PRLB - Earnings call transcript Q2 2019

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Operator

Greetings and welcome to the Proto Labs Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mr. Investor of Director Schumacher, Relations. Daniel Thank you.

begin. may You

Daniel Schumacher

With Thank Vicki is and Way, Officer. everyone. Chief you, and good John Financial Chief Donna, me our Holt, Officer; today Executive morning, our and President

market morning, financial protolabs.com. XXXX. website its the The opened, This is for the Proto issued on release results June a ended quarter at available Labs second release announcing press XXth, company's before the

prepared press the a addition, web release. slide our provided in available at In presentation online address is

to or remind and statements and like that considered, Before our performance results include we would many uncertainties begin, statements, will everyone relating actual cause and to discussion I risks forward-looking could to subject expectations may differ future that expectations. to materially that are, be from

our including any press made SEC could XX-K earnings on Form cause recent and materially our from forward-looking differ information to report and to on risks filings, for release adversely actual statements Please certain that annual refer today. outcomes

we non-GAAP within for the our reconciliation section The the to complete presentation press slide will to non-GAAP results our results. company accompanying of discuss GAAP release refer of consistent and financial with Investor past Please include a guidance and practice. our website measures Relations

the turn I'd like Vicki Labs. and Holt, President Executive over Now, to Officer call to Chief Vicki? Proto of

Vicki Holt

third significant performance, I the outlook John and at our Thank call. performance look with begin will as our as quarter will everyone. our you Thank of quarter provide well our Good overview financial second you, an the morning detailed Dan. quarter during for joining conference financial XXXX. quarter. for a second on of accomplishments us Then

$XXX.X the quarter record or in of second X.X% growth currencies. reported of representing we million, morning constant quarterly XXXX X% revenue of This over

per earnings representing $X.XX improvement. share sequential share adjusted were a Our per $X.XX,

our X.X% legacy X% in in approximately year. to services Manufacturing declining the compared currencies business with acquired our was Rapid Revenue prior constant growth

revenue the market, the was pulling growth prior the Americas by in our year. at X% of As growth acquired Americas, Year-over-year in revenue produced over our we second services quarter rate. revenue services largest growth with geography, look X.X% legacy that down our

our CNC metal we realized on of and million. focused As increase a performance expanded $X.X sheet and the revenue sequential first call, in we're services, acquired improving of quarter conference stated the in

Turning end machinery to industrial and performance Americas, market showed growth, the declined medical while markets year-over-year. customer end industry and in equipment strong automotive the

Our produced growth year-over-year European region XX.X% revenue in currencies. of constant

currency to However, headwinds, X.X%. due was reported growth

year-over-year strong similar industries, to in medical relates saw and automotive it and computer as electronics. performance customer in declines As Americas, Europe the trends in with we in

Japan currencies. Our region grew XX.X% constant in

demand model, in continue with execute Proto We Japan. Misumi partnership services market to to our drive of our go-to including Labs

revenue Transitioning XXXX. quarter by record to the the quarter, service, produced revenue in to of compared second injection X.X% increasing molding

injection introduced a with quarter, our customers with second custom During color we service, the matching precise, at cost-effective, parts which us signature new best-in-class molding will our allow lead-times. manufactured system provide to color

and our part customers, began to and printing, laser texturing, threaded inserts, including other offer injection engraving, pad We assembly. strategic to also capabilities molding recently focused mold new several

our Testing from customers with for to to the in steps experience our volume market prototyping further vendors and low as supplier our single building product gaining production. initial source represents a outsourced position roadmap

X.X%. CNC machining year-over-year growth was

Adjusting rate second for and comparison foreign rates exchange by CNC items, was our in growth in CNC creating quarter services. growth XXXX. X.X%. was growth growth of quarter The of revenue was in XX% difficult organic the our impacted Second these also CNC partially over impacted XXXX, by acquired strong flat a currency

the Second year. prior increased Labs quarter printing and XD Proto was revenue record, also over a XX.X%

offer, new to beyond printing XD printing prototyping. a During highlighting the efforts production quarter, XD our advance metal launched we industrial

of appearance the improve customer offer quality includes and production well metal parts parts, as engineering strength, as collaboration, secondary to new processes dimensional close control cosmetic Our specific accuracy plans.

