Xometry, Inc.

Hello, and thank you for standing by, and welcome to the Xometry Inc. Q4 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 on your telephone. Please be advised that today's conference may be recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Sean Mills, Head of Investor Relations. Please go ahead.

Randy Altshuler Good afternoon, and thank you for joining us on Xometry's Q4 2021 earnings call. Joining me are Randy Altshuler, our Chief Executive Officer, and Jim Rollo, our Chief Financial Officer. During today's call, we will review our financial results for the fourth quarter and full year 2021 and discuss our guidance for the first quarter and full year 2022. 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 closed today and in our SEC filings included in the Form 10-K for the year ended December 31, 2021, that will be filed with the SEC. 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 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'd like to turn the call over to Randy.

Thanks, Sean. Good afternoon, everyone, and thank you for joining us for our Q4 2021 earnings call. We are pleased to report another strong quarter. we ended our first year as a public company on a high note, delivering 77% revenue growth and 121% gross profit growth year over year in Q4. We are rapidly delivering on our mission to build a leading global digital manufacturing marketplace, transforming one of the largest industries in the world. While we're still in the early innings of the secular shift to the digital for manufacturing, Fortune 1000 companies are increasingly rethinking their supply chains and manufacturing strategies. Xometry is uniquely positioned to meet their needs through the breadth of our platform across verticals, processes, and capabilities. Likewise, we are uniquely positioned to meet the needs of our sellers through our suite of seller services. With our cloud-based software platform, we aim to be the operating system for hundreds of thousands of sellers. Global events over the last two years have crippled supply chains, spurred product shortages, and limited access to raw materials, underscoring the need for rapid digital transformation of the manufacturing industry. Our two-sided marketplace has performed exceptionally well through the manufacturing volatility of the past two years, including COVID, ongoing supply chain disruptions, and the current tragedy in Ukraine. Our ability to match buyers and suppliers in real time and our weekly updates to our AI-driven pricing model provides reliable pricing and predictable margins, even during periods of volatile commodity prices. Likewise, with our supplier network expanding domestically and abroad, we offer our customers durable supply chains irrespective of macro events. The vast majority of our orders are fulfilled in-country alleviating issues related to overseas shipping delays. The addition of Thomas only enhances our capabilities. While our thoughts go out to those tragically affected by the war in Ukraine, Xometry continues to have strong and a growing business in Europe. We do not have buyers or sellers in Ukraine or Russia and have not experienced any business interruption. Moving on to our strong Q4 results. I will provide a review of our fourth quarter performance and provide an update on key business initiatives, including the integration with Thomas. Then I will turn the call over to Jim for a more in-depth review of our financial results and outlook. We had a strong Q4 with revenue of $67.1 million as we continue to see rapid adoption of our marketplace by both buyers and sellers, as well as completing the strategic acquisition of Thomas on December 9th. Excluding Thomas, Xometry revenue grew 66% year-over-year to $63 million and increased a strong 11% quarter-over-quarter. Thomas' revenue in Q4 from the time of the acquisition was $4.1 million. While we completed the acquisition a little more than three months ago, our integration efforts are off to a strong start. I will outline our progress and roadmap later in the call and in our earnings presentations. Q4 Xometry revenue growth was driven by continued robust growth in active buyers and the rapid adoption of the platform by larger accounts across both North America and Europe. The Xometry marketplace provides flexibility and instant access to a large, broad set of seller capabilities. Additionally, we provide our sellers convenient access to supplies, enabling them to lower their cost of operations. We also improve their cash flow through our basket of fintech products. In Q4, active buyers increased 49% year over year. We saw strength across many verticals, including consumer products, robotics, medical devices, and electronics and semiconductors, as well as ongoing strength in general manufacturing. Additionally, we drove robust growth within existing accounts, powered by our land and expand strategy, and an increase in large orders, including productions. The number of accounts with the last 12-month spend of at least $50,000 increased 80% year-over-year to 701, adding a record 99 accounts to that metric in Q4. Given the success of our land and expand strategy, we are investing to expand our enterprise sales effort in the near term. 