10-Q: Xometry Q2 2025: Revenue Up 23%, EBITDA Turns Positive

Xometry reports strong Q2 2025 revenue growth of 23% and a shift to positive Adjusted EBITDA, driven by increased marketplace activity and operational efficiencies, despite a one-time debt extinguishment loss.

Summary

• Total revenue increased 23% to $162.5 million for the three months ended June 30, 2025, and 23% to $313.5 million for the six months ended June 30, 2025, compared to the prior year periods.
• Marketplace revenue grew 26% in Q2 2025 and 27% for the six months, primarily due to increased buyer activity, especially from enterprise customers.
• Adjusted EBITDA turned positive, reaching $3.9 million in Q2 2025 (vs. $(2.6) million loss in Q2 2024) and $4.0 million for the six months (vs. $(10.1) million loss in H1 2024), reflecting improved operating efficiencies.
• Non-GAAP Net Income also became positive, at $4.7 million in Q2 2025 (vs. $(0.6) million loss in Q2 2024) and $5.5 million for the six months (vs. $(6.3) million loss in H1 2024).
• Net loss increased to $(26.4) million in Q2 2025 and $(41.5) million for the six months, largely due to a $16.4 million loss on debt extinguishment from repurchasing 2027 Convertible Notes.
• Active Buyers increased 22% to 74,777 as of June 30, 2025.
• 98% of Q2 2025 revenue was generated from existing accounts.
• Accounts with Last Twelve-Month Spend of at least $50,000 grew 15% to 1,653.
• Issued $250.0 million in new 0.75% Convertible Senior Notes due 2030 and repurchased $201.7 million of the 2027 Convertible Notes.
• Initiated a workforce reduction of approximately 5% in 2025 to improve efficiency.

Sentiment

Score: 7

Explanation: The company demonstrated strong operational improvements with significant revenue growth, positive Adjusted EBITDA, and Non-GAAP Net Income. The increase in net loss is primarily due to a one-time financing event (debt extinguishment loss), which masks the underlying positive business momentum. Active buyer growth and improved marketplace margins are also strong indicators. The workforce reduction and capital structure management indicate proactive measures. Risks related to macroeconomic conditions and trade policies remain, but the core business performance is robust.

Positives

• Strong revenue growth of 23% year-over-year for both the quarter and six-month period.
• Marketplace revenue, the core business, showed robust growth of 26% for the quarter and 27% for the six months.
• Significant improvement in profitability metrics, with Adjusted EBITDA turning positive to $3.9 million in Q2 2025 from a loss of $(2.6) million in Q2 2024.
• Non-GAAP Net Income also shifted to positive, reaching $4.7 million in Q2 2025 from a loss of $(0.6) million in Q2 2024.
• Marketplace gross margin improved to 35.4% in Q2 2025 from 33.5% in Q2 2024, attributed to AI-driven platform optimization and an expanding supplier network.
• Active Buyers increased by 22% to 74,777, indicating successful buyer acquisition and retention.
• High revenue retention from existing accounts (98% in Q2 2025) suggests strong customer stickiness and potential for increased spend.
• Growth in high-value accounts, with those spending at least $50,000 increasing by 15% to 1,653.
• Loss from operations improved significantly, decreasing from $(15.3) million in Q2 2024 to $(10.3) million in Q2 2025.

Negatives

• Net loss increased significantly to $(26.4) million in Q2 2025 from $(13.7) million in Q2 2024, primarily due to a one-time $16.4 million loss on debt extinguishment.
• Supplier services revenue decreased by 6% for both the quarter and six-month period, driven by reductions in Thomas advertising and marketing services.
• Interest and dividend income decreased by 21% in Q2 2025 and 19% for the six months, due to lower investment in money market accounts as the company funds ongoing operations.
• Total gross margin for the six months ended June 30, 2025, slightly decreased to 38.8% from 39.5% in the prior year, primarily due to faster growth and associated mix shift towards lower-margin marketplace revenue.

