Greetings and welcome to the Proto Labs Third Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bill Dietrick. Please go ahead, sir. William M. Dietrick - VP-Global Marketing & Head-Media Relations: Thank you, operator, and good morning, everyone. This morning, before the market opened, Proto Labs issued a press release announcing its third quarter financial results for the quarter ended September 30, 2015. The release is available on the company's website at protolabs.com. Before we get started, during the course of this conference call, the company will provide financial projections and make other statements about its business that are forward-looking and subject to many risks and uncertainties that could cause actual results to differ materially from expectations. A detailed discussion of the risks and uncertainties that affect the business is contained in the company's Annual Report filed on Form 10-K and other SEC filings, particularly under the heading Risk Factors. Copies of these filings are available online from the SEC or on the Proto Labs' website. The company's projections and other forward-looking statements are based on factors that are subject to change, and, therefore, these statements speak only as of the date they are given. The company does not undertake to update any projection or forward-looking statement. In addition, to supplement the GAAP numbers, we have provided revenue growth on a constant currency basis, non-GAAP operating margins, and non-GAAP adjusted net income and basic and diluted net income per share information. The non-GAAP operating margin information excludes costs of stock compensation, amortization of intangibles, and transaction costs related to the Alphaform acquisition. The non-GAAP adjusted net income excludes…

Thank you. At this time, we will be conducting a question-and-answer session. Our first question today is coming from Troy Jensen from Piper Jaffray. Please proceed with your question. Troy D. Jensen - Piper Jaffray & Co (Broker): Yes. Congrats on a nice quarter, Vicki and John. Victoria M. Holt - President & Chief Executive Officer: Thanks, Troy. John A. Way - Chief Financial Officer & Head-Investor Relation: Thanks, Troy. Troy D. Jensen - Piper Jaffray & Co (Broker): Hey. So how about quickly for you, Vicki, first. If we just focus on Firstcut and Protomold, what do you think like a sustainable or maybe near-term growth rate is for those two businesses? Victoria M. Holt - President & Chief Executive Officer: Right. So each of our service offerings are going to grow at different growth rates varying by quarter. We're an on-demand manufacturer. In general we've said we feel pretty comfortable with a 25%-type growth rate. And you can see with Firstcut this year we're actually exceeding that growth rate with the addition of some new services and just general fluctuation that happens from service to service. I firmly believe that the Protomold injection molding, prototyping, on-demand manufacturing can move back up towards that 25% growth rate. It's a very large total available market out there. As I mentioned in my comments, we've focused a lot of our sales and marketing efforts on making sure our customer base understands our new full suite of services this year, and that included the additive manufacturing business. And as we reflect and look at the growth rates across all of our services, we really feel that we can refocus a little bit of our marketing effort more evenly across all of our service offerings, as well as making sure we've got the…

Okay. So our next question today is coming from Ben Hearnsberger from Stephens. Please proceed with your question.

Hey. Thanks for taking my question. A couple on Alphaform. I guess first it sounds like it's going to be dilutive for a couple of quarters. Can you just take us through the timeline on integrating Alphaform with your e-commerce model? Does that occur next quarter, a couple quarters from now or later next year? Victoria M. Holt - President & Chief Executive Officer: Yes. Great question, Ben. The neat thing about this Alphaform acquisition is that we know what we need to do to turn this business around. We need to take our business model and our technology-based e-commerce model and put it right on top of a great talented workforce that knows how to make good quality additive parts and the assets there. So that's the great thing about it. But as with any integration, you've got to get all that work done, and so there is a timeline that we're working to get customers converted over and begin to move to an e-commerce model and turn on the website for SLS and DMLS, and it'll be first quarter before we can get to that point. And then we also have to put in place all of the operational software that allows us to be who we are, and that is to be able to very quickly and reliably turn quality parts. And that software work will really continue throughout the first quarter and we don't expect to have all that fully implemented until the end of the first half. So we've got a lot of work that needs to be done. We're beginning to deploy some of those assets, which means pulling those people off of other projects and beginning to get them to work on this one. But that's why we've said to really look at the second half of 2016 to get that turned around. The beauty is we know exactly what to do and I know it's going to work, so we just have to get all the hardware and software in place.

Okay. And I know when you acquired FineLine you provided the user count. Can you give us a sense for the number of Alphaform users that are new to the Proto Labs platform? John A. Way - Chief Financial Officer & Head-Investor Relation: Ben, I think that one's difficult in this situation, especially given the magnitude of the changes we're going to have to make. We mentioned some of the contracts that we're going to have to wind down that were just unfavorable and we're going to have to execute price increases on some of it. So to give a number related to that at this stage until we get some visibility as to what's really going to happen there really I don't know is meaningful information.