printing, markets. of end our specifically production largest in in prevalent many becoming is more applications metals, XD

is metal representative expand XD our for customers' production our This service both we source parts serve still services printing. launch While positioned in Proto to the of prototype prototypes Labs best to commitment needs and across all parts, are is needs well meet lines. customers' production in now to our

sheet decline in year-over-year. the contributed metal a Finally, XX.X% $X.X representing million quarter, revenue of

did While in year-over-year improvement growth was sequential drive service. challenged, this we

for XXXX priorities. an our update on Now,

priority the relates evolution model. market to our Our of first go-to

top deeper and the our of growing of better. on voice of customers industries we far develop so how industries, two We growth serve added resources, customer capability are These We've dedicated medical investing aerospace. our focused can understanding in in leading customer development our to business are XXXX.

but recognized is awareness. we manufacturing, our have leader still brand a Labs improve to as digital in opportunities Proto

We and find ways our digital continue leader. new to to create buzz Proto promote about and the innovative market as leadership manufacturing Labs, emerging

XXXX quarter, Gala. Met renowned we Zac with pieces During fashion collaborated on and the fashion GE designer Posen the for Additive

job, team did the dresses generated wonderful leadership significant our Our attention, printing. Carolina event producing North the XD in a XD media thought printing displaying and in

match a employees sponsoring machined Discovery Labs metal parts customers, This Proto sheet life. addition, printed this DUCK! once to and program In is Labs Channel's provides participant provides BattleBots target BattleBot watching CNC the compete. Proto to XD our program. in and is energy a as to again Proto DUCK! to Labs direct bring

-- enhancing provide our invest to improve to customer to customer platform best-in-class experience, a As in we e-commerce continue our experience. relates and it

that customer our to need to our we we As engaging. and to add remains also capabilities, intuitive experience continue ensure

next this Our year improving overall for is priority efficiency.

order operations to continue to future support processes invest and growth. We making our efficient our in and more systems scale in

include functionality organization our systems efficiency. business focused internal capabilities, overall of our interconnectivity additional and drive software also to on in improvements and Our is

the Proto continuous Proto and Excellence our ensure serve Our customers. which program, remains really we have embraced us as efficient teams helps improvement innovative Labs

the CNC each We've of focus sheet areas meaningful improving Lastly, we of first services. areas on the acquired continue to progress we on to and primary rapid acquired and On in relating our call, expanded these continue quarter the performance made four services. plans. to we'll focus metal execute earnings described of our machining

in second quarter. across the we First, sales advance all to continue sales teams training

CRM instances, have enabling sellers. insights sales new also for teams, tools integrated all and We collaboration and unlocking across customer sales better enablement our

Second, pay-per-click, relates share to increased driving increased investment marketing, as optimization our we engine customer conversions. search impression in and and it

We continue to market our new our offerings through channels. multiple

three to Third, we on world. we we our metal working lead call, were for times reduce that May, indicated lead that and I'm sheet last sheet now the in very report in parts. offer launched standard times, the metal fastest day to service parts proud

Proto promise of for that very metal that brand we customers unprecedented And ensure been offering. on services. working to uphold value-based and value offer day reliability our in sheet been positive. feedback speeds to teams continue have three Our months, sheet the pricing our has all our metal our finally, test our operations in core can Labs Initial

that continued these lead rapid will to focus performance We services. execution are of in areas improvement confident sequential the the

