Xometry, Inc.

Good day and thank you for standing by. Welcome to the Summit Tree second quarter 2021 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during that session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker, Sean Mill, Vice President, Investor Relations.

Good afternoon and thank you for joining us on Xometry's Q2 2021 earnings call. Joining me are Randy Elschuler, our Chief Executive Officer, and Jim Rallo, our Chief Financial Officer. During today's call, we will review our financial results for the second quarter 2021 and discuss our guidance for the third quarter and full year fiscal 2021. During today's call, we will make forward-looking statements. including statements related to the expected performance of our business, future financial results, strategy, long-term growth, and overall future prospects. Such statements may be identified by terms such as believe, expect, intend, and may. These statements are subject to risks and uncertainties which could cause them to differ materially from actual results. Information concerning those risks is available in our earnings press release distributed after market close today and in our SEC filings included in the Form 10-Q for the quarter ended June 30th, 2021 that will be filed with the SEC on or before August 16th. We caution you not to place undue reliance on forward-looking statements and undertake no duty or obligation to update any forward-looking statements as a result of new information, future events, or changes in our expectations. We'd also like to point out that on today's call, we will report GAAP and non-GAAP results. We use these non-GAAP financial measures internally for financial and operating decision-making purposes and as a means to evaluate period-to-period comparisons. Non-GAAP financial measures are presented in addition to, and not as a substitute for or superior to, measures of financial performance prepared in accordance with U.S. GAAP. To see the reconciliation of these non-GAAP measures, please refer to our earnings press release distributed today and our investor presentation, both of which are available in the investor section of our website at investors.xometry.com. A replay of today's call will also be posted on our website. With that, I would like to turn the call over to Randy.

