XMTR - Earnings call transcript Q3 2021

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Operator

Good day, and thank you for standing by, and welcome to the Xometry Inc. Q3 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Shawn Milne. ahead. go Please

Shawn Milne

thank XXXX and joining on us Good Call. you QX Earnings Xometry's afternoon, for

Joining Altschuler, are our me Randy Chief Jim Officer; Financial Rallo, and Officer. our Chief Executive

for our guidance the we our will During XXXX. for quarter today's discuss financial fourth call, results and XXXX the review quarter third

would not During may today in overall XX-Q may. business, our and will them intend statements and the statements statements expect, obligation undue results, any included future to new from today's strategy, non-GAAP on the caution SEC place a of for or a believe, and make measures reconciliation the be we events in To financial investor result be future please internally or as reliance as November measures presentation, earnings information, XX, expected call, which or and measures the such long-term uncertainties, of that, Form in duty presented in risks to to are decision-making to our out no see cause of filings future including report we forward-looking means our will A not filed non-GAAP today prepared you also of evaluate financial terms earnings to changes like Non-GAAP subject Investors statements, could in our both use will on of replay for substitute to website press actual in our those purposes release with financial and XXXX, to measures, on With statements and today's close prospects. to These in ended market accordance are undertake our in and press performance financial operating statements release and our period-to-period Such as performance distributed GAAP. call on risks as September comparisons. these posted identified available a today's U.S. addition superior GAAP quarter to call, call to these growth We the XX. section website. forward-looking concerning expectations. over to be I the by results. related We'd point that forward-looking available with also like refer of are SEC for that to the Randy. materially will is investors.xometry.com. results. distributed turn update which at non-GAAP financial after We Information differ our of and

Randy Altschuler

joining XXXX everyone, thank us for QX Good for earnings afternoon, our you and call.

to pleased in We the we as accelerate, global are digital manufacturing shift report world. digitize of and The industries leading trend. intensifying challenges, chain supply another strong that continues for on-demand build the with secular one quarter in manufacturing the out to marketplace largest

sales revenue XX% related revenue quarter-over-quarter. to for year-over-year represents the revenue and financial will of XX% call of one results. the our business then supply companies review of of to position deliver are on XXXX, key rapid third and I both manufacturing and our our as revenue growth from a QX QX This to by of continue majority marketplace buyers of and and processes over the needs our breadth And of platform on quarter had for we of in the start Fortune buyers customer capabilities. rethinking XXXX. Xometry initiatives, in-depth revenues quarter with with to both review sellers turn XXXX masks, through strategies. with going is and adoption verticals, performance review strong more chains million a Jim of sellers. see $XX.X We a across a XX% our accounted third I'm update tremendous of those financial growth in and our performance. to In

was across Excluding attracted of that larger In to XX% rapid year-over-year. which continued today's cost as environment, accounts growth QX for revenue minimis of year, Europe. and chain both instant provide Xometry in growth America capabilities. supply growth North the buyers in the QX are by platform seller revenue to QX challenging and XXXX set active broad and revenue flexibility we was and adoption by buyers large a marketplace access was increasingly from of driven customer, de this robust in

supplies, we provide cost Additionally, raw convenient operations. of their enabling them sellers lower other to materials to our access and

in XX-month orders of across have growing accounts we of year-over-year. large through opportunity rapidly active Fusion also solution of in buyer October, well for least adoption their Georgia in by early defense. sellers basket our drove and devices, industrial Expand of an verticals, which growing to marketplace. existing We and buyers In to enabling QX, our strategy enhanced spend consumer, In Saw, number Autodesk strong growth, buyers In buyer saw designers Within giving with as in including to also we XX% of jet The accounts, version large adds and strength began set growth Big last many energy another improved a November, new a significant driven made upload flow and of design engineers increase procurement adding enterprise our Fusion assemblies. product of water Mexico, base, $XX,XXX, growing we an and robust medical products. our Alongside processes embedded deepened partnership aerospace and We XX% laser year-over-year features, in XXX. multiple Land from Autodesk, become network our capabilities our we cash technology our a tuck-in improving part active based working increased feedback for XXX, acquisition of workflows. and we and XXX. at fintech options. increased and X.X QX, In cutting Blue app within manufacturability launching as

