Xometry at JPMorgan Conference: AI-Driven Growth Strategy

On Wednesday, 14 May 2025, Xometry (NASDAQ:XMTR) presented at the 53rd Annual JPMorgan Global Technology, Media and Communications Conference. The company outlined its strategic initiatives as an AI-powered marketplace in the custom manufacturing sector. While Xometry highlighted its robust revenue growth and technological advancements, it also acknowledged challenges such as competition from traditional manufacturing methods.

Key Takeaways

• Xometry aims to increase international revenue to over 30% of total revenue.
• The company reported a 27% year-over-year growth in marketplace revenue for Q1.
• Xometry is expanding its instant quoting capabilities and integrating Thomas to enhance its ecosystem.
• The company achieved its second consecutive quarter of positive adjusted EBITDA.
• Xometry raised its revenue outlook for the year from at least 20% to at least 22%.

Financial Results

• Marketplace revenue grew 27% year-over-year in Q1, with U.S. marketplace revenue growth near 30%.
• Buyer growth increased by 22% year-over-year in Q1, adding approximately 3,200 new buyers.
• Revenue per buyer increased by 4% in Q1.
• Gross margin was temporarily affected by investments in new marketplaces but is expected to recover in Q2, with a target of 35% by year-end.
• Xometry achieved positive adjusted EBITDA for the second consecutive quarter and expects to maintain this for the full year.
• Accounts spending over $50,000 exceeded 1,500, while those spending over $500,000 grew 40% year-over-year.

Operational Updates

• Over 7,000 teams have adopted TeamSpace, indicating strong traction in production work.
• Xometry is expanding instant quoting capabilities, including tube bending, tube cutting, and injection molding in Europe.
• The integration of Thomas is underway, with upgrades to search and advertising capabilities to convert users into Xometry buyers.
• WorkCenter adoption is increasing, enhancing supplier relationships and visibility.

Future Outlook

• Xometry aims for international revenue to exceed 30% of total revenue, driven by growth in Europe and Asia.
• The company targets a long-term gross margin of 35% to 40%.
• Xometry expects to achieve free cash flow positivity as it grows adjusted EBITDA, potentially by 2026.
• Tariffs are not expected to impact near-term revenue but may increase interest in Xometry’s platform over the long term.

Q&A Highlights

• Concerns about disintermediation were addressed, with data showing increased customer spending over time.
• Larger, complex orders are likely to remain with Xometry due to its resilient platform.
• Key initiatives include expanding auto quoting, growing the global marketplace, and enhancing TeamSpace and WorkCenter.

For a detailed understanding, readers are encouraged to refer to the full transcript below.

Full transcript - 53rd Annual JPMorgan Global Technology, Media and Communications Conference:

Corey Carpenter, Internet Analyst, JPMorgan: Alright. Good afternoon, everyone. Thanks for coming. Corey Carpenter, Internet analyst at JPMorgan. Pleased to have the Xometry team with me today.

CEO and cofounder, Randy Altschuler and CFO, James Milne. I didn’t mispronounce those too badly. Randy and James, thanks for joining.

Randy Altschuler, CEO and Co-founder, Xometry: Thanks so much for having us.

James Milne, CFO, Xometry: Thank you.

Corey Carpenter, Internet Analyst, JPMorgan: So, just to start, for those in the audience newer to the story, I thought it’d be helpful, Randy, to give a high level overview of the business and really the problem that Xometry is solving.

Randy Altschuler, CEO and Co-founder, Xometry: Sure. So, Xometry is an AI powered marketplace for custom manufacturing. So, when you think about manufacturing, there’s a huge portion of it is for custom parts where it could be an aerospace company, a medical device company, industrial company that are making parts that are specific for their needs. We estimate that to be over a $2,000,000,000,000 market. Today, that market is serviced by hundreds of thousands of small to medium sized manufacturers, heavily fragmented.

And because it’s custom manufacturing, it’s very hard and difficult for a customer to get a quick price and to have an e commerce like experience. So, we’ve created with Xometry an e commerce like experience. We use AI to create instant pricing for customers for their custom parts, and then we also use that AI to optimize the match for that customer with the optimal manufacturer to make those parts for them, whether it’s domestic or whether it’s overseas. And so Xometry has been a public company since 02/2021. Today, we have, I think, 18 localized marketplaces, so not only in The United States, but also in Europe and Asia.