Labs summary, In is Proto environment. not immune macroeconomic softening to

generate the We have weakening through despite revenue to XXXX, macro half of continued conditions. first growth

to product digital Aside as economic these environment, we mega growth from There continue drive a Industry X.X stands X.X trends. are Proto disrupting mega the are our that advantage three with the from to Industry trends benefit models, and associated Labs position in take revolution. forward leader manufacturing and of

with shorter products. new to First, the importance increased lifecycles of product have being market first

changes product in extremely adoption more as Second, of product runs risk results requires the innovative Labs for development, time customization rapid connected, And and is their business. shorter finally, long-term reduce three Things supply continued well positioned of increasing helping design just offer in become of optimize in product products product mission and growth trends resulting manufacturing. And development. chains. a production our companies These significant Internet Proto personalization for and through our opportunities accelerate

digital been ever the space have and in We XXXX, leader, since. manufacturing created the

from Our Fortune quality ability speed XXX parts unmatched our unprecedented enterprises customers individuals with is industry. in to at serve to

growth. to business invest serve to continue future We in and drive customers our our

are excited for on the creation result value growth will the about business of for the this needs our We and in, for in customers and Company, drive focusing long-term shareholders. our confident prospects

financial to like I'd the results. over Now, information turn on call John more our for to

John Way

quarter in of million XXXX. million, the in Vicki. an $XXX.X Thank you, X.X% or was same Revenue quarter second over the $X.X increase

a impact revenue of currencies. in growth headwinds a representing Foreign currency million had expected, we constant slightly quarter, in than resulting larger in X% the negative $X.X

developers. Turning product to

Our second X.X% to served $XX.X or quarter the of for an growth profit unique Gross of year. increased $X quarter XX,XXX product was the increase quarter prior prior comparable compared developers year. over to million, the million the

quarter in quarter, margin margin slightly of XXXX. the in Gross was of the second in with due Year-over-year factors. gross to first quarter the the compares the was This quarter following second compression XX% XX% from in XXXX. XX.X% up second

quarter second our to for a to basis margin Our Rapid of the compared headwind Manufacturing represented this XXX XXXX. operations consolidated quarter gross point

increased mix, The that investment XX over facility expanded gross driven decrease remaining factors, support future investments in will pricing. offset XX and we basis in margin. a a wage including was our in partially to to costs by in inflation, new decrease our support and number The fixed time, Minnesota leverage point point CNC basis are of resulted growth by offerings business

consistent guidance. XX.X% compares million $XX.X revenue $XX.X totalled or in and from the was XXXX. of of revenue of million in the revenue with the second expenses up of XXXX. quarter quarter, Sales and in Operating quarter XX.X% first marketing slightly to This QX or our of XX.X% total

trade and investments activity our voice include is show in Our second seasonally sales in and the that costs quarter. customer capabilities marketing higher of developing

Research revenue, and of first with quarter. the development was consistent X%

and at systems to of capabilities internal invest our services in these experience levels business. expand improve each support the We to XXXX R&D our customer future of will growth our and in the to continue in

second share income was tax to GAAP $XX.X quarter XX.X% earnings a in the non-GAAP in from of the the the XX.X% year. totaled up in XX.X%, million, prior On XXXX. resulting basis, was tax of adjusted diluted our compared On $X.XX. quarter second a rate reporting net basis, On per an GAAP rate basis, XX.X% in

the $X.XX, second of intangibles from the for representing a of amortization XXXX. compensation, of and after-tax in second decrease cost was $X.XX share quarter our per foreign non-GAAP per Adjusting losses, unrealized earnings currency diluted stock the quarter share

in EPS marketing increased due sales driven in R&D. sequentially, to lower and share volume decrease $X.XX improved principally investments rapid by the services volume. year-over-year Earnings and in is The and mainly per

flow. to Now turning cash

quarter was strong for to and infrastructure quarter. in systems, Our generating in $XX.X to initial Europe $XX.X from consisted in million ensure the of spend investments cash produce capacity second continues during IT flows, facility equipment, operations future and growth. the and business in investments Capital million cash

capital returned expiration We date or extended a repurchasing to stock-repurchase authorized XX,XXX also approved $X.X Directors and shareholders the program $XX our to stock. of common to XXXX. Board million XX, million of increase May, our In December by shares

