Xometry, Inc.

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 speaker's remarks, there will be a question-and-answer session. To ask a question during the 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 today. Sean Milne, please go ahead.

Good afternoon, and thank you for joining us on Xometry's Q3 2021 earnings call. Joining me are Randy Altshuler, our Chief Executive Officer, and Jim Rallo, our Chief Financial Officer. During today's call, we will review our financial results for the third quarter 2021 and discuss our guidance for the fourth quarter 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 September 30th, 2021, that will be filed with the SEC on November 10th. 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.

Good afternoon, everyone, and thank you for joining us for our Q3 2021 earnings call. We are pleased to report another strong quarter as we build out the leading marketplace for on-demand manufacturing and digitize one of the largest industries in the world. The secular digital shift in manufacturing continues to accelerate, with global supply chain challenges intensifying that trend. Fortune 1000 companies are rethinking supply chains and manufacturing strategies, and Xometry is in a tremendous position to deliver on the needs of both our buyers and sellers through the breadth of our platform across verticals, processes, and capabilities. I will review our third quarter financial performance and update on key business initiatives and then turn over the call to Jim for a more in-depth review of our financial results. I'm going to start with a review of our third quarter performance. We had a strong Q3 with $56.7 million of revenue as we continue to see rapid adoption of our marketplace by both buyers and sellers. This represents revenue growth of 35% year over year and 12% growth quarter over quarter. In 2020, revenue from one customer accounted for 11% of revenue related to sales of masks, with the majority of those revenues in Q3 2020. Excluding revenue from that customer, which was de minimis in Q3 of this year, Revenue growth for Q3 2021 was 77% year over year. Q3 revenue growth was driven by continued robust growth in active buyers and rapid adoption of the platform by larger accounts across both North America and Europe. In today's challenging supply chain and cost environment, buyers are increasingly attracted to the Xometry marketplace as we provide flexibility and instant access to a large, broad set of seller capabilities. Additionally, we provide our sellers convenient access to raw materials and other supplies, enabling them to lower their cost of operations. We also improve their cash flow through our growing basket of FinTech products. In Q3, active buyers increased 61% year over year. We saw strength across many verticals, including energy and industrial technology, as well as growing adoption in consumer, medical devices, aerospace, and defense. In Q3, we began adding a network of sellers in Mexico, giving our buyers another set of options. In October, we deepened our partnership with Autodesk, launching version 2.0 of our app for Autodesk Fusion 360, enabling manufacturability feedback and multiple part upload features, improving processes for engineers and designers working in Fusion 360. In early November, We also made a tuck-in acquisition of Georgia-based Big Blue Saw, which adds enhanced water jet and laser cutting capabilities to our marketplace. Alongside strong new buyer growth, we drove robust growth within existing accounts driven by our land and expand strategy and an increase in large orders from assemblies. The number of accounts with last 12-month spend of at least $50,000 increased 67% year-over-year to 603. 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. As we discussed on our Q2 earnings call, with the increased exposure and awareness from a recent IPO, we began to invest more on top of funnel marketing initiatives in Q3 for both buyers and sellers, which will continue through Q4. On top of strong revenue growth, gross profit grew 42% year-over-year. On a sequential basis, gross profit dollars increased 22% from Q2 to Q3 2021 as gross profit margin expanded 210 basis points to 25.6%, 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 improve gross margins. At the same time, we continue to ramp up our network of active sellers, which further enables Xometry's marketplace to successfully match supply and demand and improve gross margins. Seller services had a strong Q3 as we made improvements to our supplies business and drove increasing adoption across our basket of fintech products. In August, we relaunched Xometry Supplies, including a site redesign and implementation of a new e-commerce software platform. The new site expands our product offering from 30 to 145 categories, and we plan on significantly expanding our SKU selection in early 2022. The usage of our financial products continue to improve, including the mid-August launch of Instant Pay. We rolled out Instant Pay after the successful launch of Fast Pay, providing our sellers with additional financial products to improve cash flow and more deeply engage with the marketplace. We are pleased with the adoption and increasing payment volume from Instant Pay. In early November, we acquired Factory4, a SaaS-based software solution company which helps manufacturers improve lead times and make data-driven decisions through real-time production tracking and quality control. Factory4 will serve as a platform to provide sellers a suite of tools to help them run their businesses more efficiently and cost-effectively. We plan on integrating this offering with our existing suite of financial services later in 2022. As we further build out our suite of products and our dedicated sales effort, we expect continued strong growth in seller services. Our international business continues to deliver strong growth, driven by the team in Europe. In Q3, revenue in Europe increased over 500% year over year and 48% quarter over quarter, driven by growth in new buyers and strong growth within existing accounts. In Q3, the European team continued to expand in several core regional markets, including the UK, France, and Italy. Additionally, we recently hired Vivian Shang as the general manager for Asia Pacific Business. Prior to joining Xometry, Vivian was the business development director for the China region for the French telecom Orange Group and previously held key roles at manufacturing and software companies in the region. We expect a formally launch in that region in early 2022. We have a massive opportunity for international growth. international revenue was just over $3 million for the year 2020. In 2021, we have generated roughly $11 million year to date. Currently, over 90% of our revenue is generated in the United States. We see an enormous global opportunity. As with other leading global online marketplaces, international revenue could be 40% or more of total sales over the next several years. Lastly, As part of our IPO, we pledged 1% of our equity to fund educational opportunities for underrepresented students, environmental conservation efforts, and a variety of socioeconomic causes to build a more sustainable future. As part of that effort, we recently pledged more than $900,000 to provide scholarships over the next four years to students enrolled in the Department of Mechanical Engineering at the Howard University College of Engineering and Architecture. With that, I will turn the call over to our CFO, Jim Rallo, for a closer look at third quarter financial results and business outlook.