Xometry, Inc.

Good day and thank you for standing by. Welcome to Zometry Incorporated Q1 2023 earnings call. At this time, the 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 the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Sean Milne, Vice President of Investor Relations. Please go ahead.

And thank you for joining us on Xometry's Q1 2023 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 first quarter of 2023 and discuss our guidance for the second quarter and full year 2023. 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 before the market opened today and in our filings with the U.S. Securities and Exchange Commission, including our Form 10-K for the year ended December 31st, 2022, and our Form 10-Q for the quarter ended March 31st, 2023, that will be filed later today. We caution you to not 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 in 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 in our investor presentation, both of which are available in the investor section of our website at investors.zometry.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 morning, everyone, and thank you for joining us for our Q1 2023 earnings call. In Q1, we had the highest revenue in Xometry's history. We grew revenue 26% year-over-year, including 35% year-over-year growth in marketplace revenue. We added a record number of active buyers as we continue to gain market share. We significantly increased gross margins and operating leverage, reducing our adjusted EBITDA loss in Q1 from Q4 by 17%, and by 23%, excluding non-recurring Sarbanes-Oxley Act implementation compliance costs. The continuing shift to the digital is inevitable. And as the leading two-sided marketplace, Xometry's asset-light digital marketplace creates efficiencies and value for buyers and suppliers alike. Artificial intelligence is at the heart of Xometry, generating prices for buyers and suppliers across a range of on-demand manufacturing processes. We continue to develop our proprietary machine learning algorithms, adding support for additional features, such as new materials and finishes, and training our models on an increasingly large data set of custom manufactured parts. Our technology helps buyers significantly reduce their time to market and strengthen their supply chains, and enables small and medium sized suppliers to fill their capacity with work that can boost their growth and profitability. With our market leading position, an increasingly global footprint, and a total addressable market of $2 trillion, we expect to continue to grow rapidly for many years to come. While there are no shortcuts, we are steadily and methodically executing on our vision of becoming the de facto digital rails for custom manufacturing. In Q1, revenue increased 26% year-over-year to $105.3 million. Q1 marketplace revenue was $86.7 million, representing 35% year-over-year growth. We saw strength across all processes and many verticals, including electric vehicles, energy, industrial equipment, and robotics. Our value proposition continues to resonate strongly across all sizes of businesses, especially large enterprise customers. Supplier services revenue was 18.6 million, down 3% year-over-year. Gross profit increased 20% year-over-year to $39.4 million, driven by 41% growth in marketplace gross profit. Q1 marketplace gross margins increased 140 basis points year-over-year and 170 basis points quarter-over-quarter to 28.8%. Active buyers increased 46% year-over-year to 44,716, driven by a record addition of 4,052 active buyers in Q1. Active paying suppliers grew by 11% year over year in Q1 2023 to 7,621, driven by growth in Thomas marketing products, including self-serve. Starting this quarter, we will provide a number of active paying suppliers on a quarterly basis to give an additional KPI for a supplier services segment. An active paying supplier is defined as a supplier who purchased one or more of our supplier services, including digital marketing services, data services, financial services, or supplies during the last 12 months. International revenue grew 77% year-over-year and 13% quarter-over-quarter, driven almost entirely by the growth in our European business. Xometry Asia is growing with strong momentum, including the planned launch with Alibaba1688.com in Q2. In Q1, we continued to execute on the five-point strategic plan we outlined during our Q4 2022 earnings call. Here's an update on our progress. We refocused sales efforts on our top 200 accounts, which represented approximately 50% of 2022 U.S. marketplace revenue. The collective spend of these 200 accounts and manufacturing far exceeds Xometry's current revenue. So in early 2023, we redirected salespeople and customer support to them. Given the higher spend we have with these accounts and the potential to grow that spend significantly in the years to come, we are pushing deeper and wider into them. Accounts are increasingly engaging us to potentially support their production business and to manage their tailspin. While the sales cycle for these efforts are longer, the potential spend from these transactions is significant. This does not change our goal of rapidly expanding our base of buyers through digital marketing and other marketing efforts. In fact, We're seeing strong signs of increasing brand awareness as our organic search volume is growing at a rapid clip, helping fuel record growth of new active buyers. In Q1, we made significant progress in expanding our marketplace menu. As we grow the number of processes, materials, and finishes we can offer our customers, we are increasingly able to serve as their one-stop destination. In Q1, we added more than three dozen materials and finishes, including galvanized steel, stainless steel, and custom CNC materials. Additionally, we launched instant quotes for parts with multiple finishes. We also launched a new quick-turn injection molding service for quotes in as fast as two hours and parts in as little as five business days. For U.S. buyers, we introduced a new domestic economy shipping