10-K: Xometry Reports FY2024 Results, Active Buyers Surge 23%

Xometry's FY2024 10-K filing reveals a 23% increase in active buyers and a strategic focus on AI-powered manufacturing solutions.

Summary

• Xometry, Inc. reported its financial results for the fiscal year ended December 31, 2024.
• The company operates an AI-powered online manufacturing marketplace and a suite of cloud-based services.
• Xometry's marketplace connects buyers with suppliers for custom-manufactured parts and assemblies.
• The company also operates Thomasnet, an industrial sourcing platform.
• Revenue from the marketplace was approximately 89% of total revenue for the year ended December 31, 2024.
• Revenue from supplier services was approximately 11% of total revenue for the year ended December 31, 2024.
• Active Suppliers increased 28% to 4,375 in 2024.
• The number of Active Buyers on the platform reached 68,267 as of December 31, 2024, up 23% from 55,325 as of December 31, 2023.
• For the quarter ended December 31, 2024, 97% of marketplace revenue was generated from existing accounts.
• For the quarter ended December 31, 2024, there was a 12% year-over-year increase in accounts with at least $50,000 annual spend.
• The company incurred a net loss available to common stockholders of $50.4 million in 2024 and had an accumulated deficit of $370.3 million as of December 31, 2024.
• The company estimates its addressable market is approximately $275 billion.
• As of December 31, 2024, the company had 1,088 employees.

Sentiment

Score: 6

Explanation: The document presents a mixed sentiment. While there is growth in key areas like active buyers and revenue, the company is still operating at a loss and faces several risks. The positive growth is tempered by the ongoing financial challenges and competitive pressures.

Positives

• Xometry is focused on attracting new buyers and growing wallet share with existing buyers.
• The company is developing new auto-quote categories to expand wallet share.
• Xometry is driving deeper enterprise engagement through sales and technology initiatives.
• The company is continuing its international expansion.
• Xometry is deepening and expanding supplier partnerships.
• The company is focused on becoming an enterprise solution for its suppliers.
• Xometry is enhancing supplier services.
• The company is pursuing strategic acquisitions.
• Gross margin for marketplace was 33.5% for the year ended December 31, 2024, as compared to 30.8% for the year ended December 31, 2023.
• Gross margin for our supplier services increased to 89.0% for the year ended December 31, 2024 from 82.7% for the year ended December 31, 2023.

Negatives

• Xometry has incurred net losses since its inception in 2013 and expects to incur net losses in the future.
• The company may not continue to grow on pace with historical rates.
• The company faces significant competition and expects to face increasing competition in many aspects of its business.
• The company may not be able to rapidly grow its business outside the United States.
• The company is subject to a variety of laws and regulations, both in the United States and internationally, many of which are evolving.
• The company is subject to U.S. and other anti-corruption laws, trade controls, economic sanctions and similar laws and regulations.
• The company is subject to various federal, state, local and non-U.S. laws and regulations relating to environmental protection.
• The company may not be able to successfully execute future acquisitions or efficiently manage any acquired businesses.
• The company depends upon talented employees to grow, operate and improve its business, and if it is unable to retain and motivate its personnel and attract new talent, it may not be able to grow effectively.
• Changes in, or in the interpretation of, tax rules and regulations may impact the company's effective tax rate and future profitability.
• The company's ability to use its net operating loss carryforwards and certain other tax attributes may be limited.
• Earnings for future periods may be impacted by impairment charges for goodwill and intangible assets.
• The company's use of open source software could adversely affect its ability to offer its services and subject it to possible litigation.
• The company relies on Amazon Web Services to operate its platform, and any disruption of service from Amazon Web Services or material change to its arrangement with Amazon Web Services could adversely affect its business.
• If the company fails to maintain an effective system of disclosure controls and internal control over financial reporting, its ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
• The dual-class structure of the company's common stock may allow Randolph Altschuler, its co-founder and Chief Executive Officer, to significantly influence matters requiring stockholder approval which may limit your ability to influence the outcome of important transactions and to influence corporate governance matters.
• Anti-takeover provisions in the company's charter documents and under Delaware law could make an acquisition of the company more difficult, limit attempts by its stockholders to replace or remove its current management and limit the market price of its Class A common stock.
• The company's amended and restated certificate of incorporation designate the Court of Chancery of the State of Delaware and, to the extent enforceable, the federal district courts of the United States of America as the exclusive forums for substantially all disputes between the company and its stockholders, which restricts its stockholders ability to choose the judicial forum for disputes with the company or its directors, officers, or employees.
• Servicing the company's debt requires a significant amount of cash, and it may not have sufficient cash flow from its business to pay its substantial debt.
• Conversion of the 2027 Notes may dilute the ownership interest of the company's stockholders to the extent it elects to satisfy its conversion obligation by delivering shares of its Class A common stock.
• Certain provisions in the indenture governing the 2027 Notes may delay or prevent an otherwise beneficial takeover attempt of the company.
• If the company fails to retain and motivate members of its management team or other key personnel, its business and future growth prospects would be harmed.
• Litigation or legal proceedings could expose the company to significant liabilities and have a negative impact on its reputation or business.
• Changes in tax laws may materially adversely affect the company's business, prospects, financial condition and operating results.