dollars gross initiatives gross in both buyers basis profit improvements XX% recent by from to our marketplace. top profit in driven discussed more to awareness strong IPO, on the which increased will began marketing XX% we a for a sellers, we On QX. to As and pricing invest call, with our profit gross QX funnel points and continue through XX.X%, XXX of basis, QX as QX earnings increased of exposure revenue and On growth, expanded margin in XXXX on seller AI-powered sequential from grew QX matching year-over-year. top

engage FastPay, of our out As financial products software our August, of significantly XX continue matches with At sellers gross helping scale to including marketplace InstantPay cash we as of flow to more we to offering platform. deeply expands financial site of the with The We and as supply strong of adoption margins. of new products. our plan early XXXX. continue and across additional improve XXX successful implementation the grow, usage expanding selection improve, launch number business better relaunched to from e-commerce our smarter, and had in margins. products the QX marketplace our Xometry same made a sellers driving machine and new marketplace. enables to match time, our drove rolled services categories, including learning continues basket redesign a improve our active buyers a on Xometry's the SKU to The becomes and launch site and and network our our supplies Supplies, for product we the after we up ramp improve gross further providing In mid-August improvements sellers, and to InstantPay. successfully which fintech demand Seller increasing of and transactions

will SaaS-based decisions FactoryFour, In cost make We run effectively. a this businesses production a of tools November, offering from data-driven We serve efficiently volume our suite tracking in are software and solution XXXX. improve adoption manufacturers financial real-time platform provide to and helps through InstantPay. and FactoryFour suite the services we plan a and on as early help lead more with pleased existing control. with acquired increasing quality company, which to them later of their payment times sellers integrating

As expect seller we strong our and suite growth out continued products services. build sales in further we our effort, dedicated of

increased Europe. team to U.K., XX% existing XXX% deliver growth driven revenue expand driven buyers the markets, regional international over Italy. business several to including the in European and in year-over-year In Our France continues and in team core QX, within quarter-over-quarter, growth strong growth in QX, the strong In and continued Europe accounts. by new by

Vivian was the the Additionally, Vivien Zhang joining manager General Orange for business hired Group, key as region. and the our companies we recently Prior in China Development software Xometry, to for region and held Director roles the French Asia manufacturing business. telecom, Pacific at previously the for

in expect that formally XXXX. launch to region early We in

We of revenue We have for generated the our have is year-to-date. XXXX, opportunity Currently, international the just United in see XXXX. States. over an $XX million roughly $X was global massive generated growth. XX% we In for enormous a International year revenue opportunity. million over

or revenue the leading marketplaces, XX% other online global next over with more sales of international As be several total years. could

pledged of of causes we opportunities educational a efforts our our and environmental to for variety equity conservation students, Lastly, a IPO, X% build to sustainable as socioeconomic part of future. more underrepresented fund

College and next With the over pledged enrolled Engineering Engineering to we University Jim in closer to to As that, results of recently Architecture. years a that at more effort, quarter call $XXX,XXX CFO, for at and Rallo, Harvard outlook. look over scholarships of than will the four financial part provide third turn I the the Mechanical Department students our of business

Jim Rallo

and Randy, Thanks, everyone. afternoon, good

revenue a QX and strong quarter-over-quarter. year-over-year generated and profit and quarter, had we mentioned, XX% up of significant gross Randy increase growth in million, third revenue We continued we're $XX.X expecting a XX% QX. As

