Teleconferência de Resultados do 3T26 da Proto Labs (PRLB): Receita Recorde e Elevação do Guidance Anual

A Proto Labs (NYSE: PRLB) registrou receita recorde no terceiro trimestre de 2026, com a forte demanda em usinagem CNC, impressão 3D e moldagem por injeção sustentando outro trimestre de crescimento de dois dígitos. A lucratividade melhorou, apesar da pressão de curto prazo sobre a margem bruta fabril.

Principais Destaques

• A receita do 3T26 atingiu o recorde histórico da empresa de US$ 154,3 milhões, alta de 14,2% na comparação anual em moedas constantes e marcando o quarto trimestre consecutivo de crescimento de dois dígitos.
• O LPA não GAAP aumentou 33,4%, para US$ 0,63, o maior LPA ajustado divulgado desde o 3T20. O EBITDA ajustado subiu para US$ 26,2 milhões, ou 17,0% da receita.
• A receita por cliente cresceu 17% na comparação anual, enquanto a Proto Labs atendeu a quase 21.000 clientes. A administração atribuiu o aumento ao aprofundamento do relacionamento com clientes estratégicos e à expansão ao longo do ciclo de vida dos produtos.
• A receita de usinagem CNC fabril cresceu 22%, enquanto a receita global de impressão 3D subiu 12%. A administração citou a forte demanda dos setores aeroespacial, de defesa, espacial, drones, robótica e data centers.
• A Proto Labs elevou sua projeção de crescimento de receita para o ano inteiro de 2026 de 8%-10% para 10%-11%. A administração espera que este seja o seu primeiro ano de crescimento orgânico de receita de dois dígitos desde 2018.
• A receita no 4T deve ficar entre US$ 143 milhões e US$ 151 milhões, com LPA não GAAP de US$ 0,46 a US$ 0,54. A projeção incorpora a sazonalidade normal de fim de ano e uma menor utilização das fábricas.

Principais Dados Financeiros

Nos primeiros nove meses de 2026, a receita aumentou 12%, a margem operacional ajustada expandiu 300 pontos-base e o LPA ajustado subiu 46%. O EBITDA ajustado cresceu 27,2% na comparação anual.

Desempenho Operacional e de Negócios

A receita de usinagem CNC cresceu 16,7% na comparação anual em moedas constantes. A usinagem CNC fabril cresceu 22%, sustentada pela demanda da exploração espacial, satélites, drones e robótica. A administração afirmou que a receita da usinagem CNC fabril nos EUA cresce mais de 20% há seis trimestres consecutivos.

A receita de moldagem por injeção subiu 12,6% em moedas constantes, impulsionada pelos setores de eletrônicos, aeroespacial e defesa, e telecomunicações. A receita de impressão 3D aumentou 11,5%, liderada pela forte demanda nos EUA por sinterização direta a laser de metal e HP Multi Jet Fusion. No acumulado do ano, a receita do MJF na operação fabril dos EUA cresceu mais de 40%, motivando investimentos adicionais em capacidade.

A receita de chapas metálicas recuou 4,6% em moedas constantes. A fraqueza generalizada nos mercados finais foi parcialmente compensada pela demanda dos setores aeroespacial e de defesa.

A receita das fábricas aumentou 17,5%, em comparação com o crescimento de 3% da Proto Labs Network. O ritmo da Network foi forte na Europa, mas mais fraco nos EUA, onde mais clientes optaram pela oferta fabril mais rápida.

A Proto Labs atendeu a quase 21.000 clientes durante o trimestre, apresentando crescimento trimestral pelo terceiro trimestre consecutivo. A receita por cliente subiu 17%, à medida que grandes clientes estratégicos expandiram o uso dos serviços de fabricação da empresa.

A Europa apresentou crescimento de receita de dois dígitos após mudanças na estratégia go-to-market iniciadas no final de 2025. A administração afirmou que a transformação da região continua sendo um esforço de longo prazo, com o objetivo de tornar a Europa uma contribuidora tanto para o crescimento quanto para a lucratividade.

A empresa também expandiu o ProDesk com novos tratamentos térmicos para impressão 3D em metal, recursos de FDM e acabamentos superficiais adicionais para CNC. A Proto Labs está desenvolvendo verificações de pedidos assistidas por IA e implementando o Amazon Quick em toda a empresa, visando inicialmente fluxos de trabalho go-to-market e o processamento do orçamento do pedido. A implementação deve continuar até 2027.

