Proto Labs at Cantor Fitzgerald: Automation Drives Growth

On Tuesday, 11 March 2025, Proto Labs (NYSE: PRLB) showcased its strategic direction at the Cantor Fitzgerald Global Technology Conference. The company highlighted its dual focus on rapid prototyping and production services, emphasizing automation and artificial intelligence as key growth drivers. While Proto Labs is navigating economic headwinds, its investments in technology and capacity expansion position it well for future growth.

Key Takeaways

• Proto Labs generated $500 million in revenue in 2024, with significant growth in network sales.
• The company is investing heavily in automation and AI to enhance production capabilities.
• Proto Labs approved a $100 million share buyback to optimize capital allocation.
• The company sees tariffs as an opportunity due to its rapid response and domestic presence.
• Proto Labs has expanded its production capacity with a new facility, ensuring readiness for increased demand.

Financial Results

• Revenue:

- Factory business generated $400 million in revenue in 2024.

- Network sales reached $100 million, with a 22% year-over-year increase in Q4.

• Margins:

- Factory business gross margins are approximately 50%.

- Network business targets 25-30% gross margins, currently running above the high end.

• Cash Flow:

- Cash flow from operations was $78 million, about 15% of revenue.

• Capital Allocation:

- $100 million approved for share buybacks.

Operational Updates

• Factory Business:

- Accounts for about 80% of revenues, driven by innovation and prototyping.

- Faces challenges during manufacturing downturns.

• Network Business:

- Has doubled over the past two years, offering longer lead times and cost-effective solutions.

• Production Expansion:

- Approximately 40% of the business is now production-end use.

- Cross-selling between factory and network services grew by 50% last year.

• Automation and AI:

- Investments in cobots, robotics, and AI applications.

- Launched automated inspection and mold polishing.

Future Outlook

• Growth Strategy:

- Focused on sales, marketing, and branding with the "Manufacture Like a Pro" campaign.

- Sales teams reorganized into regional structures for better customer service.

• Tariffs and Reshoring:

- Tariffs seen as an opportunity due to Proto Labs’ fast response and domestic footprint.

• Capacity:

- Expanded capacity with a new facility, maintaining excess capacity.

Q&A Highlights

• Production vs. Prototyping:

- Injection molding classified as production with repeat orders.

• Network Partner Selection:

- Hundreds of curated partners with in-person audits.

• AI Usage:

- AI integrated into factory operations, marketing strategies, and R&D.

• Margin Profile:

- Confident in maintaining current margin levels.

• Capital Allocation:

- Continued focus on share buybacks.

Readers are encouraged to refer to the full transcript for a more detailed discussion of Proto Labs’ strategies and outlook.

Full transcript - Cantor Fitzgerald Global Technology Conference:

Troy Jensen, Analyst, Volozap Proto Labs: Thanks, everybody, for making it. My name is Troy Jensen. I’m the analyst at Volozap Proto Labs. I’ve actually been luckily following you guys forever, right? If you remember, I was kind of the lead left or excuse me, lead right, underwriter on you guys’ IPO.

Yes. The IPO. Yeah. Yep. So we have Larry Lucas.

It was Brad Cleveland. It was Jack Judd. Right? It was kind of, you know, a great story and known you guys forever. So but thank you for making it, Rob.

I really appreciate it with us.

Rob Adore, CEO, Proto Labs: My pleasure.

Troy Jensen, Analyst, Volozap Proto Labs: Rob Adore, the CEO of Proto Labs. So Rob, why don’t we just quick start with just a background of yourself and maybe just kind of a quick explanation of Proto Labs, what you guys do?

Rob Adore, CEO, Proto Labs: Sure. Yeah. Happy to do that. So I’ve been with Proto Labs for about twelve years in various roles, right, as you know. I’ve been CEO for the last four years.

And, you know, over that time, I’ve seen Proto Labs go through just a great and just a tremendous journey, right. And really a transformation. You know, we started twenty five years ago with very much prototyping in mind. And we are still the premier prototyping company in the world, right. We’re the fastest company in the world because of the software that we’ve infused and the automation that we’ve infused into the manufacturing process.

But over the last several years, we’ve expanded a lot into production, right? Enabling us to serve our customer across the product life cycle. So not just in prototyping, but in use cases later in their production. And we’ve invested a lot behind that around automation to lower prices, around capabilities for inspection, quality, process validation, and those kinds of things. And so today we’re able to bring them production as well as prototyping, and serve our customers in a much broader way.