Thanks, Sean. Good afternoon, everyone, and thank you for joining us for our first earnings call as a public company. Since many of you are new to Xometry, I'll spend some time introducing you to our business after reviewing our second quarter financial performance and business progress. Before we begin, I'd like to take this opportunity to thank our sellers, our buyers, and our employees for making Xometry the leading marketplace for on-demand manufacturing as we further our mission to digitize one of the largest sectors of the global economy. I would also like to thank our new public market investors as well as our existing investors for their support. I'm going to start with a review of our second quarter performance. We had a strong Q2 with $50.6 million of revenue as we continue to see rapid adoption of our marketplace by both buyers and sellers. This represents revenue growth of 45% year-over-year and 15% quarter-over-quarter. In Q2, active buyers increased 66% year-over-year. Alongside strong new buyer growth, we continue to see robust growth within existing accounts driven by our land and expand strategy. The number of accounts with the last 12 months' spend of at least $50,000 increased 54% year over year to 508. On top of strong revenue growth, gross profit increased 21 percent quarter over quarter, with gross margins expanding 100 basis points to 23.5 percent. This was driven by improvements in pricing and seller matching on our AI-powered marketplace. As our marketplace continues to scale and as the number of transactions grow, our machine learning becomes smarter driving better matches for buyers and sellers, and helping us improve our gross margins. In the first half of 2021, we added over 60 new materials, finishes, and processes to our instant quoting engine. This allows us to widen the use cases for all of our buyers across key manufacturing processes and to attract new buyers, which underscores the extensibility of our on-demand manufacturing marketplace. In the second quarter, we released digital storefronts, the latest offering in our growing basket of seller services. Adding a customized professional digital presence for Xometry sellers increases their overall engagement, visibility, and prestige as they look to attract new buyers. The storefront is integrated into our transaction engine, enabling our sellers to efficiently bring their own buyers and transactions to the Xometry marketplace. We monetize these transactions through our financial payment products. Recently, Ranjana Clark, who is currently head of global transaction banking at Mitsubishi UGF Financial Group and is the former chief customer and marketing officer at PayPal, joined our board of directors to help guide our payment strategy. As I mentioned earlier, since many of you are new to the story, I'd like to take a few minutes to provide a brief overview of our marketplace and to discuss key opportunities for growth in areas of investment. Xometry is the leading on-demand manufacturing marketplace. Since our founding in 2013, growth has been tremendous, including 92% compounded annual growth from 2018 to 2020 with $141 million of revenue in 2020. Today, roughly 30% of Fortune 500 companies are Xometry buyers. Our mission is to accelerate innovation by providing real-time equitable access to global manufacturing capacity and demand. Our vision is to drive efficiency, sustainability, and innovation by lowering the barriers to entry to the manufacturing ecosystem and to digitize one of the largest industries in the world. The Xometry platform is a two-sided marketplace connecting buyers and sellers of custom manufactured parts through a transparent online experience. The market is ripe for disruption and digitization with a highly fragmented, regionalized base of sellers and highly inefficient, opaque process for buyers. Not only is procurement traditionally slow and expensive, there's an increased focus from buyers on ESG issues. as corporation supply chains produce five and a half times more emissions than their direct operations. For buyers, we provide immediate pricing, delivery estimates, and quality assurance. For sellers, we provide global access to buyers and jobs and a growing basket of seller services to help small local machine shops more efficiently run their businesses, including supplies, shipping, and a suite of financial products. Underpinning our marketplace, is our proprietary artificial intelligence. Our AI-powered marketplace enables instant competitive pricing and lead times across a constantly increasing number of choices and combinations of processes, materials, and finishes. It starts with our software, which enables 3D geometry and feature recognition. Our machine learning algorithms train on a huge number of features, enabling the platform to become smarter with each transaction driving higher revenue, efficiency, and margins. As pricing and lead times improve, we drive more buyers and higher engagement, resulting in more demand for sellers, creating a powerful network effect for Xometry. The power and value of our marketplace is evidenced by over 23,000 active buyers, including leading brands in aerospace, defense, robotics, medical devices, consumer products, automotive, and space. At the same time, we continue to ramp up our network of active sellers, which grew 82% from 2019 to 2020 to over 1,410 active sellers. With so many disruptions to our global supply chains, the expanded breadth and resilience of our seller network has proved crucial to our buyer base. Our market opportunity is massive. with a global TAM of $260 billion in custom on-demand manufacturing, a subset of the multi-trillion dollar manufacturing industry. Given the massive market opportunity and our scalable marketplace platform, we will be bold and aggressive in our sales, marketing, and technology investments. We're just getting started. Within our large and rapidly growing active buyer base, we have a significant opportunity to become an enterprise solution, embedded in product design and procurement workflows. We have partnerships with leading CAD platforms, including SOLIDWORKS, Inventor, and our recent March 21 launch of a new integration with Autodesk Fusion 360, which enables users to get instant pricing and lead time estimates from Xometry without leaving Fusion 360. Another key area of focus is expanding our basket of seller services. In 2019, we launched seller services, beginning with Xometry Supplies, which enables our sellers to buy competitively priced goods from leading brands. In mid-2020, we introduced financial products, including the Xometry Advance Card, which gives sellers immediate access to 30% of the value of the Xometry jobs they accept. And recently, in March of this year, we launched Xometry Pay, a new suite of payment products that allows sellers to quickly accept credit cards and offer payment terms for their customers, backed by Xometry. These financial products offer sellers the opportunity to improve their cash flow, giving them capital to buy materials, tooling, and other expenses needed for business operations. Our seller services have been well-received. with 40% of our active sellers purchasing supplies or utilizing at least one of our financial products in 2020. In late 2019, we acquired a small team in Munich, Germany, to launch our European operations. Since that time, we've seen a strong ramp in revenue in Europe as that platform leverages the AI learnings from our U.S. marketplace. We have a massive opportunity for international growth. International revenue was just over $3 million for the year 2020 and has generated roughly $6 million in the first half of 2021 alone. Currently, over 90% of our revenue is generated in the United States. We see an enormous global opportunity and are rapidly scaling up our operations in Europe and intend to build out similar capabilities in Asia Pacific. As with other leading global online marketplaces, international revenue could be 40% or more of total sales over the next several years. Post our public offering, our pro forma cash balance is roughly $346.8 million, providing strong liquidity to grow our business organically and the opportunity for strategic tuck-in acquisitions to add to our platform, including new geographies or new services. In Q3 and Q4, we're going to capitalize on our leadership position and the fragmented nature of our $260 billion market by accelerating investments in new marketing channels, creating a small dedicated sales team focused on our basket of seller services, and stepping up our efforts to expand in new international geographies, including Asia Pacific. We're also increasing our investments in our machine learning algorithms and the application of them throughout the marketplace. Xometry is committed to promoting environmental sustainability across our services and to reducing the carbon footprint of manufacturing. With the Xometry Go Green initiative, we purchase carbon credits to offset 100% of the estimated impact of the shipment of parts. And we offer buyers the ability to instantly calculate the price to purchase carbon credits to offset the CO2 emitted through the manufacturing of their parts. Our stakeholders expect us to be good stewards, not only of our business, but of the world in which we all live. So, with our recent IPO, we founded Xometry.org, which supports the Pledge 1% movement and is committing our equity over time to support charitable organizations. With that, I'll turn the call over to our CFO, Jim Rallo, for a closer look at second quarter financial results and our business outlook.