Maryland-based global manufacturing marketplace Xometry (NASDAQ: XMTR) issued its third-quarter earnings report, the second since its Initial Public Offering (IPO) on the NASDAQ exchange in July. For the quarter ended September 30, 2021, it reported a revenue increase of 35% from a year ago, to $42 million. The company said the boost was driven by strong growth in the number of active buyers, up 61% to 26,187, and rapid platform adoption by larger accounts across North America and Europe.
Known for its custom manufacturing marketplace, Xometry offers an algorithm-driven platform that directs clients to the optimal solution for a given production task. Used heavily by university students, startup entrepreneurs, and engineers at Fortune 100 companies, Xometry has several high profile customers including NASA, Dell, Bosch and BMW. Since being established in 2013, the service bureau has focused on digitizing manufacturing, connecting supply with demand, and providing a better sourcing solution to both buyers and sellers. Prior to its IPO, the company managed to raise $197.2 million in funding over eight rounds, the latest one in September 2020.
Today, Xometry provides a marketplace to serve a $260 billion opportunity, and a big chunk of that is 3D printing. To support the growing demand for 3D printing solutions, Xometry has expanded its offering to include over 70 metal and plastic materials and more than ten additive manufacturing (AM) technologies.
“The secular digital shift in manufacturing continues to accelerate, with global supply chain challenges, intensifying that trend. Fortune 1000 companies are rethinking supply chains and manufacturing strategies, and Xometry is in a tremendous position to deliver on the needs of both our buyers and sellers through the breadth of our platform across verticals, processes, and capabilities,” described Xometry CEO Randy Altschuler during an earnings call with investors on November 10, 2021.
It was a strong quarter, according to company management, with gross profit increases of 42% year-over-year to $14.5 million, versus $10.2 million in the same period in 2020, and improved gross profit margin, up 25.6% year over year. However, Xometry’s net loss widened to $14.7 million, or 33 cents per share, up from $6.2 million, or $1.99 per share, in the same quarter of last year. The company attributed the increase in net losses to a stock-based compensation expense worth $2.3 million and charitable contributions to nonprofit organizations of $1.2 million, or roughly 403,000 shares.
Looking ahead, for the fiscal year ending in December, the company said it expects business momentum to continue and fourth-quarter revenue to be in the range of $60 million to $62 million, representing year-over-year growth between 58% and 63%. These “robust market trends,” as Altschuler describes them, are also the result of aggressive sales and digital marketing investments, which will continue in the fourth quarter of the year.
“Xometry’s third-quarter 2021 performance was outstanding as we saw accelerated demand from larger customers across many verticals on our platform,” suggested Altschuler. “Additionally, we delivered significant improvement in gross margin on a year-over-year and quarter-over-quarter basis driven by AI-based pricing and expanding seller network.”
Seller services had a strong third quarter thanks to improvements to the supplies business and increased adoption across Xometry’s basket of fintech products. In August, the company relaunched Xometry Supplies, including a site redesign and implementation of a new e-commerce software platform, which expands its product offering from 30 to 145 categories, and plans to significantly expand its digital product (SKU) selection in early 2022.
As part of Xometry’s strategy to build its global on-demand manufacturing marketplace, the brand acquired in early November the SaaS-based software solution company FactoryFour, which helps manufacturers improve lead times and make data-driven decisions through real-time production tracking and quality control.
FactoryFour will serve as a platform to help manufacturers in the Xometry marketplace improve lead times and make strong, data-driven decisions through real-time production tracking. However, the acquisition is not expected to materially impact this year’s fourth-quarter revenue and adjusted EBITDA guidance just yet, but will only begin to reshape Xometry’s product offering starting in 2022.
Following the quarterly earnings announcement after markets closed on November 10, 2021, shares in Xometry rose more than 16% when markets opened on the following day to $49.90. The company stock continued to increase until November 12, when it was trading at $54.17, jumping almost 9%.
If marketplace trends continue along this trajectory, Xometry management is hoping to scale and say that as the number of transactions grows, its machine learning becomes smarter, driving better matches for buyers and sellers and increasing gross margins over time.
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