So we offer customers in different regions a local option as well as international ones.

Corey Carpenter, Internet Analyst, JPMorgan: So, you mentioned the $2,000,000,000,000 manufacturing industry. It’s obviously a massive TAM. How do you think about the addressable market within that, and why the industry has been so slow to shift online?

Randy Altschuler, CEO and Co-founder, Xometry: Yeah. I think the challenge is, because it’s custom manufacturing, it’s not commodities. So, this instance, for the customer to find that best solution is very tough. And their manufacturers are small businesses that don’t have much reach beyond their local area. So, you could be a fabulous manufacturer in Texas, and you may be an aerospace company in Southern California that’s looking for that ideal manufacturer, you wouldn’t have any visibility into that person in Texas.

And because there is no their pricing is very hard to do, it could take hours or days or even weeks to give pricing, you couldn’t create that seamless e commerce like experience. That’s why when we came and we started Xometry, we said, hey, we’re going to use AI to actually create that price. That was a real unlock. And that suddenly allowed customers to not only order and buy online, but also for them to connect with manufacturers spread out across the country. And then we also use that AI to give that manufacturer the work that fits their capabilities best.

So, if you think about these small businesses, there are other platforms in different industries where they can sell their capabilities. That wasn’t true in manufacturing, now with Xometry it was.

Corey Carpenter, Internet Analyst, JPMorgan: So, maybe if you could break down a bit the categories and end markets where Xometry has the biggest presence today, and then maybe on the flip side, where are you underpenetrated but see room for growth?

Randy Altschuler, CEO and Co-founder, Xometry: Yeah. So the great thing is as a technology company, our platform is very extensible. So we we don’t have any particular concentration in any one industry, but we’re strong across things like, as I mentioned before, everything from aerospace, medical, automotive, industrial, robotics, defense, semiconductors. And then we also have some good strength around the world. Know, we’ve since Symmetry started, we’ve been launching internationally, and that’s grown tremendously over since 02/2020 when we started international.

So, we’re spread out across lots of different industries, and we’re also spread out now more and more across the world.

Corey Carpenter, Internet Analyst, JPMorgan: So, your marketplace has over 71,000 buyers, nearly four and a half thousand suppliers. What’s the typical profile of a buyer on Xometry? What type of jobs are they using the platform for?

Randy Altschuler, CEO and Co-founder, Xometry: Yeah. So, there’s a few different profiles. The first would be an engineer, and particularly when we started Xometry, you’d have an engineer come and and he or she would buy individual parts. So it’d be an engineer at and our biggest customers are big companies, so our big big customers are big companies. We also service obviously small or medium sized customers as well.

So they’ll come and they’ll buy. As time has gone on, as we’ve gained more and more traction with our customers, as our technology developed, now we’re serving more and more procurement people, so buyers within those companies, and those projects are getting larger and larger. So, they’re not buying a single part, but they’re buying entire assemblies of parts, and we’ve been developing our software that enable them to do much more complex end use production work from Xometry as well. So, that’s been developing over time.

Corey Carpenter, Internet Analyst, JPMorgan: Similar question on the supplier side, what’s the profile, what’s the typical supplier on Xometry and how are they using you?

Randy Altschuler, CEO and Co-founder, Xometry: Yeah. And, sort of a similar range. We’ve got suppliers. So, here’s the good news, we are the leading marketplace for custom manufacturing. So, in a very positive way, come to us.

And so, we have a lot of word-of-mouth of suppliers because we’re the sort of the best game in town for their opportunity. And before Xometry, there wasn’t really the chance for them to fill their capacity at no cost, which is no cost to join us, to fill it digitally. And also, again, because we’re using AI, and this is really important, we’re enabling that manufacturer to fill their capacity with what are, for them, high value jobs. So, every manufacturer has a specialty. They could run they could take two different jobs and their margin profile in those jobs could be radically different depending if that job fits their specific capabilities.

With Xometry, thanks to our AI and our matching algorithms, we’re able to fit those specific capabilities. So, hear about us from word-of-mouth, they come, they sign up, they have to go through a vetting period with us, and then we’ve got a system to track their quality, their on time delivery, and to see how they progress and take more and more complicated work and different kinds of work from our marketplace. The use, you know, we’ll have some suppliers who use us just for a small portion of their work, then we’ve got other suppliers where the bulk of their capacity is dedicated to the Xometry marketplace.

