What happened

Shares of rapid manufacturer Proto Labs Inc. (NYSE:PRLB) jumped as much as 16.5% on Thursday after the company reported earnings. As of 11 a.m. EST shares had maintained a gain of 12%, and volume was already triple its daily average.

So what

Revenue fell 2% in the fourth quarter to $72.4 million as research-and-development spending in many industries declined. But revenue from 3D printing was up 8% to $9.8 million as the company integrated its acquisition of Alphaform, and more customers moved toward 3D printing from other molding methods.

A 3D printer

Image source: Getty Images.

Net income fell 21.9% to $9.4 million, or $0.35 per share, as marketing and sales and R&D costs ate into the bottom line. But on a non-GAAP (generally accepted accounting principles) basis, earnings were $0.41 per share, which beat estimates of $0.39 per share -- and that's what investors are focusing on in trading today.

Now what

The prototyping business can be choppy, but Proto Labs is adding capabilities that should allow it to maintain a strong market position in the future. Insert molding was added to injection molding last year and 3D printing products were expanded, which will help attract more small and medium-size runs from product developers.

The decline in top- and bottom-line results last quarter doesn't look great, but keep in mind that revenue rose 12.9% overall in 2016. As the market for rapid prototyping and small production runs matures, Proto Labs is in a strong position, and long-term growth should pick up steam.

Travis Hoium has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Proto Labs. The Motley Fool has a disclosure policy.