Earnings call transcript: Proto Labs Q2 2025 earnings beat forecasts, stock surges

Proto Labs Inc. (PRLB) reported its second-quarter 2025 earnings, surpassing analyst expectations with a non-GAAP EPS of $0.41, compared to the forecasted $0.35. This performance represents a 17.14% positive earnings surprise. Revenue also exceeded expectations, reaching $135.1 million against a forecast of $128.04 million. Following the earnings announcement, Proto Labs’ stock rose sharply, climbing 6.86% to $41.92 in pre-market trading, reflecting investor optimism. According to InvestingPro data, three analysts have recently revised their earnings estimates upward, suggesting growing confidence in the company’s prospects. The stock is currently trading near its InvestingPro Fair Value, with a market capitalization of approximately $998 million.

Key Takeaways

• Proto Labs reported a 17.14% positive surprise in EPS, beating expectations.
• Revenue reached $135.1 million, surpassing forecasts by 5.51%.
• The company’s stock price surged 6.86% in pre-market trading.
• Aerospace and defense sectors contributed significantly to growth.
• No radical strategy shifts are planned despite ongoing challenges.

Company Performance

Proto Labs demonstrated strong performance in Q2 2025, achieving record quarterly revenue of $135.1 million, marking a 6.5% year-over-year increase in constant currencies. The company maintained a gross margin of 44.8% and generated $10.6 million in cash from operations. The aerospace and defense sectors now account for over 20% of the business, showcasing robust demand. InvestingPro analysis reveals the company’s strong financial position, with a healthy current ratio of 3.13 and zero debt on its balance sheet. The company’s robust cash flows have enabled management to actively pursue share buybacks, enhancing shareholder value.

Financial Highlights

• Revenue: $135.1 million, up 6.5% year-over-year
• Earnings per share: $0.41, up $0.08 sequentially
• Gross margin: 44.8%, flat sequentially
• Cash and investments: $123.2 million, zero debt

Earnings vs. Forecast

Proto Labs reported an EPS of $0.41, beating the forecast of $0.35 by 17.14%. Revenue of $135.1 million exceeded expectations by 5.51%. This positive surprise is significant compared to previous quarters, indicating strong operational performance and effective cost management.

Market Reaction

Following the earnings announcement, Proto Labs’ stock price increased by 6.86% in pre-market trading, reaching $41.92. This surge reflects investor confidence in the company’s ability to outperform expectations. The stock’s performance is notable as it approaches its 52-week high of $46.73, signaling strong market sentiment. InvestingPro subscribers can access detailed valuation metrics, including the company’s P/E ratio of 69.05 and EV/EBITDA of 15.0, along with 8 additional exclusive ProTips that provide deeper insights into Proto Labs’ investment potential. Get access to the comprehensive Pro Research Report, available for over 1,400 US stocks, to make more informed investment decisions.

Outlook & Guidance

Proto Labs provided Q3 2025 revenue guidance between $130 million and $138 million, with an anticipated 6% year-over-year growth in constant currencies. The company expects non-GAAP EPS for Q3 to range from $0.35 to $0.43. The focus remains on enhancing customer and employee experiences without implementing radical strategy shifts.

Executive Commentary

CEO Suresh Krishna emphasized the company’s dual role in prototyping and production, stating, "We are both a prototyping and a production company, delivering through our digital factories and our partner network." CFO Dan Schumacher highlighted the company’s commitment to pricing integrity, saying, "We honor the price we give a customer. And that’s part of what we think is going to value us over the long term."

Risks and Challenges

• European revenue decline: A 15% decrease in European revenue amid contracting manufacturing activity.
• Tariff impacts: Adjusted pricing strategies to manage tariff effects, temporarily affecting network margins.
• Sector-specific challenges: Injection molding faces difficulties in the medical sector.
• Market saturation: Potential risk in maintaining growth in established markets.
• Supply chain dynamics: Need for agility in adapting to supply chain changes.

Q&A

During the Q&A session, analysts focused on the strength of CNC machining, which saw 20% year-over-year growth. Questions also addressed the temporary margin impacts from tariffs and challenges in the medical sector. New CEO Suresh Krishna discussed efforts to reduce friction and accelerate growth, highlighting strategic initiatives to enhance customer and employee experiences.

Full transcript - Proto Labs Inc (PRLB) Q2 2025:

Conference Operator, Conference Moderator: Ladies and gentlemen, good morning, and welcome to the Proto Labs Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jason Franklin, VP and Corporate Controller.

