Proto Labs Inc.—which calls itself an “e-commerce-driven digital manufacturer”—just finished its best quarter ever based on several performance metrics, president and CEO Victoria Holt said last week.
And this is after it reached new records in the two prior quarters.
“We continued to drive strong performance in the third quarter, delivering record revenue for the third straight quarter,” Holt says. “Our investments in the business to support the needs of our customers are delivering returns with increasing operating margins and record earnings.” Q3 revenue increased 12.7% to $88.11 million, as net income increased 10.3% to $13.22 million.
Proto Labs also reached new highs in Q3 in sales in the United States and in Europe, and in the number of users of its 3D printing and other forms of manufacturing. Key to its growth is the number of industrial product developers that rely on the company’s manufacturing services, with most of their orders placed through ProtoLabs.com. “Our revenue growth was driven by serving a record 16,909 product developers this quarter, an 18.5% increase over the prior year,” Holt said on a conference call with stock analysts, according to a transcript from Seeking Alpha.
“Our concerted effort over the past couple of years to expand relationships with our customers continues to drive our performance,” she added. “The U.S. and Europe, our two largest geographies, delivered record revenue levels as our focus on the customer continues to show positive signs.”
Maple Plain, Minn.-based Proto Labs provides several types of custom manufacturing that customers can order online: 3D printing, which uses digital blueprints to construct items by adding or removing materials layer by layer; additive manufacturing, a form of 3D printing used to add materials to build products; injection molding, a process by which material is forced into a mold to form a product; and CNC, or computer numerical control, a process by which machining or milling tools operate via computer programming. Two years ago, Proto Labs developed an e-commerce site where customers could place orders for all of these manufacturing services, replacing a former set-up that operated separate websites for each service. Proto Labs is No. 126 in the B2B E-Commerce 300.
Holt pointed to Abbott Electrophysiology Group as an example of a customer that recently used Proto Labs to build and launch a new medical device for commercial use. “Proto Labs was able to not only help Abbott launch this product on a tight timeline and on-budget, but our fast and cost-effective model allowed them to test multiple designs of the product with surgeons and ensure they landed on the design which best fit the needs of their customers,” Holt said on the conference call.
She added that Proto Labs works closely with such customers to learn how and why they use its technology and services. “Developing relationships with these types of customers helps us to understand why they use our services and why they don’t,” she said.
Holt said the company still needs to work on its ability to develop relationships with customers in Japan, where Q3 revenue fell 15.7%. “Winning business in Japan often requires developing longer-term relationships in order to effectively earn sustainable business with our customers,” she said. “The value our services bring to the market is strong, but the approach we take to engage customers will need to be tailored to the market.”
For the third quarter ended Sept. 30, Proto Labs reported, including revenue broken out by manufacturing process and region:
- Revenue of $88.105 million, up 12.7% from $78.173 million a year earlier, as net income increased 10.3% to $13.220 million from $11.982 million.
- Gross profit of $49.312 million, up 10.3% from $44.725 million, resulting in a gross profit margin of 56.0%, down from 57.2% a year earlier;
- Injection molding revenue of $49.480 million, up 6.5% from $46.445 million;
- CNC machining revenue of $27.166 million, up 24.7% from $21.781 million;
- 3D printing revenue of $11.102 million, up 12.7% from $9.850 million;
- “Other” products and services revenue of $357,000, up 268% from $97,000;
- U.S. revenue of $67.490 million, up 13.3% from $59.574 million;
- Europe revenue of $18.094 million, up 15.9% from $15.610 million;
- Japan revenue of $2.521 million, down 15.7% from $2.989 million.
For the nine months ended Sept. 30, Proto Labs reported:
- Revenue of $250.312 million, up 10.9% from $225.702 million a year earlier;
- Gross profit of $140.954 million, up 11.3% from $126.625 million, resulting in a gross profit margin of 56.3%, up from 56.1%;
- Net income of $37.506 million, up 12.5% from $33.335 million;
- Injection molding revenue of $144.187 million, up 7.3% from $134.376 million;
- CNC machining revenue of $73.318 million, up 21.2% from $60.510 million;
- 3D printing revenue of $32.061 million, up 14.3% from $28.059 million;
- “Other” products and services revenue of $746,000, down 72.9%% from $2.757 million;
- U.S. revenue of $191.019 million, up 12.8% from $169.364 million;
- Europe revenue of $51.224 million, up 5.6% from $48.518 million;
- Japan revenue of $8.069 million, up 3.2% from $7.820 million.
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