Earnings Call: Xometry Reports Record $142 Million in Revenue

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Earnings Call: Xometry Reports Record $142 Million in Revenue

Xometry Inc. (NASDAQ: XMTR), an artificial intelligence-powered marketplace connecting buyers with production suppliers, reported strong financial results in its third quarter of 2024. CEO Randy Altschuler and CFO James Miln announced a record revenue of $142 million, representing a 19% year-over-year increase. The company's marketplace gross profit grew by 34%, with the gross profit margin rising to 33.6%.

The number of active buyers and suppliers on the platform saw significant increases, with a 24% rise in buyers and a supplier network surpassing 4,200. Looking ahead, Xometry expects slightly adjusted EBITDA profitability in the fourth quarter and anticipates that revenue growth in 2025 will surpass that of 2024. International revenue has already increased by 55% year-over-year.

Key Points:

  • Xometry achieved a record revenue of $142 million in the third quarter of 2024, a 19% increase year-over-year.
  • Marketplace gross profit rose by 34%, with the gross profit margin increasing by 250 basis points to 33.6%.
  • The active supplier network surpassed 4,200, while the number of active buyers reached 64,851, a 24% increase.
  • Fourth-quarter revenue is expected to be between $145 million and $147 million, with marketplace growth forecasted to be between 16% and 18% year-over-year.
  • Adjusted EBITDA profitability is anticipated in the fourth quarter, marking an improvement from a $2.9 million loss in the same quarter last year.
  • International revenue has significantly increased by 55% year-over-year, approaching an annual revenue run rate of approximately $100 million.

Company Outlook: Xometry continues to expect at least 20% growth in 2025, focusing on expanding its wallet share and international markets. Cash and cash equivalents stand at $234 million, with efforts ongoing to enhance working capital efficiency. Long-term goals include reaching $1 billion in revenue and maintaining a gross profit margin between 39% and 40%.

Negative Highlights:

  • Supplier services revenue is expected to decline by approximately 10%.
  • Fourth-quarter marketplace growth is anticipated to drop to 4%, impacted by a weak industrial environment and seasonal factors, down from an earlier expectation of 8% to 9%.

Positive Highlights:

  • The record marketplace gross profit margin of 33.6% is projected to approach 35% by year-end.
  • The strong adoption of the Team Space product has led to over 4,000 teams created, targeting major customers.
  • Ongoing investments in technology and operations aim to enhance profitability.

Shortcomings:

  • No specific updates were provided regarding generative artificial intelligence investments during the earnings call.

Q&A Highlights:

  • Management expressed confidence in the resilience of marketplace models against potential impacts from current political climate customs tariffs and trade policies.
  • The global supplier base continues to grow, with new certifications added facilitated by partnerships like Thomasnet.

Xometry's third-quarter performance showcases the company's growth capabilities despite macroeconomic uncertainties. With a focus on expanding its marketplace, enhancing technology, and disciplined expense management, Xometry positions itself for sustainable growth in the manufacturing sector. The company's strategic investments and commitment to innovation indicate a secure outlook for the future as it continues to connect buyers and suppliers in its AI-powered marketplace.

InvestingPro Insights: Xometry Inc.'s (NASDAQ: XMTR) robust third-quarter performance is reflected in recent market dynamics. According to InvestingPro data, the company achieved a significant price total return of 116.23% over the last three months, consistent with reported revenue growth and improving marketplace metrics.

The focus on expanding its marketplace and enhancing technology is bearing fruit, evidenced by the 21.19% revenue growth over the past twelve months. This growth trajectory supports management's optimistic outlook for 2025 and beyond.

InvestingPro tips highlight that Xometry operates with moderate debt and has liquid assets exceeding short-term liabilities, providing financial flexibility as it pursues growth strategies. This solid financial foundation is crucial for Xometry's journey toward achieving its $1 billion revenue target.

However, investors should note that Xometry is currently unprofitable, with a negative trailing P/E ratio of -25.51 as of the third quarter of 2024. This aligns with the company's focus on growth rather than immediate profitability, as indicated in its expectations for adjusted EBITDA profitability in the fourth quarter.

Recent share performance has been particularly strong, with InvestingPro data showing a return of 31.77% over the past week and 48.59% over the last month. This increase in share price has raised Xometry's market capitalization to $1.46 billion, reflecting investor optimism about the company’s outlook.

For readers seeking a deeper examination of Xometry's financial health and market position, InvestingPro offers 13 additional tips and a comprehensive set of real-time metrics. These insights can provide valuable context for understanding Xometry's trajectory in its AI-powered manufacturing marketplace.