AMS Spring 2023

3D Printing Financials: Xometry’s Revenue Doubled, Losses Deepened

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Revenue almost doubled to $83.7 million for digital manufacturing marketplace Xometry (NASDAQ: XMTR), but so did its net losses for the first quarter of 2022. The Gaithersburg, Maryland-headquartered company reported a loss of $20.0 million for the quarter (or 43 cents per share), an increase of $9.5 million year-over-year. This was mainly due to total expenses expanding 145% to $45.7 million, driven primarily by the addition of supplier service provider Thomas (acquired by Xometry in 2021) for an entire quarter. However, losses adjusted for stock option expense and non-recurring costs came to $12.6 million or 27 cents per share.

With quarterly revenue up 90% year-over-year, Chief Financial Officer (CFO) Jim Rallo told investors during an earnings call on May 12, 2022, that Xometry had a solid first quarter and expected significant revenue and gross profit growth in the next period and the balance of 2022. A big part of this increase comes from the rapid adoption of the Xometry marketplace service by larger accounts across North America and Europe.

However, the underlying strength of the business comes from repeat purchases from existing accounts, which provides management with substantial revenue visibility and predictability, highlighted Rallo.

“Once an account joins our platform, we aim to expand the relationship and increase engagement and spending activities from that account over time. The number of accounts with the last 12-month spend of at least $50,000 on our platform reached 790 at the end of Q1 2022, up 92% year over year,” went on the executive.

In light of the ongoing macro events, from a global supply chain crisis to an escalating conflict in Ukraine, Xometry says its growth hasn’t stopped. In fact, it demonstrated the need for a continued rapid digital transformation of the manufacturing industry.

Commenting on how Xometry has overcome adverse events in the last two years, CEO Randy Altschuler said that “our unique ability to match buyers and suppliers in real-time and our weekly updates to our AI-driven pricing model provides reliable pricing and predictable margins even during periods of inflation. Likewise, with our supplier network expanding domestically and abroad, we offer customers resilient supply chains, irrespective of macro events.”

Xometry's marketplace helps pair sellers and buyers that need 3D printing solutions.

Xometry’s marketplace helps pair sellers and buyers that need 3D printing solutions. Image courtesy of Xometry.

As its marketplace continues to scale and as the number of transactions grows, Xometry’s machine learning becomes smarter, driving better matches for buyers and suppliers and helping improve gross margins. Earlier in March, the company introduced the Xometry Everywhere software, which extends the reach of its AI-driven instant-quoting pricing engine to popular third-party sites where engineers and other buyers spend significant amounts of time. Xometry Everywhere is also available for integration into the procurement processes of Fortune 1000 companies.

Later in the second quarter, the company will rely on its Xometry Everywhere software to integrate the AI-driven pricing engine into the Thomas network platform, extending the Xometry marketplace to Thomas’ 1.4 million registered users. Additionally, at this time, the brand says it will expand its marketplace menu, extending quoting capabilities into new categories based on the data and suppliers from the Thomas network. This means buyers will not only be able to choose from expanded categories and processes, but we’ll also more easily find local suppliers with expanded sets of certifications.

Currently, Xometry continues to ramp up its network of active suppliers, which further enables the marketplace to successfully match supply and demand and improve gross margins. On top of strong financial results in Q1, it released new products and services to improve the marketplace experience for users and made further progress in its integration plans with Thomas, which is included in Xometry’s supplier services.

Altschuler pointed to some very good early signs from the Thomas buyers (who are adopting the Xometry instant quoting service) and suppliers who are taking work from Xometry. There has also been an increase in Thomas Net subscriptions and many user adoptions of the analytics and other enhancements made to Thomas Net. Overall, it appears that the integration is moving smoothly, and Xometry expects this to continue as they move forward.

Xometry celebrates IPO at Nasdaq Exchange.

Xometry celebrates going public at the NASDAQ on June 29, 2021. Image courtesy of Xometry.

Overall, management hopes to see strong growth in 2022 and improve operating leverage. Management also provided guidance for the next three months and the full year along with the earnings announcement. Hoping to see revenue during the second quarter of 2022 in the range of $91.5 million and $93.5 million, representing year-over-year growth of between 81% and 85%.

As for the full year of 2022, Xometry anticipates revenue growth of up to 83%, or $400 million (that’s nearly triple what the company made in 2020), driven primarily by increasing active buyers and suppliers and added suppliers services, and revenue synergies with Thomas. In addition, this year will see Xometry expand its marketplace domestically and abroad and deliver additional services to buyers and suppliers, suggested Altschuler.

Hoping to tap a total addressable market of over $2 trillion in the massive $35 trillion global manufacturing industry means the company is ready to invest even further to capitalize on its position as one of the leading two-sided marketplaces. At the same time, the CEO stated that he expects gross profit dollars to grow over fourfold with significant gross margin expansion and that this will be “just the beginning” for the business.

“Although we are still in the early innings of the secular digitization of the manufacturing industry, Xometry has become the digital marketplace connecting buyers with suppliers. With our supplier network expanding domestically and abroad, we are playing an instrumental role in helping create locally resilient supply chains irrespective of macro events,” concluded Altschuler.

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