And all of this we did for our customers, right? Last year we served over 50,000 customers. And really many of the most innovative companies in the world, you know, more than 85% of the Fortune 500 companies in our target industries buy from us. And so I’m really pleased to be able to serve their needs in the way that they’ve been asking for in this broader way. I mean, we’ve been waiting to unlock this for a long time.

So I’m really excited to bring that forward.

Troy Jensen, Analyst, Volozap Proto Labs: Hey, could someone just quick close the door for us? That’d be great. So I want to get the background noise. All right. So let’s start with factory sales, right.

That’s really kind of the base business, organic business. Dollars 400,000,000 in revenues in 2024, very profitable with roughly 50% gross margins. It’s obviously economically sensitive. I think it was down about 5% last year. Can you just talk about what are the main drivers of your factory business?

Yeah, absolutely. So as you say,

Rob Adore, CEO, Proto Labs: our factory business is kind of the legacy business. It’s the core of our business and it’s about 80 of our revenues today. And that factory business is again, it’s the this is where we put so much of our automation and our ability to turn parts in as little as a day across all our different services. So this business is really closely coupled with our prototyping offerings. And so it’s really driven by innovation.

Right? That business is driven by innovation. And what we’ve seen historically is that in times of strong economy, that business booms. Right? Because our customers are in a hurry, they’re launching a lot of new products, they’re working to get things into market quickly and they’re not price sensitive.

And so that business grows in strong economies at multiples of GDP, right. And we have a long history of that. Conversely, in slower economies like we’ve been in over the last several years, right, where we’ve had consistent contraction in manufacturing, it does see headwinds. And that’s what’s playing out there. Now by contrast, we’ve got a network business, right, where which is characterized by longer lead times, higher volumes, lower price points.

And that’s doubled over the last two years, right? And so where customers are looking for they’re more price sensitive and they’re not in as much of a hurry, like in an economy like this, that’s a really powerful business because in a period of two years of manufacturing contraction, we’ve been able to grow double that business, take share. Right? And so this characterizes, I think, really the strength in our business model and the strategy, because we are totally unique in having these two aspects of the business, right? Being able to be so fast and responsive and prototyping, but also be able to have this kind of network model that makes us somewhat robust to the different economic external cycles.

And so I’m really pleased with it. I’m seeing it play out in a nice way here as we go forward.

Troy Jensen, Analyst, Volozap Proto Labs: Yes. So sexy business for sure if you guys remember, I do very well. The factory business used to be like a 30 grower with 25% to 30% operating margins. Obviously times have changed, right, economically sensitive, probably more competition. So we don’t kind of see that same profile.

But when I think about your factory business, I guess, I always thought injection molding would be a lot in production because people that are actually going to spend money to build a mold to print like 50 plus parts, to me that’s not much prototyping. To me that would be more production. Right? Is that am I thinking about that wrong?

Rob Adore, CEO, Proto Labs: Yeah. Well, let me address your first point about, about kind of margins and where that’s at. Because you you have a great memory. Right? Because you’re going back well over a decade.

Troy Jensen, Analyst, Volozap Proto Labs: Right. Exactly. Right.

Rob Adore, CEO, Proto Labs: When we were a much smaller business. And there, really the strategy was kind of cherry picking, right? Simple

Troy Jensen, Analyst, Volozap Proto Labs: parts fast.

Rob Adore, CEO, Proto Labs: Simple yes. So we and we said no to a lot of customers and a lot of opportunities, right, to cherry pick those most profitable ones. Ones. That was kind of a niche business, right? I don’t want to run a niche business.

I think we have a tremendous opportunity for growth playing in the larger space, playing in production. We have a huge opportunity for that. And we want to be able to say yes to customers, right, and serve them across those needs. They’ve told us for years that they want us to serve them more broadly. And that has been part of that journey is to be able to build the offering that we have today to be able to serve them more broadly, play in a much bigger tan and be more robust again to these kind of economic cycles.

And I would remind you that we are a very profitable business today, right? We carry no debt. We generated 15% of revenue in cash last year. I don’t care who you look at as our competitive set. We are vastly more profitable than them, right?

