Proto Labs delivered second quarter results that surpassed Wall Street expectations, driven by robust demand in its core manufacturing services. Management highlighted record revenue fueled by strong growth in CNC machining, especially from aerospace and defense customers, as a key contributor to the outperformance. CEO Suresh Krishna, newly appointed in the role, emphasized that investments in marketing and sales enablement were successful in expanding relationships with strategic accounts. Krishna also noted that the company’s strategy of increasing customer engagement across both its digital factories and partner network is showing traction. "We have a very innovative and resilient culture and a pervasive mindset for continuous improvement," Krishna shared, adding that expanding share of wallet with larger accounts remains a top priority.
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Proto Labs (PRLB) Q2 CY2025 Highlights:
- Revenue: $135.1 million vs analyst estimates of $128.1 million (7.5% year-on-year growth, 5.4% beat)
- Adjusted EPS: $0.41 vs analyst estimates of $0.34 (19.9% beat)
- Adjusted EBITDA: $19.69 million vs analyst estimates of $17.74 million (14.6% margin, 11% beat)
- Revenue Guidance for Q3 CY2025 is $134 million at the midpoint, above analyst estimates of $130 million
- Adjusted EPS guidance for Q3 CY2025 is $0.39 at the midpoint, above analyst estimates of $0.37
- Operating Margin: 3.7%, down from 4.8% in the same quarter last year
- Market Capitalization: $1.14 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Proto Labs’s Q2 Earnings Call
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Brian Paul Drab (William Blair) asked about the sources of CNC machining strength and whether growth was balanced across factory and network channels. CFO Daniel Schumacher confirmed both channels contributed equally, driven by large accounts and robust U.S. demand.
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Drab (William Blair) also questioned the breakdown of CNC orders between production and prototyping. Schumacher explained the growth reflected a combination of both, without providing a precise split, but noted double-digit increases in revenue per customer.
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Gregory William Palm (Craig-Hallum Capital Group) inquired about the specifics of tariff impact on margins and how quickly the company could adjust pricing. Schumacher clarified that tariffs on aluminum and steel created a short-term backlog of lower-margin orders, but pricing adjustments have since normalized margins.
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Palm (Craig-Hallum Capital Group) also pressed CEO Suresh Krishna on his early strategic observations. Krishna emphasized a focus on removing friction for both customers and employees, with near-term priorities centered on execution rather than strategic overhaul.
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Troy Donavon Jensen (Cantor Fitzgerald) asked about the outlook for seasonality and the impact of production-focused initiatives. Schumacher said the company expects typical fourth-quarter seasonality, with ongoing initiatives supporting above-average Q3 demand.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) sustained momentum in CNC machining, particularly from aerospace and defense customers; (2) stabilization of operating margins as tariff pricing adjustments take full effect; and (3) progress in reigniting European demand through go-to-market changes. Additional developments in medical device manufacturing, following ISO certification, will also be important signposts for future growth.
Proto Labs currently trades at $47.65, up from $39.11 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
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