Xometry, Inc. Q1 FY2025 earnings call

Key Points:

• Revenue in Q1 2025 was $151M, up 23% YOY, with marketplace growth at 27% driven by enterprise adoption.
• Q2 revenue expected to be $155M-$157M (17%-18% YOY growth), with marketplace growth 20%-22% YOY.
• Focus in Q2 includes using AI-driven marketplace to optimize sourcing, working with enterprise customers on domestic/offshore supply, and coordinated advertising campaigns.
• Technology investments: Launched Instant Quoting for Injection Molding in EU, UK, Turkey; enhanced Teamspace for enterprise customers; improved Workcenter supplier software; testing new search on Thomas and deploying new ad server.
• Supplier services revenue down YOY but up QOQ due to financial services, and focused on improving engagement and monetization.

In Q1 2025, Xometry's revenue increased 23% year-over-year to a record $151 million. Marketplace revenue was $136 million, representing a 27% year-over-year growth, which was a 700 basis point acceleration from Q4 2024. Supplier services revenue was $14.6 million, down 6% year-over-year due to macro-related softness in Thomas advertising and the wind down of non-core services, but up 4% quarter-over-quarter driven by financial services products. Marketplace revenue per active buyer increased 4% year-over-year. US marketplace revenue growth accelerated to nearly 30% YOY, while international revenue increased 20% YOY. Q1 gross profit was $56.3 million, with gross margin of 37.3%, and marketplace gross margin was 31.8% down 20 basis points YOY due to investments in global sourcing.

Second Quarter Guidance:

• Revenue range: $155M - $157M (17%-18% YOY growth).
• Marketplace growth: 20%-22% YOY.
• Supplier services revenue: Decrease ~5%-7% YOY.
• Marketplace gross margin: Significantly improve QOQ to range of Q2 2024.
• Adjusted EBITDA: $1M - $2M.

Full Year 2025 Guidance:

• Marketplace growth raised to at least 22% from previous at least 20%.
• Overall growth to exceed 2024 growth.
• Supplier services: Down ~5% YOY.
• Full year adjusted EBITDA positive, with incremental adjusted EBITDA margins ~20%.

• Macro environment impact on advertising in supplier services.
• Supply chain uncertainties and tariffs affecting offshore manufacturing.
• Softness in non-core services impacting supplier services revenue.

Q: Could you comment on customer behavior since April 2 tariff announcements, including new customers and existing customers leaning on Xometry?

A: Randy Altschuler stated they're seeing robust growth in Q2, with a slight mix shift to more domestic sourcing and enterprise customers reaching out to discuss sourcing strategies.

Q: On incremental EBITDA margin, how does the second quarter guidance fit with longer-term 20%+ target?

A: James Miln said the midpoint is a little under, but the first half is in the low 20s, and they're managing growth and profitability balance.

Q: Talk about improvement in supplier services, driving full year outlook?

A: James Miln mentioned Q1 improvement driven by financial services, and Randy Altschuler noted testing new search on Thomas and launching new ad server to improve advertising.

Q: Detail on Work Center and enterprise trends?

A: Randy Altschuler said Teamspace has over 7,000 teams, with largest customers growing 40% YOY, and enhancements made for enterprise collaboration.

Q: Insights on tariffs and longer-term structural change, and gross profit?

A: Randy Altschuler and James Miln discussed multi-sourcing trend and temporary impact on marketplace gross margin in Q1, with expectation of improvement in Q2.

Q: Customer conversations on domestic sourcing and platform becoming permanent in onshoring strategy?

A: Randy Altschuler said customers are digging into finding domestic capacity and mitigating risk with multi-sourcing.

Q: Q2 revenue guide vs seasonality?

A: James Miln said Q2 guide reflects strong Q1 performance and current trends, with mindful of operating environment but seeing robust demand in Q2.

Q: Production vs prototyping revenues?

A: Shawn Milne and Randy Altschuler discussed production being a growing part of revenue, with Xometry's growth rates indicating success in production, and revenue per buyer annualizing to show different numbers.

Q: Percentage of revenues from overseas marketplace partners impacted by tariffs?

A: Randy Altschuler stated the vast majority of US marketplace revenue is fulfilled by US partners.