Please go ahead, sir.

Jason Franklin, VP and Corporate Controller, Proto Labs: Thank you, Ryan. Good morning, everyone, and welcome to Proto Labs’ Second Quarter twenty twenty five Earnings Conference Call. I am joined today by Suresh Krishna, President and Chief Executive Officer and Dan Schumacher, Chief Financial Officer. This morning, Proto Labs issued a press release announcing its financial results for the second quarter ended 06/30/2025. 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 ks, 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.

Now I’ll turn the call over to Suresh Krishna. Suresh?

Suresh Krishna, President and Chief Executive Officer, Proto Labs: Thanks, Jason. Good morning, everyone, and thank you for joining our second quarter earnings call. Before getting into the details of our record performance during the quarter, I’d like to quickly introduce myself. I am honored and excited to step into the role of President and CEO at Proto Labs. I’m an engineer by training and have held many leadership positions in supply chain, operations, and general management.

I have overseen profitable growth and shareholder value creation at several manufacturing companies. As a former Proto Labs customer, I have seen firsthand how the company reliably delivers high quality custom parts and accelerates innovation for some of the world’s most pioneering companies. In fact, I used Proto Labs’ digital manufacturing capabilities to accelerate product development and beat the competition to market. I have long admired the company’s leadership in digital manufacturing, its strong culture, and its commitment to innovation and customer service. Proto Labs’ next chapter is going to be an extraordinary one, and I’m thrilled to be leading this talented team.

I also want to take a moment to thank Rob Boudour for his many contributions and leadership over the past several years. Rob played an important role in helping set the company’s direction, and I’m grateful for the foundation he helped build. I have been in the role just over two months now, and I’ve spent much of that time listening to employees in our manufacturing facilities and offices, meeting with customers, and taking a fresh look at our strategy and how we are executing it. These experiences have only reinforced my conviction in Proto Labs’ potential. We have a very innovative and resilient culture and a pervasive mindset for continuous improvement.

I believe in this company. I have personally seen the value Proto Labs delivers to its customers, and I’m excited about the opportunity to lead this great organization. This is a wonderful company with best in class profitability and cash flow generation, and a history of rapid growth. But in recent years, our growth has not kept pace with expectations. That said, I see this as a significant opportunity and I’m energized by the work ahead to help reaccelerate the business towards sustainable, strong growth.

I’m confident in our strategy of delivering high quality custom parts across the full product lifecycle, from prototyping to production. With a strong foundation already in place, I believe we can sharpen our execution, particularly when it comes to customer and employee experience. These may sound like simple concepts, but done right, they can unlock meaningful long term growth. They will be my top two focus areas. I’m sure many of you are eager to hear about my long term strategic vision, and that’s an appropriate question.

Let me reassure you that in the near term, there will be no radical shift in our current strategy. My immediate focus is to listen, learn and engage closely with our teams, customers and partners to identify the highest impact opportunities. I look forward to sharing more in the coming quarters. Now, on to our second quarter results. We delivered a very strong quarter, exceeding expectations in both revenue and EPS.

This included record revenue, highlighting our ability to execute effectively in a dynamic and uncertain environment. Our best in class profitability also enable us to continue returning capital to shareholders through ongoing share repurchases, further demonstrating the strength and resilience of our business model. I want to thank our teams across the globe for their hard work and dedication. This performance wouldn’t be possible without them. In addition to our financial results, we were also honored to receive a 2025 Future of Manufacturing Project Award from the National Association of Manufacturers.

This recognition validates the progress we’ve made as a technology focused customer centric manufacturer and underscores our leadership in driving innovation and agility across the industry. I’m also excited to announce that in June, our metal three d printing service in Raleigh, North Carolina received ISO 13,485 certification, which is an internationally recognized quality standard for medical device manufacturers. This certification is important to both current and prospective medical customers and demonstrates our commitment to quality and excellence in medical device manufacturing. The ISO thirteen thousand four and eighty five certification will help accelerate our growth in medical, specifically metal three d printed non active implants and other devices. Thanks to our production and quality teams for their hard work to achieve this certification.

Now, shifting to our two key growth indicators in the quarter. Customers utilizing our combined offer grew 44% over the trailing twelve months. And revenue per customer in the second quarter increased 11% year over year. I’m very encouraged by the continued traction we are seeing, particularly in expanding share of wallet with strategic customers. We also continue to make significant progress on our growth investments that we first shared with you on our Q4 twenty twenty four call in February.