option, which offers lower pricing and longer lead times than the standard shipping option, but with higher pricing than our traditional offshore economy option. We are pleased with the adoption of the domestic economy. In Q2, we will continue to expand the menu and will offer buyers the ability to select an increasing number of manufacturing technologies, leveraging the tremendous breadth of what the hundreds of thousands of suppliers listed on thomasnet.com can offer. This depth and breadth is critical since our market is not defined by commodity parts or SKUs, but instead is made up of thousands of different use cases. This is one of the reasons the custom manufacturing market is so fragmented. Our marketplace is unique in its ability to meet these needs. We continue to expand aggressively internationally. We delivered strong growth in Europe and launched in the UK, which is the third largest manufacturing market in the region. In the UK, we are seeing early strong demand in such industries as medical, electric vehicles, autonomous related technologies, renewable energy, and propulsion systems. Additionally, in early Q1, we made a small tuck-in acquisition in Turkey to further expand our alternative cost supplier network to serve the European market. We launched Xometry.com.tr, a localized marketplace introducing the instant quoting engine to Turkish customers. Since launch, Turkish customers from machine building, engineering, and other industries are ramping up the use of our technology. In late Q1, Xometry Asia signed an agreement to provide instant quoting for Alibaba's group's 1688.com B2B wholesale marketplace in China. Xometry's AI-powered instant quoting engine is the sole provider of real-time pricing and lead time for custom parts on 1688.com. The industrial section of the 1688 marketplace had annual traffic of 30 million visitors in 2022. This should be fully operational shortly, and we are excited by the opportunity and the trust given by 1688 in our instant quoting technology. The upcoming launch with 1688 notwithstanding, we remain pleased with the ramp in buyer demand in China as we're seeing strong order growth across many verticals, including medical devices, biotech, material production, machine building, and sensor technology. We expect China to contribute to revenue growth in 2023, and stronger in 2024. Through Xometry.eu, Xometry.UK, and Xometry.Asia, we have leveraged Xometry's core technology to provide localized platforms in 13 different languages with networks of suppliers across Europe and Asia, as well as North America. In Q1, we invested approximately an incremental $1 million to fund expansion into the UK and launch the Turkey localized marketplace. We believe these investments will pay off with continued strong international growth over the years to come. In Q1, we invested in, enhanced, and continued to drive adoption of our new products, including WorkCenter and the Industrial Buying Engine platform, increasing our footprint with both buyers and suppliers and enabling us to scale cost-effectively. For our suppliers, we made important progress on WorkCenter, the SaaS-like operating system that is the digital foundation for manufacturers. In Q1, we expanded the work center job management tools and capabilities, including support for custom job workflows, job scheduling, communication tools, and accounting integrations. For buyers, we took significant steps towards improving the industrial buying engine. The industrial buying engine digitizes the cumbersome and time-consuming request-for-quote process taking what was once off platform and integrating it into the heart of thomasnet.com. In Q1, we made it easier for buyers to initiate requests and for buyers and suppliers to engage by consolidating all communication onto a single unified UX and technical platform. While the revenue from industrial buying engine transaction fees on thomasnet.com is not yet significant to Xometry's overall revenue, as we more tightly integrate it with our instant quoting engine, we can increase our buyer's share of wallet and be their one-stop shop. We continue to modernize the marketing products and expand self-serve options on the ThomasNet.com platform, making it easier for suppliers to start their marketing journey. In Q1, we implemented auto-renewal for all ThomasNet marketing programs. In 2023, we're working to move to a pay-for-performance advertising model on ThomasNet.com. Most search and listing engines that support advertising use a pay-per-click or other performance-based advertising model, which aligns the interests of buyers and suppliers. As we improve search, we expect to see a higher level of buyer engagement, improving the opportunity for search monetization. This will help drive growth of our higher-margin supplier services, as well as boost use of the industrial buying engine. We are continuing to increase efficiency and reduce expenses across our organization. In January, we reduced our workforce by 6% to better streamline operations. We are finding additional savings, including to our fixed costs, to continue our progress throughout the year to help Xometry become adjusted EBITDA positive in Q4. The underlying metrics of the marketplace are robust, with strong additions of active buyers and record order accounts, including from existing accounts. Our international business had a record quarter in Europe and is building momentum in Asia. We made good progress with the rollout and adoption of WorkCenter and building integrations to enable Thomas and Xometry users alike to access the breadth and depth of thomasnet.com's 500,000 suppliers, the full value of which we are continuing to unlock. As a result, we are once again delivering strong sequential growth in marketplace revenue, marketplace gross margin, and reduced adjusted EBITDA losses. For 2023 overall, we expect our momentum to continue and to remain in strong growth mode. With that, I will turn the call over to our CFO, Jim Rallo, for a closer look at first quarter financial results and our business outlook.

