Record Quarterly Revenue of $115.4 million, an increase of 31% over Q3 2017

Record Quarterly Net Income of $20.9 million, an increase of 58% over Q3 2017

MAPLE PLAIN, Minn. — (BUSINESS WIRE) — October 25, 2018 — Proto Labs, Inc. (NYSE: PRLB), a leading online and technology-enabled, quick-turn, on-demand manufacturer, today announced financial results for the third quarter ended September 30, 2018.

Third Quarter 2018 Highlights include:

• Revenue for the third quarter of 2018 was a record $115.4 million, representing a 31.0 percent increase over revenue of $88.1 million in the third quarter of 2017.
• The number of unique product developers and engineers served through our web-based customer interface totaled 20,792 in the third quarter of 2018, an increase of 23.0 percent over the third quarter of 2017.
• Net income for the third quarter of 2018 was a record $20.9 million, or $0.77 per diluted share.
• Non-GAAP net income was $23.4 million, or $0.86 per diluted share. See “Non-GAAP Financial Measures” below.

“We are pleased to deliver another quarter with over 30 percent growth,” said Vicki Holt, President and Chief Executive Officer. “Protolabs again demonstrated strong performance across all of our geographies and in each of our services.”

Additional Third Quarter 2018 Highlights include:

• Gross margin was 54.1 percent of revenue for the third quarter of 2018, compared with 56.0 percent for the third quarter of 2017.
• GAAP operating margin was 21.7 percent of revenue during the third quarter of 2018, compared to 22.0 percent for the third quarter of 2017.
• Non-GAAP operating margin was 24.9 percent of revenue during the third quarter of 2018, compared to 24.6 percent for the third quarter of 2017. See “Non-GAAP Financial Measures” below.
• The company generated $25.6 million in cash from operations during the third quarter of 2018.
• Cash and investments balance was $153.4 million at September 30, 2018.

“As a result of continued strong operations and growth in each of our individual service offerings, we are becoming more of a total solution for some of our customers. The majority of our top customers have utilized every one of our core services in 2018. With our unique ability to deliver parts at unprecedented speed, we are helping more customers deliver their products to market faster and in new ways,” concluded Holt.

Non-GAAP Financial Measures

The company has included non-GAAP revenue growth that excludes the impact of changes in foreign currency exchange rates. Management believes these metrics are useful in evaluating the underlying business trends and ongoing operating performance of the company.

The company has included non-GAAP operating margin, adjusted for stock-based compensation expense and amortization expense (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 foreign currency activity, disposal of businesses and legal settlement (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, operating margin and revenues, 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 third quarter 2018 financial results today, October 25, 2018 at 8:30 a.m. ET. 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. start time. No participant code is required. A simultaneous webcast of the call will be available via the investor relations section of the Protolabs website and the following link: https://edge.media-server.com/m6/p/ep72okh4 . A replay will be available for 14 days following the call on the investor relations section of the Protolabs website.