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AMS Spring 2023

“We Have Limitless Opportunities to Fuel Growth” Says Randy Altschuler after Xometry’s Q2 Earnings

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The last few years have been rough for the capital market. Between the Covid-related economic slowdown, inflation’s impact on stock returns, and an ongoing war in Ukraine, the stock market fell into bear territory in June 2022, and Forbes just announced that despite moving higher in recent weeks, “the stock market still has further to fall.” However, for some 3D printing companies, earnings reports are looking brighter. The latest to inform its quarterly numbers is Xometry (Nasdaq: XMTR).

During the fiscal second quarter, the company said it had record revenue and gross profits. Total revenue for the second quarter of 2022 was $95.6 million, an increase of 89% year-over-year, driven primarily by accelerated marketplace growth, which accounted for roughly 80% of total revenue and expanding supplier services with the addition of Thomas, a leader in product sourcing, supplier selection, and digital marketing solutions.

With marketplace revenue at $75.6 million, the company witnessed a 55% growth year-over-year and 17% quarter-over-quarter. Marketplace revenue, which consists entirely of the historical Xometry business, was driven by continued strong growth in active buyers and the platform’s rapid adoption by larger accounts across both North America and Europe. Likewise, Xometry experienced strong year-over-year growth in many of the different manufacturing processes offered in its marketplace, suggested CEO Randy Altschuler during an earnings call on August 10, 2022, just hours after releasing the second quarter report.

Altschuler specified that in Q2, active buyers increased 40% year-over-year to 33,491, adding a record 2,808. Additionally, Xometry saw strength across multiple verticals, including automotive, electronics, semiconductors, robotics, and automation, as well as ongoing strength in general manufacturing. Just as during the first quarter of the year, the company continues to see growing traction in production orders from several customers across industries and manufacturing processes, including robotic assemblies in agriculture and injection molding for an electric vehicle company.

Also on an uptrend, the total gross profit for the period was $37.7 million, an increase of 217% compared to the same period last year, driven by significant improvements in marketplace gross margin and the addition of higher-margin supplier services. Altschuler also pinpointed an improvement in the company’s cash flow through a “growing basket of fintech products.” He explained that with the Thomas acquisition last December, Xometry expanded its baskets of supplier services, including marketing and advertising solutions.

“Our international business continues to deliver strong growth, with revenue increasing 136% year-over-year. In Q2, we further expanded our sales presence in the U.K., Germany, France, and Nordic regions. Alongside strong top-line growth, Europe continues to rapidly expand gross margins, underscoring the success and demand for our marketplace across geographies. In addition, we formally launched the platform in China in late Q1 and began taking orders from Chinese customers in April. We are pleased with the initial launch and continue to scale up the in-country team and supplier base and expect China to contribute to revenue growth in 2023,” pointed out Altschuler.

Xometry part production. Image courtesy of Xometry.

Regarding profitability, Xometry reported a net loss attributable to common stockholders of $16.6 million for the quarter, an increase of $4.3 million year-over-year, and a negative adjusted EBITDA of $8.3 million for the quarter, reflecting a decrease of $0.8 million year-over-year. Management hopes to reach profitability on an adjusted EBITDA basis by 2023.

A leading force in custom on-demand manufacturing, Xometry said that on top of strong financial results, the period marked the most extensive product release schedule in its history, and has announced the launch of the Industrial Buying Engine (IBE) to digitize sourcing on Thomasnet, including instant quote and on platform request-for-quote capability. Another new introduction is the cloud-based software Workcenter to help suppliers digitize all aspects of their operations. The freemium version of the software was developed with the acquisition of FactoryFour in the last quarter of 2021.

In 2022, Xometry hopes to expand its domestic and international marketplaces and deliver additional services to buyers and suppliers. The company estimates its total addressable market (TAM) at over $2 trillion in the massive $35 trillion global manufacturing industry.

For the full fiscal year, Xometry is raising the bottom end of its revenue guidance and now expects revenue of up to $400 million, representing year-over-year growth of up to 83%. At the same time, it believes the gross profit will grow fourfold with a significant gross margin expansion.

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

It has already been a year since the company went public on the Nasdaq exchange. In June 2021, Xometry stock opened at $68 and closed at $87.39, up nearly 99% from the offer price. The strong performance came after the company sold roughly 6.9 million shares at $44 each, above its $38-to-$42 price range. Since then, shares reached an all time low of $27.62 in May 2022 – following a general market trend – before regaining some ground to oscillate between $30 and $45. Following the release of its earnings report at market opening on August 10, Xometry stock escalated more than 25% by 10 AM.  This coincided with a general uproar in the stock market after a key inflation reading showed a better-than-expected slowdown for rising prices, which led to gains in key indexes like the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite.

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