Greetings, and welcome to the Protolabs Third Quarter 2021 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. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Dan Schumacher, Vice President of Investor Relations. Thank you, Dan. You may begin.
Thank you, Paul, and good morning, everyone. With me today are Rob Bodor, Protolabs President and Chief Executive Officer, and John Way, our Chief Financial Officer. This morning, Protolabs issued a press release announcing its financial results for the third quarter ended September 30, 2021. The release is available on the company's website. In addition, a prepared slide presentation is available online at the web address provided in our press release. Before we begin, I would like to remind everyone that our discussion will include statements relating to future performance and expectations that are or may be considered forward-looking statements and subject to many risks and uncertainties that could cause actual results to differ materially from expectations.
Please refer to our earnings press release and recent SEC filings, including our annual report on Form 10-K, for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today. The results and guidance we will discuss include non-GAAP financial measures consistent with our past practice. Please refer to our press release and the accompanying slide presentation at the investor relations section of our website for a complete reconciliation of non-GAAP to GAAP results. Now I'd like to turn the call over to Rob Bodor. Rob?
Thanks, Dan, and good morning, everyone. Thank you for joining us today for our Third Quarter 2021 Earnings Conference Call. We are currently operating in an unprecedented environment. The effects of the COVID pandemic are resulting in labor, material, and equipment shortages worldwide. Furthermore, in Europe, we're managing changes in trade norms due to Brexit. These factors are impacting our financial results. Although our third quarter revenue was within our guidance range, earnings were below our expectations. Well-documented labor and material shortages are driving inflationary pressures in our business, resulting in lower than expected gross margin performance. We're disappointed with our third quarter earnings performance, and I will outline the actions we are taking to address these headwinds. First, I'll summarize our third quarter revenue performance.
In the presence of these challenges I mentioned, we generated record quarterly revenue of $125 million, representing year-over-year growth of 17%. Hubs contributed $9 million of revenue in the third quarter, representing strong year-over-year growth of 35%. Hubs' third quarter revenue was relatively flat sequentially, primarily due to challenges in the European market and a short-term decrease in organic online search performance. In May, we transitioned the 3D Hubs brand to simply Hubs to more accurately reflect the broader nature of services provided beyond 3D printing. This brand change caused a temporary decline in customer acquisition and impacted our third quarter revenue. Although this branding shift impacted our near-term results, we believe it is the right move for the long-term success of the business. Continuing with our third quarter revenue performance by geography outlined on slide eight.
Our largest region, the Americas, generated revenue of $100 million in the quarter, representing growth of 17% year-over-year or 11% organic growth. This represents all-time record revenue for our legacy business in the Americas. This strong growth demonstrates the continued customer evolution of digital manufacturing and the large opportunity that is ahead of us. In Europe, third quarter revenue of $22 million represents growth of 17% year-over-year. Excluding Hubs Europe revenue and the impact of foreign currencies, our Europe revenue declined 7% year-over-year, reflecting continued supply chain constraints which are negatively impacting the European manufacturing environment. Lastly, our Japan region generated $3 million of revenue in the third quarter. As we move to earnings, we reported third quarter non-GAAP diluted earnings per share of $0.35. Earnings came in below our expectations, driven by lower than expected gross margins.
The labor shortage resulted in greater than anticipated wage inflation, increased overtime, and increased recruiting costs for our manufacturing workforce. In addition, we continue to manage through internal inefficiencies resulting from the launch of our Protolabs 2.0 systems. The labor shortages and supply chain issues impacting our financial performance are likely to persist through the remainder of the year and into 2022.
To address our near-term challenges, we're taking several measures, including thoughtful pricing changes to offset labor cost inflation, investing R&D resources to increase internal operating efficiency in the Protolabs 2.0 environment, and investing in robotics automation to reduce the need for additional labor to support growth. These near-term actions may not all have immediate impact on our financial results, and the benefits may be muted in the fourth quarter due to lower seasonal revenues, continued macro weakness in Europe, and additional costs incurred during the holiday season. While it may take some time to achieve the financial benefits, we are confident these are the right actions to improve the financial performance. In addition to improving our results in the short term, we also remain focused on long-term growth and capturing the opportunity that is in front of us.
