ProtoLabs Inc. reported Q1 revenue of $126.2 million, down 1.3% from $127.9 million in Q1 2024, as strength in production manufacturing and CNC machining partially offset continued weakness in prototyping demand, particularly in 3D printing.

CEO Rob Bodor said the company’s hybrid manufacturing model — combining in-house digital factories and a distributed Protolabs Network of partners — is gaining traction with enterprise customers.

“Customers utilizing our combined offer grew more than 45% over the trailing 12 months,” he said on the earnings call. “Revenue per customer increased 3% year over year, and we are seeing strong engagement with our expanded production capabilities.”

The Protolabs Network generated $26.3 million in Q1 revenue, up 11.5% in constant currency. By geography, U.S. revenue declined 1.2% year over year while Europe was flat. CNC machining revenue rose 6%, while sheet metal revenue increased 19%. Injection molding fell 7% and 3D printing declined 6%, a reflection of softer prototyping activity.

Protolabs revenue dips in Q1

Chief financial officer Dan Schumacher attributed the margin pressure to a higher mix of network-sourced jobs.

“Factory margins increased due to higher volume, but network margins were slightly down and came in just over 31%,” he said. “For Q2, we expect a flat to slightly down margin profile due to continued network mix shift.”

Despite the modest revenue decline, analysts were encouraged by the sequential improvements and production expansion.

“Proto Labs is navigating a tough macro environment by shifting its customer base toward higher-value production work,” said William Blair analyst Brian Drab. “Key metrics like customer growth, order size, and revenue per customer are all moving in the right direction.”

Craig-Hallum analyst Greg Palm echoed the sentiment: “Momentum is clearly building across the production side. The company’s ability to absorb tariff uncertainty and offer onshore fulfillment gives it an advantage as customers reconfigure supply chains.”

Management emphasized that 90% of U.S. customer orders are fulfilled domestically — either through Proto Labs’ digital factories or its network — giving the company flexibility to mitigate tariff risks.

“Our pricing systems are AI-driven and adaptive, allowing us to react quickly,” Bodor said. “And our diversified global footprint positions us well as sourcing strategies shift.”

Looking ahead, Proto Labs expects Q2 revenue between $124 million and $132 million, representing up to 2% year-over-year growth.

The company is targeting continued growth in its key metrics: increasing customer count, expanding combined factory and network use, and raising revenue per customer. Management reiterated its confidence in achieving full-year growth despite ongoing manufacturing sector headwinds.

“We’re encouraged by the response to our production campaign and the traction we’re seeing in aerospace, defense, and commercial space,” Bodor said. “Our model — fast, flexible, and automated — is built for this kind of uncertain environment.”

Check back for more earnings reports. Here’s last quarter’s update on Proto Labs sales and revenue.

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