Corey Carpenter, Internet Analyst, JPMorgan: So, maybe across buyers and suppliers, if you could talk about retention and what that looks like, And then also, kind of you give some data on cohorts, but once you’ve onboarded these companies, what is your strategy for growing wallet share with them?

Randy Altschuler, CEO and Co-founder, Xometry: Yeah, so we’ve been very strong in developing our cohorts as you mentioned, and we’ve got in our latest earnings presentation, people want to see we’ve got a nice slide that shows the growth in those cohorts, have they picked up each year since we started the company. Where we’ve seen nice traction is within these accounts, those are companies that order from us, those accounts are spending more and more with us. So, we have a metric of accounts that have spent more than $50,000 in a last twelve month basis. That’s grown to over

James Milne, CFO, Xometry: Over 1,500.

Randy Altschuler, CEO and Co-founder, Xometry: Over 1,500. So, that’s where companies are leaning more and more into Xometry buying more and more. And then also in the fourth quarter of last year, we disclosed for the first time that we have over 100 accounts that are now spending more than $500,000 with us on a last twelve month basis. So, you’ve got more buyers who are coming in, and you’ve got more companies that are spending more and more with us on a last twelve month basis. So, you’re seeing nice growth there.

One question we get a

Corey Carpenter, Internet Analyst, JPMorgan: lot from investors is just kind of your ability to shift more from prototyping to production runs. You touched on this a little bit earlier, but how big of a priority is this to you, and is there any way to frame the relative contribution of each today?

Randy Altschuler, CEO and Co-founder, Xometry: Yeah. So, we are doing more and more production work. A good way also to look at it is we have something called TeamSpace. So, this is our software that allows customers to organize and buy entire products or assemblies versus single parts, and that is more often than going to be production work. We now have over 7,000 teams that have been created in TeamSpace since we launched it at the end of twenty twenty three, so that’s gaining a lot of traction.

Again, going back to those customers that are spending more than 500,000 and more than 50,000, that’s going to be because they’re doing more end use parts, production parts with us. So, we’re seeing more and more traction with that. And then, I think our growth rates last in the first quarter, we grew our marketplace business 27% year over year. You do see some other companies that really focus primarily on prototyping. Those have been unfortunately shrinking.

So, clearly, we’ve been gaining market share, but we’re also tilting more and more towards production.

Corey Carpenter, Internet Analyst, JPMorgan: So, you all sit at a very interesting place given what’s going on with tariffs and macro. Maybe starting with tariffs, which are causing many companies to rethink their supply chains and where they source goods. What does that mean for you, and is this something you’re able to lean into as a way to accelerate maybe share gains?

Randy Altschuler, CEO and Co-founder, Xometry: Yeah. So, just to be clear, we’re very proud of our 27% year over year growth in Q1. Actually, at the end of in in q four of last year, right when we announced q three earnings, we said that ’25 was gonna be a year of of faster growth for us than ’24. That was before liberation day and all the tariffs. So, you know, because of our technology and a lot of advancement we’re making in the company, we see growth accelerating this year from last year, tariffs notwithstanding.

So, that’s exciting. And I just also wanna be clear, like in q one, we didn’t see any pull forward because of tariffs. And in q two as well, we when we did our earnings, you know, we’re feeling good about the momentum we have there. So, it hasn’t really translated yet into a revenue change, but it has had positive awareness for us as companies now are thinking, hey, there could be continued choppiness in the market in terms of supply chains. I’m used to sourcing, let’s say, directly to one Asian country in particular, I have a lot of concentration risk there.

How do I manage that supply chain more effectively? And one thing that we do at Xometry is that we’re multiple different geographies. We’ve got suppliers in 50 different countries, And so, they have the ability digitally to manage their supply chains and create more resilient ones and reduce their risk using Xometry. So, you’re seeing greater awareness, you’re seeing greater buy in to our model, and long term that should have a positive effect with us with particularly enterprise customers, but also smaller customers as well.

Corey Carpenter, Internet Analyst, JPMorgan: So, how has buyer behavior changed on your platform since Liberation Day, and what adjustments have you made to better position yourself in the environment?

