3D Printing Financials: Protolabs Maintains Its Diverse Manufacturing Impact

Protolabs‘ (NYSE: PRLB) second-quarter 2024 financial results show a company thriving not just in 3D printing but across many types of manufacturing technologies. While additive manufacturing (AM) is an important part of its operations, Protolabs is far from a pure-play 3D printing business. Instead, its wide range of services positions the brand as a versatile player in the industry.

Protolabs operates using two fulfillment models: factory and network. The factory model involves in-house production at Protolabs’ own facilities in the U.S., Europe, and Japan, using technologies like CNC machining, 3D printing, injection molding, and sheet metal fabrication. On the other hand, the network model involves partnering with third-party manufacturers to complete orders with an even broader range of capabilities and capacity, helping with scaling production and meeting different customer needs.

Protolabs headquarters

On the financial front, Protolabs posted total revenues of $125.6 million for the second quarter of the year, a 2.8% increase year-over-year. On top of that, Protolabs reported a net income of $4.5 million, or $0.18 per share, a significant improvement from a net loss of $400,000 in the same period last year.

In the second quarter, Protolabs’ 3D printing revenue grew by 1% year-over-year, increasing from $21 million in the second quarter of 2023 to $21.3 million this year. While this growth might seem modest, it shows a steady demand for 3D printing services among the company’s offerings. For comparison, Protolabs’ injection molding and sheet metal revenues remained flat, while its CNC machining revenue grew by 6%.

Metal 3D printing at Protolabs.

During an earnings call with investors, CEO Robert Bodor suggested that Protolabs is focusing on increasing revenue per customer through large orders across services. He highlighted Solmetex, a medical device manufacturer, as an ideal example of how Protolabs’ combined factory and network offer provides value to customers throughout the product lifecycle.

Solmetex uses Protolabs’ 3D printing and injection molding services to develop and produce its products. Specifically, Solmetex was recently working to launch a new water treatment product for dental offices called Sterisil Straw, which was critical in both the prototype phase and the time to market. What’s more, Solmetex was looking for a single supplier for both prototyping and production, making Protolabs an ideal fit thanks to its combined factory and network fulfillment model. Protolabs ended up manufacturing the prototypes through 3D printing in its digital factories and then finalized the required injection molding production quantities via the network.

This is a great example of how companies can rely on 3D printing as one of many valuable manufacturing tools in the toolbox. Bodor noted the company’s success in getting more customers to use its combined factory and network services, which allow Protolabs to serve as a single-source manufacturer throughout the product lifecycle. The number of customers using this combined offer has increased over 50% year-over-year.

However, Bodor explained that “while we are seeing a growing number of customers use Protolabs for both prototyping and production, there are still many cases where customers order prototypes from Protolabs and eventually go elsewhere for production volumes. Capturing additional production work from existing prototype customers is a massive growth opportunity for Protolabs.”

The executive also told investors that Protolabs is reorganizing to better serve its customers and support growth. The company is creating separate teams: one focused on sales and customer engagement and another dedicated to handling order fulfillment.

Bodor explained: “The purpose of the reorganization is to really focus us around serving our customer even better than we have been and more holistically. We are now moving to a global operations organization where, whether it’s factory or network, we’ve got one unified organization whose job it is to bring our broad, comprehensive offer to every customer in a unified way. This change aims to improve efficiency, enhance customer experience, and drive long-term growth for the company.”

Production capabilities for metal 3D printing.

Beyond 3D printing, Protolabs’ other technologies allow the company to serve a wide range of customer needs, from prototyping to low-volume production. Its network business, which includes these diversified services, saw a revenue increase of 22% year-over-year, generating $24.7 million.

Another highlight from this quarter’s earnings is that Protolabs had 22,456 customer orders during the three months ending on June 30, 2024, with revenue per customer order increasing by 7% year-over-year to $5,595. The company’s gross margin improved to 45% of revenue, up from 43.4% in the second quarter of 2023. Meanwhile, cash flow from operations was strong at $14.4 million, and the company has a cash and investments balance of $112.9 million as of the end of the second quarter.

Moving forward, Protolabs anticipates revenue between $117 million and $125 million for the third quarter of 2024. The company also expects a net income per share between 10 cents and 18 cents.

3D printed stereolithography part.

While 3D printing is still a key component of its business, Protolabs’ capacity to provide diverse manufacturing solutions positions it as a leader in the digital manufacturing space. The brand focuses on getting customers to use more of its services, showing strong potential for long-term growth and profitability.

All images courtesy of Protolabs.