[Management View]
Proto Labs reported record quarterly revenue of $135.4 million, up 7.8% year-over-year, driven by strong demand in U.S. CNC machining and network-fulfilled growth. Key strategic priorities include expanding advanced CNC capabilities, increasing cross-sell activity, and strengthening the leadership team with a new Chief Technology and AI Officer.

[Outlook]
The company expects Q4 revenue between $125 million and $133 million, implying 6% year-over-year growth at the midpoint. Non-GAAP EPS guidance for Q4 is $0.30 to $0.38, with a non-GAAP tax rate of 23%-24%. Future plans include further adoption of AI and automation, and detailed strategic initiatives to be shared in 2026.

[Financial Performance]
Revenue grew 7.8% YoY to $135.4 million, with constant-currency growth of 6.8%. CNC machining revenue increased 18.2% YoY, while 3D printing revenue declined 6.3% YoY. Non-GAAP gross margin improved by 110 basis points sequentially to 45.9%. Adjusted EBITDA was $21.1 million, or 15.6% of revenue. Non-GAAP EPS was $0.47, up $0.06 sequentially.

[Q&A Highlights]
Question 1: What's the potential growth rate for Proto Labs longer term?
Answer: We are focused on driving growth, with recent quarters showing over 7% growth. We are working on a new strategic plan to be shared in 2026, focusing on removing friction points and delivering products across the entire product lifecycle.

Question 2: Are you seeing growth across several industries or just specific ones like A&D?
Answer: We are seeing growth across various industries, not just aerospace and defense. We serve 50,000 customers annually, including innovators from diverse sectors.

Question 3: What is the CapEx requirement for CNC expansion?
Answer: The expansion involves adding mills to existing facilities, not new real estate. This is strictly equipment CapEx.

Question 4: Why is the unique developer number down despite record revenue per developer?
Answer: We are focused on growing share of wallet with existing customers while also aiming to increase our overall customer base.

Question 5: How automated is the advanced CNC machining capability?
Answer: The entire process is automated and available via our e-commerce platform, removing friction for customers. Manual intervention is minimal, with application engineers available for support.

Question 6: What are the medium-term prospects for the injection molding business?
Answer: Reduced prototyping activity has impacted growth, but we are focused on all service lines and will share more specific initiatives in 2026.

Question 7: What were the drivers of gross margin improvement in Q3?
Answer: Improvements in both factory and network margins, with network gross margin around 33%. Adjustments in pricing and sourcing algorithms helped mitigate tariff impacts.

Question 8: Where is the growth in revenue per customer coming from?
Answer: Growth is seen from both new and existing customers across diverse industries. Increased share of wallet is driven by focusing on customer needs and reorganizing our go-to-market strategy.

[Sentiment Analysis]
Analysts were positive, focusing on growth potential and strategic initiatives. Management was confident, emphasizing strong execution and future growth plans.

[Quarterly Comparison]
| Metric | Q3 2025 | Q3 2024 | YoY Change |
|----------------------------|---------------|---------------|--------------|
| Revenue | $135.4 million| $125.6 million| +7.8% |
| CNC Machining Revenue | +18.2% | N/A | N/A |
| 3D Printing Revenue | -6.3% | N/A | N/A |
| Non-GAAP Gross Margin | 45.9% | N/A | +110 bps |
| Adjusted EBITDA | $21.1 million | N/A | N/A |
| Non-GAAP EPS | $0.47 | $0.47 | Flat |

[Risks and Concerns]
- European revenue decline due to contraction in manufacturing activity.
- Weak demand in 3D printing, particularly in Europe.
- Reduced prototyping activity impacting injection molding revenue.

[Final Takeaway]
Proto Labs delivered record revenue in Q3 2025, driven by strong demand in CNC machining and network-fulfilled growth. The company is focused on strategic expansion, including advanced CNC capabilities and AI adoption. Despite challenges in European markets and 3D printing, Proto Labs is confident in its growth trajectory and plans to share detailed strategic initiatives in 2026. Investors should watch for continued execution on these fronts and the impact of new leadership on future performance.