Xometry, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; comparisons are with Q1 2021 unless noted. Xometry operates an AI-enabled manufacturing marketplace and supplier-services business. The results include Thomas, acquired in December 2021, which contributed primarily advertising revenue.
Financial performance and position
| Metric | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Revenue | $83.7 million | $43.9 million; up 90% |
| Marketplace revenue | $64.4 million | Prior-year category figure not provided as material |
| Supplier-services revenue | $19.3 million | Not considered material in Q1 2021; growth was primarily from Thomas |
| Gross profit / margin | $32.9 million / 39.4% | $9.8 million / 22.4% |
| Operating loss | $19.0 million | $10.0 million |
| Net loss attributable to common stockholders | $20.0 million; $0.43 per share | $10.5 million; $1.33 per share |
| Adjusted EBITDA loss | $12.7 million; 15% of revenue | $8.8 million; 20% of revenue |
| Operating cash flow | $(24.3) million | $(9.9) million |
Marketplace gross margin was 27.4%; supplier-services gross margin was 79.3%. Management attributed improved marketplace margin partly to more efficient, data-informed pricing and growth in active suppliers. GAAP gross margin improved overall, but operating expenses rose faster than revenue in absolute dollars, leaving the operating loss higher.
At March 31, 2022, cash and cash equivalents were $59.0 million and marketable securities were $309.7 million, totaling $368.7 million, versus $116.7 million at December 31, 2021. Current assets were $423.0 million and current liabilities $53.8 million. The company reported $278.5 million carrying value of convertible notes, with $287.5 million principal. Total liabilities were $351.1 million. Net cash used in investing activities was $282.5 million, largely reflecting $280.1 million of marketable-security purchases; financing provided $279.5 million, primarily from the notes issuance.
Revenue by geography was $77.2 million in the U.S. and $6.5 million internationally. Active buyers increased 44% year over year to 30,683; accounts with at least $50,000 of trailing-12-month marketplace spend increased 92% to 790. Existing accounts generated 94% of quarterly revenue.
Material changes and unusual items
- Revenue increased 90%, driven by marketplace growth and Thomas supplier-services revenue. Thomas acquisition effects limit direct comparability of reported revenue and expenses.
- Operating expenses increased to $51.9 million from $19.9 million. Sales and marketing, operations and support, product development, and general and administrative expenses all rose; management cited the Thomas acquisition, hiring, marketing investment, stock compensation, and public-company costs.
- In February 2022, Xometry issued $287.5 million of 1.00% senior convertible notes due 2027 and received $278.2 million net of issuance costs. The initial conversion price was approximately $56.11 per share; conversion and repurchase terms are subject to specified conditions.
- Q1 included a $0.9 million unrealized loss on marketable securities and a $0.4 million increase in contingent consideration associated with acquisitions. Stock-based compensation was $3.5 million, versus $0.5 million in Q1 2021.
- Thomas acquisition accounting remained subject to finalization; the company recorded approximately $0.6 million of additional goodwill related to an identified deferred tax liability. The company also had a $0.6 million income-tax benefit.
Outlook, commentary, and risks
Management provided no specific revenue, earnings, or cash-flow guidance in the supplied filing text. It expects existing cash, cash equivalents, and marketable securities to fund working capital and capital-expenditure needs for at least the next 12 months. Management expects continued investment in sales and marketing, operations and support, product development, and general and administrative functions; it also expects these expenses to increase in absolute dollars as the business grows. Management cited potential benefits from marketplace scale, supplier growth, and improved pricing efficiency.
Risks discussed include continued or renewed COVID-19 impacts on buyers and suppliers, geopolitical uncertainty including the Russia-Ukraine conflict, inflation and the possibility that higher costs cannot be offset by price increases, foreign-currency movements, competition, and the challenges of sustaining growth and achieving profitability. The filing states that risk factors were not materially changed from the 2021 Form 10-K. Management said disclosure controls were effective and reported no material change in internal control over financial reporting during the quarter. Ordinary-course legal matters were not expected by management to have a material adverse effect, though outcomes remain uncertain.
Investor verification priorities
- Separate organic marketplace growth from Thomas-acquired revenue and confirm the comparable-period impact of acquisitions.
- Track whether marketplace gross-margin gains persist and whether operating-expense growth moderates relative to revenue.
- Assess operating cash burn and working-capital movements, particularly receivables and the timing of payables and accrued expenses.
- Review the convertible notes’ conversion, dilution, redemption, and fundamental-change provisions, and monitor potential share issuance.
- Verify final Thomas purchase-price allocation and tax treatment, including the evaluation of acquired net operating loss limitations.
- Monitor marketable-security values, contingent acquisition consideration, and the company’s progress toward sustained profitability.