Projeções da Administração

A Proto Labs espera uma receita no 4T26 entre US$ 143 milhões e US$ 151 milhões. O ponto médio sugere um crescimento de aproximadamente 8% na comparação anual. Espera-se que a variação cambial tenha um impacto insignificante em comparação com o 4T25.

A empresa elevou sua projeção de crescimento de receita para o ano inteiro de 2026 para 10%-11%, ante a faixa anterior de 8%-10%.

O LPA não GAAP no 4T deve ficar entre US$ 0,46 e US$ 0,54. A projeção assume aproximadamente US$ 4,1 milhões em remuneração baseada em ações, US$ 900.000 em despesas de amortização e uma alíquota efetiva de imposto não GAAP de 19% a 21%.

A administração espera que a margem bruta do 4T fique estável ou ligeiramente menor na comparação trimestral. Os custos de modernização de máquinas devem diminuir, mas a receita menor, ineficiências fabris relacionadas aos feriados, mão de obra terceirizada e horas extras devem compensar parte desse benefício. As despesas com SG&A como porcentagem da receita devem se assemelhar aos níveis do 1T e do 2T, em vez do nível mais baixo do 3T.

Para 2027, a administração afirmou que o crescimento das despesas operacionais deve se aproximar do crescimento da receita, à medida que a Proto Labs aumenta os investimentos em capacidade e iniciativas estratégicas. Atualmente, a empresa espera manter seu percentual de margem bruta, embora o resultado dependa do mix de produtos e serviços.

Riscos e Pontos de Atenção

• A margem bruta não GAAP recuou, à medida que custos mais altos de matérias-primas, modernizações de máquinas e investimentos temporários em mão de obra afetaram as operações fabris.
• Espera-se que a sazonalidade do 4T reduza a receita e gere ineficiências fabris devido às folgas de fim de ano dos funcionários, exigindo potencialmente trabalhadores terceirizados e horas extras.
• A demanda na Proto Labs Network nos EUA foi mais fraca, mesmo com a demanda das fábricas permanecendo forte.
• A Europa voltou ao crescimento de dois dígitos, mas a administração alertou que a transformação de sua lucratividade continua sendo um trabalho em andamento.
• O segmento de chapas metálicas continuou a enfrentar fraqueza generalizada nos mercados finais.
• Analistas demonstraram incerteza em relação aos orçamentos futuros de defesa. A administração respondeu que a demanda é diversificada entre exploração espacial, satélites, drones, robótica e data centers, mantendo sua meta de crescimento de dois dígitos no futuro previsível.

Destaques da Sessão de Perguntas e Respostas com Analistas

A administração atribuiu o aumento de 17% na receita por cliente à cobertura de vendas corporativas, ao aprofundamento das relações com clientes selecionados de alto valor e à maior participação desde o protótipo até a produção. A empresa migrou de uma inovação abrangente para soluções sob medida para clientes e setores prioritários.

Sobre a queda sequencial da margem bruta, a administração estimou que a modernização de máquinas representou cerca de 100 pontos-base e a mão de obra terceirizada, cerca de 90 pontos-base, com o restante relacionado aos custos de materiais. A empresa adquiriu mais de 40 máquinas novas no último ano e incorreu em certos custos de modernização diretamente no 3T.

A administração afirmou que os custos de modernização de máquinas e de terceirizados são variáveis e podem cair com o tempo. No entanto, o volume menor esperado para o 4T e as necessidades de mão de obra relacionadas aos feriados de fim de ano devem limitar a recuperação da margem no curto prazo.

Transcrição Completa da Teleconferência de Resultados

Transcrição completa da teleconferência de resultados

Comentários da administração

Operator

Greetings. Welcome to the Proto Labs Q3 Fiscal Year 2026 Earnings Conference Call. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to Ryan Johnsrud, Investor Relations. Thank you, Ryan. You may begin.

Ryan Johnsrud

Thank you. Good morning, everyone, and welcome to Proto Labs' Third Quarter 2026 Earnings Conference Call. I'm joined today by Suresh Krishna, President and Chief Executive Officer; and Dan Schumacher, Chief Financial Officer. This morning, Proto Labs issued a press release announcing its financial results for the third quarter ended September 30, 2026. 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.

Our discussion today 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 company website for a complete reconciliation of GAAP to non-GAAP results. Now I will turn the call over to Suresh Krishna. Suresh?