$XX stock in stock the purchase million remaining the marketable million, quarter. under increases repurchased second stock $XXX quarter dollar To-date, program with repurchase -- of the million repurchase million, increase aggregate We to million. have an cash authorization end program. resulting to a value available up This common $XX ended first of from of $XXX the the balance at and securities we $XXX

to to reflects the be like currently million, our quarter in factors. following provide of to XXXX. in I'd growth to $XXX the for expect revenue of Now, X%. a million This the $XXX We quarter X% the of expectations guidance third range third range revenue

third in has of approach. business, quarter moderated The a our by taking economy. strong, and in the XXXX aided limited current cautious with was we growth the are very Revenue visibility economic strong

negative will year-to-date have We compared the the more and the are year. have on in prior current sequential trends business. currency million quarter placing weight analyzed on estimate We our approximately third $X revenues to our foreign impact performance

earnings guidance. to Moving

be backs estimate Our to currently We costs XX% XX% compensation stock the in approximately our third and non-GAAP $X.X of non-GAAP include of amortization for quarter. tax will million to quarter rate $XXX,XXX. add the approximately

a we XXXX above, a all EPS a our in the EPS expect quarterly between consideration tax reminder, of of third resulting outcome effective Taking $X.XX formal share a As non-GAAP our rate. remarks. per concludes XX.X% tax our to favorable be into That audit, QX in included and $X.XX the quarter.

take your questions. Vicki to and be I'll happy Now,

Operator

ahead go Thank of Our Brian coming Drab is first question William Instructions] your Blair. question. you. with Please [Operator from

Brian Drab

for Thanks my Good taking questions. morning.

Vicki Holt

Hi, Brian.

John Way

Good morning, Brian.

Brian Drab

Hi.

to are are just in the do that at you question, you in X% concerned all? at count out concerned the developer with developer the assume First market count, just growth stood But today? has weakness about end I it headwinds. the numbers all and on to me And the

Vicki Holt

Yes.

developer count with where in consistent -- is development revenue the pretty are So we the growth growth.

think growth the you pretty impact where So said, as an that, do having you are climate with we but is consistent with macroeconomic on revenue

Brian Drab

And -- yeah.

increase going for per So forward there? and developer can there's are on there, guess. revenue what nothing ways else I you What you going expecting the

John Way

Yeah.

as outpace we as over existing cross-selling that services product to developer the think of might we do sell and I more rapid progress actually our time growth drive some growth in services, those continue and developers. to revenue

past, injection because injection strong. have it, growth -- relative their think strong I developer in sizes we've per grows when molding revenue the talked services. of molding And the the is grows, just order

I think try their we what needs continue to needs. customers, are focus service them to the our on their offer to meet best and

Vicki Holt

on that build I'll And Yeah. little a bit.

you manufacturing get follow injection on-demand molding, each structures. see not complex developer, also parts from grows in but only As on that molds you the with more and

that So terms also of growth be can that in levers driving per also product helps the pulled other revenue developer.

Brian Drab

X% mid-point year-over-year to And the for guidance, Thanks. of guidance is quarter. then X% just on third the growth Great. Okay. the the revenue

midpoint, be you to of above or different directionally will where think make below and can regions the So to as you or kind the relative segments like that any midpoint? comments

Vicki Holt

Americas have being drive be largest -- likely lot I such given The to percentage higher a that generally to will as it mean, course, that and growth. a the close higher of But our will pretty tad it's well. the a and been than Americas midpoint. probably may Japan drives fact Europe big the of region Yeah. be it. the drives tends

some can visibility temper said a we've right in of guidance year There visibility well, as headwinds the best that think that the prior end some comparable in of as on very with markets. guidance in foreign given that's with some got we're feel we the our impact that what now guidance. coupled what this going is we with, It's that tough to have also dealing we've we with our Europe. is there comparing seeing we're currency comments coming we best of off macroeconomic we're got is make We today. the Overall, slowdowns our

Brian Drab

one the just sheet last Okay. metal. on then And

you you first percentage now can metal for much seeing with business the your relative So a business to of you you it sounds sounded like what offering feel bit and three-day better How quarter sheet three-day a actually call. sheet in roughly are how quite offering? metal about the on that do demand just

Vicki Holt

our May, sequential out, and three-day. so even services specialty growth only sequential pleased don't quarter is will full the that I feedback in we're that But say we seeing in there. good with have we're we've the launched this growth on a we're the getting

So it. the advantage they customers offer But and that pleased have about been and a to learning something it so new is learning are it's with of. take do, when they very

Brian Drab

of business Okay. pretty And kind this of a just fraction for this do is three-day it a rollout that can is or offer? broad you the three-day

Vicki Holt

in do good broad. service. a No. absolutely, broad. pretty that very It very in three-day, percentage it's It's the of captures Yeah, It's we can broad. our geometries specialty

Brian Drab

Okay. Thank you very much.

