Protolabs Reports Financial Results for the Fourth Quarter and Full Year 2023

Revenue of $125 Million in the Fourth Quarter of 2023

Record Annual Revenue of $504 Million in 2023

MINNEAPOLIS — (BUSINESS WIRE) — February 9, 2024 — Proto Labs, Inc. ("Protolabs" or the "Company") (NYSE: PRLB), the world’s leading provider of digital manufacturing services, today announced financial results for the fourth quarter and full year ended December 31, 2023.

Fourth Quarter 2023 Financial Highlights:

  • Revenue was $125.0 million, an 8.2% increase compared to the fourth quarter of 2022.
  • Revenue generated from Protolabs Network was $22.5 million, a 52.0% increase compared to the fourth quarter of 2022.
  • Net income was $7.0 million, or $0.27 per diluted share, compared to a net loss of $4.24 per diluted share in the fourth quarter of 2022.
  • Non-GAAP net income was $11.8 million, or $0.46 per diluted share, compared to $7.0 million, or $0.26 per diluted share, in the fourth quarter of 2022. See “Non-GAAP Financial Measures” below.
  • EBITDA was $18.3 million, or 14.6% of revenue. See “Non-GAAP Financial Measures” below.
  • Adjusted EBITDA was $22.3 million, or 17.8% of revenue, compared to $14.5 million, or 12.5% of revenue, in the fourth quarter of 2022. See “Non-GAAP Financial Measures” below.

Full Year 2023 Financial Highlights:

  • Revenue was a record $503.9 million, representing a 3.2% increase over 2022.
  • Revenue generated from Protolabs Network was $82.6 million in 2023, representing growth of 70.4% over the prior year.
  • Net income was $17.2 million, or $0.66 per diluted share, compared to a net loss of $3.77 per diluted share in 2022.
  • Non-GAAP net income was $41.6 million, or $1.59 per diluted share, compared to $41.1 million, or $1.50 per diluted share, in 2022. See “Non-GAAP Financial Measures” below.
  • EBITDA was $63.2 million, or 12.6% of revenue, in 2023. See “Non-GAAP Financial Measures” below.
  • Adjusted EBITDA was $83.2 million, or 16.5% of revenue, in 2023. See “Non-GAAP Financial Measures” below.
  • Cash flow from operations was $73.3 million in 2023, compared to $62.1 million in 2022.
  • The Company repurchased $44.0 million in common shares during the year.
  • Protolabs served 53,464 customer contacts during the year.

"We capped off a record year with strong fourth quarter results, driven by consistent execution against our priorities,” said Rob Bodor, President and Chief Executive Officer. “For the full year, we generated revenue above $500 million for the first time in our 25-year history, while delivering improved earnings, robust cash flow, and substantial capital returned to shareholders. We are encouraged by our strong finish to 2023, and we believe we have the right strategy and priorities in place to continue our momentum throughout 2024. We remain focused on driving positive global impact, maintaining our industry-leading financial model, and increasing value for our shareholders."

Dan Schumacher, Chief Financial Officer, commented, "Along with record revenue in 2023, we significantly improved profitability in both the digital factory and the digital network. We generated an industry-leading $73 million in cash from operations, and we paid 97% of our free cash flows to shareholders through share repurchases."

First Quarter 2024 Outlook

The Company will continue to provide financial guidance on a quarterly basis due to the quick-turn nature of the business and continued uncertainty in global manufacturing.

For the first quarter of 2024, the Company expects to generate revenue between $120 million and $128 million. This guidance reflects a softer start to 2024, due to December 2023 and early January 2024 order levels being lower than historical periods. However, recent performance has been more in line with historical trends, and our guidance assumes that will continue through the end of March.

The Company expects first quarter 2024 diluted net income per share between $0.09 and $0.17, and non-GAAP diluted net income per share between $0.26 and $0.34. See "Non-GAAP Financial Measures" below.

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, when viewed in conjunction with the comparable GAAP 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, goodwill impairment 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, goodwill impairment 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, goodwill impairment 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, adjusted for stock-based compensation expense, amortization expense, goodwill impairment and costs related to the Japan closure activities (collectively, “non-GAAP operating margin excluding Japan”), 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, goodwill impairment 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 fourth quarter and full year 2023 financial results and first quarter 2024 outlook today, February 9, 2024 at 8:30 a.m. EST. 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. EST 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/vyeizwtx/ . A replay will be available for 14 days following the call on the investor relations section of the Protolabs website.

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