By a lot. And so that’s our strategy is, you know, and, you know, back in those days, we also didn’t invest in much in sales and marketing. Today, I’m actually leaning in on sales and marketing, right? I’ve got a big brand campaign out there called Manufacture Like a Pro, right? That is all about getting, you know, I’m trying to yell from the mountaintops about our capabilities in production so that we can serve our customers more.

But to answer your question about injection molding, you know, today we estimate that the majority of our injection molding business is production. Okay? Where we would classify it as prototyping is when customers might create a new mold and then just generate one set of parts off of that mold that they’re testing. They’re testing, they’re evaluating their design. Then they will come back and change that design, make a second mold or third mold, right, as they iterate and they learn.

But once they start doing repeat orders off of an existing mold, right, then we classify that as production. And also we actually have offerings that are prototype molding and production molding because it’s economically better for them as they start to get into volumes to pick our production molding off.

Troy Jensen, Analyst, Volozap Proto Labs: Sure. It’s probably longer lead times, right. You don’t need to accelerate as much or you can plan more accordingly, right?

Rob Adore, CEO, Proto Labs: We can plan more accordingly. We’ll have like higher cavity molds. We’ll do things to the tool to make it more cost effective to make more parts off. Yes.

Troy Jensen, Analyst, Volozap Proto Labs: And I do know you guys have done a lot to kind of expand your offerings. You acquired three d printing, you acquired sheet metal, you got into the hubs business, which leads me to my next topic. So network sales are about 100,000,000 for you guys in 2024. Yes. I think in Q4, it was up 22% year over year.

That’s right. That’s right. Can you just talk about how the network business complements the factory business?

Rob Adore, CEO, Proto Labs: Yeah. Yeah. Thank you. It’s very complimentary and we’ve actually shaped our network to be complimentary to the factory business. Right?

So the way to think about it is maybe on a couple of dimensions. One in terms of capabilities, there are some things that we can make through the network that we can’t make in the factory. Right? Because we can identify specialist manufacturers who specialize in certain things that it wouldn’t be cost effective for us to bring in house. Right.

But now we can still offer them to our customers. Right. So it expands our envelope of what we can offer to customers. And then the second way is the same parts that we can make in house, but that those manufacturers who are our partners can make them at higher volumes, more cost effectively, right? Where our factory might be more focused on high mix, low volume, quick turn, right?

We can work with our MPs who can do that repeatedly at high volume at a lower price point. And so this allows us it’s one of the ways that we can serve the customer across their entire product life cycle as their volumes ramp up so that we can be competitive across all their needs. Pablo, can

Troy Jensen, Analyst, Volozap Proto Labs: you give us some examples of maybe effectively cross selling kind of your network sales to your factory customers?

Rob Adore, CEO, Proto Labs: Yes. So cross selling has been one of our big strategies, right, since we did the acquisition. And I’m very pleased with how that’s going. Last year, the number of customers who use both the factory and the network, right, so cross selling grew 50%, right. And I’m really excited about this because we’re still barely seeing the tip of the iceberg here.

That number represents only 5% or just over 5% of our total customer base. So there’s still a tremendous untapped potential for us as we drive this message to our customer base. But we’re seeing really strong growth and adoption already. And this is again why I’m leaning in on sales and marketing, why I’m leaning in on branding to raise that awareness.

Troy Jensen, Analyst, Volozap Proto Labs: Can you talk about just the margin profile of network versus factory?

Rob Adore, CEO, Proto Labs: Yeah. So we target 50% gross margins in the factory fulfillment and 25% to 30% in the network. I’m pleased to say we expanded gross margins in both the factory and the network last year. And the network has been running actually a few points above the high end of that range, of that target range in this economy where there’s a lot of kind of excess capacity within the manufacturers. And I’m quite pleased with both of those, the performance we’ve seen.

Troy Jensen, Analyst, Volozap Proto Labs: All right. How about, can you talk about the number of network partners you have? I mean, how do you find them? How do you qualify them?

Rob Adore, CEO, Proto Labs: Yeah. Happy to do that. So we’ve got several hundred network partners. And our strategy is not to have thousands or tens of thousands of those manufacturing partners. We want to be close to the partners.

So they’re highly curated. We audit them in person, right? We onboard them in person. We visit them routinely. And we also make sure that we’re sending them material business so that we’re one of their biggest customers or their biggest customer.

