8-K: Xometry Completes $250 Million Convertible Senior Notes Offering, Refinances 2027 Debt and Manages Dilution

Xometry, Inc. has successfully completed a private offering of $250 million in 0.75% Convertible Senior Notes due 2030, utilizing proceeds to repurchase existing 2027 notes, buy back Class A common stock, and enter into capped call transactions to mitigate potential share dilution.

Summary

• Xometry, Inc. completed a private offering of $250.0 million aggregate principal amount of 0.75% Convertible Senior Notes due 2030, including the full exercise of the initial purchasers' option for an additional $25.0 million.
• The Notes are unsecured obligations maturing on June 15, 2030, with interest payable semi-annually on June 15 and December 15, beginning December 15, 2025.
• The initial conversion rate is 21.2495 shares of Class A Common Stock per $1,000 principal amount of Notes, equivalent to an initial conversion price of approximately $47.06 per share.
• This conversion price represents a premium of approximately 30.0% over the Class A Common Stock's last reported sale price of $36.20 per share on June 9, 2025.
• Holders can convert Notes conditionally before March 15, 2030, based on stock price, trading price of notes, company redemption calls, or specified corporate events.
• After March 15, 2030, Notes are convertible at the holder's option regardless of conditions.
• Upon conversion, Xometry can elect to satisfy its obligation with cash, Class A Common Stock, or a combination.
• Xometry may redeem the Notes for cash on or after June 20, 2028, if the Class A Common Stock's last reported sale price is at least 130% of the conversion price for 20 of 30 consecutive trading days.
• The redemption price is 100% of the principal amount plus accrued and unpaid interest.
• If less than all Notes are redeemed, at least $100 million aggregate principal amount must remain outstanding.
• Upon a fundamental change, holders can require Xometry to repurchase their Notes for cash at 100% of the principal amount plus accrued and unpaid interest.
• Net proceeds from the offering were approximately $241.2 million after deducting discounts, commissions, and estimated offering expenses.
• Approximately $17.5 million of the net proceeds were used for capped call transactions.
• Approximately $8.0 million of the net proceeds, along with cash on hand, were used to repurchase Class A Common Stock concurrently with the offering pricing.
• Approximately $216.7 million in cash was used to repurchase approximately $201.7 million aggregate principal amount of Xometry's 1.00% Convertible Senior Notes due 2027, leaving approximately $85.8 million of 2027 Notes outstanding.
• The remaining net proceeds are intended for working capital, general corporate purposes, additional 2027 Notes repurchases, and potential acquisitions or strategic investments.

Sentiment

Score: 7

Explanation: The offering successfully raises capital, extends debt maturity, and includes mechanisms (capped calls, share repurchases) to manage potential dilution, which are generally positive financial management steps. The terms appear reasonable within industry standards.

Positives

• The offering refinances existing debt (2027 Notes) with new notes maturing later (2030), extending the debt maturity profile.
• Capped call transactions are expected to reduce potential dilution to Class A Common Stock upon conversion of the Notes and/or offset cash payments in excess of principal amount.
• The initial conversion price of $47.06 represents a 30.0% premium over the current stock price, indicating a significant buffer before conversion becomes economically attractive for noteholders.
• The repurchase of Class A Common Stock concurrently with the offering helps mitigate immediate dilution from the new convertible notes and signals confidence in the company's valuation.
• The transaction provides Xometry with additional working capital and flexibility for future strategic initiatives, including potential acquisitions.

Negatives

• The hedging activities by initial purchasers and their affiliates, including purchasing Class A Common Stock, could increase the market price of Xometry's stock, potentially leading to a higher effective conversion price for the Notes.
• Unwinding of hedge positions by 2027 noteholders could also impact the market price of Xometry's Class A Common Stock, potentially increasing volatility.
• While capped calls reduce dilution, they do not eliminate it entirely, especially if the stock price significantly exceeds the cap price of $63.35.
• The issuance of new debt increases the company's overall leverage, even with the partial refinancing of existing notes.