Thanks, Randy, and good morning, everyone. As Randy mentioned, we delivered strong marketplace growth in Q1 despite macro headwinds. Q1 revenue increased 26% year-over-year to $105.3 million, driven by marketplace growth. The stronger U.S. dollar negatively impacted revenue by $0.5 million on a year-over-year basis. Q1 marketplace revenue was $86.7 million, and supplier services revenue was $18.6 million. Q1 marketplace revenue increased 35% year-over-year, driven by strong growth in the number of active buyers. Q1 active buyers increased 46% year over year to 44,716 with 4,052 new active buyers. In Q1, the percentage of revenue from existing accounts was 96%, underscoring the efficiency and transparency of our business model that leads to increasing account stickiness and spend over time. Once an account joins our platform, we aim to expand the relationship and increase engagement and spending activities from that account over time. The number of accounts with the last 12-month spend of at least 50,000 on our platform reached 1,109 at the end of Q1, up 40% year-over-year. Supplier services revenue declined approximately 600,000, or 3% year-over-year in Q1. As Randy mentioned in his remarks, part of our strategic plan for 2023 is to modernize the Thomas advertising platform and expand the self-service marketing products on thomasnet.com. We expect these efforts to grow the number of digital marketing customers and to reduce the sales costs associated with acquiring them. This quarter, we are introducing a new KPI for supplier services. The number of active paying suppliers for Q1 2023 was 7,621 on a trailing 12-month basis. an increase of 11% year over year. Active paying suppliers is the number of suppliers who have purchased one or more of our supplier services, including digital marketing services, data services, financial services, or supplies during the last 12 months. We believe this KPI will help investors to better understand how we operate the supplier services segment and track its performance. Q1 gross profit was $39.4 million, an increase of 20% year-over-year. Total gross profit margin was 37.4%, down 200 basis points year-over-year, primarily driven by a mixed shift to marketplace revenue. Q1 gross margin for marketplace was 28.8%, up 140 basis points year-over-year, and 170 basis points quarter-over-quarter. Q1 gross margin for supplier services was 77.4%, driven by the high gross margin of Thomas Marketing and Advertising Services and growing financial services. Supplier services gross margin increased 110 basis points quarter over quarter due to a higher mix of Thomas Marketing Services revenue. Moving on to Q1 operating costs, Q1 total non-GAAP operating expenses increased 12% year over year to $51.2 million driven by continued investments in the business and public company costs. Q1 operating expenses included $0.8 million of incremental non-recurring accounting and legal costs associated with Sarbanes-Oxley compliance. Within our operating expenses, sales and marketing is our largest variable component. In Q1, non-GAAP sales and marketing expenses were $20.6 million, excluding stock-based compensation and amortization, an increase of 15% as compared to $17.9 million in Q1 2022. The increase in non-GAAP sales and marketing expenses on a year-over-year basis was driven by continued investment to expand our network of buyers and suppliers and hiring of additional salespeople