Okay. Would it be fair to say though it's smaller than the FineLine user count...? Victoria M. Holt - President & Chief Executive Officer: Well, in terms of count, it may not be smaller. I will also say the IT infrastructure is not as sophisticated, so it's not as easy for us to get access to all of those individual product developer data as it was with FineLine has a very sophisticated web-based e-commerce model that was easier to fit right into our model.

Okay. One last question on sales and marketing expense, it sounds like you are going to do some things to stimulate Protomold growth. I guess the question is what can you really do here? And then is the expectation that we continue to run at kind of that 15% of revenue range on the sales and marketing line? Victoria M. Holt - President & Chief Executive Officer: Yes. First off let me answer the second one first. Yes, I would estimate we're going to be in the 14% to 15% sales and marketing as a percent of sales. And what we did in second half of 2014 and 2015 after we fully integrated the additive manufacturing business is we made sure that we had content out there to help our customers understand what our additive manufacturing service offering was. So there was a shift in mix. And I think now that we've got that business fully integrated into our suite of services, we can take our content and our activities and spread it a little more evenly across all of our services. And I'm confident that's going to help with Protomold. We also had some specific sales incentives to make sure that we have a really good launch of our very first acquisition with additive. And as we move into 2016, we'll be making sure that our sales incentive plans are a little more balanced across all three of our services to incent Protomold to grow.

Okay, great. Thank you very much.

Thank you. Our next question today is coming from Brian Drab from William Blair. Please proceed with your question. Brian P. Drab - William Blair & Co. LLC: Good morning. Congratulations on a great quarter. Victoria M. Holt - President & Chief Executive Officer: Thanks, Brian. John A. Way - Chief Financial Officer & Head-Investor Relation: Thanks, Brian. Brian P. Drab - William Blair & Co. LLC: Hey, I don't know if you've said this specifically yet, but Alphaform for 2016, do you view that as dilutive or accretive to EPS? John A. Way - Chief Financial Officer & Head-Investor Relation: So as we look at the full year, we're currently planning for it to be about breakeven for the full year; probably lose a little bit in the first couple quarters and become profitable in the second half. So relatively neutral as we look at full year, probably excluding the integration cost. So the integration costs may have a little bit of a dilution. Brian P. Drab - William Blair & Co. LLC: Okay. Thanks. And then within Protomold, can you comment on the relative growth rates between the mold making or first order of parts type of business versus the parts business in the quarter? Victoria M. Holt - President & Chief Executive Officer: Yes. Yes, so as I said before, our sales between Protomold parts and Protomold molds is about half and half. And frankly the growth rates of both of those have been very similar, so not a lot of difference between the two segments. Brian P. Drab - William Blair & Co. LLC: Okay. Thanks. And then can you give us an update on maybe the impact of the SOLIDWORKS and Autodesk partnerships, has that been meaningful? Victoria M. Holt - President & Chief Executive…

Thank you. Our next question today is coming from Holden Lewis from Oppenheimer. Please proceed with your question. Holden Lewis - Oppenheimer & Co., Inc. (Broker): Great. Thank you and good morning. John A. Way - Chief Financial Officer & Head-Investor Relation: Good morning. Holden Lewis - Oppenheimer & Co., Inc. (Broker): Just want to make sure I understand on the G&A. You had about $8.1 million in expenses in the G&A line this quarter and it sounds like you're saying there's between $900,000 and $1 million that were non-recurring. So we should think about $7.1 million, $7.2 million as being kind of the run rate for G&A at this point absent Alphaform? John A. Way - Chief Financial Officer & Head-Investor Relation: That's absent Alphaform, yes. Holden Lewis - Oppenheimer & Co., Inc. (Broker): Okay. So obviously that reflects significant investments versus where you were in the first half. Are we going to see further significant investments in your organic business, so that $7.1 million, $7.2 million is not the right number? Maybe we're at $8 million at the end of Q4? Or how should I think about the ongoing investment and what it means to those lines organically? John A. Way - Chief Financial Officer & Head-Investor Relation: Yes. So I think you've got the right run rate as we look at kind of the legacy business. As we enter Q4 I think there'll be a little bit more expense and it really is more related to some of the seasonality of our expenses and let me explain that a little bit. Our commission structure starts with lower commission rates and as people achieve quotas and things like that, they get kickers in the end of the year. So commissions will be up. We perform interim audit work…

Thank you. Our next question today is coming from Bobby Burleson from Canaccord Genuity. Please proceed with your question.