So that way they have skin in the game. They see us as a real partner. And we also understand their capabilities really well. I mean, we’re a manufacturer, so we understand the needs of other manufacturers, right? And we know that if it’s something that one of our plants like I know that there’s sweet spots for one of our for each of our plants, right?

Where you send them that kind of work and it goes through very smoothly with high reliability, no issues. But if I send them something that’s kind of at the limits of what they can do, you’re probably going to run into challenges, right? At least statistically, you will run into more. And so we really want to characterize our MPs so that we understand what that sweet spot is and tailor that for them, right? And so we’ve had I mentioned we doubled the network business over the last two years.

We have not had to substantially increase the size of our MP network in that time. And that’s because many of them actually grew with us, right? We’ve had some that started with us several years ago, three, four years ago as a small machine shop with one or two mills and they now have 20 or 30, right? They’ve been able to grow with us as we’ve brought more business to them. So I’m really happy with the network and how it’s working and I’m sure we can double it again quite easily.

Okay. On the network partners, do

Troy Jensen, Analyst, Volozap Proto Labs: you think most of those are production sales? Is it mainly CNC or is it just more complex injection molding apps or is it just a specialty stuff that you’re talking about?

Rob Adore, CEO, Proto Labs: Well, so it’s really a combination of all those things. I would say that by count, they are it leans more towards CNC and to three d printing. But of course, we’ve got every kind of partnership in

Troy Jensen, Analyst, Volozap Proto Labs: the network. So would it make sense at all for you guys to actually acquire a machine shop? I mean, I think about you guys getting 25% to 30% gross margins on the network partner sales. They’re obviously making a profit too, right? Kind of it’s your customers to begin with.

I mean, is there would there ever be a reason for you guys to acquire your own machine shop to do your own long lead time types of CNC and injection molding?

Rob Adore, CEO, Proto Labs: Yes. I think those are some possibilities that we look at. One of the things that I see as a real advantage to the network model as it complements our factories is that as we look to explore ways that we can broaden our capabilities and our offerings that we bring to our customers, where in the past we would have to do an acquisition and invest upfront in order to stand up that capability to bring to market. You know, now we can do it commercially by finding some of those partners and testing it in the market without the need for that investment. And we can spin it up and bring it to market in just a matter of a few months, right?

And test the landscape before we might do subsequent investment. And that subsequent investment may take the form of acquisition. Okay. Yeah. Okay.

Troy Jensen, Analyst, Volozap Proto Labs: What about, just I know we’ve touched production versus prototyping and Proto Labs, I mean it comes across as a prototyping company. I know production is your big push right now. So some of the injection molding in the factory is all production. Yes. Most of the network business you believe is production.

Just like as a percentage of sales, what do you think production is? And then how has that changed in recent years?

Rob Adore, CEO, Proto Labs: Yes. So it’s been growing. Today, we estimate about 40% of our businesses is production end use, meaning it is a part that we make that our customer puts into their product for sale. Right? So it’s about 40%.

So it’s quite material already, even despite our name being a combination of prototype and laboratory, right? So we’re really promoting our broader capabilities in production. What we see is that when customers start to use us for production, our average order values with them go up dramatically. Their total revenue with us goes up dramatically. And so last year we served over 52,000 customers, right?

Some of the most innovative companies in the world. And again, a small percentage of them are still using us for production, though from a revenue standpoint, that’s represented 60% of our revenue. So as we really drive this conversion throughout our customer base, I see tremendous growth potential. And that’s what I’m really excited about.

Troy Jensen, Analyst, Volozap Proto Labs: And talk about if you are extremely successful with production, what does that can do to your gross margins? Because I mean, obviously, you guys have the advantage on the prototyping side, simple parts fast or just capturing someone who’s behind plan. But once you move into production, longer lead times, they can plan accordingly. They don’t need to pay up, right, a premium. So just talk about the margin profile if you’re successful in production.

Rob Adore, CEO, Proto Labs: Yes. So this might be a little counterintuitive, but I actually don’t anticipate much. I’m quite confident we’re not going to see much margin compression as we move more into production. And I’m confident on this for a couple of reasons. You know, one, it’s already 40% of our business.

So it’s material today. Right? We’re in it today. And we can measure those orders and we know the profitability of the production orders versus the prototyping orders. Right?

