On-demand digital manufacturing provider Protolabs (PRLB) has reported its highest ever quarterly revenue, generating a record $123 million during Q2 2021.
Over an impressive second quarter, the company brought in 15% more than the $107 million it managed to generate during Q2 2020, while achieving a 6% revenue rise compared to the $116 million it reported in a pre-pandemic Q2 2019.
According to Protolabs, its services experienced a surge in demand during Q2 2021, which saw it reach 23,253 unique product developers, an annual increase of 37%. The firm has attributed its wider client appeal to the production capacity inherited via its $280 million Hubs acquisition, which also helped facilitate a 29% jump in its 3D printing revenue between Q2 2020 and Q2 2021.
Despite setting a new revenue benchmark, Protolabs’ shares have fallen 9% since its financials were released, suggesting that investors were expecting the integration of Hubs to yield greater gains than the company managed to achieve.
“During the second quarter of 2021, we experienced strong demand, and delivered record revenues despite the challenges of labor availability in the U.S,” explained Rob Bodor, President and CEO of Protolabs. “I want to thank the employees of Protolabs for all that they did in the quarter, and we are confident that the best is yet to come.”
“We are emerging from the pandemic stronger than ever in the custom parts space.”
Protolabs’ Q2 2021 financials
In general, Protolabs reports its revenue across four segments: Injection Molding, CNC Machining, 3D Printing and Sheet Metal. Although Injection Molding remained the firm’s highest earner during Q2 2021, generating revenue of $58 million, the company’s CNC Machining division was its fastest-growing and brought in $42 million, 45% more than the $29 million it managed to raise during Q2 2020.
Protolabs’ 3D printing income also increased, not just over Q2 2020 but Q2 2019 as well, generating $18 million, a 20% rise on the $15 million it brought in two years ago. The segment is likely to have benefited from the firm’s Hubs purchase, which reported revenue of $9 million during Q2 2021, a 46% improvement on Q2 2020, although Protolabs doesn’t directly report its subsidiary’s 3D printing income.
After making a flat start to FY 2021, the company’s financials represent a return to significant revenue growth, during a period which saw it derive most of its income from the United States. Protolabs’ U.S. business brought in $95 million during Q2 2021, 9% more than the $87 million reported in Q2 2020, while its European income recovered dramatically over the same period, rising from $17 million to $25 million.
|Protolabs Revenue ($)||Q2 2020||Q2 2021||Difference (%)||Q2 2019||Q2 2021||Difference (%)|
Hubs integration ahead
During Protolabs’ earnings call, Bodor explained that even without Hubs’ revenue, its 3D Printing income increased by 12% from Q2 2020 to Q2 2021, thanks to “strong demand” for related services. This rise may well have been boosted by the DNV GL certification gained by the company for its metal 3D printing offering in Q2, which is likely to have made it more attractive to those in the oil and gas sector.
Q2 2021 also represents Protolabs’ first full quarter of trading with its new subsidiary, and according to Bodor, the company now aims to further integrate Hubs into its setup, as a means of creating “one unified customer experience,” driving higher revenue and taking full advantage of the broader capacity inherited through its acquisition earlier this year.
“Integration is now our top priority for the remainder of the year,” explained Bodor. “While both organizations continue to operate semi-independently and execute on their respective business plans, we continue to work together to incorporate Hubs’ capabilities. The plan is that we’ll bring them on, try and expose capabilities to Protolabs’ customers through our website, [but] that’s not the stage we’re at.”
Protolabs’ H2 2021 outlook
Given Protolabs’ strong cash balance of $89 million, it was able to repurchase $1.2 million worth of shares during Q2 2021, and the company expects its strong revenue performance to continue into H2 2021. For Q3 2021, the firm has set an outlook of between $123 million and $133 million, which if achieved would constitute annual growth of 14-24%.
As a result, Bodor concluded that despite growing competition in the digital manufacturing space, which will only increase with the funding yielded by Fast Radius and Shapeways’ upcoming SPAC mergers, he believes that Hubs’ integration will provide it with the “broadest set of capabilities and lead times in the world.”
“Several emerging companies that offer online access to manufacturing have entered or announced plans to enter the public markets, this is not unexpected,” said Bodor, “[but] we believe the combination of Protolabs’ internal manufacturing capabilities and Hubs’ network of premium manufacturing partners is superior to competing offerings.”
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Featured image shows Protolabs’ 3D printing facility in Morrisville, North Carolina. Photo via Protolabs.