Stock-Based Compensation

6 Months Ended

Jun. 30, 2026

Share-Based Payment Arrangement [Abstract]

On July 8, 2022, the board of directors approved the Proto Labs, Inc. 2022 Long-Term Incentive Plan, which was approved by the Company's shareholders at a Special Meeting of Shareholders on August 29, 2022, and subsequently amended and restated by the Company's shareholders at the Annual Meeting of Shareholders on May 23, 2024 (as amended and restated, and subsequently further amended, the 2022 Plan) to increase the number of shares available for issuance pursuant to awards under the 2022 Plan by an additional 430,000 shares, add a minimum vesting requirement, and extend the expiration date so that the term of the 2022 Plan runs for ten years from the date of the shareholder approval. On May 20, 2025 and May 19, 2026, the Company's shareholders approved amendments to the 2022 Plan to increase the number of shares available for issuance pursuant to awards under the 2022 Plan by an additional 296,000 shares and 395,000 shares, respectively. Under the 2022 Plan, the Company has the ability to grant stock options, stock appreciation rights (SARs), restricted stock, restricted stock units, other stock-based awards and cash incentive awards. Awards under the 2022 Plan have a maximum term of ten years from the date of grant. The compensation and talent committee may provide that the vesting or payment of any award will be subject to the attainment of specified performance measures in addition to the satisfaction of any continued service requirements and the compensation and talent committee will determine whether such measures have been achieved. The per-share exercise price of stock options and SARs granted under the 2022 Plan generally may not be less than the fair market value of a share of our common stock on the date of the grant.

The Company also has outstanding awards under the 2012 Long-Term Incentive Plan, as amended (the 2012 Plan), although the plan expired in February 2022 and no additional awards have since been or will be made under the 2012 Plan. The 2012 Plan provided the Company the ability to grant stock options, SARs, restricted stock, restricted stock units, other stock-based awards and cash incentive awards. Awards under the 2012 Plan that subsequently expired, were forfeited or cancelled, or settled in cash after August 29, 2022 became available for awards under the 2022 Plan.

In addition, the Company has outstanding awards that were not granted under the 2022 Plan or the 2012 Plan. These awards were granted as inducement awards to the Company’s Chief Executive Officer in May 2025.

Employee Stock Purchase Plan

The Company’s 2012 Employee Stock Purchase Plan (ESPP) allows eligible employees to purchase a variable number of shares of the Company’s common stock each offering period at a discount through payroll deductions of up to 15 percent of their eligible compensation, subject to plan limitations. The ESPP provides for six-month offering periods with a single purchase period ending May 15 and November 15, respectively. At the end of each offering period, employees are able to purchase shares at 85 percent of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last trading day of the offering period.

Stock-Based Compensation Expense

Stock-based compensation expense was $4.1 million and $4.3 million for the three months ended June 30, 2026 and 2025, respectively, and $7.3 million and $8.3 million for the six months ended June 30, 2026 and 2025, respectively.

Stock Options

The following table summarizes stock option activity during the six months ended June 30, 2026:



	Stock Options	Weighted- Average Exercise Price
Options outstanding at December 31, 2025	360,214	$	52.94
Granted	73,560	65.22
Exercised	(100,267)	43.16
Forfeited	(15,877)	56.39
Expired	(21,718)	131.69
Options outstanding at June 30, 2026	295,912	$	53.54

Exercisable at June 30, 2026	114,024	$	61.44

The outstanding options generally have a term of ten years. For employees, options granted become exercisable ratably over the vesting period, which is generally a period of four years, beginning on the first anniversary of the grant date, subject to the employee’s continuing service to the Company.

The weighted-average grant date fair value of options that were granted during the six months ended June 30, 2026 was $35.95.

The following table provides the assumptions used in the Black-Scholes pricing model valuation of options during the six months ended June 30, 2026 and 2025:



	Six Months Ended June 30,
	2026	2025
Risk-free interest rate	3.71% - 4.28%	4.13% - 4.17%
Expected life (years)	6.25	6.25
Expected volatility	52.59% - 52.69%	52.12% - 52.99%
Expected dividend yield	0%	0%

As of June 30, 2026, there was $4.4 million of unrecognized compensation expense related to unvested stock options, which is expected to be recognized over a weighted-average period of 3.2 years.

Restricted Stock Units

Restricted stock unit (RSU) awards are share-settled awards and restrictions lapse ratably over the vesting period, which is generally a period of four years, beginning on the first anniversary of the grant date, subject to the employee's continuing service to the Company. For the board of directors, restrictions generally lapse in full on the first anniversary of the grant date.

The following table summarizes restricted stock units activity during the six months ended June 30, 2026:



	Restricted Stock Units	Weighted- Average Grant Date Fair Value Per Share
Restricted stock units at December 31, 2025	696,076	$	39.07
Granted	140,399	69.19
Restrictions lapsed	(183,382)	36.20
Forfeited	(57,677)	37.14
Restricted stock units at June 30, 2026	595,416	$	47.31

As of June 30, 2026, there was $20.5 million of unrecognized compensation expense related to non-vested restricted stock units, which is expected to be recognized over a weighted-average period of 2.9 years.

Performance Stock Units

Performance stock units (PSUs) are expressed in terms of a target number of PSUs, with anywhere between 0 percent and 200 percent of that target number capable of being earned and vesting at the end of a three-year performance period depending on the Company’s three-year cumulative total shareholder return performance relative to an index and the award recipient’s continued employment. The Company’s PSUs are based on market conditions and the related compensation cost is based on the fair value at grant date calculated using a Monte Carlo pricing model.

The following table summarizes performance stock units activity during the six months ended June 30, 2026:



	Performance Stock Units	Weighted- Average Grant Date Fair Value Per Share
Performance stock units at December 31, 2025	231,959	$	56.21
Granted	64,217	105.67
Restrictions lapsed	(121,334)	57.79
Performance change	60,667	57.79

Performance stock units at June 30, 2026	235,509	$	69.29

The following table provides the assumptions used in the Monte Carlo pricing model valuation of PSUs during the six months ended June 30, 2026 and 2025:



	Six Months Ended June 30,
	2026	2025
Risk-free interest rate	3.48%	3.98% - 4.08%
Expected life (years)	2.85	2.61 - 2.85
Expected volatility	47.40%	52.40% - 53.20%
Expected dividend yield	0%	0%

As of June 30, 2026, there was $10.8 million of unrecognized compensation expense related to non-vested performance stock units, which is expected to be recognized over a weighted-average period of 2.2 years.

Employee Stock Purchase Plan

The following table presents the assumptions used to estimate the fair value of the ESPP during the six months ended June 30, 2026 and 2025:



	Six Months Ended June 30,
	2026	2025
Risk-free interest rate	3.67% - 3.78%	4.29%
Expected life (months)	6.00	6.00
Expected volatility	39.13% - 46.79%	65.60%
Expected dividend yield	0%	0%