Operator

you. Thank

your Troy ahead Jensen Jaffray. with Our next question. go from question is coming of Please Piper

Troy Jensen

Vicki. for Hi, questions Right. John. Hi, here. taking Thanks my

but molding business. lot on just dive growth. do I want question injection on lot focus not you the And think your growing kind guys I this why with guys, have hovering color on around of X% now it's thoughts services I It added hear mean, a and not it's seems of organically. to like Vicki matching. I better new just in a it's you

Vicki Holt

Yeah.

Troy Jensen

ahead. it's -- key tap can mean, injection or I again, business. get the manufacturing this the to pretty molding you growing business I it because is mean, really on-demand important Go

Vicki Holt

And move in I injection low of adjusted that I on-demand to manufacturing that basis, that double-digit key yes, drivers business injection agree. keep offer that upper and approaching in say, number. X% is agree. on quarter, singles Yeah. one so me grew molding the to business an the the molding let currency our for Well, first, double-digit.

to we from So absolutely learn we are what And our continuing as to more customers add -- that's critical. things offering, need. that we they

working because the those offers offers we mean, really on of broadly and have e-commerce really best added, not focus some we're Now, the pointed our those focused to offered, customers and been up best accounts, still experience. I how offers to in we've how a scale that understand strategic serve to out,

with begin learning we're get we offer. basically, still as more there expanded to So, experience this

to manufactured in color We the parts We're now that are color interest in excited starting be custom very some space multiple a on-demand about see particularly very customer where bring can there approach. they the early forward offer. might that, in

So, in printer a of to three pleased the we're with printers, hall. of our the part And desktop first we've before, that. mentioned look growth injection years an might five as business, with the when molding at of take prototype you there place the been iterations with down or a impact maybe one last there's

the injection somewhat is reduced. So number probably mold iterations with prototype of molded

underscores the So growth move that's on-demand again, manufacture the into the what's need to that, driving And really space. today.

Troy Jensen

Yes.

Good just understood. -- as one sequential of seasonally for guys, Okay, a we should acquisition to for you John quick assume historically, down is well, -- And luck. years? QX here that right, a quarter,

John Way

Yes.

I it will. think

As will and we're I QX. trending through down be we seasonality how think the it slightly year, the look at patterns in

Troy Jensen

of And one on like any Okay, guess, of It updated -- that maybe we China just thought perfect. Proto you seem Vicki, doesn't But, I Labs. ago for topic? could or positive conversations a for guys, thoughts it either kind be any more seeing just yet. we're trade -- quarters one tariffs

Vicki Holt

Yes.

in are back unraveled that last took So, looking to I the at and the extended place are investment Asia, the easily had several more remember, with significant. decades for conversations chains it chains. the their is also over But several not that companies supply investments supply bring

tensions, trade change. there investment lot to options -- still among to of big they I a and have about and what differences -- with it's So, how a there's is the big manufacturers although, deal discussion think

quickly. don't happen those so, And

Troy Jensen

half. luck Yes. Clear. Good in the Understood. second

Vicki Holt

Thanks.

Operator

Thank you.

ahead. DeGasperi is coming Andrew question go of Please Our Berenberg. from next

Andrew DeGasperi

guess, and question really growing of you're just mean, Hi. European considering mean, why was cutting counter my that everything can you in comment discussed. well, I R&D everything? business is some Good though of on auto first Europe, maybe, I terms morning. think, I that and -- even Japan budgets I anything cyclical,

Vicki Holt

Yes.

our auto business was Europe, in So, down.

