Proto LabsPRLB

Key highlights

• Growth outlook raised: Management increased the full year revenue growth target to a range of 8% to 10%, up from the previous goal of 6% to 8%. For the coming quarter, the company expects revenue between $145 million and $153 million, signaling confidence that the current momentum with large strategic customers will continue.
• Customer spending power rising: Revenue per customer contact, which tracks how much each engineer or buyer spends on parts, rose 16.7% to $7,239. This jump from $6,203 a year ago shows that the company is successfully winning larger orders from its existing user base even as the total number of individual contacts dipped to 20,630.
• Machining and molding lead: CNC machining revenue, which covers parts carved from solid blocks of material, grew 13.6% to $70.4 million. Injection molding, the process of creating plastic parts using molds, also grew 13.1% to $53.6 million, together offsetting a 2.6% decline in the smaller 3D printing division.
• Profit margins expanding: The non-GAAP operating margin, a measure of profit after running the business but before certain one-time costs, climbed to 12.0% from 8.6% last year. This 340-basis-point improvement was driven by higher sales and better efficiency in the company's factories.
• Regional growth driven by US: Revenue in the United States grew 10.9% to $122.8 million, while European revenue grew 9.2% to $26.6 million. The domestic market remains the primary engine for the business, now accounting for 82% of total sales compared to roughly 81% in the prior year.

Our take: This was a very strong quarter that showed real progress in the company's shift toward larger, more valuable customer relationships. Raising full year revenue guidance to 8% to 10% is a clear sign of strength, and the margin expansion proves the business can grow profitably. It reinforces the long-term case for the stock.