Financial Analysis

Revenue by product line for the three and six months ended June 30, 2026 and 2025 were as follows: Three Months Ended June 30, Six Months Ended June 30, (dollars in thousands) 2026 2025 2026 2025 Revenue: Injection Molding $ 53,625 $ 47,415 $ 104,693 $ 96,138 CNC Machining 70,360 61,945 133,605 114,788 3D Printing 20,667 21,215 41,132 41,409 Sheet Metal 4,462 4,303 8,813 8,514 Other Revenue 227 185 434 419 Total revenue $ 149,341 $ 135,063 $ 288,677 $ 261,268

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Stock-Based Compensation On July 8, 2022, the board of directors approved the Proto Labs, Inc. 2022 Long-Term Incentive Plan, which was approved by the Company's shareholders at a Special Meeting of Shareholders on August 29, 2022, and subsequently amended and restated by the Company's shareholders at the Annual Meeting of Shareholders on May 23, 2024 (as amended and restated, and subsequently further amended, the 2022 Plan) to increase the number of shares available for issuance pursuant to awards under the 2022 Plan by an additional 430,000 shares, add a minimum vesting requirement, and extend the expiration date so that the term of the 2022 Plan runs for ten years from the date of the shareholder approval. On May 20, 2025 and May 19, 2026, the Company's shareholders approved amendments to the 2022 Plan to increase the number of shares available for issuance pursuant to awards under the 2022 Plan by an additional 296,000 shares and 395,000 shares, respectively. Under the 2022 Plan, the Company has the ability to grant stock options, stock appreciation rights (SARs), restricted stock, restricted stock units, other stock-based awards and cash incentive awards. Awards under the 2022 Plan have a maximum term of ten years from the date of grant. The compensation and talent committee may provide that the vesting or payment of any award will be subject to the attainment of specified performance measures in addition to the satisfaction of any continued service requirements and the …

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Fair Value Measurements Accounting Standards Codification, Fair Value Measurement (ASC 820), defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that requires classification based on observable and unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company's assets and liabilities that are required to be measured or disclosed at fair value on a recurring basis include cash and cash equivalents and marketable securities. The Companys cash consists of bank deposits and cash equivalents consist primarily of money market mutual funds. The Company determines the fair value of these investments using Level 1 inputs. The Co …

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Goodwill and Other Intangible Assets There were no changes in the carrying amount of goodwill during the three and six months ended June 30, 2026. Intangible assets other than goodwill at June 30, 2026 and December 31, 2025 were as follows: June 30, 2026 December 31, 2025 Useful Life (in years) Weighted Average Useful Life Remaining (in years) (in thousands) Gross Accumulated Amortization Net Gross Accumulated Amortization Net Intangible assets with finite lives: Non-compete agreement $ $ $ $ 850 $ (843) $ 7 2.0 - 5.0 0 Software technology 13,229 (11,177) 2,052 13,229 (10,493) 2,736 10.0 1.5 Software platform 26,769 (12,215) 14,554 27,110 (11,241) 15,869 12.0 6.6 Total intangible assets $ 39,998 $ (23,392) $ 16,606 $ 41,189 $ (22,577) $ 18,612 Intangible assets allocated to the Protolabs Network entities consisted of intangible assets of 11.6 million in Europe and $16.6 million in the United States as of the date of the acquisition. The Euro-denominated intangible assets are translated at the end of each period using the current exchange rates resulting in a foreign currency translation adjustment that is recorded as a component of Other Comprehensive Income. Foreign currency unrealized losses related to intangible assets were $0.9 million and $0.5 million as of June 30, 2026 and December 31, 2025, respectively. Amortization expense for intangible assets was $0.9 million for each of the three months ended June 30, 2026 and 2025, and $1.8 million for the six months ended June …

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Income Taxes The Company is subject to income tax in multiple jurisdictions and the use of estimates is required to determine the provision for income taxes. For the three months ended June 30, 2026 and 2025, the Company recorded an income tax provision of $3.5 million and $2.2 million, respectively. For the six months ended June 30, 2026 and 2025, the Company recorded an income tax provision of $6.7 million and $4.6 million, respectively. The income tax provision is based on the estimated annual effective tax rate for the year applied to pre-tax income. The effective income tax rate for the three months ended June 30, 2026 was 27.4 percent compared to 33.7 percent in the same period of the prior year. The effective tax rate decreased by 6.3 percent for the three months ended June 30, 2026 when compared to the same period in 2025, primarily due to an increase in tax benefits from the vesting of restricted stock and the exercise of stock options. The effective income tax rate for the six months ended June 30, 2026 was 27.8 percent compared to 36.6 percent in the same period of the prior year. The effective tax rate decreased by 8.8 percent for the six months ended June 30, 2026 when compared to the same period in 2025, primarily due to an increase in tax benefits from the vesting of restricted stock and the exercise of stock options, as well as tax benefits recognized on losses incurred by a newly established entity in India. The effective income tax rate for the three and six …

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Recent Accounting Pronouncements The Company did not recently adopt any accounting pronouncements that had a material impact on the Company's Consolidated Financial Statements. Apart from the items discussed in our Annual Report on Form 10-K for the year ended December 31, 2025, there are no other new accounting pronouncements that are expected to have a significant impact on the Companys consolidated financial statements or related disclosures. …

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Segment Reporting The Companys reportable segments are based on the internal reporting used by the Companys CEO, who is the chief operating decision maker (CODM), to assess operating performance and make decisions about the allocation of resources. The CODM's primary profit measure for purposes of resource allocation and performance assessment is income (loss) from operations at the segment level. This measure is used to evaluate current-period performance, develop forecasts and budgets, and make decisions about capital and other resource allocations between segments. The Companys reportable segments are based upon geographic region, consisting of the United States and Europe. The Corporate Unallocated category includes non-reportable segments, as well as research and development and general and administrative costs that the Company does not allocate directly to its operating segments. Revenue in the United States and Europe is derived primarily from Injection Molding, CNC Machining, 3D Printing and Sheet Metal product lines. Injection Molding revenue consists of sales of custom injection molds and injection-molded parts. CNC Machining revenue consists of sales of CNC-machined and lathe-turned customer parts. 3D Printing revenue consists of sales of 3D-printed parts. Sheet Metal revenue consists of sales of fabricated sheet metal parts. Intercompany transactions primarily relate to intercontinental activity and have been eliminated and are excluded from the reported amounts. …

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Recent Accounting Pronouncements The Company did not recently adopt any accounting pronouncements that had a material impact on the Company's Consolidated Financial Statements. Apart from the items discussed in our Annual Report on Form 10-K for the year ended December 31, 2025, there are no other new accounting pronouncements that are expected to have a significant impact on the Companys consolidated financial statements or related disclosures. …

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