Proto Labs, Inc. (NYSE:PRLB) Q3 2023 Earnings Call Transcript

Rob Bodor: Yes. Thank you. I think you’re right about that. I think that the metric of number of developers is probably going to be less relevant for us longer term as we go forward because consistent with our strategy, we are showing signs that we’re able to penetrate our customers and increase our average order values with them and so forth. Right. And in this quarter, even with a modest decrease in that count, we were able to grow revenue overall. In the past, we were very driven by the product developer count, solely given that we were primarily a prototyping company. And so those were really our primary customers. As our strategy of expanding our capabilities, serving our customers more holistically, serving them in production use cases and so forth continues to rollout, I think we’re able to expand revenue somewhat independent of that metric. So I think it’ll become less and less relevant over time.

Brian Drab: Okay. All right, thank you very much.

Operator: Our next question is from Ben Rose with Battle Road Research. Please proceed.

Ben Rose: Yes, good morning, guys. A few questions. I know that last quarter you called out some weakness in medical devices and consumer electronics, and it sounds like those couple of verticals did rebound this quarter. Is there any commentary you can give as to perhaps why that was the case, if in fact that was the case and how sustainable you think that is moving into next year?

Rob Bodor: So, Ben, on the medical side, we were up quarter-over-quarter in medical, really with some of the strength and injection molding around medical, however, it was still down 4% year-over-year, so it performed well, but it was still slightly declining year-over-year. And computer electronics did not improve for us quarter-over-quarter. But injection molding medical is important to us, as you can imagine, with our quick turn business. For those in medical that are developing new devices, we help them succeed at what they’re doing and bringing those devices to regulatory approval and into production.

Ben Rose: Okay. And so just from an end market standpoint, was there relative strength, therefore in areas like auto and aerospace and defense?

Rob Bodor: Yes. So the strong industries for us in the quarter were aerospace, automotive and industrial.

Ben Rose: Okay. And Europe was particularly strong in this quarter in contrast to a number of the other manufacturing automation companies that we follow. Is there any specific commentary you can give as to the strength there?

Rob Bodor: Yes, Europe’s growth is mainly being driven by our expanded network offer within the region. So that really drove the growth that we saw in Europe.

Ben Rose: Okay. And then with regard to the unique developer number in the quarter, I was curious to know, can you cite the number of production buyers that you had in this quarter, perhaps versus last year and perhaps how that number is evolving?

Rob Bodor: Yes, no, we don’t have a number on production, but I would say the indicator ends up being, as was discussed earlier, your revenue per developers as Brian talked about. As that increases, it will be a sign that we are getting more of that production business and you can see that in the quarter.

Ben Rose: Okay, thank you very much.

Rob Bodor: Thanks, Ben.

Operator: And our next question is a follow-up from James Ricchiuti with Needham and Company. Please proceed.

Rob Bodor: Hi, Jim. Jim, are you there?

James Ricchiuti: Apologies, I was on mute. Yes, you may have touched on this, but what I’m struck by is the with stronger growth rate in Europe over the last several quarters versus North America. That’s not to say you didn’t show progress in North America this past quarter, but I’m wondering, as you think the next year, and I’m not looking for guidance, but only – is that going to be one of the priorities, potentially a more uniform growth rate between the two major regions. And to the extent you want to, but is there any preview you can give us about possibly what some of the priorities might be looking out to 2024?