Suresh Krishna

Thank you, Ryan. Good morning, everyone, and thank you for joining our earnings call. I am very pleased with our third quarter performance, which provides further evidence that the execution of our strategy is translating into strong and consistent financial results. Third quarter revenue grew 14%, resulting in another record revenue quarter. This is the fourth consecutive quarter of double-digit growth. We also delivered double-digit non-GAAP EPS growth for the fourth consecutive quarter with EPS growth outpacing revenue growth in each of these quarters.

In the first 9 months of 2026, year-over-year revenue grew 12%, adjusted operating margin expanded 300 basis points and adjusted EPS grew 46%, underscoring the consistency of our execution and the strength of our momentum. These results are driven by the tremendous work of our Proto Labs team and their continued commitment to serving our customers. I want to thank them all for everything they do every day. The trends that drove strong performance in the first half of the year continued in the third quarter.

Larger strategic customers continue to broaden their relationships with Proto Labs and turn to us for more of their manufacturing needs across the entire product life cycle. This is reflected in a 17% year-over-year increase in revenue per customer. In addition, we served almost 21,000 customers in the quarter, up sequentially for the third straight quarter. We continue to see strong demand in high-growth industries, including aerospace, defense, drones, robotics and data centers. We work with most innovative companies in these markets, including Blue Origin, Relativity Space, Raytheon, AeroVironment, Shield AI, Agility Robotics and many others. These customers need to rapidly move from ideas to prototypes and into production, making Proto Labs' speed, quality and reliability increasingly critical. We saw broad-based strength across our business in the third quarter with each of our 3 largest service lines growing double digits year-over-year.

Factory CNC Machining was particularly strong, growing 22% as our world-class speed continues to resonate with customers. Global 3D printing revenues grew 12%, led by strong demand from metals and HP's Multi Jet Fusion technology, or MJF. Year-to-date, MJF revenue in our U.S. factory operation is up more than 40%, and we are investing in additional capacity to support that growth. Proto Labs is at the center of a major shift taking place in manufacturing driven by 4 powerful macro trends.

First, reindustrialization. Companies are bringing manufacturing closer to their customers and building more resilient regional and sovereign supply chains. Second, a wave of hardware innovation moving at the speed of software. Investment is accelerating across critical and emerging industries like space, drones, robotics, data centers and other highly engineered hardware that ultimately needs to be designed, tested and manufactured from prototype to production at faster speeds than ever before.

Third, physical AI. AI is moving beyond software and into the physical world, driving a new generation of robotics, autonomous systems, intelligent machines and other advanced products that require manufacturing to leverage physical AI. And fourth, supply chain agility and scalability. As innovation accelerates, companies need manufacturing partners that can invest and scale with them without the manpower and capital constraints of traditional supply chains.

This is exactly the environment Proto Labs is built for. We help customers move quickly from idea to prototype to production while delivering the quality, reliability and scalable capacity they need. And we have an important structural advantage, our true digital thread. Proto Labs' software-native digital manufacturing model enables speed and automation today while creating a foundation to leverage AI and scale efficiently over time. And with millions of CAD files and decades of manufacturing data in our library, we have a powerful foundation to apply AI, advance our manufacturing capabilities and create more valuable solutions for our customers.

We are already seeing the benefits of these trends in our business, and we believe they create a significant opportunity for Proto Labs over the next several years. We continue to invest in capabilities to capture the opportunity ahead. We are advancing our 4 strategic pillars: elevating the customer experience, accelerating innovation, expanding into production and driving operational efficiency. I'd like to share several important business and product updates with you now.

On ProDesk, we launched new metal 3D printing heat treatments, FDM printing capabilities and additional CNC Machining surface finishes, giving customers more control over part performance, surface quality and finishing requirements. Next, we continue to enhance the Proto Labs Network with improvements designed to accelerate order acceptance, improve partner communication and strengthen quality. We are also developing AI-assisted order checks to identify specification discrepancies earlier and further automate the customer and partner experience.

With respect to improving efficiency across the organization, last week, we announced an enterprise implementation of Amazon Quick as part of our broader AI road map. Our initial focus is on go-to-market workflows where we believe AI can improve productivity, reduce response times and streamline order-to-quote processing. To accelerate implementation, we created forward deployed AI engineer roles to identify high-impact use cases and design AI-enabled workflows across the organization. Enterprise-wide implementation will continue into 2027, led by Marc Kermisch, our Chief Technology and AI Officer.

Technology is an important enabler of our strategy, and operational execution is the other. In August, Sam Ramahi was named Chief Operations Officer. Sam brings over 25 years of executive operational leadership across global companies like nVent, Eaton, Honeywell and more. Sam will help advance our strategic pillars while focusing on driving operational excellence across safety, quality, delivery and cost. We are also expanding the talent and capabilities needed to execute our strategy.