The contract manufacturing market is very large, and it is evolving and becoming ever more digital, and customers are seeking alternatives to address the supply chain challenges they are facing. We created the e-commerce model for custom manufacturing over 20 years ago, and we're still the only company to digitally manufacture parts across a range of services, both additive and traditional. Through our in-house digital manufacturing process, we've eliminated much of the upfront cost and labor through the automation of non-recurring engineering. Unlike others that have applied a digital face to traditional operations, Proto Labs is the only company to have transformed the actual manufacturing processes, enabling us to be the fastest and most reliable custom parts manufacturer. Protolabs is the world's leading provider of digital manufacturing services, having manufactured approximately 400 million parts since our founding in 1999, making us the largest player in the space by far.
Furthermore, we've served hundreds of thousands of customers, ranging from entrepreneurs to startups to mid-sized firms, and over 85% of the Fortune 500 companies in our target industries. As recognition of our best-in-class digital manufacturing capabilities and industry leadership, the World Economic Forum announced our induction into the World Economic Forum's Global Lighthouse Network, recognizing our industry-leading efforts to implement fourth industrial revolution technologies. Protolabs joins this exclusive network as one of only 10 Lighthouse manufacturing facilities in the United States, and we share the honor with Fortune 500 companies like Johnson & Johnson, Procter & Gamble, Unilever, Western Digital, and Schneider Electric. Our U.S. injection molding facility was inducted into the World Economic Forum's network because of our transformation from a prototype provider to a full production provider through technologies connecting our e-commerce experience to the manufacturing shop floor.
As a technology-driven manufacturer, we provide Injection Molding production lead times in as fast as one day instead of the traditional two or three months. This recognition is a reflection of the innovation and capabilities throughout the entire digital thread that is intrinsic to our model. While our award-winning internal manufacturing capabilities offer unprecedented speed, we acquired Hubs in January to broaden our offerings and serve more customer use cases. Hubs' premium network of manufacturing partners will allow us to broaden our pricing and lead time options, as well as offer capabilities outside of our legacy part envelope, including larger parts, tighter tolerances, increased finishing options, and much more. The combination of Proto Labs' internal manufacturing capabilities and Hubs' network of premium manufacturing partners is the superior model, together providing the broadest set of manufacturing capabilities and lead times in the world.
Looking forward, we will continue to make investments in the business focused on capturing the long-term opportunity guided by our three priorities. As a reminder, those priorities are, first, to create a world-class customer experience for digital manufacturing. Second, to expand our portfolio of customer offerings to meet the broadest set of customer needs. And third, to further invest in our employees. We have made significant progress on all three priorities for the first nine months of this year while continuing to set quarterly revenue records. As it relates to our goal of providing a world-class customer experience, we launched Protolabs 2.0 to deliver a new e-commerce experience in the Americas in the first quarter.
Customer response to the new platform continues to be positive, and recently, our revamped digital quoting platform was honored with a first place finish in the software category of Design World's 2021 Leadership in Engineering Achievement Program Awards. This is a testament to the fantastic development work our teams have done over the past few years, designing a best-in-class digital quoting and ordering user experience. However, as I referenced earlier, Protolabs 2.0 has impacted our internal operational efficiency. We're focusing our software teams on addressing our internal systems to improve their performance. Next, our customer offering has greatly expanded in 2021 through acquisition and organic innovation. Hubs manufacturing partner network allows us to serve more customer needs, and organically, we launched a flexible lead time offering in our internal CNC Machining service, as well as an enhanced quality offering for Injection Molding production offers.
These new offerings contributed to record revenue in the third quarter, and we will continue to invest in future offering expansions. Finally, Protolabs employees drive our success, and we continue to invest in our employees in several ways. We invest in training and development and developing employees to fuel innovation and challenge employees to continually enhance their skills. In 2021, we materially expanded our training content and resources with a focus on remote learning to support our flexible workforce. Our Diversity, Equity and Inclusion Leadership Council partners with our leadership team to help us leverage the diversity of our workforce in a meaningful way and create a culture of inclusion for all employees. Now, John will provide an in-depth look at our third quarter financial performance and our outlook for the fourth quarter. John?
