Proto Labs, Inc. (NYSE:PRLB) Q3 2017 Earnings Conference Call Transcript
Oct 26, 2017 • 08:30 am ET
Greetings and welcome to the Proto Labs' Third Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded.
I would like to turn the conference over to your host, Mr. Dan Schumacher. Please go ahead, sir.
Thank you, Operator, and good morning, everyone. This morning before the market opened, Proto Labs issued a press release announcing its financial results for the third quarter ended September 30, 2017. The release is available on the Company's website at protolabs.com.
(Forward-Looking Cautionary Statements).
Now, I'd like to turn the call over to Vicky Holt, President and CEO of Proto Labs. Vicky?
Thank you, Dan. Good morning everyone and thank you for joining us on our third quarter conference call. With me today is John Way, our CFO. The Proto Labs team produced a record performance in the third quarter by many different metrics. We reported record quarterly revenue of $88 million. This represented an increase of 12.7% over the prior year and was at the high end of our guidance range for the quarter. Adjusting for discontinued services and the impact of foreign currency, revenue growth was 13.8% over the prior year. Our revenue growth was driven by serving a record 16,909 product developers this quarter, an 18.5% increase over the prior year. Looking at our performance by region, our focus on sales productivity continues to show positive signs. Revenue in the United States, our largest market, produced record revenue and strong growth of 13.3% over the prior year. Europe revenue was also a record and grew 15.9% on a reported basis. Year-over-year European revenue growth benefited from foreign currency exchange rates. Adjusting for currency, revenue growth was 11.7%. Revenue in Japan declined 8.6% in constant currency. Although our relatively small revenue base in Japan often results in quarter-to-quarter variability, we are disappointed in our third quarter results in the region. Winning business in Japan often requires developing longer term relationships in order to effectively earn sustainable business with our customers. The value our services bring to the market is strong, but the approach we take to engage customers will need to be tailored to the market. Both David Fein and I had been to Japan in the past month to work with the team and review strategy to drive sustainable performance. We're putting in place many of the disciplined processes that are now showing results in the United States and our evaluating potential distribution opportunity to expand our market presence.
Moving to revenue by service, all our services delivered record level of revenue in the third quarter. Injection molding increased 6.5% over the prior year. CNC machining grew 24.7% and 3D printing grew 12.7% from the prior year. Injection molding grew $2.7 million or 5.7% sequentially. This growth included the early results of our on-demand manufacturing service which we launched in June and expect to be a key driver