Randy Altschuler, CEO and Co-founder, Xometry: So, actually, prior to Liberation Day, we started investing and diversifying our supplier base into different markets. So, we made some investments in that even before Liberation Day because we know that customers, tariffs notwithstanding and Liberation Day notwithstanding, we know customers are more and more concerned about building resilient supply chains and knowing that there are gonna be more disruptions. It could be COVID related, it could be weather related, or it could be geopolitical related. So, we’ve been making those investments And we’ve and in our platform, tariffs is an input, so we can input that into our formula. So, it’s very easy for us.

We don’t really take financial risk with that, so we can manage if there is different tariff regimes, it’s actually, with our digital platform, relatively easy for us to manage that. So I think we’re seeing that. We we did note that there’s been a slight shift. So the majority of of the work that we do, the vast majority of the work we do in The United States for US customers is already done domestically. That was happening prior to to Liberation Day.

We are still we are seeing a slight shift to even more of that, but I would say it’s a slight shift. And we were already the vast majority of US work was already being done here domestically anyway.

Corey Carpenter, Internet Analyst, JPMorgan: Last one on macro, which I have to ask about. Manufacturer sentiment really, you know, really dropped in April. It feels like the soft data is weakening, the hard data has held up. Just curious, have you seen any shift in buyer behavior in recent weeks given the macro uncertainty?

Randy Altschuler, CEO and Co-founder, Xometry: Yet again, we announced about our earnings about a week ago, we had April under our belt, so we feel good about positive momentum and strong demand. And remember, for the last couple of years, even as Xometry has been growing nicely, U. S. Manufacturing has been in contraction. So, this is nothing new to us.

We’ve been gaining market share. We’ve been growing nicely. You know, if there was a rebound, that would be a tailwind for us, but we’ve already baked into our guidance when we’ve described being conservative about macro and and thinking it’s gonna continue to be the choppiness we’ve seen for the last couple of years.

Corey Carpenter, Internet Analyst, JPMorgan: So, shifting back to Xometry. Two of your bigger product initiatives in recent years, WorkCenter and Teamspace, which you’ve alluded to a bit. But, for those less familiar, maybe give a quick overview of each, you know, why these are important initiatives and kind of what you’re seeing around adoption.

Randy Altschuler, CEO and Co-founder, Xometry: Yeah. So, I’ll start with TeamSpace and then go to WorkCenter. So, know, Xometry for a single engineer is a we have an experienced build for that. But, as we’ve begun to do more and more work for enterprise customers, for large companies, and as we started to do more and more production work and more complex work, we realized that customers are working in groups. So, it’s not just a single engineer, it’s an engineer, it’s a procurement person, it’s a quality engineer, it’s a whole group of people, and there are multiple parts and there’s a lot of complexity to that.

And so they wanna be able to track that, manage that all together. So we developed TeamSpace. It’s something we we built in house. And that, as I mentioned before, gained great adoption. We have over 7,000 teams created since through Q1 of this year.

So, that’s just helping us grow faster in our enterprise customers. It’s also a way to attract new buyers organically and it’s enabling us to do more and more of that production work. On the other side, we’ve got WorkCenter. WorkCenter is a manufacturing execution system that we give to all of our suppliers. There’s no cost to it.

So we think about it, it’s a way for them to manage their their work. The jobs that they’re getting from the Xometry marketplace, they can also use that for their own work. And we love WorkCenter for a number of reasons. First, it gives us visibility into what’s going on on the job. So historically, when a customer goes and tries to buy from a small manufacturer, they have almost no visibility other than the job’s gonna be delivered on this date.

We promise you good luck. And now with work center, we actually know what’s going on. When has the job started? When has the material been ordered? When have the quality the quality been done?

Where are the certifications? Where is the traceability? All the different things that that customers are looking for, we’ve got that now digital in this software. And that just gives us and our customers a lot more visibility into the status of their job. And, again, as you look at more complexity, more production, that visibility is really critical.

The second thing that we love so much about work center is we’re letting our suppliers use it for all of their work. So not just the stuff they’re doing for Xometry, but for all of their customers. And so, for us that creates a stickier relationship. If they’re using our software to run their businesses, that gives us closer relationships and it also gives us the opportunity to cross sell other software to them that would be helpful to their businesses. It’s also a monetization opportunity for Xometry as well.