Risks

• The company may not continue to grow on pace with historical rates.
• If the company is unable to manage the anticipated growth of its business, its future revenue and operating results may be adversely affected.
• The company's operating results may fluctuate from quarter to quarter, which makes its future results difficult to predict.
• The company's growth depends on its ability to attract and retain a large community of buyers and suppliers.
• The company's success depends on its ability to deliver products and manufacturing processes that meet the demand of buyers transacting on its marketplace and its ability to adapt to technological changes and improvements.
• If the company fails to maintain and improve the quality of its platform, customer support and ancillary services available through its platform, it may not be able to attract and retain buyers and suppliers.
• The company provides quality assurance to buyers even when a supplier manufactures the ordered part(s), which could subject it to liability for poor quality parts.
• The company's business model involves its agreeing to pricing with a buyer in advance of sourcing the opportunity to a supplier.
• The company or its third-party partners or service providers may experience a security breach, including unauthorized parties obtaining access to buyers confidential information.
• Failure to deal effectively with bad actors engaging on the company's marketplace or platform could harm its business.
• The company may be subject to disputes between buyers and suppliers on its platform.
• The company relies on a third-party payment processor to process payments made by buyers and payments made to suppliers, and if it cannot manage its relationship with such third party and other payment-related risks, its business, financial condition, and results of operations could be adversely affected.
• The company relies on third parties to fulfill buyer orders.
• The company faces significant competition and expects to face increasing competition in many aspects of its business, which could cause its operating results to suffer.
• The company may not be able to rapidly grow its business outside the United States.
• Unstable market and economic conditions, including a global or domestic recession or the fear of a recession, and inflation may have serious adverse consequences on its business, financial condition and share price.
• Changes in U.S. and international trade policies could adversely impact the company's business, results of operations and financial condition.
• The company and the third parties with whom it works are subject to stringent and evolving U.S. and foreign laws, regulations, and rules, contractual obligations, industry standards, policies and other obligations related to data privacy and data protection, and any actual or perceived failure by the company (or the third parties with whom it works) to comply with such obligations could materially and adversely affect its business.
• The company's intellectual property and proprietary rights are valuable, and any inability to obtain, maintain, protect or enforce them could substantially harm its business, products, services and brand.
• The company could incur substantial costs and other harms as a result of any claim of infringement, misappropriation or other violation of another party's intellectual property or proprietary rights.
• The company relies on Amazon Web Services to operate its platform, and any disruption of service from Amazon Web Services or material change to its arrangement with Amazon Web Services could adversely affect its business.
• If the company fails to maintain an effective system of disclosure controls and internal control over financial reporting, its ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.

Future Outlook

Xometry intends to continue investing in acquiring new buyers, developing new auto-quote categories, driving deeper enterprise engagement, continuing its international expansion, deepening and expanding supplier partnerships, becoming an enterprise solution for its suppliers, enhancing supplier services, and pursuing strategic acquisitions.

Management Comments

• Our mission is to accelerate innovation by providing real time, equitable access to global manufacturing capacity and demand.
• Our vision is to drive efficiency, sustainability and innovation for industries worldwide by lowering the barriers to entry to the manufacturing ecosystem.

Industry Context

The manufacturing industry is undergoing a digital transformation, with companies increasingly seeking efficient and agile ways to transact. Xometry's AI-powered marketplace and cloud-based services are positioned to capitalize on this trend by connecting buyers and suppliers and providing them with the resources they need to grow their businesses.

Comparison to Industry Standards

• Xometry competes with service bureaus, brokers, vertically integrated service bureaus, the service bureau divisions of additive original equipment manufacturing companies, independent machine shops and 3D printing service bureaus and digital manufacturing service companies.
• Some competitors include companies that sell software and services to suppliers, enabling them to sell from their own website or otherwise run their business independently of Xometry's platform.
• Xometry differentiates itself by providing real-time access to orders, cash flow stability, global access to customers, supplier services, and financial products.

Management Changes

Legal Proceedings

• From time to time, the company is involved in various claims and legal actions that arise in the ordinary course of business.
• The company is not a party to any legal proceedings, that individually or in the aggregate, are reasonably expected to have a material adverse effect on its consolidated results of operations, financial condition or cash flows.

Stakeholder Impact

• The company remains focused on empowering local businesses and enabling new product development for companies around the world.
• The company's corporate culture is centered around its mission through its commitments to serve the local communities in which it operates, champion technological innovation, and drive sustainability for manufacturing worldwide.

Next Steps

• The company intends to continue investing in acquiring new buyers through traditional paid sales and marketing techniques as well as leveraging its strong organic referral network to drive awareness and build trust.
• The company is also focused on increasing buyer loyalty and buyer spend within existing accounts by investing in its sales and marketing capabilities.
• The company will continue to expand the number of processes on its marketplace and expects to accelerate the development of new instant-quoting capabilities over time.
• The company intends to focus on expanding wallet share and revenue with its enterprise accounts through sales and technology initiatives including Teamspace and enterprise resource planning (ERP) integrations.
• The company will continue to dedicate sales and marketing resources to develop its supplier networks and attract buyers to its marketplace in other regions.
• The company is focused on attracting new suppliers, recognizing the massive opportunity still in front of it and the intrinsic benefit an active, diverse supplier population brings to the overall platform.
• The company will increasingly become the enterprise solution for suppliers to manage their businesses on and off platform.
• The company will continue to market its financial service products to U.S. suppliers, which enhance the conversion of purchase orders to cash.
• The company believes there is significant opportunity for targeted investments and acquisitions to strengthen its competitive position and processes.

Key Dates