Xometry‘s (Nasdaq: XMTR) announcement of its strategic partnership with Google Cloud, a key division of Alphabet, aims to accelerate the digitization of manufacturing globally, marking an essential step in the industry’s evolution.
This move, combined with the company’s strong financial performance in the third quarter of 2023, including a 15% increase in total revenue and a 22% rise in marketplace revenue, highlights Xometry’s commitment to innovation and growth.
Manufacturing revolution
Xometry’s collaboration with Google Cloud, known for its comprehensive cloud computing services, marks a new chapter in the digital transformation of manufacturing. The company uses Vertex AI—a powerful tool from Google Cloud designed to enhance artificial intelligence applications—to help accelerate the deployment of new auto-quote methods and models within Xometry’s AI-powered Instant Quoting Engine. This integration allows Xometry to offer a broader range of manufacturing options on its platform. By leveraging Vertex AI’s capabilities, Xometry can create and manage AI models more easily, leading to smarter and faster decision-making. As a result, the manufacturing process becomes quicker and more efficient for buyers and suppliers.
“Since our inception, Xometry’s two-sided marketplace has harnessed data and the power of AI to connect buyers and suppliers in real-time, driving the digitization of industry around the world,” said Matt Leibel, Xometry’s Chief Technology Officer. “Google Cloud’s expertise in AI and its Vertex AI platform will help enable us to get to market even faster with new offerings in entirely new categories, allowing us to become even more indispensable to our customers and suppliers globally.”
This partnership is more than just a technological upgrade; it could change how manufacturing works for the company. Xometry explains it’s now turning old, slow manual methods into quick, digital ones. This speeds up production and makes supply chains stronger and more reliable. Xometry’s latest move shows its commitment to bringing the latest technology to manufacturers everywhere, making their work easier and better.
“Xometry is at the forefront of the AI adoption cycle. Our innovative work with Xometry to power their AI-driven digital marketplace has the potential to transform custom manufacturing, while seamlessly and efficiently connecting customers and suppliers globally,” adds Brad Little, Vice President of Google Cloud.
Market influence
Amid this technological change, Xometry’s financial performance in the third quarter of 2023 demonstrates the strength of its business approach and the effectiveness of its marketplace. The company reported a significant increase in total revenue and marketplace revenue. This financial growth is supported by a 13% increase in gross profit and an impressive 22% rise in marketplace revenue.
Basically, Xometry’s Q3 revenue showed a 15% increase compared to the previous year. A 22% year-over-year increase in marketplace revenue and a 10% increase from the previous quarter mainly drove this growth. However, there was a 16% decrease in supplier services revenue, primarily due to a $2 million reduction from stopping the sale of tools and materials. Xometry reported a net loss attributable to common stockholders of $12 million for the quarter, a $3 million improvement from the previous year. This net loss for the third quarter of the year includes significant expenses like $5.7 million in stock-based compensation and $2.5 million for depreciation and amortization.
Meanwhile, the gross profit for the period went up by 13% from last year, fueled by a 25% increase in marketplace gross profit. Also, the marketplace gross margin rose by 70 basis points to 31.1%. The company also saw a reduced Adjusted EBITDA loss of $4.2 million, which is a $4.4 million improvement from the previous quarter, thanks to higher revenue, gross profit, better operating efficiency, and further savings in expenses.
Digital leap
Looking ahead, Xometry anticipates a revenue growth of between 28% and 32% year-over-year in the last quarter of 2023, estimated to be between $126 million and $130 million. This expectation is based on the marketplace’s accelerated growth, projected in the 40% range year-over-year, driven by strong growth in orders and Marketplace Active Buyers. The latter increased 43% from 36,789 on September 30, 2022, to 52,467 on September 30, 2023, with a record addition of 4,173 new Active Buyers.
“In Q3 2023, we had record financial results, including our highest revenue and gross profit in Xometry history,” points out Xometry CEO Randy Altschuler. “Driven by AI, the underpinnings of marketplace growth are robust with over 40% Active Buyer and order growth in Q3 (…) We are excited to announce our new Google Cloud AI partnership, which will accelerate instant quoting into many new categories on our platform. We expect to continue to rapidly gain market share and accelerate marketplace revenue growth in Q4.”
Despite challenges, such as decreased supplier services revenue due to strategic business shifts and net loss, the company is focused on expanding marketplace functionality. The launch of Xometry Teamspace and the integration of new certifications like AS9100 for aerospace and defense buyers, as well as the deal with Google Cloud, are proof of that. By embracing AI, Xometry aims to set new standards in the manufacturing industry, promising even greater advancements and successes in this digital era.