First, our marketing investments continue to drive engagement and reinforce our brand in both prototyping and production. We are seeing increased awareness and interest from customers across our target industries, especially aerospace and defense, where our speed, complexity, and domestic capabilities make us a preferred partner. We help accelerate innovation for a wide variety of customers in aerospace and defense. We serve the leaders in space exploration and satellites like NASA, Blue Origin, and Relativity Space, as well as commercial aircraft manufacturers like Airbus and Boeing. Defense contractors including Raytheon, Lockheed Martin, Nottrop Grumman, and Andero all trust Proto Labs to deliver quality parts quickly.

In addition, we manufacture lots of parts for companies on the leading edge of drone development, including defense, electric flying taxis, parcel delivery services, and many more. In an industry with lots of funding and innovation, Proto Labs is a trusted manufacturing partner for many. As our second key growth investment, we have continued to advance our sales enablement tools and processes, allowing our sales teams to better understand the strategic production needs of our customers and make it easier for these customers to interact with Proto Labs in this context. And third, we also continue to make progress to optimize our fulfillment channels. These efforts help us better align our manufacturing footprint and capabilities with customer demand and are central to our ability to deliver a seamless customer experience across both factory and partner network.

We are still early on the journey to improve our production fulfillment capabilities. Our global operations organization continues to refine how parts are manufactured with excellent quality in the right place at the right time for the right price, which vastly improves the customer experience. Turning to tariffs and the evolving trade landscape. This is another area where Proto Labs is well positioned to succeed. As always, we are focused on what we can control.

Speed and agility are central to our operations, and those trends are especially critical in today’s environment. Our global manufacturing footprint gives us the flexibility to adapt quickly to shifting supply chain dynamics and serve customers effectively regardless of geography. While trade policies and tariffs continue to change rapidly, we believe tariffs and further investments in American manufacturing innovation are a tailwind for our business in the long term. On the other hand, tariffs and frequently changing trade policies can create short term margin pressures. For instance, if we quote a price for the customer and subsequent trade policies alter our cost structure, we absorb that risk in the short term.

While this may impact margins temporarily, our AI driven pricing and fulfillment systems enable us to adapt in real time, delivering a smoother customer experience than many peers who simply pass tariff related increases directly to the customer. This is a strong example of how we reduce friction for our customers, fostering greater loyalty and expanding share of wallet. Finally, and perhaps most importantly, we continue to generate very healthy cash flows, which gives us the financial strength to invest in growth and innovation while maintaining resilience through market uncertainty. To close, I want to briefly revisit our 2025 priorities, which are still intact. We are both a prototyping and a production company, delivering through our digital factories and our partner network.

And we execute with excellence across all these areas. Sharpening our strategy and execution are top priorities of mine, and it’s essential for driving our growth. As I mentioned earlier, that focus extends to both customer and employee experiences. In the near term, we will work to remove friction for both customers and employees, and we will increase our speed of execution. I’m deeply committed to not just what we deliver to our customers, but how we deliver it by our employees with speed, clarity and discipline.

Our priorities remain as follows: drive growth in our key performance indicators expand our production capabilities and reinforce our core prototyping business. I am pleased with the progress our employees have made through the first half of the year, and I’m confident that we have the foundation, the team and the strategy in place to drive sustainable growth while maintaining our industry leading profitability and cash flow generation. I’m excited about the path ahead. We’ll continue to drive innovation, execute for our customers and deliver long term value to our shareholders. With that, I’ll turn it over to Dan to walk through the financials.

Dan?

Dan Schumacher, Chief Financial Officer, Proto Labs: Thanks, Suresh, and good morning, everyone. Second quarter revenue was a company record, dollars 135,100,000.0. This is above our guidance range, up 6.5% year over year in constant currencies, and up 7% sequentially. Revenue fulfilled through our digital factories grew 4% year over year in constant currencies, and revenue fulfilled through Proto Labs Network was up 16%. Turning to revenue by service in constant currencies.

Second quarter CNC machining revenue was also a company record, growing 20% over the prior year. And in The US alone, CNC machining revenue grew 30%. We continue to see very strong demand from aerospace and defense customers, specifically in high requirement parts. The value we deliver via our factory and network CNC machining offer is really resonating with our innovative customers. Injection molding declined 4% year over year.

