Xometry, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; financial statements are unaudited. Xometry operates an AI-enabled marketplace connecting buyers with manufacturing suppliers, alongside supplier services including Thomasnet advertising and marketing.
Financial performance
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Revenue | $122.7 million | $105.3 million |
| Gross profit / margin | $47.9 million / 39.0% | $39.4 million / 37.4% |
| Operating loss | $(17.9) million | $(19.8) million |
| Net loss attributable to common stockholders | $(16.6) million; $(0.34) per share | $(18.3) million; $(0.38) per share |
| Adjusted EBITDA loss (non-GAAP) | $(7.5) million; (6.1)% margin | $(11.8) million; (11.2)% margin |
| Net cash used in operating activities | $(11.7) million | $(16.5) million |
Marketplace revenue rose 24% to $107.2 million; marketplace gross margin improved to 32.0% from 28.8%. Supplier services revenue fell 17% to $15.5 million, while its gross margin rose to 87.9% from 77.4%. Sales and marketing, operations and support, and product development expenses increased; general and administrative expense declined. Stock-based compensation was $6.0 million, up from $4.7 million.
Liquidity, debt and cash flow
At March 31, 2024, cash and cash equivalents were $45.7 million and marketable securities were $208.1 million, totaling $253.8 million. Current assets were $341.4 million and current liabilities were $78.7 million. Management said available cash and marketable securities should fund working capital and capital expenditures for at least the next 12 months.
Cash used in operations was $11.7 million; capital expenditures, including internal-use software, were $4.3 million. Investing activities provided $2.9 million, including $10.0 million of marketable-security sale proceeds. The company had $287.5 million principal amount of unsecured 1% convertible notes due February 2027, with a $282.2 million carrying value. Their initial conversion price is approximately $56.11 per share. The notes are convertible into cash, shares, or a combination at the company’s election.
Material changes and operating indicators
- Total revenue grew 16%, primarily from marketplace growth; International revenue increased to $19.3 million from $11.4 million, while U.S. revenue rose to $103.4 million from $93.9 million.
- Management attributed marketplace margin improvement to more efficient AI-driven pricing and a larger supplier base, which increases competition for orders.
- Supplier services revenue declined partly because the company exited its U.S. tools and materials business in Q2 2023 and, to a lesser extent, Thomas advertising and marketing revenue decreased.
- Active Buyers increased 32% to 58,504, and accounts with at least $50,000 of trailing-12-month marketplace spend increased 25% to 1,381. Existing accounts generated 95% of quarterly revenue.
- Active Paying Suppliers declined 6% to 7,159; excluding tools and materials, the measure declined 2% to 7,147.
Outlook, risks and other items
The filing provides no specific quarterly or full-year revenue or earnings guidance. Management expects to continue investing in the business and states that certain operating expenses may increase in absolute dollars as the company grows. It expects longer-term cash needs to be met primarily through operating cash flow and available liquidity, while noting it may seek additional equity or debt financing.
Management cited macroeconomic uncertainty, inflation, geopolitical tensions, potential slower customer spending, foreign-exchange exposure, and the ability to manage costs, growth, and profitability as risks. A 10% unfavorable change in the euro exchange rate would, per the filing’s sensitivity analysis, have reduced period revenue by 1.3%. The company reported no material changes to previously disclosed risk factors, no material legal proceedings, and effective disclosure controls as of quarter-end.
Unusual and potentially relevant items include $0.6 million of Class A shares issued in February as contingent consideration for the Tridi acquisition, and a $0.1 million increase in the related contingent-consideration liability recognized as expense. The company also reported approximately 5.1 million shares issuable upon conversion of the notes and excluded approximately 11.3 million potentially dilutive securities from diluted EPS as anti-dilutive or contingent.
Key facts for investors to verify
- Whether marketplace revenue growth and the improvement in marketplace gross margin persist, particularly as order volumes, supplier capacity, and pricing evolve.
- Whether supplier services revenue stabilizes after the tools and materials exit, and how Thomas advertising revenue and paying-supplier trends develop.
- Operating cash burn, capitalized software investment, and the adequacy of liquidity relative to the path to profitability and 2027 note obligations.
- Potential dilution from convertible notes, equity awards, and continuing stock-based compensation.
- Whether the growth in active buyers and larger-spend accounts translates into durable repeat purchasing and improved operating leverage.