Xometry, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023; filed February 29, 2024. Although the request refers to 2023 Q4, the filing provides annual financial results, not a separate fourth-quarter income statement or cash-flow statement. Unless noted otherwise, financial amounts below are in USD millions.
Business context
Xometry operates an AI-enabled marketplace connecting buyers seeking custom-manufactured parts and assemblies with a network of manufacturing suppliers. Marketplace sales accounted for approximately 85% of FY2023 revenue; supplier services, including Thomasnet advertising and marketing, financial products and software, accounted for approximately 15%.
Financial and operating performance
| Metric | FY2023 | FY2022 | Change / context |
|---|---|---|---|
| Revenue | $463.4 | $380.9 | Up 22% |
| Marketplace revenue | $394.8 | $303.2 | Up 30%; marketplace gross margin rose to 30.8% from 28.2% |
| Supplier services revenue | $68.7 | $77.7 | Down 12%, largely following exit from the U.S. supplies business |
| Gross profit / margin | $178.3 / 38.5% | $146.0 / 38.3% | Gross profit up 22%; supplier services margin increased to 82.7% from 77.9% |
| Operating loss | $(73.6) | $(77.1) | Improved by $3.5 |
| Net loss | $(67.5) | $(79.0) | Net loss per share was $(1.41), versus $(1.68) |
| Adjusted EBITDA loss | $(27.5) | $(44.8) | Margin improved to (5.9)% from (11.8)% |
| Operating cash flow | $(29.9) | $(62.6) | Cash use decreased; FY2023 included a $20.6 increase in accounts receivable |
| Cash and marketable securities | $268.8 | $319.4 | At December 31; comprised of $53.4 cash and $215.4 marketable securities in 2023 |
| Convertible notes | $287.5 principal; $281.8 carrying value | $287.5 principal; $279.9 carrying value | 1.00% notes due February 2027 |
Operating expenses totaled $251.8, or 54.3% of revenue, compared with $223.1, or 58.5%, in FY2022. Cash used in investing activities was $16.8 provided in FY2023, including $50.0 of marketable-security sale proceeds and $18.5 of property and equipment purchases, including internal-use software. Cash from financing activities was $1.1.
Year-end current assets were $356.2 and current liabilities were $83.2. Management stated that available cash, cash equivalents and marketable securities should support working capital and capital expenditure needs for at least the next 12 months, while noting actual cash needs could differ from its assumptions.
Material changes versus FY2022
- Marketplace growth drove the increase in total revenue; supplier services revenue declined after the company exited its U.S. supplies business in the second quarter of 2023.
- Marketplace gross margin improved by 2.6 percentage points. Management attributed this to more efficient AI-driven pricing and a larger, more competitive supplier network.
- Active buyers increased 36% to 55,458, and accounts with at least $50,000 in trailing-12-month marketplace spend increased 30% to 1,331. For Q4, 96% of marketplace revenue came from existing accounts.
- Active suppliers increased 36% to 3,429. Active paying suppliers fell 6% to 7,271, primarily due to the supplies-business exit; excluding supplies, the company said the metric was flat year over year.
- General and administrative expense included an $8.7 lease-abandonment charge after the company ceased using certain offices but remained obligated to pay their leases. The company also recorded $0.7 of 2023 restructuring costs; it said restructuring actions initiated in May 2023 and December 2022 reduced its workforce by approximately 10%.
- The company acquired Turkish marketplace provider Tridi in January 2023, expanding its European capabilities and access to the Turkish market.
- FY2022 comparatives were revised for errors management characterized as immaterial, affecting revenue, cost of revenue and certain expenses. The filing states the corrections did not affect FY2022 operating cash flow.
Outlook, risks and unusual items
- Outlook: The filing provides no specific FY2024 revenue, earnings or margin guidance. Management expects to continue investing in technology, sales and marketing, support, and international expansion; it cautions that these investments may not produce expected benefits and that profitability is not assured.
- Profitability and cash burn: Xometry has a history of losses, reported a $319.9 accumulated deficit at year-end, and expects possible future losses. Continued operating cash use and working-capital needs are relevant to the stated liquidity outlook.
- Marketplace execution: The company depends on attracting and retaining buyers and suppliers, accurate advance pricing, supplier fulfillment and part quality. It may bear losses when supplier costs exceed quoted buyer prices or when parts fail to meet specifications.
- Debt and dilution: The $287.5 principal amount of 1% convertible notes matures in 2027. Conversion, refinancing or a required repurchase following specified events could affect liquidity or dilute shareholders.
- Other risks: Management highlights economic and geopolitical uncertainty, competition, international expansion, data privacy and cybersecurity, reliance on AWS and Stripe, and integration of acquisitions. The company reported no material legal proceedings expected to adversely affect it.
- Controls and audit: Management and KPMG concluded internal control over financial reporting was effective at December 31, 2023. A material weakness identified in 2022, primarily involving revenue and cost-of-revenue processes, was reported as remediated. KPMG issued unqualified opinions on the financial statements and internal controls, and identified marketplace revenue and cost-of-revenue audit evidence as a critical audit matter.
Important facts for investors to verify
- Whether marketplace revenue growth and buyer/account expansion continue, and whether repeat-account activity translates into durable revenue and cash generation.
- Whether marketplace gross-margin improvement persists, especially as order mix, supplier capacity and pricing change.
- Cash conversion and receivables: accounts receivable rose to $70.1 from $49.3, while FY2023 operating cash use remained $29.9.
- The sustainability of adjusted EBITDA improvement and the nature and recurrence of excluded items, particularly the lease-abandonment charge and other adjustments.
- Liquidity and potential dilution associated with the 2027 convertible notes, including conversion and fundamental-change provisions.
- Effects of the supplies-business exit, restructuring and ongoing lease obligations, and progress on integrating Tridi.
- The impact of the immaterial FY2022 corrections and the durability of the remediation of the prior-year control weakness.