Three d printing revenue was down 1% year over year amidst continued weakness in prototyping. And lastly, sheet metal grew 9%, bolstered by improved offerings and additional go to market efforts. Revenue in The US grew 12% year over year, while Europe revenue declined 15% in constant currencies. Manufacturing activity in Europe continues to contract. We reorganized our European go to market teams at the start of the second quarter and remain focused on identifying and executing opportunities to drive demand across the region.

Shifting to margins. Second quarter consolidated non GAAP gross margin was flat sequentially at 44.8%. On a year over year basis, gross margin was down 90 basis points, driven by higher growth in network revenue and a lower US network margin due to changing tariffs. We responded to these changes by adjusting pricing, and in June, network margins were back to pre tariff levels. Non GAAP operating expenses increased $2,700,000 compared to the prior year, an increase of 6%, consistent with revenue.

The majority of the operating expense increase was in variable expenses tied to revenue, namely incentive compensation and commissions. Second quarter adjusted EBITDA was 19,700,000.0 or 14.6% of revenue. Non GAAP earnings per share were $0.41 in the quarter, above our guidance range and up $08 sequentially on higher than anticipated volume. EPS was up $03 on a year over year basis. Proto Labs continues to lead the digital manufacturing industry in terms of cash generation, reflecting the strength of our business model.

We generated $10,600,000 in cash from operations during the second quarter, and we returned $3,100,000 to shareholders in the form of repurchases. On June 30, we had $123,200,000 of cash and investments on our balance sheet and zero debt. Our outlook for the 2025 is outlined on slide 13. We expect revenue between $130,000,000 and $138,000,000 At the midpoint, this implies 6% growth year over year in constant currencies. We expect foreign currency to have an approximately 400,000 favorable impact on revenue compared to the 2024.

Moving to earnings guidance. We anticipate non GAAP add backs in the third quarter to include stock based compensation expense of approximately $3,900,000 and amortization expense of $900,000 We currently estimate a non GAAP effective tax rate between 2425% in the third quarter. In summary, we expect third quarter non GAAP earnings per share between $0.35 and $0.43 That concludes our prepared remarks. Operator, please open the line for questions.

Conference Operator, Conference Moderator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. A The first question comes from the line of Brian Drab from William Blair. Please go ahead.

Brian Drab, Analyst, William Blair: Hi, good morning. Thanks for taking my questions.

Suresh Krishna, President and Chief Executive Officer, Proto Labs: Thanks, Brian.

Brian Drab, Analyst, William Blair: Can you hear me okay? Yes, good morning. I just wanted to first start with the strength that you’re seeing in CNC. And I’m curious, I know you mentioned aerospace and defense, that makes sense. I’m just wondering, are you seeing more of that strength in one area or the other in terms of the factory or the network?

Or is that driving growth across both of those business lines?

Dan Schumacher, Chief Financial Officer, Proto Labs: Yes. Thanks for the question, Brian. We are seeing similar growth both in the factory and the network from year over year growth percentage perspective. As I talked about in the call, it’s 30 CNC growth in The US that’s really driving the overall 20% for the company.

Suresh Krishna, President and Chief Executive Officer, Proto Labs: Brian, this is Suresh. I’d like to just add, we grew revenues with our larger accounts, and that’s based on the focus for our go to market reorganization that we’ve done. I’d like to give a huge shout out to our go to market team in The Americas for continuing to drive great customer service and great customer relationship. Also, huge shout out to our production teams based in Nashua, New Hampshire and Brooklyn Park, Minnesota for being able to jump 30% more revenues year over year. That shows the agility that we have in the organization to be able to respond to customers’ needs.

Brian Drab, Analyst, William Blair: That’s great. And are those I’m just wondering if you could give us any insight to those orders and CNC work. Is that leaning more toward production or is it leaning more toward prototyping or all of the above? What’s the breakdown there?

Dan Schumacher, Chief Financial Officer, Proto Labs: Yeah, I would say all of the above. We don’t give a split at that level, but it is a combination of both production and there is some prototyping that is in there as well. But yeah, obviously the performance there, as Resh talked about, helped increase our revenue per contact year over year double digits.

Brian Drab, Analyst, William Blair: Okay. And can you comment on whether you’re seeing that strength continue into the third quarter and is still pretty robust in July?

Dan Schumacher, Chief Financial Officer, Proto Labs: Yes, the midpoint of our guide indicates that we’re continuing to see the strength and it’s in the same areas, Brian.

Brian Drab, Analyst, William Blair: Yeah, yeah, okay. I’ll just ask one more for now. Can you just add a little more color around the injection molding business? Know you said prototyping is relatively soft, but just how the injection molding business is what’s putting it under pressure and what could turn that around and how it’s performing across the network versus the factory?

