Longview

What: Shares of Proto Labs (NYSE:PRLB) are trading nearly 13% higher as of this writing, after the company reported strong fourth-quarter earnings Thursday morning.

So what: Fourth-quarter revenue increased 32% year over year to $73.8 million, marking the company's 14th consecutive quarterly sales record. This growth increased earnings by 15.3% to $0.45 per diluted share.

A crucial metric for investors to watch is the number of unique product developers that Proto Labs serves in a given quarter. When the number of product developers served increases between periods, it suggests that the company's rapid manufacturing and 3D printing services are faring well in the marketplace. In the fourth quarter, Proto Labs served 12,414 product developers, a 22% increase year over year. This figure was slightly lower than the 12,541 product developers it served in the third quarter.

By segment and geography, Proto Labs experienced growth across the board. Excluding the impact of its recent Alphaform acquisition, 3D printing revenue increased 69% annually to $6.6 million. European sales increased 22.3% year over year to $12.2 million. Had the U.S. dollar remained stable, sales in Europe would've increased 34.7%. Sales originating from Japan increased 45.9% to $2.6 million. With a stable dollar, Japan sales would've increased a blistering 54.1%.

Compared to last year, Proto Labs' fourth-quarter gross margin compressed 390 basis points to 56%. Management attributed annual decline mainly to a 260-basis-point impact from the Alphaform acquisition, and to a lesser extent investments in added capacity and currency headwinds.

Now what: Overall, Proto Labs' earnings showed strong growth and solid execution in what has been a challenging environment for many industrial-focused companies. In the coming year, investors can "anticipate the launch of at least one significant new product offering within our injection molding service during the year," according to CEO Vicki Holt. This plays right into a major aspect of the company's growth strategy: Attracting and serving more customers by bringing new manufacturing services online.

Steve Heller owns shares of Proto Labs. The Motley Fool owns shares of and recommends Proto Labs. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.