And that is how it’s been playing out. But two, we’ve been investing behind this, right? We’ve invested a lot in automation over the last several years, right? Whether it’s cobots or higher volume robotics or applications of AI that we’ve talked about, or frankly, new investment, new invention that we’ve done. Right?

I mean, we’ve got a portion of our R and D team who focuses on automation in these ways. And so, you know, we’ve talked about launching automated inspection, right. First to the world, automated inspection, automated mold polishing. Again, our invention first to the world, right, that we have technologies around. And that has substantially reduced our need for skilled labor, right, in the plants and allowed us to expand our gross margins even as we’ve grown production.

Can you explain how you’ve adopted AI into the business model? Yeah, we’ve got AI actually in lots of parts of the business. We’ve got it on the factory floor in a number of different areas. We’ve got it in go to market. We use it for R and D.

We use it in software development. And it’s pretty pervasive. In fact, we’ve got our own kind of protected instance of chat GPT that is available for all employees to use. It’s just in our intranet. And we’re encouraging them to experiment with it and find opportunities to drive productivity, whether it’s in their emails or in their marketing creative or in analyzing data and synthesizing things.

So, yes, we’re adopting that quite a lot. I see that as a really big opportunity for all companies, but we’re definitely investing behind it.

Troy Jensen, Analyst, Volozap Proto Labs: Can you talk about how you’ve been able to adopt it in with your pricing models, whether it’s for the factory and or networking?

Rob Adore, CEO, Proto Labs: Yeah, sure. So machine learning is part of what we do to study pricing and to look at pricing sensitivities and so forth. We’ve done that for a long time, both in the factory and in the network. In the network, it’s actually core to how our real time pricing is done is through AI based algorithms.

Troy Jensen, Analyst, Volozap Proto Labs: And so correct me if I’m wrong, but like when a network order comes in, your pricing engine will kind of look at the CAD file, right? And it’ll kind of give them a quote, right? That’s right. And the customer will accept it. And once they’ve accepted, then you go shop that quote to your customers at

Rob Adore, CEO, Proto Labs: To our MPs.

Troy Jensen, Analyst, Volozap Proto Labs: To your MPs, excuse me. So let’s say, you quote a customer at 1000 Dollars right? Yes. So then you shoot it out to your NPs, right? I mean, can you talk about like the process?

Do you start like see if anyone will make it for $600 If nobody accepts it, do you make it for $6.50? Talk about the process of No.

Rob Adore, CEO, Proto Labs: So we’ve got a target margin that we’re going after, right? So we will price it to our customer and we will price it to the MP. Our objective is not to find the lowest bidding MP. Our objective is to place it with the MP that we’re certain is going to deliver with high quality and reliability that geometry, right? And if it’s a different geometry, we might go to a different MP because of what we know about them.

Troy Jensen, Analyst, Volozap Proto Labs: Oh, interesting.

Rob Adore, CEO, Proto Labs: Right? And the reason is that, again, we serve these amazing customers that we want to have long standing relationships with, right? And that means that, you know, we want them to grow their business with us and do more and more production with us. So quality is fundamental. Reliability is fundamental.

We have a very strong brand around reliability and quality, and we want to maintain that with those customers. So we have, you know, so our algorithms are tuned to that to really making sure that we’re sourcing every job with an MP for whom that is a straightforward thing to deliver that they do every day so that their reliability and quality is going to be high. And we study the market, so we know what we believe is a competitive market rate for that kind of job. And that’s what we posted at. Okay.

All right.

Troy Jensen, Analyst, Volozap Proto Labs: And then the engine learns down the process and dumps and fine tunes and gets better pricing for you guys and Yep. That’s exactly right.

Rob Adore, CEO, Proto Labs: And the engine learns as we do that. But no, we’re not trying to skim and trying to find the lowest bidder. Does your competitor do that?

Troy Jensen, Analyst, Volozap Proto Labs: Perhaps. Okay. Yes. Because I think talk about then quality, right? So quality is so critical for everyone.

So Right? So you guys qualify these partners, you know what they can do, great, right? Because I mean customer is good. So you think about product liability, ITAR, intellectual property issues. Exactly.

It’s a lot.

Rob Adore, CEO, Proto Labs: Yes. So we have to hold ourselves to those high standards. Yeah. Okay. Perfect.