Risks

• Market price volatility of Xometry's Class A Common Stock could affect the conversion value of the Notes and the effectiveness of hedging strategies.
• The company's ability to meet its obligations under the Notes, including interest payments and principal repayment at maturity or upon repurchase, depends on its future financial performance.
• Changes in U.S. securities laws or regulations could impact the terms or liquidity of the Notes or the Class A Common Stock issued upon conversion.
• The effectiveness of capped call transactions in mitigating dilution is subject to the cap price and market conditions.
• The company's ability to execute its strategic use of remaining net proceeds (e.g., acquisitions) is subject to market conditions and availability of suitable opportunities.

Future Outlook

Xometry expects to use the remaining net proceeds from the offering for working capital and other general corporate purposes, which may include additional repurchases of the 2027 notes from time to time and acquisitions of, or strategic investments in, complementary businesses, products, services or technologies. However, the company currently has no agreements or commitments for such acquisitions or strategic investments.

Management Comments

• Randolph Altschuler, Chief Executive Officer, signed the 8-K filing, indicating management's formal approval of the transaction.

Industry Context

This convertible notes offering by Xometry, an AI-powered marketplace for manufacturing services, aligns with a broader trend among technology and growth-oriented companies to raise capital through convertible debt. This method allows companies to secure financing at lower interest rates compared to traditional debt, while also providing a potential equity upside for investors. The use of capped call transactions is a common strategy in such offerings to manage potential stock dilution, reflecting a focus on shareholder value in a competitive and evolving industrial digitization landscape.

Comparison to Industry Standards

• The 0.75% interest rate for a 5-year convertible senior note (due 2030, issued 2025) is competitive and generally favorable for a growth company, especially when compared to non-convertible debt rates for companies with similar risk profiles.
• The 30.0% conversion premium over the last reported sale price is within the typical range for convertible notes offerings by technology companies, which often aim for premiums between 20% and 40% to minimize immediate dilution.
• The use of capped call transactions is a standard practice in convertible note offerings to mitigate dilution, with a cap price (75% premium) that provides substantial protection against share issuance unless the stock price appreciates significantly.
• The repurchase of existing convertible notes (2027 Notes) with proceeds from the new offering is a common debt management strategy to extend maturity profiles and potentially reduce near-term debt service obligations, similar to actions taken by other companies in the tech sector.
• The concurrent repurchase of Class A Common Stock is also a common strategy to offset potential dilution from the convertible notes and signal management's belief in the company's valuation, a practice observed across various publicly traded growth companies.

Related Party Transactions

• Xometry entered into capped call transactions with certain of the initial purchasers of the Notes or affiliates thereof.
• Xometry repurchased shares of Class A Common Stock from purchasers of the Notes in the Offering in privately negotiated transactions effected through one of the initial purchasers or one of its affiliates.
• Xometry repurchased 2027 Notes in privately negotiated transactions effected through one of the initial purchasers or one of its affiliates.

Stakeholder Impact

• Shareholders: Potential future dilution is mitigated by capped call transactions and concurrent share repurchases, but some dilution remains possible if the stock price exceeds the cap. The refinancing of debt may improve financial stability.
• Noteholders (new 2030 Notes): Receive 0.75% interest and conversion rights, offering a balance of fixed income and equity upside potential.
• Noteholders (2027 Notes): A significant portion of their notes were repurchased, providing liquidity and an exit opportunity.
• Company: Strengthens its balance sheet by extending debt maturity and provides capital for strategic growth initiatives.

Next Steps

• Interest payments on the 0.75% Convertible Senior Notes due 2030 will commence on December 15, 2025, and continue semi-annually.
• The company may consider additional repurchases of the 2027 Notes following the offering.
• The company may pursue acquisitions of, or strategic investments in, complementary businesses, products, services or technologies using remaining net proceeds.

Key Dates

Keywords

Convertible Senior Notes, Debt Offering, Capital Raise, Refinancing, Capped Call Transactions, Share Repurchase, Dilution Management, Corporate Finance, SEC Filing, Xometry