Proto Labs' Q2 2025: Key Contradictions in Gross Margins, Production Growth, and Customer Adoption

Gross margin pressures and network revenue impact, production growth and revenue per customer contact, CNC growth and production orders, gross margin impact and network margins, customer adoption and production initiatives are the key contradictions discussed in Proto Labs' latest 2025Q2 earnings call.



Record Revenue and Growth:
- Proto Labs, Inc. reported record revenue of $135.1 million for Q2 2025, up 6.5% year-over-year in constant currencies and 7% sequentially.
- The growth was driven by strong demand from the Aerospace and Defense sector, particularly in CNC machining, and customer engagement through marketing investments and sales enablement tools.

CNC Machining and Aerospace & Defense (A&D) Growth:
- Second quarter CNC machining revenue was a company record, growing 20% over the prior year, with U.S. CNC machining revenue growing 30%.
- This growth was primarily due to increased demand from A&D customers for high-requirement parts, with similar growth observed in both factory and network channels.

Injection Molding and Medical Sector Challenges:
- Injection Molding revenue declined 4% year-over-year, with weakness noted within the medical sector.
- The company is addressing these challenges by innovating and adding production capabilities to win more medical production business.

Network and Global Operations Optimization:
- Network revenue grew 16% year-over-year, while digital factories revenue increased 4%.
- The growth in the network is attributed to ongoing efforts to optimize manufacturing footprint and capabilities, aligning with customer demand and improving customer experience.