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Global manufacturing marketplace Xometry (XMTR) generated record-breaking revenue during the last quarter, according to its Q3 2022 financial results.
Xometry brought in $103.6 million in Q3 2022, 82.7% more than the $56.7 million it reported for Q3 2021. On the firm’s earnings call, its CEO Randy Altschuler attributed this growth to the “value of its marketplace,” which is enabling it to gain significant market share, and he “expects these gains to continue in Q4 and into FY 2023.”
“In Q3 2022, Xometry delivered strong marketplace growth, robust expansion in marketplace gross margin and significant operating leverage quarter-over-quarter,” said Altschuler. “In Q4, we are seeing record orders while suppliers are taking jobs at significantly lower prices, dampening near-term revenue growth. We expect to continue to rapidly gain market share and customer share of wallet fueling robust marketplace revenue growth into 2023.”
Xometry’s Q3 2022 financials
Since Xometry’s Initial Public Offering (IPO) in July 2021, it has reported its financial results publicly under its Marketplace and Supplier Services divisions. The former, which includes revenue generated via the sale of parts and assemblies, brought in $84.1 million in Q3 2022, while the latter, covering Thomasnet advertising, marketing services, supplies and financial services, reported earnings of $19.5 million.
Xometry’s Marketplace revenue rose 55% over Q3 2021 and 11% against Q2 2022. On the firm’s call, Altschuler explained how this was driven by a “strong growth in its active buyers,” and the rapid adoption of its platform by large accounts in North America and Europe. The company hasn’t revealed how Supplier Services did over the same period, but Thomasnet provided the majority of its revenue.
In its financials, Xometry hasn’t provided a breakdown of revenue by manufacturing process either, though it has said that it does measure this, with many methods seeing “strong year-on-year growth.” Overall, the firm’s number of active buyers also rose to 36,789, a 40% increase on Q3 2021, amid keen interest from customers across automotive, robotics, automation, education, food and manufacturing.
When it came to client spend, Xometry says its number of those that spend at least $50,000 per year, increased 62% year-over-year to 974. That said, towards the end of Q3, the company did note that pricing trends were becoming a headwind. As such, Altschuler added that Xometry is “working on optimizing pricing,” but he said he remains confident of continued growth due to rising order frequency.
|Financials ($)||Q3 2021||Q3 2022||Difference ($)||Difference (%)||9M 2021||9M 2022||Difference ($)||Difference (%)|
|Cost of Revenue||42.2m||62.7m||+20.5m||+48.6||115.0m||171.3m||+56.3m||+48.9|
|Loss From Operations||14.3m||15.2m||+0.9m||+6.3||36.1m||49.8m||-13.7m||+38.0|
A continually-evolving platform
Rather than settling for the level of growth its current platform is achieving, Xometry has continued investing heavily in its development, as well as new technologies to add to its offering. During Q3 2022, the firm rolled out a new industrial buying engine, designed to better digitize the cumbersome and lengthy quotation process, and provide users with an integrated offering that’s easier to checkout on.
The Xometry Workcenter software was also launched last quarter. Developed as an all-in-one Manufacturing Execution System (MES), the program offers suppliers a one-stop view of all of their orders, and enables them to focus on attracting new buyers. The platform has also been able to introduce a freemium version to help drive initial interest, thanks to its acquisition of FactoryFour in Q4 last year.
In Europe, Xometry introduced new production technologies including vacuum casting and compression molding during Q3 2022. These expansions contributed to the company’s strong top-line growth on the continent, which it says is also seeing “rapidly expanding gross margins.” More broadly, the firm’s international business achieved annual growth of 75%, while its Chinese business also performed well.
“On top of strong revenue growth, gross profit grew 182% year-over-year in Q3, driven by significant improvements in marketplace gross margin, and the addition of higher margin supplier services,” added Altschuler. “We remain pleased with the ramp and buyer demand in China as we’re seeing orders from across many verticals including medical, biotech, new energy and universities.”
Projecting FY revenue growth
As we pass the midpoint in Q4, Xometry has projected FY 2022 revenue of between $104 million and $106 million, reflecting year-on-year growth of 55-58%. When it comes to gross margins, the firm says it “expects them to improve” quarter-over-quarter in Marketplace, though it anticipates them falling across its wider business.
While the company has observed a decline in job costs in recent weeks, it believes it can optimize pricing while maintaining strong order growth and conversions through changes in its algorithms. As a result, Xometry sees itself as strongly positioned to keep investing in its business and continue gaining a larger share of what is a “massive market.”
“As our costs declined, our AI-driven marketplace lowered prices to buyers, which boosted conversion rates while dampening our revenue growth in the near-term,” concluded Altschuler. “We expect the combination of pricing optimization and higher order frequency will grow our revenue per buyer in early 2023, enabling us to deliver robust marketplace growth.”
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Featured image shows a message from NASDAQ welcoming Xometry to its stock exchange. Image via Xometry.