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Item 3 — Quantitative and Qualitative Disclosures About Market Risk
Proto Labs, Inc. · 10-Q · Q2 FY2026 · Period ended Jun 30, 2026
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Foreign Currency Risk
As a result of our foreign operations, we have revenue, expenses, assets and liabilities that are denominated in foreign currencies. We generate revenue and incur production and sourcing costs and operating expenses in British Pounds and Euros.
Our operating results and cash flows are adversely impacted when the United States Dollar appreciates relative to foreign currencies. Additionally, our operating results and cash flows are adversely impacted when the British Pound appreciates relative to the Euro. As we expand internationally, our results of operations and cash flows will become increasingly subject to changes in foreign currency exchange rates.
We have not used forward contracts or currency borrowings to hedge our exposure to foreign currency risk. Foreign currency risk can be assessed by estimating the change in results of operations or financial position resulting from a hypothetical 10% adverse change in foreign exchange rates. We believe such a change would generally not have a material impact on our financial position, but could have a material impact on our results of operations. We recognized foreign currency losses of $0.2 million and foreign currency gains of $0.5 million for the three months ended June 30, 2026 and 2025, respectively. We recognized foreign currency losses of $0.2 million and foreign currency gains of $0.5 million for the six months ended June 30, 2026 and 2025, respectively. The changes in foreign exchange rates had a favorable impact on consolidated revenue of $0.4 million for the three months ended June 30, 2026 and a favorable impact on consolidated revenue of $2.6 million for the six months ended June 30, 2026 compared to the same period in 2025.