So getting grow. Japan got -- helping the market, there which lower from penetration entered the even so other so in we're segments drive we what remember, the I base the It's that you've that. think see industry of you than base, and the to later many and a far that's across Europe market a lower continued U.S. is

developers penetration our in new markets. to So we continue and drive key product

a was medical one of medical Medical lifetime In value. for industry a as high segment. -- market the real better was the potential segment longer and target strong close in rates us. we quarter, to We get tend our

So continue us model as -- Europe. industry enhance high to in the we in across that's market segments, focus our potential to -- helping on go-to globally

is a Japan also base. very low

to in bandwagon the Japan the business But e-commerce, more a model. X.X in is, take world that we're because So, market you're we outside penetration and and doing rest get have our little getting a that market. of got with the coupled growing benefits -- I customers there, behind in bit as I they've digital of Misumi, benefits Misumi, used what But younger our more think, on that of the BXB is with from advantage to from Industry you're lot they're seeing, of we're the growth get recognizing, which mean, relationship environment a there. is that in

we're to some improvement So see starting there.

Andrew DeGasperi

in help And you like those understand mean for then, what of see many mean, with business.? opportunity maybe can runs in machines? the kind part -- metal that kind I how do on-demand, month I a of XD us do -- And you Great.

Vicki Holt

Yes.

little comment in total. first, that me space about a So, bit let

use very best feel and in our early to across capabilities the the So, help production in printing production and for We knowledge that leader both in the a parts, it's parts. technologies XD very, we that of technology with XD printing, learn companies for that plastics. as use of how metals still to the are position

only of but usually cycles with to it's a to the it, allow close to not part plans those and The go the move have develop you've made, you to into for production that geometry its also in secondary be because product a long, going the coupled got control itself operations all develop are quality how that with would application.

a industry cycles, longer help lot aerospace from interest this device of be key verticals to we've So like but and navigate our them the change. got to med ones

for So revenue expect wouldn't in offer us. stick quick it's great I there. hockey changes a

John Way

in Yes. services, is, of And, thing Andrew, I as all think low-volume space. other it to think about the kind in about there the of talked we've is our

up want be continuing and smaller producing of to lot We So use these have over year technology machines how a to run them will parts learn does at it's and these pickup. somewhat leader as effectively. parts. date, as not them, to we'll like But start least And to for are this pick it are it companies the up think time. a we

Andrew DeGasperi

you. Thank Great.

Operator

you. Thank

question next of Greg Palm coming from is Our Craig-Hallum. ahead. go Please

Danny Eggerichs

Hi, questions. This for actually Eggerichs on my is today. for taking Thanks guys. Greg Danny

Vicki Holt

Hi, Danny.

John Way

Hi, Danny.

Danny Eggerichs

QX, know your underperformed here like were significantly that segments or outperformed I guide for just any you prior results your expectations? segment. against specifically don't there looking But by at

Vicki Holt

In services markets? end of or terms

Danny Eggerichs

In actually. terms of service,

Vicki Holt

services. really. Services, Not

think I little a CNC bit, the but… machining

John Way

our I perspective. we're the guide. little foreign growth a of think in Danny, Adjusting greater CNC were. middle we wider, for than thought a strong from off really kind but that, year-over-year was a little headwinds were of Yes. they currency the coming

it we would quarter, As we through looked June than was little have softer bit anticipated. at a the

So we we little started than ended the had it. quarter a softer

really came three than driving, are so where factors in for kind those QX, what's QX. So think the more of probably results guide I our

Danny Eggerichs

can give Is little Okay. mentioned there. June commentary was that there softer bit so I there? far a July, guess you're anything that Great. just you any seeing you in that

John Way

in think guidance. it's I our reflected

Danny Eggerichs

then what remind replace initiatives can position? the any you major departure his of of us past there the is just CRO of to given quarter, of kind this And And were? lastly, some Okay. plans