Yeah. Good morning and congratulations on the strong results. Victoria M. Holt - President & Chief Executive Officer: Thanks, Bobby.

Just curious, we've talked a lot about the Fineline growth and 80% is a great number. I'm wondering whether or not you're seeing any benefit the other direction toward Protomold, towards Firstcut as engineers go out there and look for additive solutions? Victoria M. Holt - President & Chief Executive Officer: It's a good question. And what I'll say is I think there are as many examples of customers that come in and start asking for a additive manufactured part and really as we work them through what their needs are, what they really need is a machine part or a injection molded part, and sometimes it's vice versa. They'll come in for a machine or – and really as you talk them through, it should be an additive part. That's the beauty of our suite of services. So that's the positive that we get with cross-selling. I also think that by having additive manufacturing in our portfolio, it helps drive total product developer growth, because we've got a broader suite of services and as we're out there trying to bring developers into the fold and they get those ones that Google 3D printing, and then they come in and they also understand we do CNC machining and injection molding. So overall it helps our brand awareness, it helps our acquisition of product developers and there's cross-selling that takes place. It's really hard to point to, by having 3D printing, we get x amount of lift in each of those services, but I'm confident it helps our brand awareness and it helps cross-selling across each service and the value they bring to developers.

Okay. Great. And then in terms of the Fineline gross margin, it looks like you've done a nice job there moving that higher. I'm wondering how much more room there is to go. And then wondering kind of Alphaform versus Fineline, whether or not long-term you see those two businesses operating at essentially the same margin? John A. Way - Chief Financial Officer & Head-Investor Relation: Yeah. So the first one, we have done a nice job improving the margins on Fineline. I guess as I'd look at it we will be moving into a new facility next year, so a larger space. And with that move we might see a little bit of compression on that margin just because we'll have more space and more costs associated with that space as we grow into it. So that's kind of the capacity investment. But where they're operating now, I hate to say there's no room, I think there might be a little bit more room for more quick terms and more things like that as we add capacity. But we're pleased with where it's performing. As we look at Alphaform, we've got a long way to go to get there and it is in a different geography. I think generally speaking we would expect them to migrate to near the same levels but, like I said, there's ways to go to get there.

Okay. Great. And then does Alphaform do anything for your legacy businesses in Germany? Is there any benefit in terms of the customer rolodex that you inherit in terms of what Protomold or Firstcut might see in terms of demand? Victoria M. Holt - President & Chief Executive Officer: Yeah. I think so. Absolutely. So first let me comment on the fact that Alphaform had a really good brand recognition in Germany, so the fact that we've made the acquisition, it gives us brand awareness within that geography, which is great, and you've got the cross-selling opportunities that come with that, so that's a positive. As mentioned before, we haven't been able to really take the rolodex of prospects and move them into our sales and marketing engine yet, but we'll be working on that. The other thing I'll say that Alphaform does have an injection molding business that's in Eschenlohe just outside of Munich. That business manufactures injection molding tooling and injection molding parts with a focus on larger parts and parts that are generally more complex and outside the envelope of our current software. So we're evaluating how we might use that capability and leverage that capability to bring greater value to our customers right now. John A. Way - Chief Financial Officer & Head-Investor Relation: And I think one thing to add related to that is just having the presence, the manufacturing presence in Germany, we think will be beneficial to our overall business. Victoria M. Holt - President & Chief Executive Officer: Yeah.

Okay. Great. Thanks.

Thank you. Our next question today is coming from Jim Ricchiuti from Needham & Company. Please proceed with your question. Jim A. Ricchiuti - Needham & Co. LLC: Thanks. Just again with going back to Alpha, trying to get a sense as to looking out to 2016 when you could see more of the cross selling opportunities beginning to be realized. Is that in the second half? I mean, do you expect to put more resources into their marketing efforts? Victoria M. Holt - President & Chief Executive Officer: I think that on – cross selling will start in the first quarter. So as we get to the point, once we get the website turned on, which will take time, we've got to – we don't have SLS and DMLS turned on, on our website. We turned on SLA and we're taking orders to the UK with SLA. But we still have to get SLS and DMLS turned on and get all that in place. But once that website gets turned on, we can turn on our sales and marketing people on that portfolio and start the cross selling between all the services. And marketing will start when we get to that point as well. Jim A. Ricchiuti - Needham & Co. LLC: Okay. I was also just thinking in terms of the training that might be involved in putting all this together, you still think early in 2016? Victoria M. Holt - President & Chief Executive Officer: First quarter and – mid to end of first quarter so let's give ourselves a little room but we're actually, we want to do this quickly. There is a turnaround, so this business isn't profitable today. We don't like to have bleeders, so we want to get this fixed. And so we're…

Thank you. Our next question today is coming from Weston Twigg from Pacific Crest Securities. Please proceed with your question.