Risks

• Unfavorable macroeconomic conditions, including inflation, interest rate fluctuations, volatile market conditions, and geopolitical tensions (e.g., Russia-Ukraine war, Middle East conflict), may negatively affect business growth and results.
• Changes in U.S. and international trade policies, such as new tariffs or restrictive trade measures, could increase costs of raw materials, components, or finished goods, potentially forcing price increases or decreasing demand.
• Supply chain disruptions may occur due to increased costs and uncertainty from trade policies, impacting the ability to meet customer demand or causing reputational harm.
• Trade disputes and political tensions may lead to increased preference for local competitors, changes in government procurement policies, heightened regulatory scrutiny, decreased intellectual property protections, and difficulties in attracting international partners.
• International suppliers may choose not to engage, increasing dependency on domestic suppliers.

Future Outlook

The company expects continued growth in its business, including managing and sustaining growth and achieving profitability. Future investments are anticipated in the business, with capital expenditures and requirements being estimated. The company aims to attract new buyers and suppliers, manage costs, and compete effectively in a rapidly changing environment. The One Big Beautiful Bill Act (OBBBA) enacted on July 4, 2025, is being assessed for its impact, with a preliminary assessment indicating no material impact on condensed financial statements.

Management Comments

• The increase in Adjusted EBITDA was driven primarily by increased operating efficiencies as we continue to grow our revenue and margins faster than our expenses.

Industry Context

Xometry operates in the rapidly digitizing manufacturing industry, leveraging AI to connect buyers and suppliers globally. The company's two-sided marketplace model, which benefits from network effects, aims to accelerate innovation and improve efficiency by lowering barriers to entry in the manufacturing ecosystem. While the broader macroeconomic environment presents uncertainties, Xometry's focus on expanding its supplier network and technology platform (e.g., Teamspace in Europe) positions it to gain market share and deepen engagement with enterprise customers, aligning with the trend of digital transformation in industrial sectors.

Corporate Governance

Legal Proceedings

• No material legal proceedings were brought against the company, nor were there any material developments to ongoing legal proceedings during the period ended June 30, 2025.

Stakeholder Impact

• **Shareholders**: Potential dilution from convertible notes (though capped calls aim to mitigate this), impact from treasury stock repurchase, and the $16.4 million loss on debt extinguishment affecting reported net loss.
• **Employees**: Workforce reduction of approximately 5% impacts employees, while 401(k) matching contributions continue.
• **Customers (Buyers)**: Benefit from increased buyer activity, particularly enterprise customers, and an AI-driven platform that optimizes pricing and expands manufacturing categories.
• **Suppliers**: Benefit from an expanding network, access to a diverse base of buyers, and supporting services like marketing, financial products, and Workcenter for productivity optimization.
• **Creditors**: Impacted by the issuance of new 2030 Convertible Notes and the partial repurchase of 2027 Convertible Notes, altering the company's debt structure.

Next Steps

• Continue to improve features on Xometry and expand the offering with the launch of Teamspace in Europe.
• Continue to add suppliers to the platform with new and innovative manufacturing processes to meet buyer needs and remain competitive.
• Assess the full impact of the One Big Beautiful Bill Act (OBBBA) on consolidated financial statements, with provisions effective through 2027.
• Monitor and manage the impact of macroeconomic events, inflation, interest rates, and geopolitical tensions on business operations.

Key Dates

Recommendation

The company demonstrated strong operational performance with robust revenue growth, particularly in its core marketplace segment, and a significant shift to positive Adjusted EBITDA and Non-GAAP Net Income. While the reported net loss increased, this was primarily due to a one-time, non-recurring loss on debt extinguishment, which should not overshadow the underlying business improvements. The growth in active buyers and high-spend accounts, coupled with improved marketplace gross margins, indicates a healthy and expanding business model. The strategic financing activities, including the issuance of new convertible notes and the repurchase of existing ones, along with capped calls, show proactive capital management. Despite macroeconomic risks, the company's core business momentum and efficiency gains make it an attractive investment.

Keywords

Xometry, XMTR, Manufacturing Marketplace, AI Manufacturing, On-Demand Manufacturing, Industrial Sourcing, Thomasnet, Custom Parts, 3D Printing, CNC Machining, Sheet Metal, Supply Chain, Digital Manufacturing, SEC Filing, Quarterly Report, Financial Results