We have officially inaugurated our new global capability center in India. Engineers are on site and are working directly on our manufacturing and AI road map. The talent and capabilities we are building in India will help accelerate progress across all 4 strategic pillars. The strength (sic) [ capability ] center strengthens our investments in technologies that will meaningfully improve productivity, including AI, automation and advanced manufacturing capabilities that support our broader digital manufacturing strategy.

Turning to Europe. Revenue grew double digits in the third quarter, in part due to the go-to-market changes we initiated late last year. We are very pleased with this performance, and I want to thank our team in Europe, led by Pjotr Horowitz, for their continued execution and commitment. We continue to advance the initiatives needed to return Europe to profitability, addressing the drivers of underperformance while putting the right organizational structure, operating model, talent and capabilities in place to execute more effectively.

These efforts are designed to complement the go-to-market changes already underway and support further operational improvements. As I shared last quarter, the transformation in Europe remains a work in progress, and it's a longer-term effort. While we are encouraged by double-digit revenue growth, our objective remains unchanged, transform Europe into a contributor to both future growth and profitability.

Before I turn the call over to Dan, I want to highlight 2 recent recognitions of our commitment to manufacturing innovation. In August, we announced a partnership with MIT and a grant supporting U.S. manufacturing innovation research at MIT Industrial Performance Center. And in September, Proto Labs was one of the only 500 U.S. companies named to Business Insider's America's Most Innovative Businesses 2027 list. We are proud of both recognitions and believe they reinforce Proto Labs' position at the center of manufacturing innovation.

In closing, I am very pleased with our results through the first 9 months of the year and the progress we are making on our transformation. At the same time, I believe we are still in the early innings of what this business can achieve. We are executing our strategy at a time when some of the world's most innovative industries are moving faster, manufacturing supply chains are being reconfigured, and speed and digital manufacturing capabilities have never been more important. We believe Proto Labs is uniquely positioned for this environment and the opportunity ahead. We remain focused on building on recent momentum and delivering sustained profitable growth and long-term value for our customers and shareholders.

With that, I'll turn the call over to Dan to walk through the financials and outlook.

Dan Schumacher

Thanks, Suresh, and good morning. I'll start with an overview of our third quarter results, followed by our outlook for the fourth quarter. Third quarter revenue was a company record $154.3 million, up 14.2% year-over-year in constant currencies. U.S. revenue grew 14.7%, while Europe grew 12.2% in constant currencies. Third quarter CNC Machining revenue grew 16.7% year-over-year in constant currencies. Our largest service continues to see very strong demand in aerospace and defense, most notably space exploration, satellites and drones, as well as in robotics.

Injection Molding grew 12.6% in constant currencies, driven by strength in electronics, aerospace and defense and telecommunications. 3D printing revenue increased 11.5% year-over-year in constant currencies. As we saw in the first half of 2026, demand in DMLS and MJF remained very strong in the U.S. We continue to invest capital to expand capacity in those areas. Sheet Metal revenue declined 4.6% year-over-year in constant currencies with broad weakness across end markets, partially offset by strength in aerospace and defense.

On to profitability. Non-GAAP gross margin was 44.5% in the third quarter, down 230 basis points sequentially and 140 basis points year-over-year. The lower gross margin was driven by our factory operations, primarily reflecting higher raw material costs, machine upgrades and targeted near-term investments in labor and contractor support. These were made to accommodate the significant increase in volume over the course of the year while maintaining our standards for speed, quality and reliability. Third quarter non-GAAP operating expenses were $50.3 million, up $1.7 million compared to the prior year, primarily reflecting increased investment in demand generation, along with higher contractor, professional services and software license costs as we continue to fund our strategic priorities.

Importantly, we continue to generate significant operating leverage. Adjusted operating expenses were 32.6% of revenue, down from 34.8% of revenue in the second quarter and 35.9% in the third quarter of 2025. This operating leverage reflects both strong revenue growth and the targeted actions we have taken to improve our cost structure and reallocate resources towards our highest priority growth initiatives. We continue to invest and add resources behind our strategic initiatives while identifying additional efficiencies that can help fund future growth.