Troy Jensen, Analyst, Volozap Proto Labs: How about investing for sales growth? I know that was kind of a big theme on the recent earnings call. Now Manufacture Like a Pro, I guess, is the branding of it. Just explain to us what you’re going to do to kind of kick start the growth in this business.

Rob Adore, CEO, Proto Labs: Sure. Yeah. So we’re really leaning into that and driving investment in sales and marketing and branding. So again, we’ve got a very large brand campaign that we kicked off in January, Manufacture Like a Pro, really to reinforce and just tell the story of our capabilities in production, which have evolved and expanded quite a lot in recent years. Making sure that customers understand our capabilities for process validation, quality documentation, our pricing at high volumes and all these things that they care about as they go into production, right.

Also how we qualify and validate our MPs and so forth. We’re also investing behind sales. So last year we did the largest reorganization in the history of the company, set up team based regional sales that are empowered to serve their customers in each of the regions in The Americas and in EMEA. We put in place first ever a global revenue operations function to help facilitate and make more productive our go to market teams with better systems, insights, data, those kinds of things, right, to help them be very effective. And we have really a team based model, right, because production is much more of an enterprise sale than an individual sale.

And so we bring our, you know, a team, right, to that that is cross functional. Just like on the customer side, there might be many stakeholders that have to make a large production buying decision, not just the buyer, but the quality person, maybe the general manager of that business, what have you. Right. And so similarly, in addition to our salesperson, we’ve got application engineers, we’ve got customer success folks, we’ve got sometimes factory leaders, we’ve got our quality team, right? So we bring a much broader group of people that can really address all of the questions that the customer has to that.

And so we’re leaning in on all of those areas to drive growth. And I’m really pleased to see that we’re starting to get traction with that, right? I mean, again, our production business is growing. We’re seeing more and more adoption from customers in the cross sell and seeing average revenue grow up.

Troy Jensen, Analyst, Volozap Proto Labs: If successful with this new model, Manufacture Like a Pro, will you see upsized growth in factory or network or both or?

Rob Adore, CEO, Proto Labs: I expect to see it across both. Okay. Yeah. Because we’re doing a production in both. Great.

Troy Jensen, Analyst, Volozap Proto Labs: Exactly. Okay. I always think of you guys as a high quality too, right? So Thank you. Yeah.

Typically, it’s always what I always heard. All right. Let’s talk about tariffs. If you go back, just reshoring, air shoring, I’d argue kind of coming out of COVID, supply chains were all messed up and this whole theme of reshoring, air shoring was hot. I talked to a lot of resellers of kind of industrial equipment.

We just talked about having better conversations with C level executives, right, just about kind of more production applications in The U. S. Obviously, it slowed down. It was the war in Ukraine. It was inflation.

It was rates or recession. Now tariffs is the next kind of concern, right? Whether or not we’re going to have them or not or today might be different than tomorrow. But you just thought your thoughts on reshoring and tariffs and does it impact you guys at all? Absolutely.

Rob Adore, CEO, Proto Labs: Well, so actually, I see tariffs as a big opportunity for us. I mean, first of all, remember that we are very fast at responding, right? And throughout our history, we have been a great partner for whether it was COVID, right, where we did 20,000,000 parts for products very urgently, right, to combat COVID. We have a long history of that. When there’s supply chain disruption, people come to us.

Right? And certainly this is we’re in a period of more disruption. But from a footprint standpoint for our US customers, you know, we’ve got really strong factory presence in The US, right? So all our factories are in The US for our US customers. And we’ve got also a strong set of MPs also in The US, right?

So we’ve got a really strong domestic footprint already that can serve their needs. And our factories, unlike, you know, maybe traditional manufacturers, as we see demand increase, we don’t need skilled labor to scale up and meet that demand because of the nature and level of automation in our digital factories. Right? So I stand really well prepared to see a surge in reshoring and think that would drive a lot of robust demand. But furthermore, we’ve also got a global network of MPs across many, many countries.

Right? And so if there is a tariff situation or a trade situation that makes one country unattractive, right, we can very quickly, and I mean, we do this routinely, switch to another country or another region of the world for doing the production. For example, every year during Chinese New Year, right, we shift, you know, that demand to other parts of the world without a hitch, right? So we’re quite capable of that as well. So I think that these changes actually could be a real opportunity for us.