Thanks, Rob. Our detailed third quarter financial results begin on page 11 of our presentation. As Rob stated, there are a few factors impacting our current financial performance. I'll spend some time providing additional detail on these factors. Starting with revenue. Our third quarter revenue of $125.3 million was at the low end of our guidance range and represents a 16.6% year-over-year increase or 8.1% organic growth in constant currencies. Hubs generated $8.8 million of revenue in the third quarter, representing growth of 35% year-over-year. Changes in foreign currency had a $400,000 favorable revenue impact in the quarter. As Rob mentioned earlier, our revenue in Europe was lighter than we anticipated, driven by supply chain interruptions and impacting the economic environment.
We served 23,450 unique product developers in the third quarter, up 24.8% year-over-year. This growth was driven by the acquisition of Hubs and growth in our legacy business. The growth in developers outpaced revenue growth due to business mix with strong growth in our CNC services. Turning to our detailed income statement, our non-GAAP gross margin in the quarter of 44.9% compares to 46.8% in the second quarter of 2021 and was below our guidance range. Our personnel costs are the primary driver of our lower gross margins. The labor shortages in the markets where our manufacturing operations are located are driving inflationary costs in the form of higher wages, increased recruiting costs, and increased overtime.
In addition, we are incurring some additional labor due to inefficiencies as our employees continue to adapt to operating in our new systems. Higher medical costs is also a contributing factor as our employees are obtaining care that was deferred during COVID. The higher personnel costs, combined with lower revenues than expected in Europe, resulted in gross margins below our expectations. Hubs' gross margin in the third quarter improved sequentially to 17.2%, up from 12.9% in the second quarter. For the quarter, Hubs represented a 200 basis point headwind to our overall gross margin due to the lower-margin nature of the outsourced manufacturing model. Under GAAP accounting, our cost of goods sold for Hubs includes payments to our manufacturing partners, logistic costs, and operations and support costs associated with serving our manufacturing partners.
In the long term, we will continue to drive gross margin improvements in Hubs through the expansion of our manufacturing partner network and improvements to the pricing algorithms. However, in the near term, we are encountering headwinds related to logistics, labor, and material cost inflation. Our total non-GAAP operating expenses were $43.6 million compared to $42.8 million in the second quarter of 2021 and slightly below our guidance range of $44 million-$46 million. Third quarter 2021 non-GAAP operating expenses increased from $33.3 million in the third quarter of 2020. The Hubs acquisition added $3.8 million of operating expense in the quarter.
Other year-over-year increases include Protolabs 2.0 amortization and license costs of $1.9 million, investment in R&D of $1.7 million, and investment in sales and marketing of $2 million. Consistent with the prior quarter, our GAAP operating expenses include the impact of a revaluation of contingent consideration associated with the Hubs acquisition. GAAP accounting requires that we revalue the contingent consideration on a quarterly basis until the contingent consideration period concludes. The third quarter adjustment was primarily driven by fluctuations in our stock price as a portion of the contingent consideration is payable in equity. We have reversed the impact of the revaluation in our non-GAAP reporting. Moving to taxes.
Our non-GAAP effective tax rate in the third quarter was 25.3% compared to 26.7% in the prior quarter and up from 22% in the third quarter of 2020. The year-over-year tax rate increase is primarily due to the mix of earnings in our tax jurisdictions, resulting in fully reserved net operating losses. The net result was non-GAAP diluted earnings per share in the quarter of $0.35, representing a $0.32 per share decrease from the prior year and a sequential decrease of $0.04 per share. The year-over-year change in non-GAAP earnings per share is presented on slide 13 and consisted of the following components.
First, the net impact of our revenue growth and the increased labor costs in our legacy business resulted in lower gross margin, contributing a $0.06 reduction in our earnings per share. The lower than anticipated gross margin was the primary driver of earnings below our expectations. As we continue year-over-year, increased sales and marketing and general and administrative expenses, primarily driven by personnel-related costs, including wage inflation, incentive compensation, and medical costs had a $0.05 per share impact. As Rob stated, we are investing in the business to better serve our customers, which will drive long-term growth and shareholder value. These investments were part of our business plan and had a $0.20 per share negative impact on our financial results this quarter compared to the third quarter of 2020. The investments include the following.
