8-K: Xometry Achieves Record Revenue and Gross Profit in Second Quarter 2024, Driven by Marketplace Growth

Xometry reported record revenue and gross profit in Q2 2024, fueled by a 25% year-over-year increase in marketplace revenue and improved gross margins.

Summary

• Xometry's Q2 2024 revenue reached a record $133 million, a 19% increase year-over-year.
• Marketplace revenue grew by 25% year-over-year to $117 million, while supplier services revenue decreased by 13% to $15.3 million.
• Gross profit also hit a record of $52.9 million, up 21% year-over-year, with a record gross margin of 39.9%.
• Marketplace gross profit increased by 33% year-over-year, and marketplace gross margin reached a record 33.5%, a 180 basis point increase.
• Supplier services gross margin improved significantly by 910 basis points to 88.9%, driven by the Thomas marketing and advertising services business.
• Adjusted EBITDA improved by 70% year-over-year to a loss of $2.6 million, representing 2.0% of revenue.
• The company's net loss attributable to common stockholders was $13.7 million, a decrease of $12.9 million year-over-year.
• Active buyers on the marketplace increased by 27% to 61,530, while active paying suppliers decreased by 7% to 6,992.
• Accounts with last twelve-month spend of at least $50,000 increased by 24% to 1,436.
• Xometry is beta-testing new auto-quote tube-bending and tube-cutting processes and expanding its offerings in the Asia Pacific and European regions.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong revenue growth, improved margins, and significant progress in reducing losses. The company is executing well on its strategy, and the future outlook is promising. However, the company is still not profitable and faces risks, so the sentiment is not a perfect 10.

Positives

• The company achieved record revenue and gross profit in Q2 2024.
• Marketplace revenue experienced strong growth of 25% year-over-year.
• Gross margins improved significantly, particularly in the marketplace and supplier services segments.
• Adjusted EBITDA loss improved substantially, indicating progress towards profitability.
• The number of active buyers on the marketplace increased significantly.
• Xometry is actively expanding its offerings and international reach.

Negatives

• Supplier services revenue decreased by 13% year-over-year.
• Active paying suppliers decreased by 7% year-over-year.
• The company still reported a net loss of $13.7 million for the quarter.
• Xometry is still not profitable on an Adjusted EBITDA basis, although the loss has reduced significantly.

Risks

• The company's financial outlook is based on assumptions that are subject to change and outside of its control.
• There is no assurance that Xometry will achieve its financial guidance.
• The company faces risks related to competition, managing growth, and macroeconomic conditions.
• Fluctuations in inflation and rising interest rates could impact the company's performance.

Future Outlook

Xometry expects Q3 2024 revenue to be between $136 and $138 million, representing a 14-16% year-over-year growth, and an Adjusted EBITDA loss between $1.5 and $3.5 million. The company reaffirms its fiscal 2024 marketplace revenue growth of at least 20% year-over-year and expects supplier services revenue to be down approximately 10% year-over-year.

Management Comments

• Randy Altschuler, Xometry's CEO, stated that they delivered record revenue, record gross profit, and record gross margins as their AI-powered marketplace continues to gain market share.
• James Miln, Xometry's CFO, noted that the company delivered another strong quarter with better-than-expected results driven by improving marketplace gross margin and significant operating leverage, resulting in a 70% improvement in Adjusted EBITDA loss.

Industry Context

Xometry's results reflect a broader trend of digitization in the manufacturing industry, with companies increasingly adopting online marketplaces and AI-powered solutions to streamline supply chains. The company's focus on expanding its marketplace and enhancing supplier services aligns with the industry's move towards more efficient and resilient manufacturing processes.

Comparison to Industry Standards

• Xometry's 25% year-over-year marketplace revenue growth is strong compared to traditional manufacturing companies, which often see single-digit growth rates.
• The 33.5% marketplace gross margin is competitive with other tech-enabled marketplaces, but may be lower than some software-focused companies.
• The 70% improvement in Adjusted EBITDA loss indicates progress towards profitability, but the company still lags behind established, profitable players in the broader technology sector.
• Compared to companies like Proto Labs (PRLB), which also offers on-demand manufacturing, Xometry's marketplace model provides a broader range of services and a larger supplier network, but may have lower margins in some areas.
• The expansion into new geographic regions and the development of new auto-quote capabilities are consistent with the strategies of other fast-growing technology companies.

Stakeholder Impact

• Shareholders will likely view the strong revenue growth and improved profitability metrics positively.
• Employees may benefit from the company's growth and expansion.
• Customers will have access to a broader range of services and capabilities.
• Suppliers may see increased opportunities through the expanded marketplace.

Next Steps

• Xometry plans to release new auto-quote tube-bending and tube-cutting processes later in Q3.
• The company will continue to expand its offerings in the Asia Pacific and European regions.
• Xometry will focus on driving deeper enterprise engagement and enhancing supplier services.

Key Dates

Keywords

Xometry, Manufacturing, Marketplace, AI, Gross Profit, Revenue, Adjusted EBITDA, Supplier Services, Digital Manufacturing, E-commerce