Adjusted EBITDA was $26.2 million, or 17% of revenue, up from $21.1 million or 15.6% of revenue in the third quarter of 2025. Year-to-date, adjusted EBITDA is up 27.2% year-over-year. Third quarter non-GAAP earnings per share were $0.63, up 33.4% year-over-year, driven by revenue growth, mix shift and significant leverage on our SG&A expenses. $0.63 is the highest adjusted EPS figure we've reported since the third quarter of 2020. Adjusted EPS is up 45.5% year-over-year year-to-date. We generated $22.8 million in cash from operations during the third quarter, and we repurchased $5 million of common stock. On September 30, we had $175 million of cash and investments on our balance sheet and 0 debt.

Our outlook for the fourth quarter of 2026 is outlined on Slide 14. For the fourth quarter, we expect revenue between $143 million and $151 million. At the midpoint, this implies 8% revenue growth year-over-year. As a result, we are raising our full year 2026 revenue growth outlook from a prior range of 8% to 10% to a new range of 10% to 11%. We anticipate 2026 will be our first year of double-digit organic revenue growth since 2018. We expect foreign currency to have a negligible impact on revenue compared to the fourth quarter of 2025.

Our fourth quarter earnings guidance incorporates the following assumptions: Non-GAAP add-backs will include stock-based compensation expense of approximately $4.1 million and amortization expense of $900,000, a non-GAAP effective tax rate between 19% and 21%. In summary, we expect fourth quarter 2026 non-GAAP earnings per share between $0.46 and $0.54. That concludes our prepared remarks. Nicole, please open the line for questions.

Operator

[Operator Instructions] Our first question comes from Brian Drab with William Blair.

Perguntas e respostas

Brian Drab

Congrats on a great quarter. Could you just start by talking about -- it looks like revenue per customer is up about 17%. And maybe add some granularity to that in terms of -- is it driven by volume? Or is it also the breadth of services now that you're increasingly offering that's allowing for that -- that's just a very impressive result and where are you seeing the most success?

Suresh Krishna

Brian, this is Suresh. Thanks for your question. As we've talked before, we are absolutely focused on our 4 key strategic pillars, the first of them, which is elevating customer experience. And the second of them, which is accelerating innovation on behalf of the customers. And the third, which is expanding into production, are all contributing to this particular growth that we are seeing in wallet share with our core customer base. Some of the changes we've made to be able to do this well beyond the strategy, is the way we are executing.

We have an enterprise sales team. We are focused on a handful of industries that are high value for us. And those sales teams are building deep customer relationships and listening and turning it around to provide innovation that is specific to these customers. In the past, we may have innovated for the general customer base, which for us is tens of thousands of customers, to now being very focused on the customers where we see high value. So that is where we are able to drive wallet share and increase revenue per customer.

Brian Drab

And then I mean I'm seeing the stock, I'm surprised a little bit to see that the stock is indicating slightly down before the open here. I guess it could be just the guidance for -- midpoint of guidance is $0.50 for the fourth quarter after you just put up $0.63. But is there -- what is there beyond just typical seasonality for the fourth quarter that you're looking at as you guide for that fourth quarter?

Dan Schumacher

Yes. I mean, one, it is typical -- I assume the seasonality that we've seen for the prior 7 years for last quarter. So it is built in there that we expect to see some softness around the holiday time, which, as you know, impacts that EPS number. Second, gross margin, I'm assuming to be flat to slightly down quarter-over-quarter. We don't expect to see the same -- we talked about machine upgrade costs and so forth. We don't expect to see it at that high of a level.

But as we have lower revenue and we have some inefficiency in our factories around the holiday time as we bring in contractors and overtime as employees are taking time off. And then I would expect SG&A expenses as a percent of revenue to look more like the first and second quarter of the year rather than what we saw in the third quarter. So there is a pickup in SG&A expenses as well.

Operator

[Operator Instructions] Our next question comes from Austin Bohlig with Needham.

Austin Bohlig

Congrats on the great results. I was just hoping to get a little bit more color on, kind of, the growth you're seeing in the factory versus the network. I didn't see what the revenue for the network was, if you could provide that.

Dan Schumacher

Yes. So network revenue was up 3% year-over-year. So that meant that factory growth was up 17.5%. So again, we had higher growth in the factory than we had in the network. From a network side, we are seeing really strong momentum in the network in Europe, but things are a bit softer in the U.S. Our customers, as we come to them, they have a choice in this time in terms of do they need the speed that we're offering through the factory or do they need the breadth of services and maybe longer lead time of the network. And we are just seeing more of our customers in the U.S. take advantage of that speed, and you're seeing that in the tremendous growth.

