Protolabs enjoys continued growth amid rising CNC Machining, 3D Printing and Sheet Metal demand

Digital manufacturing service provider Protolabs (PRLB) achieved incremental growth of 3.2% in Q2 2022, according to its latest financials. 

Over Q2 2022, Protolabs generated $126.9 million in revenue, slightly more than the $123.0 million it reported in Q2 2021, and a 9.5% jump on the $115.9 million it brought in during Q2 2019. While the firm’s CNC machining earnings improved 15.9%, its overall growth was also aided by Protolabs’ Hubs acquisition last year, as without Hubs’ $11.3 million income, revenue would be flat against Q2 2019. 

“Highlights of our second quarter performance includes strong growth in our CNC Machining, 3D Printing, and Sheet Metal services, as well as another quarter of strong growth at Hubs,” Rob Bodor, President and CEO of Protolabs said on its earnings call. “Both Protolabs and Hubs’ offerings continue to resonate in the marketplace, and we are now more excited than ever to bring the two together by the end of this year.”

An image of Protolabs HQ in Minnesota
Protolabs’ Minnesota headquarters. Photo via Protolabs.

Protolabs’ Q2 2022 financials 

As is usually the case with Protolabs, Injection Molding was its highest revenue generator during Q2 2022, as it brought in $53.4 million. However, this represents an 8.2% fall on the $58.2 million it generated in Q2 2021, something Bodor attributed on the firm’s earnings call to the customer stockpiling and boom in medical orders seen last year. That said, the CEO maintained that Protolabs is “still confident” in the value of its Injection Molding offering, and he backed it to return to growth. 

With Q2 2022 revenue of $48.2 million, CNC Machining was the company’s next highest-earning division, in addition to being its fastest-growing, as it brought in 15.9% more than it did in Q2 2021. This growth was mirrored by the performance of Protolabs’ 3D Printing and Sheet Metal businesses, which drew in revenue of $5.2 million and $20 million, reflecting 10.6% and 9.9% year-on-year growth respectively. 

On the firm’s call, Bodor explained that with the exception of Injection Molding, its services actually grew 15% between Q2 2021 and Q2 2022. While demand for Protolabs’ medical and automotive offering declined last quarter, Bodor described its performance in aerospace as well as the industrial and commercial machinery markets as being “very strong.”

It could be said that the firm’s aerospace offering’s earnings potential was boosted by Protolabs gaining ‘JOSCAR’ accreditation earlier this year, a prestigious industry standard valued by those operating in the aerospace, space and defense sectors. The business’ decision to add Aluminium 5083 to its rapid CNC Machining service, won’t have harmed its revenue there either, with the material being highly resistant to saltwater and chemicals, making it ideal for marine and automotive use cases.

Revenue ($)Q2 2021Q2 2022Variance ($)Variance (%)Q2 2019Q2 2022Variance ($)Variancr (%)
Injection Molding58.2m53.4m-4.8m-8.255.5m53.4m-2.1m-3.8
CNC Machining41.6m48.2m+6.6m+15.938.9m48.2m+9.3m+23.9
3D Printing18.2m20.0m+1.8m+9.915.3m20m+4.7m+30.7
Sheet Metal4.7m5.2m+0.5m+10.65.5m5.2m-0.3m-5.5

Undergoing an international realignment 

Protolabs’ expansion in Q2 2022 saw it serve 24,058 unique product developers, 2.4% more than the 23,492 it addressed in Q2 2021. Geographically, this growth was largely seen in the US, with the firm’s business there generating $100.7 million, 5.6% more than the $95.3 million it reported in Q2 2021. By contrast, Protolabs’ European revenue fell 5.1% to $23.4 million, and its Japanese arm closed altogether. 

According to Bodor, the company’s Japanese business only grew to 3% of its total revenue between opening in 2009 and present day. In particular, the CEO said Protolabs’ low-touch business model “didn’t resonate especially well in a region where customers place enormous value on long-term relationships.” With the division set to close, Protolabs will lose out on the $2.9 million revenue it generated last quarter from now on, and ship its final parts there in September 2022. 

Moving forwards, Bodor added that Protolabs aims to not only “accelerate growth” in its Injection Molding services, but also continue the integration of Hubs, as it seeks to build a single unified “e-commerce platform.” The firm is on-track to launch an initial integrated CNC machining offering by the end of 2022, and Bodor said it’s “very excited” about the potential of its upcoming “unified digital experience.”

“Bringing together the strengths of Protolabs and Hubs will provide a customer offering that no one else in the market can replicate with unrivaled breadth of manufacturing capabilities, lead times and prices, furthering our industry leadership and profitable growth,” said Bodor. “Our best-in-class speed and reliability allows Protolabs to partner with customers as they innovate and create new and improved products.”

“Our next priority in 2022 is to delight our customers, and we continue to deliver on our strong on-time delivery and quality rates while offering the fastest lead times in the industry.”

Robert Bodor will succeed Vicki Holt as President and CEO of Protolabs, effective March 1, 2021. Image via Protolabs.
Rob Bodor, President and CEO of Protolabs. Photo via Protolabs.

Slightly lower revenue growth ahead?

As Protolabs moves into Q3 2022, it has lowered its Q4 2022 revenue guidance slightly from between $123 million and $131 million, to $121 million to $129 million. This readjustment excludes any revenue impact caused by the closure of the firm’s Japanese business, but does factor in its July performance, current demand trends and seasonality patterns.

Looking ahead, Protolabs believes unfavorable foreign currency rates will see it bring in $2.9 million less in Q3 2022, than it did in Q3 2021. Much like its 3D printing competitors, the company also admits to facing difficult macroeconomic conditions in the quarter ahead, but Bodor wrapped up Protolabs’ call by saying it’s well-positioned to overcome these. 

“The combination of Protolabs’ best-in-class rapid digital manufacturing services and Hubs’ outsourced manufacturing partner network is a unique and winning model in a rapidly growing market,” concluded Bodor. “While we may face near-term disruption and macroeconomic uncertainty, we remain confident in our long-term strategy and are focused on execution.”

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Featured image shows Protolabs’ Minnesota HQ. Photo via Protolabs.