Troy Jensen, Analyst, Volozap Proto Labs: So you guys probably had no impact on your business model as far as you guys don’t source anything internationally, right? You’re buying are the mills coming at all internationally? Or do you guys see any expenses hit tariffs?

Rob Adore, CEO, Proto Labs: You know, I think we’re watching the raw materials, right? But we’re fortunate that our raw materials are relatively simple, right? Yep. Plastics and and and metals. And, And, yeah, I mean, we’re watching that carefully.

I’m not very concerned, especially if there are broad costs implications. I think we should be able to pass those on to customers. Do you source any aluminum or steel from Canada?

Troy Jensen, Analyst, Volozap Proto Labs: Tariffs are going up there. Yes. I have read that. Yes. It’s not material for us.

It’s not. Okay. Yes. I imagine most of it has to be kind of locally spun. So how about talk about I know you guys have been extremely profitable, right?

And you guys have implemented a buyback, right, to kind of return to shareholders. Where are you on the buyback? Would you guys consider dividends at all or?

Rob Adore, CEO, Proto Labs: Yes. So right now we’re focused on the buyback as a way to return capital to shareholders. And we just had another $100,000,000 approved, right. And we’ve been in the market this quarter buying back on that. Okay.

Troy Jensen, Analyst, Volozap Proto Labs: Is it x percent of cash flows? Are you just trying to offset share based compensation dilution? Is there a strategy behind that?

Rob Adore, CEO, Proto Labs: We’ve gone beyond offsetting dilution to trying to return most of free cash flow

Troy Jensen, Analyst, Volozap Proto Labs: back to shareholders. Okay. And what was key cash flow from operations last year? Do you guys remember?

Rob Adore, CEO, Proto Labs: Yes. Cash flow from operations last year was $78,000,000 so about 15% of revenue. Okay. Awesome.

Troy Jensen, Analyst, Volozap Proto Labs: Well, is there any questions from the audience? Anyone? Anything else, Rob, that you think is kind of important that you kind of want the investors to know here?

Rob Adore, CEO, Proto Labs: Yeah. Well, first of all, thank you very much. Appreciate the time. Enjoyed our conversation. You know, I think this is a really exciting time to be in manufacturing.

It’s also a really volatile time to be in manufacturing. I’m really excited for our business in a time like this because these kinds of disruptions have proven to be good for us, right? Because of our unique capabilities to respond quickly and the automation that we have. You know, as I think about profitability and it’s really about growth for us, right? I think as we you know, we’re continuing to invest in automation and productivity and we’ve talked about a number of those.

But we see tremendous amount of opportunity for revenue growth as we execute on this production strategy. And with that, I expect to see significant gross margin expansion and EPS expansion.

Troy Jensen, Analyst, Volozap Proto Labs: Really awesome.

Rob Adore, CEO, Proto Labs: Because of the leverage that we can get in our model.

Troy Jensen, Analyst, Volozap Proto Labs: Is there more automation to be done in your business?

Rob Adore, CEO, Proto Labs: Yeah. I mean, we’re constantly looking at that. As I said, we’ve got R and D teams dedicated to this. And the way we tend to think about it is we look at our, the stages in our manufacturing process, right? And we identify where are there places where there’s inefficiency, where there are places where it’s still manual, right?

And we focus our innovation there. And that’s how we got to automating inspection, automating mold polishing. Mold polishing used to be entirely manual. And now it’s very heavily automated. It’s interesting because

Troy Jensen, Analyst, Volozap Proto Labs: when I walk through your plans, it’s surprisingly quiet as far as, like, the number of people. Right? It’s because of the automation, historical automation too, you never really needed a machinist, right, to run a machine and, like, a light would pop on if a machine need to be serviced or, you know, kind of switch to the next part. So it seemed like you guys were already running super efficient, but we’d be able to find

Rob Adore, CEO, Proto Labs: more ways to do that. We have. And I mean, I think for the kind of manufacturing that we do in the contract manufacturing space, I believe we are the most digital, but we’re not stopping there. Right? We’ll continue to invest in that.

Troy Jensen, Analyst, Volozap Proto Labs: Yep. Does it make sense for you guys to I mean, most of the manufacturing in the factory is Minneapolis based, right? Does it make sense to move manufacturing factory manufacturing out to the coast or?

