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Introduction & Market Context
Proto Labs Inc (NYSE:PRLB) released its Q1 2025 earnings presentation on May 2, 2025, showcasing sequential revenue growth despite year-over-year challenges. The digital manufacturing company, which pioneered on-demand manufacturing services, demonstrated resilience in a challenging manufacturing environment with its unique hybrid manufacturing model and strategic focus on the aerospace sector.
The company’s stock has shown positive momentum, trading at $38.20 as of the most recent data, within its 52-week range of $25.76 to $46.73. Following the earnings release, the stock rose 3.63% in pre-market trading, reflecting investor confidence despite a slight EPS miss compared to analyst expectations.
Quarterly Performance Highlights
Protolabs reported Q1 2025 revenue of $126.2 million, down 1.0% year-over-year but up 4% sequentially from Q4 2024. While this figure represents a modest annual decline, it exceeded analyst expectations of $124.51 million. The company’s non-GAAP earnings per share came in at $0.33, slightly below the forecasted $0.34 and down from $0.40 in Q1 2024.
As shown in the following financial summary chart:
Revenue fulfilled through the Protolabs Network showed particularly strong performance at $26.3 million, up 11.5% year-over-year in constant currencies. This highlights the company’s successful expansion of its fulfillment network beyond its in-house capabilities.
The company’s margins faced some pressure, with non-GAAP gross margin at 44.8% compared to 45.6% in Q1 2024, though this represented an improvement from 43.4% in Q4 2024. Similarly, non-GAAP operating margin stood at 7.4%, down from 9.5% a year ago but relatively stable compared to 7.6% in the previous quarter.
The comprehensive financial results table provides a clear view of the company’s performance metrics:
Service Line Performance
Protolabs’ service lines showed mixed performance in Q1 2025. CNC Machining emerged as the largest revenue contributor at $52.8 million, growing 6% year-over-year in constant currencies. Sheet Metal, though a smaller segment, demonstrated impressive growth of 19% to reach $4.2 million.
Conversely, Injection Molding revenue declined 7% to $48.7 million, while 3D Printing revenue fell 6% to $20.2 million. These divergent trends reflect shifting customer demands and Protolabs’ evolving service mix.
The following chart breaks down revenue by service line:
The company’s strategy focuses on increasing the number of customers using its combined manufacturing offerings, with customer contacts using the combined offer up over 45% year-over-year on a last-twelve-months basis. Additionally, revenue per customer contact in Q1 2025 grew 3% year-over-year, indicating success in driving higher revenue per customer through larger orders.
Aerospace Industry Focus
A standout element of Protolabs’ presentation was its emphasis on aerospace industry penetration. The company highlighted that it serves 100% of Fortune 500 aerospace companies, positioning itself as a critical supplier in this high-value sector.
As illustrated in this aerospace industry slide:
Protolabs has strategically positioned itself in the aerospace supply chain with AS9100-certified machining and 3D printing facilities. The company is expanding its use of the Protolabs Network for extended ITAR capabilities and providing on-demand production for generative AI component designs.
The presentation showcased partnerships with major aerospace players including Blue Origin, Lockheed Martin (NYSE:LMT), and NASA:
A particularly notable customer example featured Protolabs’ support for Blue Origin’s Blue Moon Mark 1 lunar cargo lander, which will provide access to the lunar environment:
Financial Position and Outlook
Protolabs maintains a strong financial position with $116.3 million in cash and investments and zero debt. The company generated $18.4 million in operating cash flow during Q1 2025, while capital expenditures were modest at $1.3 million.
The company returned significant capital to shareholders through $20.9 million in share repurchases during the quarter, representing 122% of free cash flow according to the earnings call transcript.
Looking ahead, Protolabs provided Q2 2025 guidance projecting revenue between $124 million and $132 million and non-GAAP EPS between $0.30 and $0.38. Foreign currency is expected to have an approximately $0.3 million favorable impact, while the non-GAAP effective tax rate is projected between 25% and 27%.
CEO Rob Bedore emphasized the company’s leadership position during the earnings call, stating, "We pioneered on-demand manufacturing over twenty-five years ago, and we remain the fastest in the world." CFO Dan Schumacher highlighted the company’s strategic positioning, noting, "We are well positioned both from the number of different fulfillment options we can offer customers as well as our financial strength."
While macroeconomic headwinds, tariff policies, and manufacturing sector contraction present ongoing challenges, Protolabs’ diversified service offerings, strong aerospace relationships, and solid financial foundation position it to navigate these challenges effectively in the coming quarters.
Full presentation:
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