'XX reached the XXXX. basis platform that the XXXX, from least and engagement QX XX.X% our spend of margin substantial platform. growth QX of existing to excluding strong As from of strength us from transparency was XX% This that XXX and We visibility our account spending their our account increased Randy our points revenue mentioned, XX% points spend time. XX%, as underlying revenue and growth XX,XXX. quarter-over-quarter. sales from QX, repeat we investment in model unit to QX purchase customer. on at The platform, XX-month XX.X%, up to joins last at that accounts activities year-over-year in predictability. the basis of 'XX. XX% QX over and margin business provides of was year-over-year, up from increasing the gross number one as percentage spend and over end year-over-year gross leads buyers, our approximately revenue activity our revenue to with driven QX year-over-year the active relationship economics buyers time. an continued XX% and of well account increase and we number and expand QX accounts attractive and existing compared the leverage XX,XXX XXX was increase was by XXX with Once stickiness efficiency in in the the as aim buyers underscoring business active increasing from In existing marketing resulting QX of believe on increased accounts reflects

sequentially trend We expect expect from margin to QX into to gross continue that in XXXX. improve and QX

As number continues and machine smarter, to matches as transactions driving and over the increasing margin our time. of grow, learning our for gross scale becomes marketplace and sellers buyers better our

total to that SG&A is allocated costs. increased of operating compensation expense QX revenue. XXXX of stock-based representing included to million, XX% on across QX expenses the Moving items. XX.X% $XX.X XXXX operating operating million line year-over-year expenses QX $X.X

QX Additionally, million our operating company charitable approximately variable marketing our $X.X and our incremental related costs $X.X million include expense is public expenses, contribution. operating sales component. and largest Within in to

marketing and stock-based XX.X% a and sales of and as Sales On non-GAAP depreciation services in for including $XXX grow driven marketing to XX% compensation excluding the and compensation expand a network $X.X to continued million costs XX.X% and in including XX.X% our our representing stock-based was of an aggressively investment same of compared XX.X% to ago. marketplace, million, sellers, networks. marketing TAM, large to revenue a additional XX% year-over-year billion we Sales $X.X were buyer increased our increase compared basket to and intend our period expense. our increased hiring of seller salespeople, XXXX. buyers revenue of year-over-year, by QX, of year basis, and and in seller amortization, percentage Given QX

and continue and hiring marketing to increased including aggressively channels, invest expect in marketing digital marketing new in our sales to sales We QX, team. in further

efficiency. EBITDA EBITDA stronger-than-expected was for adjusted adjusted expansion and our QX marketing was than $XX by Our QX million gross guidance, driven margin XX.X% loss or growth, better significant revenue of revenue.

and Additionally, for company roughly XXXX. XXXX revenue costs delayed respectively. and our was Segment QX early U.S. and Europe $XXX,XXX XX.X segments XX.X operating our $X.X from QX, and from In and were until QX U.S. respectively. public was European million, million, of and segments $X operating loss

securities margins gross with grew the marketable and equivalents which we from early proceeds cash with We debt. business, paid European $XXX.X In the XXX% improving million continue to subsequently in $XXX and no our our of quarter, QX, transaction net volume approximately and our end July, as invest At million over were in third debt. in down raised cash increases. IPO

Now on to moving guidance.

We growth XXXX, QX of of representing in the XX% $XX one customer range expect accounted million QX year-over-year XX%. of million, revenue for XX% $XX In to to revenue.

from that XX% to for as 'XX. XX% to revenue 'XX guidance revenue compared is Excluding QX customer, growth QX

'XX assumes Our that QX one revenue from revenue guidance customer. no

Additionally, we QX do revenue Big expect of be to material and the acquisitions Saw not Blue to EBITDA. or tuck-in adjusted FactoryFour

compensation and adjusted public the QX to range million will higher continue we sales in we invest spending in as we the exclude which million marketing, of adjusted $X.X company $X in EBITDA. loss to be to expect In costs. expect from million, range $XX international of stock-based EBITDA to We QX, expense accelerated and $XX million

part Randy for previously organizations. we shares contributions XXX,XXX X% the as of as nonprofit capitalization pushed Company's to the or charitable IPO, to discussed, Additionally, approximately of xometry.org