Austin Bohlig

Got it. And then just one follow-up. So with all the defense or A&D success more broadly, like, with your conversations with your customers, how are you guys feeling this with, like, some uncertainty around the fiscal '27 budget continuing resolution continuing through 2027? Do you guys think that, like, this momentum can continue even with some kind of lingering uncertainty around future budgets?

Suresh Krishna

Yes. Austin, thanks for bringing that up. We are very, very broad-based in terms of the industry we serve, and A&D for us is very broad as well. While there might be some uncertainty around defense budget, we see tremendous opportunity in space exploration, in satellites, in drones, neoprimes, along with the primes. And then beyond that, we absolutely see non-A&D sectors like robotics and data centers also growing. So we are very confident that when you look out into the future that we would continue to be able to drive our goal of double-digit growth for the foreseeable future.

Operator

Our next question is from Brian Drab with William Blair.

Brian Drab

I was just wondering if you could talk maybe for Dan, a little bit further out in terms of how you're thinking about the trajectory of gross margin and expense dollars as we think about 2027, maybe just directionally or at high level, like, different projects that -- and different expenses to think about as we're modeling?

Dan Schumacher

Yes. So we're in the middle of establishing our 2027 budget and plans as we speak. But what I would tell you is we're going to continue to accelerate our investment in several areas. One is expanding our capacity. And the second is investing in our strategic pillars. So that's elevating our customer experience, accelerating innovation, expanding into production, and driving operational efficiency. So with the last one, our objective from a spending perspective is really to focus on how do we continue to increase our efficiencies as we invest.

I would expect next year from an operating expense perspective that the growth in operating expenses would be much closer to the revenue growth next year than what we saw this year as we start to make these investments. From a gross margin perspective, it really is going to depend on the mix that we're seeing and the different types of products that we have and how that plays out as we go through the year. But I would expect that we would be able to hold our gross margin percentage as we go into 2027.

Brian Drab

Okay. I'll follow up more later on that, but that's really clear.

Operator

Our next question comes from Greg Palm with Craig-Hallum.

Greg Palm

Sorry if this got, I guess, maybe explained or specified. I've been juggling a handful of calls this morning. But in terms of the -- maybe the sequential gross margin bridge from Q3 to Q2, a couple of hundred basis points, give or take. Dan, I know you listed a bunch of reasons, but just can you break that out between them? And then just in terms of sustainability or confidence in getting that gross margin level back up from here, maybe just a little bit more color on that, please.

Dan Schumacher

Just to be clear, Greg, you're talking about Q2 to Q3 gross margin?

Greg Palm

Correct.

Dan Schumacher

All right.

Suresh Krishna

Yes. So Greg, as we noted in our prepared remarks, demand has been exceptionally strong in our U.S. factory CNC. Revenues have grown over 20% for 6 quarters in a row. So while our automated model is designed to scale efficiently with this kind of volume increase, we, in this particular quarter, had to do some machine upgrades. We found opportunistically a window where we could do that. And some of our older machines were upgraded so that they could start to perform at the same rate as some of the newer machines that we have acquired more recently.

We've acquired over 40 new machines this past year. So that -- those expenses were incurred within the quarter and not capitalized. And then there were some some contract labor we had to bring in for our support services because we were chasing this growth and make sure that we could deliver everything we needed for our customers within the time frames that we provide them. Beyond that, there was raw material increases that we saw. So those are the pressures that we got in Q3 versus our Q2 performance.

Dan Schumacher

Greg, just to provide more specifics, I would say there's about 100 basis points in those machine upgrades. There's probably about 90 basis points in that contract labor and the remaining in the material cost. I just want to reemphasize that the contract upgrades and obviously, the contract labor, those are all variable costs that we can choose to move over time. And it's really focused on making sure that we have the speed, the quality and the reliability for our customers.

Greg Palm

Okay. So just to be clear, though, so does some of that -- I mean, you incur that completely in Q3 and then it goes away completely for, sort of, Q4 or go forward or...

Dan Schumacher

Yes. Well, one thing I would say is we're always using contract labor, right, to vary depending on the volume that's coming in. But yes, there is some assumption in the guide that, that cost comes down as we're in fourth quarter. But what is, kind of, counteracting that, right, is the lower volume that is in the middle of the guide as well as seasonality. So we may have to use some of that contract labor and some of that overtime as our employees take off for the holidays.

Operator

[Operator Instructions] It looks like we have no more questions in the queue. This now concludes our question-and-answer session. Ladies and gentlemen, thank you for your participation. This concludes today's teleconference. Please disconnect your lines, and have a wonderful day.