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    PRLB
    Earnings call· Jun 2026(Q2 FY26)

    Proto Labs Q2 FY26 earnings call PRLB

    Jul 31, 2026 Source

    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

    7
    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

    7
    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)——

    Operational metrics

    10
    Revenue per customer
    17%year-over-year
    Q2 FY26

    Reflecting continued momentum as the company deepens engagement with enterprise accounts.

    Non-GAAP Gross Margin
    46.8%up 200 bps year-over-year
    Q2 FY26

    These increases were driven by higher margins in both factory and network fulfillment as well as a mix shift.

    Non-GAAP Operating Expenses
    $52Mup $3.1M compared to prior year
    Q2 FY26

    Primarily reflecting increased investment in demand generation, and higher contractor and professional services costs as we continue to invest in our strategic pillars. Lower level as percent of revenue due to targeted cost reductions in Europe and U.S.

    Adjusted EBITDA
    $25.1Mup from $19.7M in Q2 2025
    Q2 FY26

    Strong increase in adjusted EBITDA and margin.

    Non-GAAP Earnings Per Share
    $0.60up $0.19 or 45% year-over-year
    Q2 FY26

    Driven by revenue growth, gross margin improvements and significant leverage on SG&A expenses.

    Common Stock Repurchased
    $5M
    Q2 FY26

    Amount of common stock repurchased during the quarter.

    Cash and Investments Balance
    $162.9M
    as of June 30, 2026

    Balance on the balance sheet at quarter end.

    Total Debt
    $0
    as of June 30, 2026

    No debt on the balance sheet at quarter end.

    Aerospace and Defense Revenue
    almost 20%growth
    Q2 FY26

    Strong growth across satellites, drones, rockets, and space exploration, representing a significant portion of total revenue.

    Network Gross Margin
    33.6%up sequentially and year-over-year
    Q2 FY26

    Improvement in gross margin for the network segment.

    Industry KPIs

    1
    MetricValueDetails
    Data center prime power demandstrength

    Deals & partnerships

    3
    AeroVironmentLong-standing customer relationship for prototyping and production.over 10 years

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

    Lockheed MartinExpanded 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 DynamicsOngoing 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

    2
    Europe profitabilityMid- 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 declineQ2 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

    5

    Europe Profitability

    Mid- to long-term effort, early progress in Q2
    CurrentEarnings headwind, work in process
    TargetContributor 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.

    Q&A highlights

    9

    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 read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.