QX, questions. As charge to to up will expenses, a EBITDA. result, from nonoperating through be open million which a In for expected was adjusted With this forward. $X.X excluded you and operator, call quarter administrative and charge $X.X $X.X that, approximately each will can quarter, million the general be please moving record a we

Operator

We'll Instructions] compile just to roster. [Operator for a moment Q&A pause

Sterling We the line first Morgan. have question with from our JP coming of Auty

Unidentified Analyst

environment? been the you from on Rajat on constraint chain Can on color business Sterling. is supply have like This for the give how impacted

Randy Altschuler

and Altschuler, the welcome, Randy this CEO. is And Yes.

the wonderful that a convenient broad about buyers and So instant it our with access seller of large Xometry the is marketplace provides to thing set capabilities.

a needs. help of chain Also, place marketplace flexibility country. supply orders supply Xometry are go our to there is again, to for help And challenges. fulfilled them So these are to buyers when new increased are the and to chain for the majority there's options those better better in issues, no frankly looking ideal alleviate buyer And marketplace. with our

So this delays, overseas, shipping helps to alleviate any related issues cetera. et

helping growing readily to we're Mexico. lower in materials manufacturers time, tools, our and overperform base economy environment. for our the and the we're cost providing also we're options them access enabling in available at the such is as which same our raw to So buyers, including constantly seller countries buyers, and adding this an And sellers, helping sellers, we're option additional new and

able So both issues. of to overall, sellers environments, environment all with buyers kinds the particularly Xometry and marketplace, challenging we're supply a help in in with chain

Unidentified Analyst

sense And then -- what the a the buyers active revenue increase in quick quarter? follow-up on that And the that. was Can that you trends give was during driving quarter. us on a for of what

Randy Altschuler

Yes.

excluding very earlier sales. obviously trend in large up call, that in that. XXXX, XX% per that boosted we then disproportionately for a As the the accounted take XXXX, customer, you mentioned nice, masks if customer our the sort sort is of of of had, we was But selling then customer revenue over in one out this

per we're trend. customer happy So with the revenue

Operator

next We with Brian Drab Blair. the question William for have

Brian Drab

we the talk a acquisitions in about if more detail. little wondering could bit was I

Blue learn I just a First, I'm buying, wondering I what them the guess, just I'll instead with through of operating Saw, about looks that. broker little company Big the bit thinking just adding an if to with start like, network the model. around

Randy Altschuler

built this by a water has we quoting and weren't tremendous instant they small but for jet founded years company, over Brian, So a Saw, was built Blue looking laser for it's engineer, to ago very Big capabilities some XX -- for jet. and terrific he -- software

to want his engine we own and he's built so take that. And for

and well large that use quoting for our engine we base. as data technology quoting us, the to he's take a that customer instant that to or enhance that instant our So as base technology, great for large accumulated want user

marketplace. So that's capabilities accelerate and the going our laser waterjet to for just cutting in

Brian Drab

That it. then can the more little you just about thinking a Got great the sense. makes behind talk bit acquisition? FactoryFour And

Randy Altschuler

XXXX. and They're SaaS-based L.A., a manage founded production. FactoryFour, they solution in their help Yes. on And it's in manufacturers then based

quality planning, production, control. So

stickiness the Brian, well. SaaS-based will and within products our insight by marketplace, real-time sellers will then the this So their And finally, it also for Xometry provide that into more embedding as fintech can our also we and marketplace provides be us to efficient, available capacity into into integrate sellers, them solution our for help utilization.