First, we acquired Hubs to fulfill a broader range of our customers' needs. We are continuing to invest in the business to operate at scale and are currently incurring operating losses during this stage. The operating result related to this investment represents a $0.09 per share impact to our earnings, including the impact of the equity issued in conjunction with the transaction. Next, we have discussed the investment in our systems in prior calls. This investment was required to modernize our architecture and support the long-term growth of our business. The depreciation and license costs associated with Protolabs 2.0 represented a $0.05 per share impact year-over-year. We also continue to invest in R&D to improve our systems and expand our product offering to serve our customers. Protolabs 2.0 has been well-received by our customers.
However, the system requires improvements to support the efficiency of our internal operations. We are also investing in R&D to expand our capabilities in each of our services. Our increased investment in R&D resulted in a $0.06 per share decrease. Finally, the increase in the effective tax rate had a $0.02 per share unfavorable impact on the quarter. Transitioning now to the cash flow statement and balance sheet summarized on slide 15. We generated $11.5 million in cash from operations in the third quarter. Our operating cash flow continues to be impacted by the timing of cash receipts and payments, resulting in an increase in our working capital, including an increase in our accounts receivable balance. We also repurchased $11.8 million under our stock repurchase program in the quarter.
On September 30, our cash and investment balance was $83.9 million, and our balance sheet remains debt-free. Turning now to our outlook for the fourth quarter of 2021 outlined on slide 17. We expect to generate revenue between $112 million and $122 million in the fourth quarter, representing year-over-year growth of 7%-16%. Our fourth quarter revenue assumption includes the seasonality we generally experience in our business in the fourth quarter and anticipates continued softness in the European economic conditions. We expect foreign currency to have an approximately $500,000 favorable impact on revenue compared to the prior year, assuming foreign currency rates remain at current levels. Turning to gross margin. We expect fourth quarter non-GAAP gross margin of approximately 45% ±100 basis points.
Our gross margin projection remains in line with the third quarter results as we anticipate continued wage and raw material cost inflation, which we are working to mitigate through pricing and other operating efficiencies. The benefits of these actions will be offset by incremental costs we will incur in the fourth quarter as a result of holiday pay. Business mix will also continue to be variable in our gross margin performance due to the addition of Hubs as the outsourced manufacturing model gross margin is lower than our internal manufacturing operations. We expect total non-GAAP selling general and administrative expenses to be between $43 million and $44 million in the fourth quarter, consistent with recent quarters. We estimate our fourth quarter non-GAAP effective tax rate to be approximately 11% compared to 25.3% in the third quarter.
The lower tax rate is the result of the anticipated release of uncertain tax position reserves for which the statute of limitations has expired. Now, I'd like to turn the call back to Rob for closing remarks.
Thank you, John. In summary, our financial performance is currently below our expectations. We're actively working to drive near-term financial improvement while we continue to invest and innovate to maintain our leadership position and capitalize on the long-term opportunity. I am confident that Protolabs has the best employees in the industry, the most recognizable brand, and the best long-term strategy to expand our customer offerings and drive strong, profitable growth. The two awards that we received in the quarter from the World Economic Forum and Design World recognize our leadership in digital manufacturing. Our speed, scale, and manufacturing experience put us in an optimal position to lead the digital manufacturing evolution. That concludes our prepared remarks. Now John and I will gladly take your questions. Operator, can you please open the line?
Thank you. Our first question is from Brian Drab with William Blair. Please proceed with your question.
Good morning. Thanks for taking my questions.
Morning, Brian.
Good morning. I don't know if you mentioned. I might have just missed this, but the 3D printing expansion that you announced about a week ago or a few days ago. Can you talk about what you're seeing in the 3D printing industry that's giving you know, that's making you wanna invest in expanding that? What's the cost gonna be? What's the timing? And how big is it? I think your facility in North Carolina right now is about 80,000 sq ft, and you're adding 120,000. You know, it seems like a pretty big expansion. I just wondered if you could just comment on that. Thanks.
Yeah. We're really in the initial stages of that, you know, haven't even broke ground on the facility. We've contracted it essentially to have that facility built. In the 3D printing market, it's been growing nicely since the acquisition really back in 2014, and we continue to see a lot of opportunities in the 3D printing space. With that demand and as it transitions, you know, from just prototyping into more production opportunities, we see tremendous opportunity. We are investing in order to realize that. It will take a year or so in order to construct that facility, and we'll be online, you know, sometime in 2023.
With the production we expect
Got it. Sorry, go ahead.
Sorry. With production, we expect, you know, greater needs for space.