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. In October, we launched version 2.0 of the Xometry app for Autodesk Fusion 360, a leading CAD design platform. Version 2.0 offers manufacturability feedback and multiple part upload features, improving the user experience for engineers and designers working in Fusion 360. We continue to expand our seller services revenue, including improvements to our supplies business and our basket of FinTech products. The usage of our financial products continue to improve, including Instant Pay, which launched in the fall. Our financial products improve sellers' cash flows and engagement levels. Our international business continues to deliver strong growth, driven by the team in Europe. In Q4, revenue in Europe increased over 300% year-over-year. Additionally, in Q4, we hired a general manager for our Asia Pacific business to quickly scale up our team and platform. We expect to formally launch a localized marketplace in that region by the end of Q1 and begin taking orders in Q2. We have a tremendous opportunity for international expansion and are investing to drive future growth. International revenue grew over 400% to $16.2 million for 2021, up from just over 3 million in 2020. Currently, over 90% of our revenue is generated in the U.S. We see an enormous global opportunity, and as with other leading online marketplaces, international revenue could be up to 40% or more of total sales over the next several years. On top of strong revenue growth, gross profit grew 121% year over year, excluding Thomas, Xometry gross profit dollars increased 83% year-over-year and 20% from Q3 to Q4 2021, driven by improvements in pricing and seller matching and 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 our marketplace to successfully match supply and demand and improve gross margins. On top of these strong financial results, in Q4 we made three acquisitions, including Big Blue Saw, Factory 4, and Thomas, to improve our marketplace experience for buyers and sellers and strategically transform our market and growth opportunities. Thomas is a leading online platform for industrial product sourcing, supplier selection, and marketing services. The addition of Thomas accelerates the growth of Xometry's marketplace, creating exceptional scale of buyers and manufacturers. We have established an end-to-end suite of seller services, including digital marketing products and advertiser services. Thomas is accretive to our margins and accelerates our path to profitability. We are executing against our integration plan as we now go to market as one company. We have integrated our teams, centering them around marketplace and seller services. We have a robust product roadmap focused on driving more buyers and sellers to the marketplace as we strive to become an enterprise solution for both. For buyers, we expect to integrate our instant quoting technology in the Thomas platform in Q2, opening up Thomas's 1.4 million plus registered users and 20 million annual sourcing sessions to our marketplace. The technology behind this integration is based on our Xometry Everywhere initiative, which can be integrated in minutes to unlock Xometry's instant quoting on virtually any website. We are launching Xometry Everywhere later in March. Additionally, in Q2, we will expand our quoting capabilities into new categories based on the data and suppliers from the Thomas network. Buyers will not only be able to choose from expanded categories and processes, but be able to more easily find local suppliers and with an expanded set of certifications. Also, buyers will be able to choose from over 45,000 diversity certified suppliers, a category that is increasingly important to enterprise buyers. Also, by the end of Q2, we will roll out our one identity single sign-ons. Our buyers will be able to seamlessly purchase across Xometry Instant Quote and Thomas RFQ with a single sign-on. One Identity will create a unified shopping cart across platforms to easily facilitate purchase and payment. For sellers, we introduced a new supplier analytics dashboard in the Thomas platform, which provides real-time data on buyers that are in market for the supplier services and the buyer's engagement with the supplier's profiles. Recently, we introduced a self-service option for sellers to purchase Thomas advertising services on the Thomas platform. Our new self-service option removes frictions for new customers and introduces a new entry price point for our marketing and advertising service offerings. The new dashboard and self-service options are foundational components of our strategy to significantly grow the number of premium suppliers and the frequency at which they actively engage with the Thomas platform. We expect to rapidly expand the number of premium sellers on the platform from roughly 5,000 today, given that there are 500,000 registered sellers on the platform. Also for sellers, we will release a new version of our order management software in Q2 to integrate seamlessly with the Xometry Marketplace and with the thomasnet.com platform, giving suppliers a one-stop view into all of their orders. At the end of Q2, we expect to launch a freemium version of this software as we look to drive deep adoption within our seller base. The operating system will serve as the platform to deliver our basket of seller services to our base of manufacturers and drive further engagement on our marketplace. We expect that our product release schedule will drive additional growth and revenue synergies for the balance of 2022. We remain confident in our plan to deliver up to $400 million in revenue in 2022, which Jim will provide more detail on later in the call. We have limitless opportunities to fuel our growth. This year will see us expand our marketplace domestically and abroad and deliver additional services to buyers and suppliers. Our TAM is over $2 trillion in the massive $35 trillion global manufacturing industry. We will continue to invest to further capitalize on our position as a leading two-sided marketplace. In 2020, our revenue was $141 million. In 2022, we expect that to nearly triple to $400 million. And at the same time, we expect gross profit dollars to grow over fourfold with significant gross margin expansion. And we're just getting started. With that, I'll turn the call over to our CFO, Jim Rallo, for a closer look at fourth quarter financial results and our business outlook.