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: April 1st 2024 - June 30th, 2024
Xometry US and International manufactured CNC prices consistently decreased throughout 2Q24, except for an increase during last 2 weeks of the quarter.
Protolabs US and International manufactured CNC prices remained mostly unchanged throughout 2Q24, except for a step down during the last 3 weeks of the quarter in US and international pricing.
Protolabs saw prices for 3D printed parts remain unchanged throughout 2Q24, while Xometry saw a significant price drop in the beginning of April and further decreased throughout 2Q24.
Driven by Xometry’s price decrease, Xometry on average was offering in-line or cheaper prices on the majority of CNC parts manufactured in US and internationally compared to Protolabs.
Xometry international prices were ~71% less expansive than producing the same CNC parts in the US, while Protolabs parts on average were ~82% less expensive.
Protolabs 3D printing pricing remain unchanged since we began tracking prices in March 2024 and on average offered lowered prices on all 3 3D printed parts compared to Xometry. In-line with CNC pricing behavior, Xometry saw 3D printed parts pricing decline throughout 2Q24.
ISM Manufacturing index was in contracting territory every month in 2Q24. The index also indicated accelerating declines throughout 2Q24 with ISM Manufacturing Index of 49.2, 48.7 and 48.5 in April, May and June, respectively. Coupled with declining prices, we believe the slowing manufacturing activity in 2Q24 supports our belief Protolabs and Xometry likely saw challenging demand in the June quarter.
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
Xometry US CNC prices consistently decreased throughout 2Q24, except for an increase during last 2 weeks of the quarter.
Protolabs US CNC prices remained mostly unchanged throughout 2Q24, except for a step down during the last 3 weeks of the quarter.
Xometry price index peaked at $106 on April 1st and bottomed at $82 on June 10th.
Protolabs price index remained unchanged at $107 throughout the quarter until declining the last 3 weeks of the quarter and bottoming at $93 on the last day of the month.
Average Weekly Part Price Trends (03/04 - 04/08)
On average, Xometry offered lowered prices on 2 of the 3 US manufactured CNC parts, but provided delivery 1 day later.
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 international CNC prices consistently decreased throughout 2Q24, except for an increase during last 2 weeks of the quarter.
Protolabs international CNC prices remained mostly unchanged throughout 2Q24, except for a modest step up in pricing during the last 2 of 3 weeks of the quarter but declined to quarter lows the last week of June.
Xometry price index peaked at $117 on April 8th, and bottomed at $89 on June 17th.
Protolabs price index remained unchanged at $91 throughout the quarter until June 17th, where it increased to $96 but declined to $88 in the last week of the quarter.
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.
Xometry international prices were ~71% less expansive than producing the same CNC parts in the US, while Protolabs parts on average were ~82% less expensive.
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 3D printing pricing remain unchanged since we began tracking prices in March 2024.
In-line with CNC pricing behavior, Xometry saw 3D printed parts pricing decline throughout 2Q24 and remained at all time low levels of $53 at quarter end.
Average Weekly Part Price Trends (03/04 - 04/08)
Protolabs on average offered lowered prices on all 3 3D printed parts, but prices on average were closer compared to our 1Q24 analysis.
Source: Protolabs and Xometry Website, Industrial Tech Analyst
ISM Manufacturing Data Remained Challenged in 2Q24
After ISM Manufacturing PMI returned into expansion territory in March 2024 for the first time since Oct 2022, ISM Manufacturing index was in contracting territory every month in 2Q24. The index also indicated accelerating declines throughout 2Q24 with ISM Manufacturing Index of 49.2, 48.7 and 48.5 in April, May and June, respectively. Coupled with declining prices, we believe the slowing manufacturing activity in 2Q24 supports our belief Protolabs and Xometry likely saw challenging demand in the June quarter.
ISM Manufacturing PMI (>50 = Expansion, <50 = Contraction)
Source: FactSet
2Q24 Earnings Preview
Protolabs PRLB 0.00%↑: We expect Protolabs to report 2Q24 earnings sometime during late July or early August. Given pricing trends remained mostly stable throughout Q2, we expect Protolabs to report 2Q24 results in-line with previous guidance. Protolabs guided Q2 revenues in the range of $122 - 130M, which implies ~3% Y/Y growth at the midpoint. However, given the price decline at quarter-end, as well as ISM manufacturing data that remained in contracting territory throughout 2Q24 we would not be surprised if Protolabs comes in at the low-end of their guidance range. Looking longer term, 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 assuming the Company leverages their internal manufacturing capabilities for these larger orders. 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.
Xometry XMTR 0.00%↑: We expect Xometry to report 2Q24 earnings sometime during late July or early August. We believe Xometry’s declining pricing trends does not bode well for the Company’s 2Q24 results. Xometry guided Q2 revenues in the range of $127 - 129M, which implies ~15% Y/Y growth at the midpoint. Although Xometry saw pricing trends improve in the last three weeks of the quarter, we believe the Company had a very challenging quarter as the manufacturing environment remains tough and will report revenues below the low-end of Q2 guidance. We believe this is already being reflected in the stock price with shares down ~30% in 2Q24. We believe Xometry 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 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. In fact, Xometry moved away from their original commentary on the 1Q24 earnings call where they expect to be adjusted EBITDA positive in 3Q24 and onward. Rather the Company expects to reach EBITDA profitability when the company hits a run-rate of $600M ($150M per quarter) with gross margin of 38%-40%.
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