Proto Labs Inc (PRLB) Q1 2025 Earnings Report

Proto Labs reported solid Q1 2025 results, underscoring the company’s ongoing transition toward a production‑oriented, hybrid factory/network model. Revenue came in at $126.2 million, essentially flat year over year in constant currencies (down 1% YoY), with a sequential improvement of 4%. Non‑GAAP gross margin rose 140 basis points sequentially to 44.8%, driven by higher factory volume, while YoY gross margin fell about 80 basis points due to a higher mix of network‑fulfillment and softer volumes. net income was $3.60 million, or $0.15 per share, with free cash flow of $18.38 million and 14% of revenue generated as free cash flow, highlighting Proto Labs’ cash generation discipline in a volatile macro backdrop. Importantly, the company generated zero debt and ended the period with approximately $82.7 million in cash and cash equivalents, plus a larger total cash and short‑term investments balance of about $96.8 million. Management framed the quarter as a constructive start to 2025, with production as the primary growth vector and a broader strategy to expand the combined Proto Labs Offer through marketing, go‑to‑market reorganization, and optimized fulfillment channels.

The production‑driven growth is supported by a 45%+ expansion in customers utilizing the combined offer over the trailing 12 months, and a 3% year‑over‑year increase in revenue per customer in Q1. Revenue by service showed CNC Machining +6% YoY (driven by production and high‑requirement parts) and Sheet Metal +19% YoY, while 3D Printing declined ~6% YoY (reflecting prototyping headwinds in a softer macro environment). Injection Molding declined ~7% YoY (partly explained by nonrecurring large Q1 2024 orders), but was up ~7% sequentially from Q4. The Protolabs Network yielded $26.3 million in revenue, up 11.5% in constant currencies, reinforcing management’s thesis that the network and factory combinations can mitigate demand volatility.

Looking ahead, management provided a Q2 2025 revenue guide of $124–$132 million (midpoint ≈ +2% YoY in constant currency terms) and a non‑GAAP EPS range of $0.30–$0.38, with an implied modest gross margin trajectory as the mix shifts toward network fulfillment. The broader 2025 priorities emphasize continued production expansion, go‑to‑market optimization, and a streamlined organizational structure to drive efficiency and growth. The company also highlighted its tariffs positioning and the resiliency of its global footprint, noting that about 90% of US revenue is fulfilled domestically, which should help insulate margins and pricing power in a tariff‑uncertain environment.