We believe Protolabs and Xometry are the two behemoths in the digital manufacturing space, and offer the two best on-demand manufacturing marketplaces.
Since March 1st, 2024, we have been uploading 3 different CNC part files and 3 different 3D printable files weekly to both Protolabs Network and Xometry to track pricing trends across the two marketplaces. By tracking prices on the same parts over time we believe we can gauge demand trends as prices should theoretically rise on these marketplaces as demand increases (assuming supply remains constant). In addition, we believe analyzing how each marketplace prices the same part can provide additional competitive insights. We focus on CNC and 3D printing prices as these services account for ~50% and ~75% of total sales for Protolabs and Xometry, respectively.
Key Pricing Takeaways: March 3rd 2024 - April 8th, 2024
Xometry and Protolabs saw US manufactured CNC prices increase throughout the month of March.
Xometry saw International CNC prices increase throughout March, while Protolabs CNC prices declined throughout the month.
Protolabs and Xometry saw prices for 3D printed parts remain unchanged throughout the month of March, but Xometry saw a significant price drop in the beginning of April.
Protolabs on average offered lower prices on 2 of the 3 CNC parts for both US and international manufacturing options.
International prices were ~75% less expansive than producing the same CNC parts in the US for both Xometry and Protolabs.
Protolabs on average offered lowered prices on all 3 3D printed parts
Given the stronger than expected March ISM Manufacturing data, which moved into expansion territory for the first time since Oct 2022, we believe increase in price supports our belief Protolabs and Xometry likely saw demand improve throughout March.
Below we highlight these pricing trends in more detail.
CNC US-Based Manufactured Price Analysis
Analysis based on total price basket of 3 aluminum parts to be produced via CNC by US-based manufacturers and delivered in a 9 - 11 day delivery window. Price Index consists of a base price of $100 on March 4th, 2024. A deviation up or down from $100 will indicate percentage change in price from the original basket of 3 parts on March 4th. For example, $107 implies the basket price for these 3 parts are 7% higher than they were on March 4th.
CNC US Manufactured Price Index
Both Xometry and Protolabs saw US manufactured CNC prices increase throughout the month of March.
Xometry price index peaked at $106 on April 1st then declined modestly.
Protolabs price index peaked at $107 and maintained this level into April.
Average Weekly Part Price Trends (03/04 - 04/08)
On average, Protolabs offered lowered prices on 2 of the 3 US manufactured CNC parts, while also providing delivery 1 day earlier.
Source: Protolabs and Xometry Website, Industrial Tech Analyst
CNC International-Based Manufactured Price Analysis
Analysis based on total price basket of 3 aluminum parts to be produced via CNC by international-based manufacturers and delivered in a 9 - 11 day delivery window. Price index consists of a base price of $100 on March 4th, 2024. A deviation up or down from $100 will indicate percentage change in price from the original basket of 3 parts on March 4th. For example, $107 implies the basket price for these 3 parts are 7% higher than they were on March 4th.
CNC International Manufactured Price Index
Xometry saw International CNC prices increase throughout March and into April, while Protolabs prices declined throughout the month.
Xometry price index peaked at $117 on April 8th.
Protolabs price index bottomed at $91 and sustained those prices into April.
Average Weekly Part Price Trends (03/04 - 04/08)
On average, Protolabs offered lowered prices on 2 of the 3 International manufactured CNC parts, but Xometry prices offer delivery 2 days faster.
International prices were ~75% less expansive than producing the same CNC parts in the US for both Xometry and Protolabs.
Source: Protolabs and Xometry Website, Industrial Tech Analyst
3D Printing Price Analysis
Analysis based on total price basket of 3 3D printed nylon parts to be produced via Select Laser Sintering (SLS) and delivered in a 5 day delivery window. Xometry and Protolabs only offer US-based 3D printing services.
3D Printing Price Index
Protolabs and Xometry prices remained unchanged throughout the month of March, but Xometry saw a meaningful decline on April 1st.
Average Weekly Part Price Trends (03/04 - 04/08)
Protolabs on average offered lowered prices on all 3 3D printed parts, and were at least 65% less expensive on every part.
Source: Protolabs and Xometry Website, Industrial Tech Analyst
Strong March ISM Manufacturing Data
March ISM Manufacturing was 50.2, which beat consensus expectations and returned into expansion territory for the first time since Oct 2022. As shown in the chart below, US manufacturing has been in contracting territory since November 2022. We believe the robust manufacturing activity in March supports our belief Protolabs and Xometry likely saw demand improve in March given by the increase in pricing trends.
ISM Manufacturing PMI (>50 = Expansion, <50 = Contraction)
Source: FactSet
1Q24 Earnings Preview
Protolabs (PRLB): We expect Protolabs to report 1Q24 earnings sometime during late April or early May. Given our strong pricing trends and robust manufacturing activity indicted by the ISM index in March, we expect Protolabs to report solid 1Q24 results. The company guided Q1 revenues in the range of $120 - 128M, and we expect the company to come in toward the higher-end of that guidance range. Although our sample size is still small, we believe our pricing data data shows Protolabs has robust pricing power and is able to price parts on their marketplace cheaper than competitors given their internal manufacturing capabilities. We suspect this will allow them to continue to take share, which was evident in 2023 when Protolabs Network revenues grew ~70% Y/Y compared to Xometry’s Marketplace revenue growth of ~30%. We believe the combination of Protolabs Factory and Network business positions the company as a clear leader in the digital manufacturing space. We expect the combination will allow Protolabs to acquire new customers, and more importantly grow wallet share per customer given the company’s internal manufacturing capabilities. While we believe gross margins could be lumpy as the Network business ramps, we believe Protolabs will continue to grow and produce strong free cash flow. Link to our bullish Protolabs initiation report here.
Xometry: We expect Xometry to report 1Q24 earnings sometime during late April and early May. In-line with Protolabs, we believe our pricing trends and robust macro data, bodes well for Xometry when they report 1Q24 results. International was only 13% of total sales in 2023, but the robust price accretion our data showed in March and early April is something to watch. However, we believe the fact Xometry consistently quoted higher part prices than Protolabs is also something to monitor. We believe Xometry will continue to grow and is a great tool to secure prototypes and low-volume production parts, but our bearish thesis is driven on the assumption Xometry will struggle to increase wallet share among customers. As seen in our pricing data, Xometry likely needs to charge higher prices in order to maintain their margin (35 - 40%) via a markup. As customers ramp up production, we believe they will go directly to the manufacturer, which is why we believe Protolabs is much better positioned. Driven by sluggish revenue per customer growth and expectation of higher opex spend to acquire new users in order to grow, we believe the company will continue to underwhelm investors profitability expectations. Although Xometry could report solid revenue growth in Q1, we remain bearish on Xometry shares given profitability concerns. Link to our latest bearish Xometry report here.
Link to our detailed Protolabs and Xometry financial models here.
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