Right. The revenue capacity at the existing facility, I guess. I mean, I guess you're approaching that. I mean, you're gonna do about $75 million in 3D printing revenue this year. Is that running pretty close to full capacity?
We're projecting it will be by the time that, you know, the facility's completed. You know, we have to.
Right.
We have to plan ahead. Yep.
Right. I was wondering if you could just comment on, you mentioned, you know, there's an increasing selling and marketing expense, and, just in the context of this whole industry becoming more competitive, right? There's a lot of companies spending a lot of money on Google Ads, and, you know, Can you comment on what you're seeing there and how competitive it is? How much of a, you know, challenge it is kinda to keep pace with all these? I mean, I think it's kinda surprising. You know, eight years ago, I wouldn't have plugged in rapid injection molding into Google and had anything except Protolabs come back. Now, you know, you have people I think buying your AdWords, et cetera. Like, how
Can you just talk about how big a headwind or challenge that is?
Yeah. I can start, and maybe John you can pick up. I think, you know, as we think about competition, right, you've got to remember we've got our four services, and it's not equal across those services, right? First of all, across all our services in our fastest lead time category, you know, we are absolutely the winners, right? We're the fastest manufacturers in the world, and across all our categories, we can make parts in as little as one day. I think that's a very well protected space for us. We really don't run into much competition in Injection Molding and Sheet Metal. Where, you know, like Hubs, where we're seeing others in the longer lead times is in CNC and to a lesser extent, 3D printing right now.
Yeah. It is impacting our sales and marketing and cost of acquisition. You know, I think we continue to deploy innovative solutions and other methods in order to attract new customers. Certainly the cost of search has increased over the years.
Yeah. Search is definitely more active.
Okay. My last question, if I could, is just around pricing trends and the raw materials. You know, how are you managing through this, and how big a deal is this? John, you and I discussed some, you know, the A, you have the competitive environment resulting in the need to experiment with pricing a little bit more, particularly in CNC. You know, B, you have these raw materials that are spiking. You know, just as a, I guess, C, I'm thinking about also how in your parts business and the Injection Molding, you have some, I think, fixed pricing there that you promise the people if they come back for parts off existing molds. Like, how does that all?
You know, how do you manage through that in this environment? I don't know that you've seen this kind of confluence of negative, you know, events or challenges, in the past.
I think you hit it right on the head, right? Like, there are a lot of variables we're playing with. You know, and different materials have different levels of price inflation as well that adds another factor there. I think as we're looking at it and looking at our cost structure, try to break it down to what are probably more permanent or long-term type increases in cost, and those we'll look to recover with pricing and what are the ones that are more temporary and how do we absorb or manage those out of the business related to it, and flex related to that. You know, it is, it's a delicate balance and as much art as it is science, I'd say.
Yeah. Brian, you brought up, you know, material cost headwinds, which I think are real. You know, in addition, as we described in the quarter, we saw, you know, labor and wage increase headwinds as well. I think on both of those, you know, for those that are longer term, we will be taking pricing actions in order to offset those. You know, we didn't take enough in this past quarter. We underestimated that change, and we'll be taking more.
Got it. Okay. Thank you. Thank you. Our next question comes from Greg Palm with Craig-Hallum Capital. Please proceed with your question.
Yeah, thanks. This is Danny Eggerichs, John Way, for Greg Palm today. Thanks for taking the question.
Morning.
I was hoping to dig in a little bit more on the 2.0 inefficiencies and maybe go into a little bit more on that. Is that something? Is that a problem specific to the platform, or is it simply just integration and adaptation by the employees, and would that be at, like, a sales level or manufacturing level? Just hoping to dig in a little bit more there.
Absolutely. You know, we launched 2.0 earlier in the year, and you know, we expected that there would be things that we'd have to work through with a large system launch like that, both for customers to adapt to using the new system and for our employees to adapt to using the new system. That's what we saw, and we worked through that. With customers, it worked very well and you know, they're very happy with it now. With employees, we made headway, but we're seeing some of those inefficiencies persist. That's a real focus for us now as you know, we've changed some of the workflows for our employees, and in some cases, those workflows are less automated than they were in 1.0.
We're addressing that head on. We're working with you know the business leaders in those areas and the subject matter experts. We've identified the areas in the workflows that where those inefficiencies remain, and we're targeting our software teams specifically to address those to drive those improvements.