So Xometry, book they business as of the outside they're them own of Xometry manage their as it within too. we're the stickier doing working And relationship makes likewise, with marketplace. it

Brian Drab

one around to going ask lines I'm acquisitions. along these Great. just just more

revenue what the mean or... material X% exactly? be revenue less than the in can sense, I you any that fourth mentioned that of us You mean, give quarter, does wouldn't like but

Randy Altschuler

Brian, less in the and understand, we've than QX. got holidays in we coming also also It's November, -- got X%. think I But it's we've closed these And fair. up

Shawn Milne

Yes, Brian, Shawn it's Milne.

look It's versus at for look forma, the it can less or if our X% at you revenue pro revenue this way. You it actually their year. total

Randy Altschuler

For this minimis. quarter, de it's

Operator

question from Nick We have of our the Jones Citi. with next line coming

Unidentified Analyst

This is for on Nick. [Jeff Steiner]

of Just questions. a couple

to on you acquiring Just confirm, Blue Saw are their Can Big any then capabilities? so you the acquisition. not follow-up manufacturing of

Randy Altschuler

Nick, are, as did because again, -- of a small. Big said, instant minimis. de really not Blue material. Shawn And It's that for offering in founder It's that's the the being platform Saw from data business I just quoting but the We cut. acquisition help accumulated tiny. mean, that and laser has and the we he's we jet and our it's over it's in our built enrich going or water XX engine to marketplace years, own very

Unidentified Analyst

to sort base. materials just Got inflation? your out to uniquely pressures raw of sort are supplier suppliers -- positioned of help you seeing? able your then it. that with to seeing separately, they're impact Or And inflationary being any provide you Are of mentioned you

Randy Altschuler

Yes.

about reprices inflation, when think about Xometry think So -- when weekly. the general, so think platform in you you I

to the prices incorporate that or sellers enables changes materials offer in labor. any us So for both buyers that raw both and

So sellers. our right different we're efficiency account and many into taking pricing platform up on our keeping provides sellers, And buyers better buyers and both our matches buyers AI the that as for inputs. the with the for

the might So or material or a utilization, got. might things a a at just it's it's capacity, of equipment of cost have particular the supplier time, specific kind about the seller not labor, time they've at but what also that have like

are those helping things the buyers all sellers. for the provide So pricing great both us and

some materials, effectively we the are to where prices. group some them those Going for specifically environment inflationary organization materials, and operate the them, purchasing this lower to in find at we -- struggling suppliers get sellers to enable or and quicker

if So you manufacturer small might you're a those struggling be issues. with

As you get our and part power buying marketplace, better those expedited of the to of benefit lead times kinds the Xometry of materials.

Operator

We have RBC line Matt Markets. question the of from coming next Capital our Hedberg with

Matt Hedberg

want with I to Randy, start you.

you one you always intrigued the cases. that Xometry is the were with production think of period, diversity cited for during leveraging use Can talk of Xometry. number use the network. of the as I of that sellers sort us And things cadence and a as that about of that increase? runs run of buyers the of Just side pipeline platform the on curious cases more sort and matures, sort production

Randy Altschuler

Yes.

that one LTM producing assemblies, -- basis. And more XX% the you good number through marketplace, of spend Xometry think $XX,XXX indicators are of and highlighted, grew and seeing year-over-year of we over of Matt, and the an number XXX particular, we're we think that indicator about I sort and more accounts than and think, from more of I in to an you're accounts. of So as that of kind orders larger the hear the to

those sectors. Land for that's for Expand also really not I in many us different orders. larger strategy, for a we're And only So good but think seeing proxy, our and

sometimes their runs And production assembly. sometimes and production runs, plus their

$XX,XXX, -- But of mix of quarter-over-quarter, as you those a accounts as sizes grow good that's that our it's more So order grow a larger. see than $XX,XXX and those. larger sense

Matt Hedberg

improving of year. you And The also a that but to still it's products financial out, of margin reasons for that a of I is benefit AI is including, services. services becoming algorithm, great financial helpful. algorithms, AI super that, next it's or you lot more kind a something lot is That's I know the think, for certainly material and a I about one certain to the of about talk Jim. but QX improving revenues. hear then path -- there's improvement contributor break And into can gross and know noticeable, for to plan Is you scale? think help it if to small, it maybe us