Rob Adore, CEO, Proto Labs: Yeah. Well, we’ve also well, we are on the East Coast, right? We’ve got facilities in Raleigh and in New Hampshire, right? So all of our three d printing is in two facilities. We just a year ago, you know, expanded into a second facility in three d printing in North Carolina, in Raleigh.

And then we’ve got two facilities in New Hampshire as well where we do CNC machining and sheet metal. Yeah. So that’s our current footprint. I think we’re good in terms of having to expand the footprint for another year or so.

Troy Jensen, Analyst, Volozap Proto Labs: And enough capacity. I know you guys have historically kind of bought a new building or so or expanded capacity every couple of years.

Rob Adore, CEO, Proto Labs: Yeah. Well, again, so we just did one in a year ago, right? And we’ve got excess capacity in all of our facilities now. So I feel good for a little while.

Troy Jensen, Analyst, Volozap Proto Labs: Yes, exactly. Well, perfect. Well, if there are no questions from the audience, I’m kind of tapped out. So Kieran, go ahead. Thank you.

Rob Adore, CEO, Proto Labs: Well, so if you think about kind of the network and factory model, right, what’s attractive about that is and I’ll take it one by one. But I think collectively we’ve got a really good kind of ROIC engine, right? Obviously on the network side, we can grow revenue without having to invest capital, right? So that’s very attractive and that’s growing really well. On the factory side, depreciation is relatively small relative to revenue for our business because of just the nature of the business and the automation that we have in place.

So I don’t I think we would focus on growth and whatever it is that we need to do to drive growth and to serve our customers. And I don’t think that would be a big influence for us because of kind of the fortunate nature of how our business is constructed regardless of how that turns out. Yeah. Awesome.

Troy Jensen, Analyst, Volozap Proto Labs: And with that, we’re out of time. So thank you very much. I really appreciate it. Appreciate your time.

Rob Adore, CEO, Proto Labs: Thank you. Thank you. Okay. To to and to to to to and to to to to to to to to

Deepak Mathivanan, Analyst, Cantor Fitzgerald: Great. Good evening, everyone. My name is Deepak Mathivanan. I cover global Internet here at Cantor Fitzgerald. Thanks, everybody, for joining us.

And we are excited to have Jankaj Dogen, cofounder and president of Marty Technologies join us today. Janket, thanks for joining us.

Jankaj Dogen, Cofounder and President, Marty Technologies: Thanks for having me.

Deepak Mathivanan, Analyst, Cantor Fitzgerald: Great. So, hey, maybe to start off, for folks who are sort of new to Marty, can you provide a brief overview of the business? What are the primary areas you participate in and how do you view the big picture opportunity for Mardi?

Jankaj Dogen, Cofounder and President, Marty Technologies: Sure. So we launched Marta in 2019 in Istanbul, Turkey. Turkey is one of the 20 largest economies in the world. It’s 85,000,000 population. And Istanbul is one of the largest cities in the world with a population over 20,000,000 people.

When we launched Martin in 2019, for those in The U. S. Audience, imagine a market without any sort of ride hailing services, so no car hailing, no motorcycle hailing, no micro mobility services, so no e bikes, e scooters, e moped rentals, no car sharing, that was the state of the Turkish market when we launched in 2019. And our goal was to effectively catch up Turkey to the technology enabled transportation innovations that have taken place pretty much everywhere else in the world. Where are we as of 2025?

We are the number one urban mobility app in the country. We are the equivalent of Uber and Lime in the sense that we offer a full range of ride hailing services, including car hailing, motorcycle hailing, and taxi hailing, and micro mobility services as well. We have e bike, e scooter and e moped rentals. And in all of the verticals where we operate, we are the dominant market leading firm in the country.

Deepak Mathivanan, Analyst, Cantor Fitzgerald: Got it. No, that’s great. And that’s helpful background. So tell us a little bit in detail about what’s different about Marty Waze’s competition. I mean, if you look at ride sharing industry or mobility in general, we’re starting to see market structure somewhat being established in many regions.

You usually have one dominant player or two dominant players. How do you think about Marty’s competitors and what differentiates Marty specifically?

Jankaj Dogen, Cofounder and President, Marty Technologies: So the way that the mobility landscape has played out in Turkey, I think is similar to how it has played out in many developed as well as developing countries globally. And that’s one where local companies that are able

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