Xometry reports 83% revenue growth in Q3 2022 as it continues to expand market share

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Global Manufacturing Market xometry (XMTR) generated record-breaking revenue in its most recent quarter, according to its financial results for the third quarter of 2022.

Xometry grossed $103.6 million in Q3 2022, up 82.7% from the $56.7 million reported for Q3 2021. In the company’s earnings call, its CEO, Randy Altschuler, attributed this growth to the “value of its market,” which allows it to gain significant market share, and he “expects those gains to continue in the fourth quarter and into fiscal 2023.” .

“In Q3 2022, Xometry delivered strong market growth, robust in-market gross margin expansion and significant quarter-over-quarter operational leverage,” Altschuler said. “In the fourth quarter, we are seeing record orders as suppliers accept orders at significantly lower prices, dampening near-term revenue growth. We expect to continue to rapidly gain market share and wallet customer share, which will drive robust revenue growth in the market through 2023.”

A message from NASDAQ welcoming Xometry to its exchange.
A message from NASDAQ welcoming Xometry to its exchange. Photo via Xometry.

Financials from Xometry Q3 2022

Since Xometry IPO (IPO) in July 2021, it publicly disclosed its financial results in its Marketplace and Supplier Services businesses. The former, which includes revenue from sales of parts and assemblies, brought in $84.1 million in the third quarter of 2022, while the latter covers Thomasnet Advertising, Marketing Services, Consumables and Financial Services reported revenues of $19.5 million.

Xometry’s marketplace revenue increased 55% over Q3 2021 and 11% over Q2 2022. When asked by the company, Altschuler explained how this was driven by “strong growth in its active buyers” and rapid adoption of its platform by major customers in North America and Europe. The company didn’t reveal how supplier services performed over the same period, but Thomasnet delivered the majority of its revenue.

In its financials, Xometry also didn’t provide a breakdown of revenue by manufacturing method, although it has said it measures it, with many methods reporting “strong year-over-year growth.” Overall, the company’s active buyers also increased to 36,789, a 40% increase from Q3 2021, amid strong interest from customers in the automotive, robotics, automation, education, food and manufacturing sectors.

As for customer spending, Xometry says the number of those spending at least $50,000 annually increased 62% year over year to 974. However, towards the end of the third quarter, the company noted that price trends were increasing a headwind. Because of that, Altschuler added that Xometry is “working on optimizing pricing,” but said he remains confident of continued growth based on increasing order frequency.

Finance ($) Q3 2021 Q3 2022 Difference ($) Difference (%) 9M 2021 9M 2022 Difference ($) Difference (%)
revenue 56.7m 103.6m +46.8m +82.7 151.2m 282.9m +131.7 million +87.1
cost of sales 42.2m 62.7m +20.5m +48.6 115.0 m 171.3m +56.3 million +48.9
gross profit 14.5m 40.9 m +26.4 million +182.1 36.2m 111.5m +75.3m +208.0
operating expenses 28.8m 56.1m +27.3 million +94.8 72.3m 161.3m +89.0m +123.1
loss from operations 14.3m 15.2m +0.9 million +6.3 36.1m 49.8m -13.7m +38.0

A constantly evolving platform

Rather than being content with the growth of its current platform, Xometry has continued to invest heavily in its development and new technologies to expand its offering. In the third quarter of 2022, the company launched a new industrial shopping engine designed to better digitize the cumbersome and lengthy quoting process and provide users with an integrated offer that makes checkout easier.

That Xometry Workcenter Software was also introduced in the last quarter. Developed as an all-in-one Manufacturing Execution System (MES), the program gives suppliers a one-stop view of all their orders and allows them to focus on attracting new buyers. The platform was also able to launch a freemium version thanks to its acquisition to spark initial interest FactoryFour in the fourth quarter of last year.

In Europe, Xometry introduced new manufacturing technologies including vacuum casting and compression molding in Q3 2022. These additions contributed to the company’s strong revenue growth on the continent, which it says is also seeing “rapidly increasing gross margins.” More broadly, the company’s international business achieved annual growth of 75%, while its Chinese business also performed well.

“In addition to strong revenue growth, third-quarter gross profit increased 182% year over year, driven by significant improvements in the marketplace’s gross margin and the addition of higher-margin supplier services,” Altschuler added. “We remain pleased with ramp and buyer demand in China as we see orders from many industries including medical, biotech, new energy and universities.”

A set of Xometry-made parts.  Photo via Xometry.
A set of Xometry-made parts. Photo via Xometry.

Revenue growth forecast for the fiscal year

As we’re past the middle of the fourth quarter, Xometry is forecasting fiscal 2022 revenue to be between $104 million and $106 million, representing year-over-year growth of 55-58%. In terms of gross margins, the company expects the marketplace to “improve” quarter-over-quarter, although it expects them to fall across its broader business.

While the company has seen labor costs drop over the past few weeks, it believes it can optimize pricing while maintaining strong order growth and conversions through changes in its algorithms. As a result, Xometry feels strongly positioned to continue investing in its business and continue to capture a larger share of a “huge market.”

“As our costs decreased, our AI-driven marketplace lowered prices for buyers, which boosted conversion rates while simultaneously dampening our revenue growth in the short term,” concluded Altschuler. “We expect the combination of price optimization and higher order frequency to increase our revenue per shopper in early 2023, enabling us to deliver robust market growth.”

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The image shown is a message from NASDAQ welcoming Xometry to its exchange. Image via Xometry.

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