Got it. Is it safe to say that Hubs is still operating separately from the core business?
Yes. Yeah.
Is
If I-
Is that something that gets pushed down the line a little bit as you're working to improve the 2.0?
Yeah, that's exactly right. You know, if you recall the timing, we did the acquisition of Hubs and launched 2.0 within a few months of each other, right? We launched 2.0 first in Europe in November and then in the U.S. in February. We did the Hubs acquisition in January. At the time, right, we indicated that our intent was to, you know, operate Hubs as a standalone entity for a period. You know, that's what we've done this year, kind of consistent with that. You know, we wanna make sure that when we integrate them, you know, we're integrating them into a. You know, we've got 2.0 in a place where it's efficient, and we're integrating Hubs into that, you know, that efficient system.
You got it right.
Got it. Makes sense. Maybe just one more. Looking at the current supply chain environment, do you think it's something that could drive more business to your platform as a result of the reshoring, the second sourcing, and so on? Have you seen any indication of new customers or activity resulting from this?
Yeah, we have. You know, we've talked about our Injection Molding service and particularly on the parts side of the business, how we're seeing increased demand. We attribute a lot of that to exactly those effects.
Got it. Thanks. That's all for me.
Thank you. Our next question comes from Gal Munda with Berenberg . Please proceed with your question.
Hey, good morning, guys. Thanks for taking my questions.
Good morning.
First question. You guys mentioned investing in robotics and automation, and I know you already do some of this, so I'm wondering, you know, this new tech that you're investing in, is it, you know, is it different? What might the timeline look like there? And then how you're thinking about how much it might cost? Just any color you can provide on that.
Sure. You know, to improve our gross margins, right, there's a couple of things we're doing. One is pricing, which we've already talked about, and the other is efficiencies. The efficiencies come in two forms. One is workflow efficiency, right, which our software teams are helping to drive, and I just kind of described that. The second is production floor efficiency and automation, right? That's gonna come from the work of our software teams and from additional, you know, robotics and other kinds of automation that we're exploring and have started to put in place on the factory floor. You know, these are things that help us to scale our operations without needing to add incremental labor at the same rate that demand is scaling.
We've begun to put those in place, and we're looking at a number of different solutions there.
Okay. This is kind of a combination of adding some to your existing facilities and then also probably investing in more for that new North Carolina expansion?
Yeah. I think it's more in the existing operations. You know, the increase in production in our Injection Molding allows us to research and look at new opportunities to use robotics and things like that in the process. That's where the focus is.
Got it. Okay, thanks. I was wondering, can you guys just touch a little more on the European business? It seems like this obviously impacted the kind of the base business but also had a pretty big impact on Hubs. I'm just wondering if you could kinda touch on how what the factors are here and then how big they are relative to each other, so we can kinda estimate what might happen there.
Yeah. I think in general, we're just seeing macro softness in Europe over this period. You know, demand has generally softened. We saw that consistently in the organic business and in Hubs.
Okay, great. Then, one more from me, if I can. I know you guys, you called out kind of specifically in the press release that $84 million in cash and investments with no debt. I'm just wondering if you can elaborate on any near-term plans you have for that capital. I know you did some repurchases, but, kind of looking forward, is it gonna be more of that or anything different? What are you guys thinking there?
Yeah. I don't think it's in our capital allocation changes. You know, we'll continue to invest to support the growth of the business, and do opportunistic share repurchases.
Great. Thanks, guys.
Thank you.
Thank you. There are no further questions at this time. I would like to turn the floor back over to Rob Bodor for closing comments.
Thank you for joining us on our third quarter conference call. We're not satisfied by our financial performance in the quarter and are taking actions to drive improved results. I remain very confident in our long-term strategy, and I'm pleased with our record revenue this quarter in the presence of supply chain and labor shortages. We have the winning model to capture the tremendous opportunity in the market for digital contract manufacturing. To drive long-term shareholder value, we will continue to evolve our world-class customer experience for digital manufacturing, expand our portfolio of offerings to serve customer needs, and invest in our employees. Furthermore, I'd like to thank the Protolabs employees for their continued efforts as we close out 2021. I also wanna thank our shareholders for their continued support of Protolabs. We look forward to updating you on our performance next quarter. Have a great day.
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.