Vicki Holt

in in and in in was really initiative that in regions So the first have Japan. leadership strong that Americas, the one each team sales the major with let to And Europe me now. say a we build the things place of of right was that,

and jump sales XXXX, kind of both refill voice that year also things us The any us technologies, partnering joined in strategic So enhance He's customers. investment that evolve that been we've going – that well. backfill our And our we've customer the we've with so the amount us, skills that. the to get greatest market really been on to to analysis continue any recently our our chief to immediately initiative to enhance a marketing identified, of our of real the takes here really it's and go-to that the that's to one to doing off role. got to a pressure sales now model we into based on continuing as where of marketing – of gotten from for frankly We've and on investments. addition data. teams but return sales on actual area selling team, that and in that's continue segments major the where full our allowing grow significant we potential a also of strategic on focus marketing can of with and training And officer for selling focusing – high customer skills allow

that forward. need we to evaluate in So be fill going we role we're will at time. not continuing point this rushing to And what

Danny Eggerichs

color. the appreciate Great. All right. I

Operator

Thank coming you. [Operator ahead. Blair. of is question from Our William Brian Drab Please Instructions] next go

Brian Drab

outlook, on margin. the of color gross be terms you Hi. it would some willing just further I give to in if to get wanted

tick of the do gross in up you year, half the of second all, margin sequentially? First expect to

John Way

Yeah.

sequential by gross I to it, as look going think be improvement. looking looking but modest to improvement, impacted margin we're is as Really we revenue. it drive we're that at sequential at

we the better – revenue improvement. margin ability have growth, gross better drive the the the to So

So at flat up I a little is would look the way to bit it.

Brian Drab

And Rapid, margin operations? I roughly gross Alpha headwinds what was each gave absolute and at level, the think at but the of least you to related those

John Way

is it XXs. in to close and in our Europe business low XX%. XD improved the actually And Rapid in printing is

Brian Drab

think two about those level they of now, any years state? just when can Okay. know kind months you XX statement steady off if from And don't make And you or but… I reach that's where

John Way

we're think get the XX% out in I what the two up the Well, XD are in accomplish gross of to XX% the to the the current to sheet we've what Europe think plans set I those we got get at range. range, metal initially to up and Once to is driving we printing there. margins next place to and initiatives drive from get those that, continue set plans levels. will to up But

Brian Drab

is within And John, think, that? years timeframe any of or you that rough next couple around the

John Way

Yeah. that's yes, think the I right timeframe. – I

factor to revenue cost going leverage think in us I is drive the help And revenue that. be ability growth again, big those a in margins. fixed continue the will in to and to pull the

Brian Drab

medical a markets? you areas. about, as obviously talked those mentioned penetrate little and And you are missed what specifically doing Okay. to further key taking may I You bit aerospace have initiative as I was notes here. But

Vicki Holt

Right.

marketing and form on also team. tailor in business meet so from so frankly our helping us but experience that put dedicated have that but what can So sales markets in we – also sales that also a needs the resources this team helping And us and roadmap segments, to teams sales marketing helping we build is are doing forward, some those going continue development we're of both relationships, also to the end that engagement, those marketing segment. our

John Way

their And in are with that of get the production, services. to at so metal to utilize looking help develop and how parts we're working them those those closely two are industries XD printing that

Vicki Holt

is And device med molding. segment color about very the injection excited custom also

to with that's custom segment color addition. to So is the that be tense do able uses molding injection that a and tooling, our welcome

Brian Drab

Got it.

much. very you Thank Okay.

Vicki Holt

Thank you.

Operator

turn to time, Holt Ms. comments. like the I'd for this to At back closing you. Thank floor over

Vicki Holt

Thank excited joining Proto Labs. today. about outlook Donna. for you We the Thanks, for us remain

trends ahead, favorable mega are As our business the are to look that and model. we X.X long-term Industry our strengths we confident current

Our differentiated platform companies the competition. digital products market faster their technology demonstrated has help the manufacturing enabled ability to than entrepreneurs to get and

to service We interface with our and customer and our technology offerings features innovate continue enhance to experience.

employees for Labs their continued I for as as customers their thank our the well Proto want to support. efforts

the value and during We Thank to reporting term, you. are driving on over to next in great quarter. forward shareholder the look XXXX and our progress to committed long you

Operator

you Ladies for your participation. This thank concludes and Gentlemen, today’s conference.

You may a at time. disconnect lines your day. wonderful have And this

Proto Labs (PRLB) 25 Jul 192019 Q2 Earnings call transcript