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Proto Labs (PRLB) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Industrials· Jul 31, 2026

Source: earnings call transcript

Executive summary

Proto Labs Q2 FY26 — Record Revenue and Strong Profitability Driven by Strategic Execution

Proto Labs achieved record revenue and strong profitability in Q2 FY26, demonstrating early success in its strategic transformation. The company saw double-digit growth, gross margin expansion, and operating leverage, driven by deepening relationships with larger customers and strong performance in CNC machining and injection molding. While Europe's revenue growth is encouraging, profitability in the region remains a focus for mid- to long-term improvement.

Highlights

5

  • Record revenue of $149.3 million, up 10.2% year-over-year in constant currencies.

  • Non-GAAP gross margin expanded 200 basis points year-over-year to 46.8%.

  • Non-GAAP earnings per share of $0.60, up 45% year-over-year, highest since Q3 2020.

  • Injection molding revenue grew 12.9% year-over-year in constant currencies, a meaningful acceleration.

  • CNC Machining revenue grew 13.1% year-over-year in constant currencies, continuing strong performance.

Concerns

3

  • 3D printing revenue declined 2.7% year-over-year in constant currencies, mainly due to a 6.7% decline in Europe.

  • Europe profitability remains a "work in process" and a "mid- to long-term effort" to turn from an earnings headwind into a contributor.

  • Non-GAAP operating expenses were up $3.1 million year-over-year to $52 million, primarily due to increased investment in demand generation and higher contractor/professional services costs.

Guidance & targets

CategoryTargetConfidence
Q3 FY26 Revenue
$145 million and $153 million
high materiality
High
Full Year 2026 Revenue Growth
8% to 10% year-over-year
high materiality
High
Q3 FY26 Foreign Currency Impact on Revenue
$400,000 unfavorable impact
medium materiality
High
Q3 FY26 Non-GAAP Stock-Based Compensation Expense
approximately $4.2 million
low materiality
High
Q3 FY26 Amortization Expense
$900,000
low materiality
High
Q3 FY26 Non-GAAP Effective Tax Rate
between 23% and 24%
low materiality
High
Q3 FY26 Non-GAAP Earnings Per Share
between $0.56 and $0.64
high materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Company-wide
Achieved record revenue for the quarter.
$149.3M10.2% (constant currencies)——
U.S.
Strong growth in the region.
—10.9% (constant currencies)——
Europe
Reflects early results from go-to-market changes and increased customer engagement. Profitability is still a work in process and a mid- to long-term effort.
—7.3% (constant currencies)——
CNC Machining
Continued strong performance driven by volume and pricing, with significant demand from aerospace and defense, including space exploration, satellites, and drones.
Factory operation growth: 20% year-over-year
—13.1% (constant currencies)——
Injection Molding
Meaningful acceleration reflecting improvements in quality, customer engagement, and larger orders. Noted strength in telecommunications (data center demand) and aerospace and defense.
—12.9% (constant currencies)——
3D Printing
Decline mainly due to Europe. Strength observed in DMLS and MJF technologies in the U.S., driven by aerospace and defense and electronics, with ongoing capacity investments.
Europe decline: 6.7%
—-2.7% (constant currencies)——
Sheet Metal
Solid growth in the service.
—3.5% (constant currencies)——

Deals & partnerships

AeroVironment Long-standing customer relationship for prototyping and production. over 10 years

AeroVironment relies on Proto Labs for both prototyping and production needs.

Lockheed Martin Expanded use of 3D printing capabilities for additive production.

Lockheed Martin has expanded its use of Proto Labs' 3D printing capabilities as they build out a network of strategic partners in additive production for space flight.

Anduril, Meta, Medtronic, Edwards Life Sciences, Boston Dynamics Ongoing partnerships supporting rapid innovation and complex production needs.

Proto Labs continues to build credibility as a partner that can support rapid innovation and increasingly complex production needs for these companies.

Risks & headwinds

Europe profitability Mid- to long-term effort

Earnings headwind

Mitigation:Go-to-market changes, operational efficiency improvements, consolidation to single ERP system and legal entity.

3D printing revenue decline Q2 FY26

2.7% year-over-year decline in constant currencies, including a 6.7% decline in Europe

Mitigation:Investing to add capacity in DMLS and MJF technologies in the U.S.

What to watch in Q3 FY26

Europe Profitability

Mid- to long-term effort, early progress in Q2
Current Earnings headwind, work in process
Target Contributor to future growth and profitability

Why it matters

Europe is a significant region, and its profitability turnaround is key to overall company performance.

Overall, Europe remains a mid- to long-term effort. Our objective is to turn what has been an earnings headwind into a contributor to future growth and profitability, and the second quarter was an encouraging step in that direction.

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Q&A highlights

What were the factory and network revenues, and what was the network margin?

Network revenues were flat in Q2, with the overall goal being double-digit growth in both factory and network long-term. Network gross margin was 33.6%, showing sequential and year-over-year improvement.

“The gross margin in the quarter for the network was 33.6%. That's both up sequentially and year-over-year.”

asked by Greg Palm · answered by Dan Schumacher

2 min read 6 chapters

Detailed narrative

Strategic Pillars and Customer Engagement

Proto Labs is actively executing on its four strategic pillars: elevating customer experience, reigniting innovation, expanding into production, and driving operational efficiency. This focus has led to a 17% year-over-year increase in revenue per customer, reflecting deeper engagement with enterprise accounts. The company aims to remove friction for customers, enabling it to cater to their needs more effectively and grow wallet share.

Growth in Core Services

CNC Machining demonstrated strong performance with 20% year-over-year growth in factory operations, primarily fueled by demand from the aerospace and defense sector, including space exploration, satellites, and drones. Injection Molding saw a significant acceleration, growing 13% year-over-year, driven by strength in telecommunications (data center demand) and aerospace and defense, attributed to improved quality, customer engagement, and larger orders.

Europe Transformation Progress

Early progress has been made in Europe, with revenue growing 9% year-over-year. This improvement is a result of go-to-market changes implemented late last year, including aligning sales and marketing efforts to core industries and simplifying customer engagement. The consolidation of European operations into a single ERP system and legal entity aims to reduce complexity and enhance operational efficiency, though achieving full profitability in the region remains a mid- to long-term objective.

Leadership and Operational Changes

The company has made key leadership appointments to strengthen its commercial organization and manufacturing excellence. Bernardo Parlange was hired as Chief Commercial Officer to unify sales, marketing, and customer success, while Micah Roberts joined as Senior Director of Global Quality to enhance quality outcomes and production consistency. A search is underway for a new Chief Operations Officer following the planned retirement of Mike Kenison.

Physical AI in Manufacturing

Proto Labs is at the forefront of "physical AI," applying artificial intelligence to manufacturing processes. Leveraging its extensive library of over 15 million CAD designs and proprietary manufacturing execution software, AI is used to improve instant quoting, design for manufacturability, sourcing, and overall operational efficiency. This approach aims to enhance speed and accelerate customer innovation in the physical world.

Financial Strength and Outlook

The company delivered a record revenue quarter and strong profitability, with non-GAAP gross margin expanding by 200 basis points year-over-year and adjusted EPS reaching its highest level since Q3 2020. Based on strong first-half performance and Q3 guidance, Proto Labs raised its full-year 2026 revenue growth outlook to 8%-10% year-over-year, signaling confidence in continued momentum and strategic execution.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.