Corey Carpenter, Internet Analyst, JPMorgan: So, another initiative has been expanding instant quoting in the marketplace many more broadly. Could you talk about the progress you’ve made here, and is there any way to frame the type of uplift instant quoting can drive when you add it to a category?

Randy Altschuler, CEO and Co-founder, Xometry: Yeah. So, there’s no question. The more that we can instant quote, the more orders we’re going to get, the higher our margins are going to be. Like, there’s all sorts of knock on effects by expanding what we can do with instant quoting. We’re also going to gain greater share of wallet.

So, our spend per buyer is going to go up and it’s going be a stickier relationship. So, it’s just like any other shopping experience. If you can do more at one place, then you’re gonna shop more there and you’re gonna go elsewhere, less. So, again, the good thing is we’re AI powered, we’re building these algorithms, we’ve been investing in those algorithms. Last year, we worked together with Google’s AI team to find techniques to accelerate the deployment of more instant quoting models.

So, we released tube bending and tube cutting. There’s some other exciting things that are coming. In fact, we just released in Europe instant quoting for injection molding, which is very exciting. So, as we add these technologies, we would expect not only to gain new buyers, but we’re also to grow our book of business with existing buyers.

Corey Carpenter, Internet Analyst, JPMorgan: So, a couple questions on Thomas, but I’ll just wrap it into one question if that’s okay. You acquired them a few years ago. Maybe if you could remind us the vision behind the acquisition. Has it worked out like you expected? And just where are you at with the integration?

Randy Altschuler, CEO and Co-founder, Xometry: Yeah. So, Thomas, a storied company with a hundred plus year history, the largest directory for North American manufacturers. So, back in the day, if you wanted to find a great manufacturer or North American supplier for something, there were these books that Thomas had which were very well known. And go to the digital age, Thomas put that online and it’s just a great directory for people who are looking to find to find that right supplier for them. We bought that business and there’s a bunch of opportunities for us.

First of all, the advertising business itself is a very high margin business. Its gross margin is close to 90%. And of the 500,000 suppliers that are listed on Thomas Net, only 1%, roughly 1% of them are advertising today. So, if we can increase penetration and get more advertisers, that’s gonna be very helpful to our bottom line atometry. So we’ve been working very assiduously now to upgrade the technology on Thomas, both the search capabilities, so people are coming to Thomas and searching, and also the advertising technology.

And so we’ve been working hard at that. We’ve been deploying new search. That’s already in production starting in April. We’re going to be expanding that to more and

Unidentified speaker: more of

Randy Altschuler, CEO and Co-founder, Xometry: our showing that to more and more of our users and making enhancements to that. And then the next couple of months we’ll be releasing new advertising technology, so we can expand that number of buyers behind that 1% the penetration we get today. The second thing is Thomas has I think 1,200,000 registered users on it. I don’t know the exact number, but something around that number. That’s very exciting.

Xometry Thomas has a longer history than Xometry and to a certain extent more greater awareness than we do. So the ability for us to convert those Thomas users into Xometry buyers is another great opportunity for us. So think about it like a great tack there from taking those Thomas buyers and exposing to them to the Xometry marketplace. And then there’s also an opportunity as we expand into new categories on Xometry, we launch new categories, we’re talking about do new instant quoting, we are seeding that, the suppliers for that are coming from Thomas. So, as we add new categories, we’re saying, okay, Thomas has got all these suppliers listed, we then bring them into the Xometry marketplace to service those new customers that are buying these instantly quoted parts from us.

So and then finally, the the final thing is that, you know, we can’t offer Thomas as much broader than Xometry. So if we wanna again be that one stop shop for our customers today, we can instantly quote for them, bunch of stuff on Xometry, and then we can also steer them to Thomas and say, hey, what you can’t buy instantly on Xometry, here’s a great place to find it on Thomas Net, and keep them within the Xometry ecosystem.

Corey Carpenter, Internet Analyst, JPMorgan: I forgot to mention if you have questions, can submit it online. I have the the iPad and we’ll send the microphone around later as well after we get through a few more. I wanna ask about competitive landscape. So, only a fraction of the industry is online. It’s a massive industry.

