Digital manufacturing leader Protolabs is positioning itself to benefit from long-term shifts in global trade policy, including tariffs, even as those same dynamics create near-term financial headwinds.
Speaking on the Protolabs’ Q2 earnings call, newly appointed CEO Suresh Krishna said Protolabs is adapting quickly to the evolving trade landscape by leveraging its global manufacturing network and AI-driven pricing systems. While he acknowledged that changing tariff structures can pressure margins, he framed the broader environment as a strategic opportunity.
“Tariffs and further investments in American manufacturing innovation are a tailwind for our business in the long term,” Krishna said. “At the same time, tariffs and frequently changing trade policies can create short-term margin pressures.”
Those pressures are most apparent when the company quotes a price to a customer, only to see its own input costs change later due to new trade rules. Rather than pass those additional costs on to customers — like many competitors — Protolabs often absorbs the impact to maintain trust and reduce friction.
“This is a strong example of how we reduce friction for our customers, fostering greater loyalty and expanding share of wallet,” Krishna said.
How Protolabs plans to capitalize on tariffs
Chief financial officer Dan Schumacher confirmed that tariffs had a measurable impact on Protolabs Q2 results. The company’s non-GAAP gross margin declined 90 basis points year over year, driven in part by lower margins in its U.S.-based digital partner network due to tariff-related cost shifts. But Schumacher said the company moved quickly to recalibrate pricing, and margins had returned to pre-tariff levels by June.
“While there was a temporary margin impact, we responded by adjusting pricing,” he said. “Our network margins have since stabilized.”
Protolabs’ global manufacturing footprint — spanning both its own digital factories and a partner network — gives the company flexibility to shift production in response to tariffs or other supply chain disruptions. Krishna said that kind of agility is becoming a competitive differentiator as customers seek faster, more reliable domestic manufacturing options.
“Our speed and agility are central to how we operate,” Krishna said. “Those trends are especially critical in today’s environment.”
CEO Suresh Krishna reached a record $135.1 million in its fiscal Q2, up 6.5% year over year in constant currency. Demand was strongest in CNC machining, which rose 20% overall and 30% in the U.S. — driven by aerospace and defense customers seeking high-complexity, domestic parts at speed. The company counts NASA, Lockheed Martin, Raytheon, and Blue Origin among its customers.
While Krishna said his immediate focus is on execution and customer experience, he indicated that Protolabs is well positioned to benefit from broader shifts in trade and industrial policy.
“We are focused on what we can control,” he said. “And we believe the direction of trade policy ultimately plays to our strengths.”
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