Proto Labs(US:PRLB)2024-05-03 16:19Financial Data and Key Metrics Changes - First quarter revenue was $127.9 million, growing 1% year-over-year in constant currencies, and was at the top end of the guidance range [45] - Non-GAAP EPS was $0.40, down $0.06 sequentially, primarily due to higher operating expenses [20] - Non-GAAP gross margin increased 30 basis points sequentially to 45.6%, driven by improvements in factory gross margins [47] Business Line Data and Key Metrics Changes - Proto Labs Network revenue reached a quarterly record of $23.9 million, up 38% in constant currencies [45] - Injection Molding revenue grew approximately 1% year-over-year in constant currencies, with strong growth in larger orders [46] - CNC Machining revenue grew 3% year-over-year in constant currencies, while 3D Printing revenue was flat year-over-year [46] Market Data and Key Metrics Changes - U.S. revenue grew 4% year-over-year, while Europe revenue declined 9% year-over-year in constant currencies due to the absence of large orders from the previous year [45] - The Eurozone and U.K. manufacturing sectors continued to contract in the first quarter based on weak demand [45] Company Strategy and Development Direction - The company is focused on increasing the number of customers using its comprehensive offer and driving higher revenue per customer through larger orders [31] - There is a significant growth opportunity as less than 5% of the 53,000 total Proto Labs customer contacts currently utilize both the factory and network services [9][24] - The company aims to capitalize on technological advancements and automation to enhance production efficiency and customer service [10] Management's Comments on Operating Environment and Future Outlook - Management noted a challenging environment with variability in order trends, particularly a softening in larger orders as the company approached the Easter period [52] - The guidance for the second quarter anticipates revenue between $122 million and $130 million, with expectations for year-over-year growth [49] - Management expressed confidence in maintaining strong gross margins due to increased automation and efficiency in production [54] Other Important Information - The company repurchased $16 million of common stock in the quarter, equivalent to 85% of its free cash flow [48] - The company has zero debt and $112.9 million in cash and investments on its balance sheet as of March 31, 2024 [48] Q&A Session Summary Question: Can you elaborate on the guidance approach? - Management indicated that guidance is based on order trends observed, with a focus on the variability in the business environment [22][52] Question: What is the status of customer cross-selling opportunities? - Less than 5% of customers currently use full services, indicating a significant growth potential as the company works to increase this number [24][39] Question: How does the softness in orders compare between Europe and the U.S.? - Management noted that the softness is more pronounced in the U.S. than in Europe, with larger orders being a key factor [40]