Who are you competing with for the buyers and suppliers, and how do you feel like Xometry is differentiated?

Randy Altschuler, CEO and Co-founder, Xometry: By far, our biggest competitor is the old way of doing business, which is the traditional I’m gonna go to the local manufacturer or the manufacturer I’ve historically known. It’s really shifting that behavior that is the key to us. And, look, we saw that happen in so many other industries, that’s why the shift is inevitable. Like, it’s happening in other industries, the shift to digital is going to happen. We’re obviously trying to make sure it happens as quickly as possible and we are the clear leader in that, but that’s really where we see the competitive push which is, hey, I’ve always done it this way, why should I change?

And if anything, the current macro just underscores for them, hey, I guess I have some real risk here. I I I should you know, this model makes even more sense for me.

Corey Carpenter, Internet Analyst, JPMorgan: So let’s talk about international. It’s about 15% of your business, but it’s growing growing faster. What does your international footprint look like today, and what are the drivers that get you to your target of international being over 30% of revenue over time?

Randy Altschuler, CEO and Co-founder, Xometry: Yeah. So, we’re based in Europe right outside of Munich, Germany. We’re in most EU countries today, and again, we’ve got it in localized languages there. So, think the good news is particularly in Europe, we’ve got the countries covered, but our penetration levels are still low. So, there’s lots of room to continue growth there.

These are obviously large markets. We’re in The UK as well, which is no longer part of the EU, but we’re in The UK. And so we’ve got lots of room to grow there. We’ve built nice localized marketplaces there and we’re seeing good traction. And the value proposition is very similar.

Like we’ve seen European customers embrace just the way that Americans have embraced our value prop. There’s some localization whether it’s the materials offered, the pricing, they use our core algorithms but there are adjustments to that, obviously currency, etcetera, but it’s a similar model. We also launched in Asia. We’re based in Shanghai, that’s our headquarters for Asia Pac. We are expanding now into other countries in Asia that are English speaking like Australia like that.

So there are some new geographies for us there. And again, we’re beginning to gain some nice traction there. We’ve talked about how China this time this year will be begin to be a meaningful contributor to our growth as well. So historically, our international growth has been powered almost entirely by Europe, but Asia is now gaining some steam there as well.

Corey Carpenter, Internet Analyst, JPMorgan: And do the recent tariffs tariff changes impact your international strategy at all, or does does it make it, you know, maybe more or less of a near term priority for you?

Randy Altschuler, CEO and Co-founder, Xometry: We already, like, as I said, prior to to Liberation Day, we were already investing and expanding into other geographies, particularly from a supply perspective. I think it just underscores the value of having a global marketplace. So, obviously for our European customers, the tariffs in China didn’t mean much. But we had other customers who were bringing products to America where it didn’t mean. And they were sourcing, let’s say from China and they were saying, hey, I don’t want to source anymore from China because I’m to bring it into The United Let’s go to look and look look at other regions.

So, the ability to do that digitally and and the fact that we don’t own the the bricks and mortar, right, we don’t own the factories, we can really put our customers first, that’s super powerful.

Corey Carpenter, Internet Analyst, JPMorgan: James, thank you for your patience. I do have a few financial questions. So, you raised your revenue outlook last quarter. Could you just talk about what gave you the confidence to do that given all the uncertainty going on and maybe what some of the assumptions are that you’re embedding into that outlook?

James Milne, CFO, Xometry: Absolutely. So, I mean, just taking a little bit of a step back, we’ve been very consistent over the last few quarters in seeing our growth initiatives translate into growth. So back in November and back in February, where we started we’re talking about 25%, we talked about Marketplace growing at least 20% and the overall business revenue growth rate increasing from 24%. Last week, we delivered on Q1, really pleased with the result, 27% growth in marketplace year over year. In fact, we were close to 30% in The U.

S, which is the highest rate that we’ve seen in the last couple of years. I think that’s on the back of great execution from the team and consistent execution over several quarters. So certainly, as we looked ahead, we felt confident that we could raise that outlook on marketplace from at least 20 to at least 22 for the year. As Randy said, I think Xometry is purpose built for resilient and flexible supply chains. I think it we’re not necessarily seeing that in the numbers yet in terms of change of behavior from the current tariff environment.

