Proto Labs’ third quarter results were marked by a negative market reaction, despite exceeding Wall Street’s revenue and earnings expectations. Management attributed the company’s performance to robust demand for U.S. CNC machining and sheet metal services, particularly in aerospace, defense, robotics, and semiconductors. CEO Suresh Krishna highlighted improved execution in the U.S. go-to-market teams and noted, “Our record revenue was led by increased demand in our U.S. CNC machining and sheet metal offerings, supported by strength across several key end markets.” Persistent weakness in European manufacturing and reduced prototyping demand in injection molding tempered overall momentum.
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Proto Labs (PRLB) Q3 CY2025 Highlights:
- Revenue: $135.4 million vs analyst estimates of $133.9 million (7.8% year-on-year growth, 1.1% beat)
- Adjusted EPS: $0.47 vs analyst estimates of $0.39 (19.9% beat)
- Adjusted EBITDA: $21.13 million vs analyst estimates of $18.9 million (15.6% margin, 11.8% beat)
- Revenue Guidance for Q4 CY2025 is $129 million at the midpoint, roughly in line with what analysts were expecting
- Adjusted EPS guidance for Q4 CY2025 is $0.34 at the midpoint, above analyst estimates of $0.33
- Operating Margin: 6.5%, in line with the same quarter last year
- Market Capitalization: $1.15 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 Q3 Earnings Call
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Greg Palm (Craig-Hallum): Asked about Proto Labs’ long-term growth potential. CEO Suresh Krishna pointed to recent quarters of above 7% growth and highlighted a forthcoming strategic plan in 2026 focused on removing customer friction and expanding offerings.
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Troy Jensen (Cantor Fitzgerald): Questioned declining unique developer numbers despite higher revenue per customer. Krishna acknowledged the focus on growing share of wallet with existing customers and stated efforts to increase the overall customer base will continue.
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Troy Jensen (Cantor Fitzgerald): Inquired about cross-selling between factory and network. CFO Dan Schumacher noted a 35% year-over-year increase in customers using both services, emphasizing better customer conversations and broader solution offerings.
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Brian Drab (William Blair): Asked about automation in advanced CNC machining. Krishna explained that customers can now specify requirements digitally, reducing manual intervention and friction, with engineers available for support if needed.
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James Ricchiuti (Needham & Company): Queried about gross margin drivers and network margins. Schumacher highlighted sequential improvements in both factory and network margins, crediting changes to pricing and sourcing algorithms for network margin gains.
Catalysts in Upcoming Quarters
In future quarters, the StockStory team will monitor (1) the pace of adoption for advanced CNC machining services and their impact on total order volumes, (2) further improvements in network and factory margins resulting from automation and AI initiatives, and (3) signs of stabilization or recovery in European manufacturing demand. Progress in expanding the customer base and share of wallet will also serve as key indicators of operational success.
Proto Labs currently trades at $48.46, down from $53.11 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free for active Edge members).
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