Q1/Q2 down mid-single digit YoY Flat-to-low growth (+2% YoY); prototyping softness persists Soft
Regional trendsQ1 US -1.2% YoY; EU roughly flat Q2 US +12.4% YoY; EU -10% YoY Q3 US +10% YoY; EU -5% cc
Network marginQ2 impacted by tariff changes (per Q3 commentary) ~33% GM; improved QoQ via pricing/sourcing updates Improving
Customer KPIsQ1 revenue per contact +2.5% YoY Q2 +10.9% YoY; Q3 +14.1% YoY Improving mix/share

Management Commentary

  • CEO: “record quarterly revenues and exceeded earnings expectations… very encouraged by the progress we’ve made over the last two quarters—we have significant momentum into year-end… focused on accelerating profitable growth” .
  • CEO on strategy and capacity: “expanding CNC machining capacity in our factories… advanced machining capabilities… with tighter tolerances, diverse finishes, and quality documentation” .
  • CFO: sequential margin drivers and cash: “non-GAAP gross margin up 110 bps sequentially… Q3 adjusted EBITDA $21.1M (15.6%)… generated $29.1M of cash from operations… $138.4M cash and investments; zero debt” .
  • Network/tariffs: “even though tariff costs were still up, we improved our [network] margins quarter over quarter… ~80 bps sequential gross margin lift from network; network GM ~33%” .

Q&A Highlights

  • Growth durability: CEO framed “accelerated growth” (7%+ YoY two quarters) with 2026 strategic plan forthcoming; focus on removing friction and end-to-end lifecycle offering .
  • CNC capacity and capex: Expansion is primarily incremental mills (no facility constraint), leveraging digital manufacturing footprint to keep fast lead times .
  • Customer metrics: Analyst flagged lower unique developers YoY; management emphasized focus on share-of-wallet growth alongside efforts to expand the customer base .
  • Advanced CNC automation/pricing: E-commerce-driven “digital thread” with options for documentation; competitive pricing for complex parts in 5–10 day lead times; human support for complex cases as needed .
  • Margin puts/takes: Network margin recovery via pricing/sourcing; factory margin aided by higher Europe factory volumes QoQ; combined to deliver +110 bps QoQ non-GAAP gross margin .

Estimates Context

  • Q3 2025 beats: Revenue $135.4M vs $133.8M*; non-GAAP EPS $0.47 vs $0.392* — both above consensus. CFO cited gross margin expansion as primary sequential EPS driver .
  • Prior quarters: Q2 revenue $135.1M vs $128.1M*; non-GAAP EPS $0.41 vs $0.342* — also beats . Q1 revenue $126.2M vs $123.7M*; non-GAAP EPS $0.33 vs $0.292* — beats .
  • Q4 setup: Company revenue guide $125–$133M brackets S&P Global consensus $129.1M*; non-GAAP EPS guide $0.30–$0.38 centers near consensus $0.344* .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Mix-driven upside with scalable capacity: U.S. CNC momentum and factory capacity additions support sustained top-line resilience into Q4; network execution is improving margins despite tariff cost inflation .
  • Sequential margin trajectory is positive: +110 bps QoQ non-GAAP gross margin on factory and network; watch for continued network margin normalization and operating leverage on SG&A .
  • Europe remains a swing factor: Continued contraction in European manufacturing dampens 3D printing and overall EU growth; any stabilization could add incremental margin/volume upside .
  • Guidance implies steady YoY growth: Q4 revenue guide implies ~6% YoY at midpoint with EPS centered around consensus; FX a modest tailwind and add-backs/tax rate disclosed for modeling .
  • KPI quality over quantity: Fewer customer contacts but higher revenue per contact (+14.1% YoY) reflects success with larger/strategic customers and cross-sell (factory + network) .
  • 2026 catalyst path: New CTO/AI officer, advanced CNC launch, and upcoming strategic plan signal continued product and process upgrades to support “accelerated growth” narrative .
  • Risk checks: Tariffs remain a cost headwind (though mitigated via pricing/sourcing), and injection molding prototyping demand softness persists; monitor EU macro and IM pipeline .

Appendices

Non-GAAP Reconciliations and Notes

  • Non-GAAP EPS $0.47 adds back SBC ($3.68M), amortization ($0.94M), FX, CEO transition and exit costs, with tax effects; reconciliations provided by company .
  • Non-GAAP gross margin 45.9% adds back SBC and amortization in COGS; non-GAAP operating margin 10.0% adds back SBC, amortization, CEO transition and exit costs .

Other Relevant Q3 Press Releases

  • Advanced CNC Machining Capabilities (Oct 16): tighter tolerances, diverse finishes, quality documentation; available via online platform; ITAR/AS9100-compliant stateside capacity .

Sources: Protolabs Q3 2025 press release and 8‑K (Oct 31, 2025) ; Q3 2025 earnings call transcript (Oct 31, 2025) ; Q2 2025 press release (Jul 31, 2025) ; Q1 2025 press release (May 2, 2025) ; Advanced CNC press release (Oct 16, 2025) . Values marked with * retrieved from S&P Global.