We’ll watch that as we move forward. And we take into account that the macro industrial complex is still in some contraction, but we’ve been in that situation again for the last couple of years. So, I think it’s on the basis of what we’ve seen in the business and how our team has been able to execute.

Corey Carpenter, Internet Analyst, JPMorgan: And then revenue growth historically has been driven mostly by buyer growth. Revenue per buyer has been relatively flat. What’s been driving this dynamic, and do you expect revenue per buyer to become a bigger contributor over time?

James Milne, CFO, Xometry: So, think our growth initiatives can grow both buyers and revenue buyer over the long term. I think it’s great that we’re seeing such great traction on the buyer front. We’re up to 22% growth year over year in Q1, and we had a really nice adds addition of nearly 3,200 new adds. The revenue per buyer was up 4%, so the majority of that growth is coming from continuing to add buyers to the platform. That’s through technology and through our sales teams and marketing.

So as Randy talked about, technologies like TeamSpace help us provide more value to our buyers and help them bring their colleagues to the platform as well. We’re also being more efficient on the marketing front. Our ad dollars are going further. And then we’re seeing nice growth internationally as well as in The U. S.

So I think there’s a large pool of buyers for us that continue to grow there, but the initiatives of enterprise, of driving more to the marketplace platform, showing more value from Xometry are also enablers of revenue per buyer growth over the long term too.

Corey Carpenter, Internet Analyst, JPMorgan: So my next question is on marketplace gross margin, but I’ll do a check to see if we have any questions in the audience before I paw forward. Alright. Just raise your hand later if you have one. So marketplace gross margin very closely met metric very closely followed by investors. What are some of the puts and takes impacting this in the near term?

And then any rough timeline around when you think you could reach your 35 to 40% long term target?

James Milne, CFO, Xometry: So, we were very close to the 35% at the end of last year, rounded to 35%, thirty four point five % in Q4. Really pleased with the execution we had last year. When you look at the last four or five years, we’ve added 10 points of margin through gross margin. So really showing the impact of more data, more orders, growing supplier network as well. And that’s in our end the algorithms to have more data to play with to match the optimal supplier, and that’s coming through in our ability to drive up the gross margin.

One thing I’ll note is in Q1 we made a deliberate choice to accelerate some of that investment in new marketplaces that temporarily dampened the gross margin in Q1. And we expect that to fully recover here in Q2 back in line with where we were a year ago. And we’d expect to continue to see annual growth on gross margin this year. So I would expect us to be again exiting around that 35% rate.

Corey Carpenter, Internet Analyst, JPMorgan: Okay. And then on EBITDA, you flipped back positive last quarter. You reiterated your guide to be positive for the full year. Where do you see the most opportunity for leverage in the model? Do you still think that 20% to 30% is the right long term target?

James Milne, CFO, Xometry: Yes. So, in Q1, was our second quarter of adjusted EBITDA profitability. We went positive for the first time in Q4 last year. We intend to stay there now going forward. That’s what we guided to in Q2.

And for the full year here, we’ll be adjusted EBITDA positive. When we look at it, we look at our what incremental adjusted EBITDA are we driving from the growth? And last year, that was in the low 20s, I think around 22, 20 three percent. In Q1 here it was 27%. What’s been driving that?

Well, we’ve made investments over time, like in sales around our enterprise and international teams, in marketing, and we’re seeing the leverage come through. In Q1 we saw 500 basis points of leverage from that. So, a year ago, we were adjusted EBITDA loss was around £7,500,000 and we were back into positive here in Q1. So, really seeing nice leverage from the model. I think as we move forward, scale is important.

So, as we go from here to £1,000,000,000 in revenue, what we’re saying is we’re targeting 20% incremental adjusted EBITDA margins. I think we’re at a stage where scale is and growing revenue is still vitally important. It’s a massive opportunity for us out there. But delivering that from here to £1,000,000,000 would set us on a really good path to be on that way to 20% to 30% margins over long term, which I think we can get through the marketplace scaling, continued gross margin in the 35% to 40% range, plus getting that supplier services Thomas business back into some growth.

Corey Carpenter, Internet Analyst, JPMorgan: One more, excuse me, financial question and Randy we’ll close with you on a bigger picture question. What’s the right way to think about EBITDA conversion to free cash flow and when do we when do you think we could see you turn free cash flow positive and perhaps related to that, just any thoughts on kind of your options around the convert, is due in 2027?