Dan Schumacher, Chief Financial Officer, Proto Labs: Yeah, so let me answer the last part of your question first. The network is a relatively small portion of our injection molding business. The majority of it is through the factory. A couple of things to comment on. Last year we had some larger injection molding production orders, specifically in automotive that provided some headwind year over year, but in general we’re seeing weakness within medical, and that is impacting what we have around injection molding.

That being said, we’re continuing to innovate in that space. We see that as a real big driver for us in the future from a production perspective. So we’re continuing to add capabilities to that to win more of that production business.

Brian Drab, Analyst, William Blair: Got it. Okay. I’ll more later. Congrats on the record revenue result.

Suresh Krishna, President and Chief Executive Officer, Proto Labs: Thanks, Brian.

Conference Operator, Conference Moderator: Thank you. The next question comes from the line of Greg Palm from Craig Hallum Capital Group. Please go ahead.

Greg Palm, Analyst, Craig Hallum Capital Group: Hey, good morning. I’d also like to offer my congratulations on good quarter and Suresh, welcome aboard.

Suresh Krishna, President and Chief Executive Officer, Proto Labs: Thanks, Greg. Thank you.

Greg Palm, Analyst, Craig Hallum Capital Group: Maybe Suresh, I’d like to just start with you in kind of a broader question on not necessarily why you joined, but maybe it’s a little bit early, but you’ve been there a couple of months, so you’ve got a little bit of an opportunity to figure out maybe what excites you, what’s gone wrong in the past, what’s been missing. I mean, just I know we’re still waiting for kind of a longer term strategic vision, but can you just tease us a little bit and give a little bit of a bit more color on kind of what’s exciting you going forward?

Suresh Krishna, President and Chief Executive Officer, Proto Labs: Thanks, Greg, for that question. As I said in my prepared remarks, I believe there is a large opportunity to reaccelerate the growth of this business and that’s what excites me about joining Proto Labs at this point in time. I’m spending all my time listening and talking to our employees, customers, and our partners. And right now, I’m very focused on removing friction for our customers and our employees. And through these efforts, we’ll be able to identify, you know, what our future opportunities are, and we’ll be able to share those with you in the coming quarters.

Greg Palm, Analyst, Craig Hallum Capital Group: Okay. Fair enough. We’ll we’ll be looking forward to that. In terms of the quarter and the gross margin, I want to maybe dig into that a little bit more. Presumably, maybe that’s more related to some of the longer lead time offerings.

But just can you give us a sense the negative impact from the tariffs? And I don’t know if you’re able to kind of quantify that. And just to be clear, it sounds like that was maybe a temporary issue that’s now been resolved. So what’s kind of the implied outlook for gross margin here in Q3?

Dan Schumacher, Chief Financial Officer, Proto Labs: Yes, absolutely. So great, yes. Part of our pressure in the quarter on margins was tariffs. So it was our US network margins that were impacted by that. And that had happened midway through the quarter.

We were able to, like I said on the call, adjust our pricing and adjust our fulfillment so that in June, our network margins in The US were back to normal. So that provided part of the headwind quarter over quarter from a gross margin perspective. In addition, we had soft volume through the factory within Europe as well, which also challenged the margins quarter over quarter, and we had a higher mix of network revenue from Q1 to Q2, which also provided margin pressure. Now on the positive side, as we talked about, we grew 4% in the factory. So we had some strong factory margins in The United States that was able to offset those things, allowing gross margins to be flat quarter over quarter.

Greg Palm, Analyst, Craig Hallum Capital Group: What exactly though in terms of the tariffs was the impact? Because I mean, you’re a quick turn business. So I guess I’m a little bit confused on kind of what I mean, what was happening in May, for instance, if you said it was midway through the quarter. What was the surprise that impacted the margin specifically knowing that I mean, a lot of it, I think the tariffs that were originally enacted were actually kind of early April, right?

Dan Schumacher, Chief Financial Officer, Proto Labs: So I mean, the specific impact was when we talked about in the quarter last time, if a tariff was put on a certain country from our network perspective, we can then source it from a different country to avoid those tariff impacts. But the tariff that took hold was the one that was on aluminum and steel. So it didn’t matter what country it was coming from, you were going to get a tariff impact from that. And so as that happened in the network, which has longer lead times, you have more like twenty to thirty days of backlog that’s through the network, that is priced at a different price than what our assumption was on the cost on the tariff. And so it was really, at the time, adjusting our pricing so that and looking at different ways in which our algorithm is working in terms of what we’re charging MPs and so forth, working through those dynamics to offset the tariff impact, but then it takes thirty days for that backlog to come through and then you get your margin right on the other side.

