Revenue of $125.9 million in the First Quarter of 2023
GAAP Earnings Per Share of $0.10, Non-GAAP Earnings Per Share of $0.30

MAPLE PLAIN, Minn. — (BUSINESS WIRE) — May 5, 2023 — Proto Labs, Inc. (the "Company" or "Protolabs") (NYSE: PRLB), the world’s leading provider of digital manufacturing services, today announced financial results for the first quarter ended March 31, 2023.

First Quarter 2023 Highlights:

• Revenue for the first quarter of 2023 was $125.9 million, representing a 1.4 percent increase compared to revenue of $124.2 million in the first quarter of 2022.
• Revenue generated from our digital network powered by Hubs was $17.2 million in the first quarter, representing growth of 67.3 percent over the first quarter of 2022 and 16.3 percent sequential growth compared to the fourth quarter of 2022.
• Net income for the first quarter of 2023 was $2.7 million, or $0.10 per diluted share.
• Non-GAAP net income was $7.9 million, or $0.30 per diluted share. See “Non-GAAP Financial Measures” below.

“As we continue to operate in a challenging economic environment, amplified by rising interest rates and slowing manufacturing activity, I am pleased with first quarter financial results above our guidance ranges,” said Rob Bodor, President and Chief Executive Officer. “As our Protolabs and Hubs teams together build the most comprehensive offer in the digital manufacturing space, we are pleased with the growth of our digital network revenue fueled by cross selling efforts of our go-to-market teams.”

Additional First Quarter 2023 Highlights:

• Protolabs served 23,287 unique product developers during the quarter.
• The Company repurchased $21.1 million of shares during the quarter.
• Gross margin was 42.7 percent of revenue in the first quarter of 2023.
• Non-GAAP gross margin was 43.4 percent of revenue in the first quarter of 2023. See “Non-GAAP Financial Measures” below.
• EBITDA was $14.1 million, or 11.2 percent of revenue, in the first quarter of 2023, compared to $17.8 million, or 14.3 percent of revenue, in the first quarter of 2022. See “Non-GAAP Financial Measures” below.
• Adjusted EBITDA was $17.8 million, or 14.1% of revenue, in the first quarter of 2023, compared to $22.3 million, or 17.9% of revenue, in the first quarter of 2022. See “Non-GAAP Financial Measures” below.
• Cash and investments balance was $104.7 million as of March 31, 2023.

“As customers shift their buying preferences to longer lead times and lower-priced offerings, we continue to manage the business and adapt our operations to align with demand,” said Dan Schumacher, Chief Financial Officer. “We continue to innovate and drive efficiencies to enable us to leverage our profitable operating structure and, coupled with our strong financial position in which we have no debt and generate strong operating cash flows, are well-positioned to weather economic volatility and dynamic customer preferences.”

Non-GAAP Financial Measures

The Company has included non-GAAP revenue growth by region and by service line that excludes the impact of changes in foreign currency exchange rates (collectively, “non-GAAP revenue growth”). Management believes these metrics are useful in evaluating the underlying business trends and ongoing operating performance of the Company.

The Company has included earnings before interest, taxes, depreciation and amortization (“EBITDA”) and EBITDA, adjusted for stock-based compensation expense, unrealized (gain) loss on foreign currency and costs related to the Japan closure activities (collectively, “Adjusted EBITDA”), in this press release to provide investors with additional information regarding the Company’s financial results. The Company has also included earnings before interest, taxes, depreciation and amortization margin (“EBITDA margin”) and EBITDA margin, adjusted for stock-based compensation expense, unrealized (gain) loss on foreign currency and costs related to the Japan closure activities (collectively, “Adjusted EBITDA margin”), in this press release to provide investors with additional information regarding the Company’s financial results.

The Company has included non-GAAP gross margin, adjusted for stock-based compensation expense and amortization expense in this press release to provide investors with additional information regarding the Company’s financial results.

The Company has included non-GAAP operating margin, adjusted for stock-based compensation expense, amortization expense and costs related to the closure of Japan (collectively, “non-GAAP operating margin”), in this press release to provide investors with additional information regarding the Company’s financial results.

The Company has included non-GAAP gross margin excluding Japan, adjusted for stock-based compensation expense and amortization expense in this press release to provide investors with additional information regarding the Company’s financial results. The Company has included non-GAAP operating margin excluding Japan, stock-based compensation expense, amortization expense and costs related to the Japan closure activities (collectively, “non-GAAP operating margin”), in this press release to provide investors with additional information regarding the Company’s financial results.

The Company has included non-GAAP net income, adjusted for stock-based compensation expense, amortization expense, unrealized (gain) loss on foreign currency and costs related to the closure of Japan (collectively, “non-GAAP net income”), in this press release to provide investors with additional information regarding the Company’s financial results.

The Company has provided below reconciliations of GAAP to non-GAAP net income, non-GAAP gross margin, non-GAAP gross margin excluding Japan, non-GAAP operating margin, non-GAAP operating margin excluding Japan, non-GAAP revenue growth by region and by service, and Adjusted EBITDA and Adjusted EBITDA margin, the most directly comparable measures calculated and presented in accordance with GAAP. These non-GAAP measures are used by the Company’s management and board of directors to understand and evaluate operating performance and trends and provide useful measures for period-to-period comparisons of the Company’s business. Accordingly, the Company believes that these non-GAAP measures provide useful information to investors and others in understanding and evaluating operating results in the same manner as our management and board of directors.

Conference Call

The Company has scheduled a conference call to discuss its first quarter 2023 financial results and second quarter 2023 outlook today, May 5, 2023 at 8:30 a.m. EDT. To access the call in the U.S. please dial 877-709-8150 or outside the U.S. dial 201-689-8354 at least five minutes prior to the 8:30 a.m. EDT start time. No participant code is required. A simultaneous webcast of the call and accompanying presentation will be available via the investor relations section of the Protolabs website and the following link: https://edge.media-server.com/mmc/p/o8vnhfjc. A replay will be available for 14 days following the call on the investor relations section of the Protolabs website.

About Protolabs

Protolabs is the fastest and most comprehensive digital manufacturing service in the world. Our digital factories produce low-volume parts in days while our digital network of manufacturing partners powered by Hubs unlocks advanced capabilities and volume pricing at higher quantities. The result? One manufacturing source—from prototyping to production—for product developers, engineers, and supply chain teams across the globe. See what's next at protolabs.com.

Forward-Looking Statements

Statements contained in this press release regarding matters that are not historical or current facts are “forward-looking statements” within the meaning of The Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other factors which may cause the results of Protolabs to be materially different than those expressed or implied in such statements. Certain of these risk factors and others are described in the “Risk Factors” section within reports filed with the Securities and Exchange Commission. Other unknown or unpredictable factors also could have material adverse effects on Protolabs’ future results. The forward-looking statements included in this press release are made only as of the date hereof. Protolabs cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, Protolabs expressly disclaims any intent or obligation to update any forward-looking statements to reflect subsequent events or circumstances.