James Milne, CFO, Xometry: Great. So, Xometry has a great asset light model. We’re not vertically integrated. It’s coming through right now in terms of our differentiation and the value that we drive to buyers today, because we’re able to provide them with these options across 50 countries very easily. Being asset light means that there’s low CapEx and working capital requirements that convert our adjusted EBITDA into free cash flow.

So, as we grow our adjusted EBITDA here and get up into the mid to single mid to high single digits on adjusted EBITDA as we pass through in 2026 here, I should think, then we’ll be passing free cash flow breakeven as well. We’re in a strong cash position right now. We have two thirty one million pounds in cash. So, our main focus will be continuing to drive towards getting to cash flow positive, put us in the best position with the convertible coming up in just under two years to be able to optimize our balance sheet and put us in a great position to continue to invest organically in the business, as well as part of our strategy, I think selective M and A would make sense as well.

Corey Carpenter, Internet Analyst, JPMorgan: Randy, I wonder if

Unidentified speaker: you could comment a little bit. I think there’s a misconception in the market that people will use the Xometry platform to discover great suppliers who can produce the product. But then once you’re up and running, especially if it’s truly going from prototype to production, that they kind of say, now we don’t need Xometry anymore and we kinda move on. Yes, maybe you need it for another part down the line, but that part is now kinda direct between the two. Wonder if you can just talk about, you know, how do you help us understand that that is not really what’s going on?

Are are there hard ways to quantify and really show us that, you know, even the production contracts that you you get on the platform stay with Xometry and aren’t kind of taken offline direct between those two players? Thank you.

Randy Altschuler, CEO and Co-founder, Xometry: Yeah. Great question. You know, concerns about disintermediation. Right? So let me give a couple of data points and then I’ll talk through a little bit.

So, first of all, looking at the number of accounts that are spending more than $50,000 with us in an LTM basis, last twelve months basis, that’s more and more you’re going to see that with production and that number has been growing very nicely. So, we’re at over 1,500 customers. Then also looking at the number of customers spending more than $500,000 with us, and we noted that was 100 customers and those customers grew over 40% last year. So, are customers that are leaning into production. If they were loving us and leaving us, we wouldn’t be having seen that kind of growth within them both in those larger accounts, but also in those 50,000 plus accounts.

And that’s also another proof point is also the team space, the number of teams that we’ve got, that 7,000. Again, those are gonna be more likely than beyond a production or end use part than they would be on a prototype side. I think also you have to understand, our customers are coming to us not to find another supplier. Because there’s a million suppliers out there, they’re coming to us to find a solution. So if you’re a customer, you’re trying to find an easier and more secure and reliable way to get your parts made.

And and if it’s production and if it’s end use and I really care about it, I’m gonna lean even more to Xometry because my alternative is to use a small manufacturer where risk is inherently higher. Just that’s the risk of any small business, I would rather go to a public company and have the resiliency and the backup that Xometry provides. So, the larger the order, the more complex, it’s more likely that the customer is going to lean into us versus manufacturer.

Corey Carpenter, Internet Analyst, JPMorgan: Great. I’ll close with I think a question for you, Randy. Just bigger picture, one or two things you’re most excited about and you think could be most transformative to the business in the years ahead?

Randy Altschuler, CEO and Co-founder, Xometry: Well, I think, you know, just our continued execution. You know, we’ve got this great competitive moat that we built. But as we continue to expand what we can auto quote, as we continue to expand our our marketplace globally, as we continue to enhance tools like TeamSpace and WorkCenter to build sticky relationships with our buyers and suppliers. We’re gonna get closer and closer to our vision, which has become the rails, the place for custom manufacturing. And and this is something because we’re using AI and we’re getting data, it’s a a cumulative effect.

The more data we get, the smarter our algorithms become, not only in what the price thing’s at, but also to identify the best opportunity, the best supplier for that customer. And nobody could do that. You know, we we have sort of a a really great position in that, and that gets smarter and smarter.

Corey Carpenter, Internet Analyst, JPMorgan: Great, well in there. Thank you for joining. Thanks everyone. Thank you. Thanks Corey.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.