Hi. You touched on briefly related to gross margins, but I'm just wondering if you could help us understand better the pricing environment in the additive manufacturing side? You said that Alphaform struggled with some bad contracts and maybe you can help us understand how you avoid getting pulled into some pricing battles given that a lot of the additive manufacturing service bureaus have developed and operate on a similar model to Proto Lab's. Victoria M. Holt - President & Chief Executive Officer: Yeah. The way I'll answer that is that we are putting our business model, it's a web-based e-commerce business model on to that Alphaform business. And our quoting is actually generated by virtually manufacturing the part, and our software does that and we turn around an instant quote and that's the price for the part that the customer buys and our service offering around that which is speed and reliability really results in the customers seeing that as great value. So we need to put in place all the steps to deliver reliably and quickly the valuable parts on demand and the website that puts in place a disciplined business process around pricing those and then training our sales people to sell that value.

Okay. John A. Way - Chief Financial Officer & Head-Investor Relation: And one thing related to Alphaform specifically. They looked at their business kind of as two separate operations. One a prototyping business that they priced one way and one a volume production of additive parts which they priced based on the material usage basis that doesn't take into effect the complexity and size of parts and things like that, and build time related to it. So the way they had looked at, especially that volume production of additive parts component of the business, they just were looking at it wrong.

Got it. That's helpful. And then you didn't give a number on the long term gross margin profile for the additive manufacturing business as a whole, but could you give us a feel for where you think that could settle out over the next year or two? John A. Way - Chief Financial Officer & Head-Investor Relation: Yeah, so I mean – and you can back into the number, we're approaching 55% here in the quarter and long-term we see it north of 50%, kind of in the same range where we are now. Victoria M. Holt - President & Chief Executive Officer: Yeah. Over the long-term, again, after Alphaform disintegrated and we turned the business around and that's going to take a little while, but once we get there I see no reason why we couldn't have similar margins for the European additive manufacturing business just as we have here in North America.

Very helpful. Thank you.

Thank you. Our next question today is coming from Andrea James from Dougherty & Company. Please proceed with your question. Andrea Susan James - Dougherty & Co. LLC: Hi. Thanks so much. Most already asked, I'll just ask a couple of quickies. Once Alphaform normalizes what's your expectation for target operating margin? I think historically you targeted 27% to 29%, but I'm not sure with the changing offerings that there's a new normal. John A. Way - Chief Financial Officer & Head-Investor Relation: Yeah. So, Andrea, like I said earlier, we're going through our annual business planning and budgeting process right now, and working through some of that related to it and I think we'll be prepared to give that guidance next quarter. Andrea Susan James - Dougherty & Co. LLC: Okay. And then one more thing. As you segment your sales force and you target different customers within the organization, are you seeing that customers need more handholding? And then just, Vicki, you had said something about as you go through with someone on the part they want, you're helping them decide whether to go with a mold or additive manufacturing. Is that a conversation happening over the phone increasingly or is the software still primarily handling that? Victoria M. Holt - President & Chief Executive Officer: I'll answer the second one first. It's primarily over the phone. Our software is not yet consultative and that will take quite some time. So at this point all the conversations between service offerings happen with both our sales team as well as our customer service engineers and designers. So that's where that takes place. And, again, from a segmentation point of view, it's not more handholding in one segment versus the others. I mean it really is customer-by-customer specific to be…

Thank you. We've reached the end of our question-and-answer session. I'd like to turn the floor back over to Ms. Holt for any further closing comments. Victoria M. Holt - President & Chief Executive Officer: Great. Thank you for joining us today. We're very proud of the progress we've made this quarter and we remain excited about the outlook for Proto Labs and its continued growth around the world. I again want to thank our employees for all their dedication and hard work in achieving this performance and we look forward to updating you next quarter. Thank you.

Thank you. That does conclude today's teleconference. You may disconnect your lines at this time and have a wonderful day. Victoria M. Holt - President & Chief Executive Officer: Thank you.