So I know a bit of a clunky answer, but it was the aluminum and the steel tariff impact, it was the fact that we have thirty days of backlog. And then once we’ve adjusted for that, then we don’t have a margin impact, but you still have that backlog coming through at a lower margin.

Greg Palm, Analyst, Craig Hallum Capital Group: No, that’s more color. I would have assumed it would have been a pass through, but the lag makes sense. By the way, what was did you give a network?

Dan Schumacher, Chief Financial Officer, Proto Labs: Greg, just real quickly. We don’t pass that through to the we honor the price we give a customer. And that’s part of we think is going to value us over the long term, right, in terms of maintaining that relationship.

Greg Palm, Analyst, Craig Hallum Capital Group: Yes. Okay. And then just, I guess, two quick housekeeping. Did you give a gross margin for the network business as a whole in the quarter? And then in terms of A and D, what percent of your business is A and D in terms of mix today?

Dan Schumacher, Chief Financial Officer, Proto Labs: Yes. So our network margin was just below 30%. It was 29% in the quarter. In terms of percent of A and D, it’s north of 20% in the quarter.

Greg Palm, Analyst, Craig Hallum Capital Group: North of 20% in the quarter. Okay. I will leave it there. Thanks.

Dan Schumacher, Chief Financial Officer, Proto Labs: Yes.

Conference Operator, Conference Moderator: Thank you. The next question comes from the line of Troy Jensen from Cantor Fitzgerald. Please go ahead.

Troy Jensen, Analyst, Cantor Fitzgerald: Hey, gentlemen. Congrats on the nice results. And Suresh, welcome.

Suresh Krishna, President and Chief Executive Officer, Proto Labs: Thank you.

Troy Jensen, Analyst, Cantor Fitzgerald: Hey, so Ken, just a follow-up on a comment you just said about thirty days of visibility. I always thought of you guys as having much less than that. I thought like lead times were like kind of seven to ten days. So can you explain that comment?

Dan Schumacher, Chief Financial Officer, Proto Labs: Yeah, I have longer visibility for 15% of the business that goes through the network. For 85% of the business, I have a limited visibility.

Troy Jensen, Analyst, Cantor Fitzgerald: Okay, so I get it, this network business. All right, perfect. And then I know like the last couple of quarters, you’ve had this new initiative to push into production. Is there any update you can give us, any kind of stats that you can see if you’re being successful?

Brian Drab, Analyst, William Blair: Yeah.

Dan Schumacher, Chief Financial Officer, Proto Labs: Obviously, the stats that we talk about on the call, right? So we’re seeing an 11% increase in revenue per customer contact, right? So we’re really happy with that. And in addition, we find customers that are fulfilling their orders through both the factory and the network in general are doing about twice the amount of business overall with us. Right?

So it’s another indication of moving more into production or fulfilling that customer more holistically. And so that was up 44 year over year. So those are the two external metrics that we talk about. That is driving a decent amount of growth and the growth that you saw within the quarter.

Troy Jensen, Analyst, Cantor Fitzgerald: Okay. And last question for me. Can you just talk about would you expect to get normal seasonality in Q4? Or are some of these initiatives going to help offset what we’ve typically seen as kind of a down slightly sequential quarter?

Dan Schumacher, Chief Financial Officer, Proto Labs: Yes. I would speak to the midpoint of our guidance. From where we see things, obviously coming off the earnings call last quarter, orders were stronger than what we anticipated, continued, and and that’s indicative of where we are in the guide. So for our Q3 seasonality, we gave a midpoint of the guidance, I think that’s where we think that that’s going to fall. In terms of the fourth quarter, I would expect typical seasonality Q3 to Q4 just because of the holiday periods.

So that ends up being down slightly from the third quarter.

Troy Jensen, Analyst, Cantor Fitzgerald: Awesome. All right, guys. Keep up the good work.

Suresh Krishna, President and Chief Executive Officer, Proto Labs: All right. Thanks, Troy. Thank you.

Conference Operator, Conference Moderator: Thank you. Ladies and gentlemen, with that, we conclude the question and answer session. On behalf of Proto Labs, that concludes the conference. Thank you for your participation. You may now disconnect your lines.

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