8-K: Xometry Reports Strong Q4 and Full Year 2023 Results, Appoints New CFO

Xometry's Q4 2023 revenue increased by 31% year-over-year, driven by a 42% surge in marketplace growth, and the company appointed James Miln as its new CFO.

Summary

• Xometry reported a 31% year-over-year increase in revenue for the fourth quarter of 2023, reaching $128 million.
• Marketplace revenue grew by 42% year-over-year to $112 million, while supplier services revenue decreased by 15% to $16.1 million due to the discontinuation of tools and materials sales.
• Gross profit for Q4 increased by 39% year-over-year, with marketplace gross margin improving to 31.3%.
• The adjusted EBITDA loss for Q4 was $2.9 million, a $12.8 million improvement year-over-year.
• For the full year 2023, total revenue was $463 million, a 22% increase year-over-year, with marketplace revenue at $395 million, a 30% increase.
• The company's net loss attributable to common stockholders was $10.6 million for the quarter and $67 million for the full year.
• Xometry appointed James Miln as Chief Financial Officer, effective March 1, 2024, succeeding James Rallo who is retiring.
• The company expects Q1 2024 revenue to be between $118 and $120 million, with an adjusted EBITDA loss between $7 and $9 million.
• Xometry anticipates marketplace revenue growth of at least 20% for fiscal year 2024 and expects to achieve adjusted EBITDA profitability in the third quarter of 2024.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong revenue growth, improved profitability metrics, and strategic initiatives. The appointment of a new CFO with relevant experience is also a positive signal. However, the company is still reporting a net loss and has a softer outlook for the start of the year, which tempers the overall sentiment.

Positives

• Xometry achieved record financial results in Q4 2023, including the highest revenue and gross profit in its history.
• The company experienced strong growth in its marketplace, with a 42% increase in revenue year-over-year in Q4.
• Xometry improved its operating leverage, reducing its adjusted EBITDA loss by 32% quarter-over-quarter in Q4.
• The company's marketplace gross margin improved significantly, reaching 31.3% in Q4.
• Xometry's active buyer base increased by 36% year-over-year, indicating strong customer growth.
• The company is projecting to be Adjusted EBITDA profitable in the third quarter of 2024.
• The appointment of James Miln as CFO is expected to drive long-term growth and profitability.

Negatives

• Supplier services revenue decreased by 15% year-over-year in Q4, primarily due to the discontinuation of the sale of tools and materials.
• Active Paying Suppliers decreased by 6% year-over-year, although excluding the exited tools and materials business, it was flat.
• The company reported a net loss of $10.6 million for Q4 and $67 million for the full year.
• Xometry anticipates a softer start to the year, as reflected in their Q1 2024 outlook.
• Supplier services revenue is expected to decline by approximately 10% year-over-year in fiscal 2024.

Risks

• The company faces competition in the manufacturing marketplace.
• Xometry's ability to forecast performance is limited due to its relatively short operating history.
• The company's financial performance is subject to fluctuations in general macroeconomic conditions.
• The company's future results are subject to risks and uncertainties that could cause actual results to differ materially from those projected.
• The company's financial outlook is based on assumptions that are subject to change and many of which are outside of its control.

Future Outlook

Xometry expects Q1 2024 revenue to be between $118 and $120 million with an adjusted EBITDA loss between $7 and $9 million. The company anticipates marketplace revenue growth of at least 20% for fiscal year 2024 and expects to achieve adjusted EBITDA profitability in the third quarter of 2024.

Management Comments

• Randy Altschuler, Xometry's CEO, stated that the company delivered record financial results in Q4 2023, including the highest revenue and gross profit in Xometry history.
• Randy Altschuler noted that Xometry's strong 31% revenue growth was driven by accelerated 42% marketplace growth.
• Randy Altschuler mentioned that the company improved operating leverage, reducing Q4 Adjusted EBITDA loss by 32% quarter-over-quarter.
• Randy Altschuler stated that James Miln's experience will help Xometry capitalize on its leadership position in digitizing manufacturing and drive to long-term operating margin targets.
• James Miln stated that he looks forward to working with the Xometry team to further build on the company's momentum and help realize additional operating leverage and efficiency.

Industry Context

Xometry's results reflect a continued trend of digital transformation in the manufacturing industry, with the company's AI-powered marketplace gaining traction. The appointment of a new CFO with experience in tech and consumer brands suggests a focus on scaling operations and achieving profitability.

Comparison to Industry Standards

• Xometry's 42% year-over-year marketplace revenue growth in Q4 significantly outpaces the growth of traditional manufacturing companies, indicating a strong adoption of its digital platform.
• The company's marketplace gross margin of 31.3% in Q4 is competitive with other online marketplaces, but it is still working towards overall profitability.
• Compared to companies like Protolabs (PRLB), which also offers digital manufacturing services, Xometry is demonstrating faster revenue growth, but it is still in the process of achieving consistent profitability.
• The expansion of Xometry's services, such as the addition of the IATF 16949 Automotive standard and the launch of new quoting tools, positions it well against competitors in the on-demand manufacturing space.
• The acquisition of Tridi Teknoloj A.S. is similar to moves by other companies to expand their global reach and supply chain capabilities.

Management Changes

Stakeholder Impact

• Shareholders will likely react positively to the strong revenue growth and improved profitability metrics.
• Employees may benefit from the company's growth and strategic initiatives.
• Customers will have access to an expanded marketplace and improved services.
• Suppliers will have increased opportunities to connect with buyers through the platform.
• Creditors will be reassured by the company's improved financial performance.

Next Steps

• Xometry will focus on expanding buyer and supplier networks.
• The company will drive deeper enterprise engagement.
• Xometry will further expand the marketplace menu.
• The company will continue to grow internationally.
• Xometry will enhance supplier services.
• The company will work towards achieving adjusted EBITDA profitability in the third quarter of 2024.

Key Dates

Keywords

manufacturing, marketplace, AI, digital transformation, revenue, gross profit, EBITDA, CFO, financial results, supply chain