Jim Rallo

Yes.

would we not it So us. in the break still really that if It's good time. becomes product you absolutely. We've I growth said earlier that at is out would material. material tell that this for that

driving So profit is the continuing gross right margin. But now, increased AI adoption is the to really, grow. the

orders, bigger So really the said as bigger, we bigger the right that's I've as occurring data, the and revenue, we more and what's the get that before, more now. our right, transactions have, more

like yes, jump part when happy we're bigger said, that seller So now, -- I once it's that services you becomes then a of see right the and general in business. break out to

Randy Altschuler

And is Randy. Matt, this

about FactoryFour. fintechs going we're these embedding SaaS to Just jump sellers, to Brian's embedding, our to question tools we're back products, that. like be offering FactorFour products our With into going in,

marketplace. their the drive for that will from So more the just Xometry for everyday they're work that use beyond them, help getting adoption

Matt Hedberg

Well quarter. Super on helpful, done the guys.

Randy Altschuler

you. Thank

Operator

next have our of the with coming Keirstead from Karl line We [Operator Instructions] question UBS.

Karl Keirstead

through That's Maybe or Randy couple a the three congrats suppliers. constraints of around managing the sellers these supply and Jim, last more months. over impressive. questions on

and not that And come gave constraints color any the buyers. didn't can the issue secondly, did sellers, given with, during encounter the as supply offer expansion during you us then on really just supplier jobs they quarter? to the an have board on of you or capacity among the where take network on you Xometry up issues So did Were some happy the stats the quarter? around on progress you any the

Randy Altschuler

Yes, Karl.

of wasn't issue. So twofold. I that Is that, fact the evidence the think an

not we we margin of well. our QX you're seeing experienced then expansion, to growth saw sellers -- result had which in the as of First, you're continuing well. tremendous to very increasing in And guide you marketplace as QX, active also AI we're as seeing rapid a of that revenue that an and number only that the revenue and growth in

So things to two enables find -- that matches. help that, us those we're that because Karl, And margin growing as contribute AI, we're those that profile. to not growing us to can using that enables and

constraint was again, not revenue And surge us. profit by a supply evidenced and that's in for So our in margins. surge gross our

Operator

follow-up William a the of coming have with We question from line Drab Brian Blair.

Brian Drab

you the sellers or manufacturing partners? mention active Did number of

Randy Altschuler

but did put We Brian, into we going that are to not, our XX-K.

We will update that the first but XX-K. give number, the it but is a we'll growing number in exact

Brian Drab

questions wondering, it's hearing you And the respect? that it. out? to are on know I'm in customers just some just of that can't then how been elsewhere even runs, are than get this supply playing how around typical, that it chain. is you or coming guys Got the need And would get larger they what just seeing are lot environment. Xometry. molding and A maybe CNC that or at perform And just What something orders have coming whether in you they you with from larger injection volume because they customers can in

Randy Altschuler

again, is in QX. to I in you mask to you're the is look, then when XX%. guidance, include back customer, And go Well, which it's XX% range XX% looking our that XX%,

with an we're doing of accelerated LTM basis. the to customers And think that So Brian, orders. think, part more is again, growth. back that I $XX,XXX more certainly, there it's goes flexibility. are because on larger issues, we stat than And And across I of And customers different we -- give provides States. there's internationally -- extent United that them supply them our marketplace chain the give the and to lots both of that options, that

And any -- that, jobs when that be for materials having for sourcing troubles chain well. -- supply thing those the for were a reliable of may raw sellers, are it's that it's the about perfect anecdote or for for talking for just concerns. a great it's we So material also same a towards as or for constraints like great sellers other other frankly, solution we're reasons, input

helps sides. really So it both

Operator

That then you Q&A call. of portion Thank concludes for the the participating.

You disconnect. now may

Xometry (XMTR) 11 Nov 212021 Q3 Earnings call transcript