3D Printing Financials: Xometry’s Year of Growth and Challenges

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Finishing 2023 amid broader economic challenges that have troubled many in the 3D printing sector, Xometry (Nasdaq: XMTR) reported a solid 31% increase in the fourth quarter revenue, reaching $128 million thanks to a 42% rise in marketplace growth. Despite a drop in supplier services revenue by 15% overall, the report is positive and optimistic. Especially noteworthy is the 39% jump in gross profit, boosted by a 68% growth in marketplace gross profit and a 5% increase in marketplace gross margin to 31.3%. However, Xometry still navigates the waters of an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) loss and net losses.

Diving deeper into the earnings report, the fourth quarter of 2023 marked record highs for Xometry in revenue and gross profit. Marketplace revenue alone increased by 42% to $112 million, highlighting the accelerated adoption and efficiency of Xometry’s Artificial Intelligence (AI)-driven platform. This was slightly offset by a decrease in supplier services revenue, primarily due to strategic exits from the tools and materials business, which reduced revenue by approximately $6 million year-over-year. Still, the gross profit margin’s climb to 31.3% from marketplace activities is a good sign for the company.

Considered the largest marketplace for custom manufacturing, Xometry is a booming ecosystem leveraging AI to redefine efficiency and innovation in manufacturing. By using AI and machine learning, Xometry’s platform analyzes part geometry and manufacturing capacity to offer instant pricing and lead times, simplifying the sourcing process for custom parts. This AI integration ensures a more dynamic marketplace. Through its Manufacturing as a Service (MaaS) model, Xometry harnesses AI to match demand with supply, optimizing production processes and opening new opportunities for buyers and suppliers. In fact, according to the company’s earnings report, its active buyers count soared by 36%, and the number of accounts with a spend of at least $50,000 grew by 30%.

In the fourth quarter, Xometry faced some challenges, with an adjusted EBITDA loss of $2.9 million, although this was still an improvement from the previous year. The net loss for shareholders was $10.6 million, a decrease of $15.3 million year-over-year.

2023 was a big year for Xometry. The company rolled out Xometry Teamspace, a tool that lets people work together online, making managing projects a lot easier. It also added a new automotive standard, IATF 16949, to its system, harmonizing several quality management systems across the global automotive supply chain. It also made its instant quote tool, the Xometry Instant Quoting Engine, even smarter with AI.

International expansion and product diversification remained key. Launching localized marketplaces, introducing new services like quick-turn injection molding, and strategic acquisitions like Tridi Teknoloj in Turkey align with Xometry’s intention to scale its offerings. Other strategic expansions include collaborations with industry giants like Google Cloud and initiatives to improve supplier visibility through Thomas Marketing Services.

For the full year 2023, Xometry saw a significant financial increase, pulling in $463 million in total revenue, a 22% jump from the previous year. The marketplace, its core business, generated $395 million, up 30% compared to last year. Despite this, the supplier services side dropped by 12% to $68.7 million, mainly because they stopped selling tools and materials. The company’s gross profit reflected its revenue growth, rising by 22% to $178 million, with the marketplace’s profit margin improving too. Still, the net loss for shareholders was $67 million, showing a $12 million improvement from the last year.

Xometry appoints James Miln as its new Chief Financial Officer. Image courtesy of Xometry.

With the release of its last 2023 earnings report, Xometry also announced the appointment of James Miln as Chief Financial Officer (CFO). A veteran of big-name tech and consumer brands, Miln joins from Yelp (NYSE: YELP), where he helped steer the company through a period of strong, product-driven growth, including introducing new AI-powered search experiences. Miln succeeds retiring CFO Jim Rallo, who will remain an advisor with Xometry through April.

Xometry is gearing up for an AI-powered future to scale innovation and improve manufacturing efficiency. The company’s roadmap for 2024 is nothing short of ambitious, focusing on expanding its buyer and supplier networks, driving deeper enterprise engagement, and growing internationally. Despite a “softer start to the year,” CEO Randy Altschuler said he is confident about Xometry’s long-term profitable growth future.

Looking ahead, Xometry anticipates a strong start to 2024, with a projected revenue increase of 12% and 14% in the first quarter, aiming for $118 million to $120 million. However, it’s expecting an Adjusted EBITDA loss between $7 million and $9 million for the same period. Over the whole year, it expects marketplace revenue to jump by at least 20%, though supplier services revenue might dip by about 10%. By the third quarter of this year, Xometry is optimistic about having a profitable adjusted EBITDA despite expecting financial pressures from expanding internationally and investing in the business’ growth.

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