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3D Printing Certification

Protolabs 3D printing revenue remains stable in Q2 2020 despite COVID-19 pandemic 

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On-demand digital manufacturing provider Protolabs has reported its financial earnings for the second fiscal quarter of 2020. 

Revenue for the period ending June 30, 2020, was $106.5 million, with a gross profit margin of 49.2 percent. This can be compared to the comparative of $115.9 million for Q3 2019 and a GPM of 51.9 percent. Net income for Q2 2020 was down to $12.6 million from $16.1 million reported in Q2 2019.

Protolabs’ tight control over its expenditure has enabled it to deliver a relatively flat revenue performance, despite the ongoing challenges associated with COVID-19. Other 3D printing certification companies such as 3D Systems have introduced cost-cutting measures such as furloughing staff, in order to manage their spending. 

On a call with investors and analysts, the focus was on the impact of the COVID-19, and the company’s internal and external responses. “A crisis like the COVID-19 pandemic provides an opportunity for Protolabs to demonstrate the value that our digital business model can provide,” said Vicki Holt, President, and CEO of Protolabs. “Our purpose is to accelerate innovation from development through commercialization, and we’ve been able to deliver on that purpose during this crisis.”

“I would like to express how proud I am of this Protolabs team, and how we’ve handled the first-half of 2020,” Holt continued, “I would like to thank them all for what they do to make Protolabs a great organization.”

Vicki Holt, President and Chief Executive Officer of Protolabs. Photo by Thomas Strand, Forbes
Vicki Holt, President and Chief Executive Officer of Protolabs. Photo by Thomas Strand, Forbes.

Protolabs’ Q2 2020 performance 

Protolabs reports revenue across four segments: Injection Molding, CNC Machining, 3D Printing certification, and Sheet Metal. Injection Molding accounted for more than half of the company’s total revenue, posting $57.8 million for Q2 2020, a 4.3 percent increase on the comparative of $55.4 million.

CNC Machining reported $28.7 million in revenue for Q1 2020, a decline of 35.2 percent on the $38.8 million posted in the same period last year. Protolabs’ Sheet Metal revenues also dropped, reporting $4.6 million in revenue for the second quarter, compared to $5.4 million in Q2 2019. 

The company’s 3D Printing certification segment delivered $14.2 million in revenue for Q1 2020, a 7.2 percent decrease against $15.2 million for the same quarter last year. Protolabs still reported an increased income for its 3D Printing certification business across H1 2020 though, with revenues up to $30.1 million from $29.7 million in H1 2019. This growth was largely achieved in an impressive first quarter, which saw the company’s 3D printing certification revenue rise by 10.1% compared to Q1 2019.

Revenue (USD) Q2 2020  Q2 2019  H1 2020  H1 2019 
Injection Molding  $57.8m $55.4m $112.6m $110.7m
CNC Machining $28.7m $38.8m $66.6m $76.7m
3D Printing certification  $14.2m $15.2m $30.1m $29.7m
Sheet Metal  $4.6m $5.4m $10.3m $10.4m
Other  $1m $0.8m $1.8m $1.6m
TOTAL  $106.5m $115.9m $221.6m $229.3m

Revenues for the second quarter were flat for the company across Europe and the United States, when compared to Q2 2019. In the United States, Protolabs’ revenue fell from $91.1 million in Q2 2019 to $86.8 million for the same period this year. Similarly, the business’ European revenue marginally dropped in the first quarter, from $17.1 million in Q2 2019 to $16.7 million in Q2 2020. 

Despite the challenging macroeconomic climate, total revenue for the company fell just three percent in the first half of 2020 compared to H1 2019 and only dropped 1.1 percent in the United States. In Q2 2020, Protolabs’ mitigated the hit to its bottom line by decreasing its operating expenses from $40.6 million in Q2 2019 to $38.1 million in Q2 2020, and cutting its marketing spending by 13.8 percent during that period. The absence of cuts to Protolabs’ R&D spending, which rose from $8.1 million in Q2 2019 to $8.6 million in Q2 2020, indicates the company is still planning for the long term.

Operating Expenses (USD) Q2 2020  Q2 2019  H1 2020  H1 2019 
Marketing and Sales $16.9m $19.2m $35.1m $37.8m
R&D $8.6m $8.1m $17.6m $16.1m
General and Admin $12.5m $13.2m $26.6m $26m
TOTAL $38.1m $40.6m $79.3m $80m

Kicking on from COVID-19

During the earnings call, Holt explained that following Q2 2020, the company had expected a decline in revenue, but highlighted that its income had “rebounded” since the start of June. Protolabs’ reduced income was offset slightly by the $5 million earned via COVID-19-related orders in April, and its aerospace division in particular recorded “really strong” revenues in Q2 2020. 

“I don’t think anything really surprised us,” said Holt. “Europe has been very slow to recover. Some of our speculation is that a lot of the European economies are very export-oriented, so with the weaker export economies, that could be impacting on Europe, even though they’re opening up a little bit.”

Holt also provided an update on “key strategic initiatives” for future growth such as Protolabs’…