Proto Labs Inc., which does virtually all of its on-demand manufacturing sales through ecommerce, has become accustomed to steady growth, and 2018 was no exception. The provider of 3D printing and other forms of manufacturing services grew its revenue last year by almost a third over 2017, to more than $445 million.
But the company needs to improve how it interacts with and serves customers to continue thriving in a competitive market, CEO Vicki Holt says. Among its priorities: Investing in its customer-facing ecommerce site to make it more user-friendly, arming sales reps with better data and technology resources and improving its internal technology systems to increase operating efficiency.
“As a digitally enabled ecommerce company, we want to make sure that we continue to evolve our customer interface to delight our customers,” Holt said on a conference call with stock analysts last week, according to a transcript from Seeking Alpha.
Focusing R&D on ecommerce
She noted that Proto Labs’s ecommerce platform launched at the company’s founding 20 years ago. “Our customers and their needs have evolved significantly since then,” she said. “And while our ecommerce platform has also evolved, we must continue to improve and allow for growth as well as the addition of new services in the future. As more competitors enter the market, we will continue to advance and provide a world-class ecommerce experience for all our customers.”
Holt didn’t go into more details about how the company is improving its ecommerce site, which has had to absorb steady increases in the volume of product developers using its digital interface to place orders. The company says the number of product developers coming to its website increased 22.5% year over year in 2018 to nearly 46,000.
But she noted that, in relation to the company’s ecommerce platform and its technology supporting internal operations, Proto Labs invested 6.7% of its revenue last year in research and development activities and is continuing R&D investments this year.
Growing sales with a Japan-based distributor
The company formed a partnership last year with Misumi, a parts distributor in Japan, to increase its branded image there and develop customer demand. “We are pleased with the progress of this partnership, as it has continued to accelerate demand and order volume in Japan,” Holt said. Sales in Japan grew 26.5% year over year in 2018, as sales in Europe increased 5.6%, and revenue in the United States, the company’s largest market, increased 23.9%, she noted.
Proto Labs, with manufacturing facilities and online customers in the United States, Europe and Japan, 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.
For the fourth quarter ended Dec. 31, 2018, Proto Labs reported:
- Revenue of $112.77 million, up 19.7% from $94.18 million from a year earlier, including $53.691 million from injection molding, $38.16 million from CNC machining and $13.92 million from 3D printing;
- Gross profit of $59.16 million, up 11.8% from $52.88 million, resulting in a gross profit margin of 52.5%, down from 56.2%;
- Net income of $19.29 million, up 35% from $14.27 million.
For the full year ended Dec. 31, 2018, Proto Labs reported:
- Revenue of $445.6 million, up 29.3% from $344.49 million a year earlier;
- Gross profit of $238.68 million, up 23.1% from $193.84 million;
- Net income of $76.59 million, up 47.9% from $51.78 million.
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