Maryland’s Xometry Inc. reported record-breaking revenue in the second quarter — reflecting strong demand for its manufacturing platform in a challenged supply chain landscape — and its stock soared on the news.
The newly public and fast-growing Derwood company, whose two-sided marketplace connects engineers and product designers with manufacturers, said on an earnings call Wednesday that it is also raising its revenue guidance for the full year from $392 million to $400 million to, now, between $395 million and $400 million. The company reported revenue of $218.3 million last year and $141.4 million in 2020.
The momentum is being driven largely by an expanding customer base — which comprises both suppliers of manufacturing services and buyers of manufactured parts. Xometry executives said Wednesday that the company is on track to become profitable before interest, taxes, depreciation and amortization (EBITDA) in 2023.
“We have not seen anything from a macro standpoint that’s slowing us down,” Xometry Chief Financial Officer James Rallo said on the call with analysts. In the context of the global manufacturing market, “we’re still really small, so we’ve got a lot of room to grow,” he said.
Xometry’s (NASDAQ: XMTR) shares climbed 32% after the earnings call, to $55.44, before retreating somewhat later in the day. The stock was trading at $50.35 Wednesday afternoon, up 20% from Tuesday’s close.
Xometry’s financial performance
Xometry’s technology, using artificial intelligence technology, connects designers and engineers with manufacturers — helping the buyers get the parts they need and the manufacturers increase sales. Engineers, for example, can submit design files online and instantly get quotes on custom manufactured parts, which are then ordered and sourced through Xometry’s network. The company has also been broadening its services since acquiring New York digital marketing company Thomas Publishing Co. in December for $300 million.
Xometry reported $179.3 million in revenue for the first six months of 2022, an 89% increase from the same period in 2021. In the second quarter, the company generated $95.6 million in revenue — $75.6 million from its marketplace sales and $20 million in supplier services through its purchase of Thomas. That addition helped fuel a total gross profit of $37.7 million during the quarter, a 217% increase year over year.
Overall, the company reported a net loss of $16.6 million for the second quarter, a $4.3 million increase from the second quarter of 2021. It also reported an adjusted EBITDA loss of $8.3 million for the quarter, down about $800,000 year over year.
Xometry’s platform now counts 33,491 active buyers using the marketplace, a 40% increase from a year ago. The growth is due to new services for suppliers it added during the quarter. The included a new cloud-based software, called Workcenter, that combines job boards and financial services for shop owners to manage their projects, and its Industrial Buying Engine, which gives instant quotes so customers can easily source and buy from suppliers.
Those moves stand to help Xometry continue to grow its customer base, CEO Randy Altschuler said on the call. “I think you’re going to see a strong increase in the number of new active buyers in Q3, and I think that will be an increase that is stronger than what we’ve had historically.”
Xometry ended June with $356.7 million in cash.
The road to profitability
Xometry wants to become the go-to system for buyers and sellers and, ultimately, transform the manufacturing industry by “helping create locally resilient supply chains,” Altschuler said. And though the industry is “still in the early innings” in the shift to digital manufacturing, companies are “increasingly rethinking” their strategies and supply chains, he said on the call.
The company is now hiring up to keep up with that demand, Altschuler said in a recent interview. Now with about 1,000 employees, Xometry is looking for software engineers and manufacturing experts, as well as sales and customer support staff, among others, he said.
To accommodate its expanding headcount, the business is “continuing to invest in our footprint in Maryland,” Altschuler told us, declining to comment further on its real estate plans at this point. It already has three Montgomery County offices — in Derwood, Bethesda and Gaithersburg — in addition to space in New York; Atlanta; Lexington, Kentucky; Jackson, Tennessee; Culver City, California; Horsham, Pennsylvania; and Ottobrunn, Germany.
The recent passage of the CHIPS and Science Act of 2022, which President Biden signed into law Tuesday, also stands to benefit Xometry’s model, he said. The $280 billion spending package aims to support the U.S. production of semiconductors, or chips, that power the most common electronic devices, as well as to foster innovation and scientific research. And most of its work in connecting buyers of manufacturing with manufacturers is domestic, Altschuler said.
“So when things like these big infrastructure programs are put in place where there’s investments in the U.S. to build things,” he said, “that will benefit the manufacturers in our marketplace — and it’s good business for us.”
Altschuler started Xometry in 2013 with co-founder Laurence Zuriff, the company’s chief strategy officer. Eight years later, in summer 2021, the company executed a roughly $300 million initial public offering — raising much more than originally planned.