to support strong growth in our land and expand strategy. We delivered strong growth in new active buyers in Q1, leveraging increasing brand awareness and efficient marketing spend. As Randy mentioned, we invested approximately an incremental $1 million in Q1 in to fund expansion in Europe, including the launch of the UK and Turkey marketplaces. Our just a bit dial off for Q1 was 11.8 million, or 11.2% of revenue, compared with 15.2% of revenue in Q1 2022. One quick note on GAAP EPS and Q1, as part of the IPO, we pledged 1% of the company's capitalization, or approximately 403,000 shares, to Xometry.org. for charitable contributions to nonprofit organizations. As a result, we recorded a non-operating charge in general administrative expenses, which is excluded from adjusted EBITDA. In Q1, we recorded a charge of 0.4 million. Turning to segment reporting, in Q1, revenue from our U.S. and international operating segments was 93.9 million and 11.4 million, respectively. Segment loss from our U.S. and international operating segments for Q1 was $12.9 million and $5.4 million, respectively. We continued to invest in our international business, which grew 77% year-over-year in Q1 and 87% year-over-year on an FX-neutral constant currency basis. At the end of the first quarter, cash and cash equivalents and marketable securities was $296.2 million. Now, moving on to guidance, We expect Q2 2023 revenue in the range of $109 to $111 million, representing year-over-year growth of 14% to 16%. We expect marketplace revenue growth to remain healthy in Q2 2023. As a reminder, Q2 2022 is the toughest year-over-year marketplace revenue comparison, with 56% growth in the prior year period. Given the significantly lower gross margin of supplies, we are not going to proactively offer this service to our partners, and we expect supplier services revenue to be down year over year. This change creates a drag reflected in our Q2 2023 revenue guidance. We expect marketplace and supplier services gross margins to improve in Q2 quarter over quarter. In Q2, we expect adjusted EBITDA loss to be in the range of $8.5 to $9.5 million, a significant 19% to 28% improvement quarter over quarter. Q2 adjusted EBITDA loss will be lower quarter over quarter, driven by sequential growth in marketplace revenue, improving marketplace gross margins, and further measures to tighten operating expenses, particularly fixed costs. In Q2, we expect stock-based compensation expense to be approximately $5 to $6 million, which we will exclude from adjusted EBITDA. As Randy mentioned, we expect robust marketplace growth and gross profit growth in 2023. We reiterate 2023 revenue guidance of $470 to $480 million, representing 23 to 26% growth year over year. We expect marketplace revenue growth of approximately 30% in 2023. We expect to be profitable on an adjusted EBITDA basis in Q4 2023. We expect significantly improved operating leverage in the second half of 2023, driven by strong buyer and order growth and further improvement in gross margins, driving faster gross profit growth. We expect significant leverage over fixed and semi-fixed costs, including public company costs. We expect 2023 adjusted EBITDA loss in the range of $24 million to $26 million, given the incremental non-recurring costs in Q1, and the additional international investments we discussed previously. With that, operator, can you please open up the call for questions?

Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Please stand by while we compile the Q&A roster. Our first question comes from the line of Ron Josie of Citibank.

Your line is now open.

Great. Thanks for taking the questions. I've got two, please. You know, Randy, I guess coming out of last year, we talked a little bit about supplier behavior and just wondering if you can talk to us about supplier behavior as they're turning to more normalized trends, you know, in terms of taking jobs and overall pricing, that would be helpful on number one. And the second key point on gross profits, Jim, you talked about margins expanding in the back half of the year, but we also saw margins expand at 1Q. So talk to us a little bit more about what's driving that overall gross margin, particularly in the marketplace side. Thank you, guys.

Yeah, and good morning. And, Ron, good to speak with you. So, you know, just going about the change from Q4 to Q1, you know, we saw marketplace revenue, you know, growing stronger even than we expected, and we saw strength in active buyer growth. and strong growth in orders. And suppliers continue to react well and participate well in the marketplace. So I think we saw strength across all processes and many verticals. And as we saw with our record add of net active buyers in the quarter, we also saw our competitive position continue to strengthen as well. Just on your question about gross margins going up, You know, we did talk about how in Q4, we've been doing experimentation, you know, testing the price elasticity of customers. We ended that at the end of January. So, you know, you saw a nice rebound in gross margins from Q4 to Q1 of 28, you know, of 170 basis points to almost 29%. And as we've also mentioned in this call, we've guided to increased gross margins for Marketplace and supplier services in Q2 as well.

Yeah, Ron and then Sean, I just want, you know, for the year we, you know, we also talked about gross margin being for the marketplace 30% plus.

Thank you.

Thank you.

One moment please for the next question.

Our next question comes from the line of Nick Jones of JMP Securities. Your line is now open.

Great. Thanks for taking the questions, too, if I can. I guess first, kind of high level, how much is some of these industry trends and metrics we're seeing reported impacting the overall business? Is that kind of a factor we're seeing, or is Omnistry still kind of able to grow through some of these macroeconomic pressures?

Yeah, look, I think with our investments in technology, our investments in international, and, you know, you're seeing in Q1 that we've been gaining market share by adding a record number of active buyers. And we saw strength, you know, Nick, across all processes and across many verticals. So, you know, I think as we gain market share and as our investments continue to pay off, you know, we're excited to continue to grow.

Great. And then maybe just as we think about the back half and the full year guide, you know, revenue would have to kind of accelerate to hit those. Can you kind of speak to what gives you confidence in the full year number? You know, are you seeing kind of similar behavior and active buyer kind of LTV to CAC or cohort curves that gives you confidence in kind of that performance and this kind of uptick in active buyers you've had?

Yeah, look, again, I think in the second half, we expect our investments that we've been talking about to continue to bear fruit, including, you know, continue strong active buyer growth, order growth, and international growth. And we think those combined will, you know, enable us to, you know, to reach that guidance that we provided.

Great. Thanks, Randy. Thank you. One moment, please. Our next question comes from the line of Brian Drab of William Blair.

Your line is now open.

Good morning. Thanks for taking the questions. I was wondering if you could talk first a little bit more about the Alibaba 1688 opportunity. Just some more detail there would be helpful. I mean, the big question is, what's the revenue opportunity there longer term? And can you talk about how that agreement and how the business model is structured? And have they ever tried providing custom parts in the past? Thanks.

Yeah, and Brian, good morning, and thank you for the question. So, you know, we've not baked in, just to be clear in our guidance here, anything related to 1688. You know, as we talked about during their prepared remarks, you know, notwithstanding 1688, Our China marketplace has been growing very strongly, so we're very happy about that. We expect it to be a revenue contributor this year and even a stronger revenue contributor in the year that follows. We are excited. That said, we are very excited about the 1688 opportunity. It will, you know, be fully operational later this quarter. And, you know, it will actually be, you know, 1688 is using our technology to provide the instant quoting for custom parts, and we're the exclusive provider of that. And then, you know, Domitry Asia will be the fulfillment for that. I actually don't know, Brian, if they've ever offered it before. I don't think so. But, and I believe the answer is they've never offered it before, but I couldn't tell you 100%, but I strongly believe they've never offered it before.

Yeah, and Brian and Sean, and just on the agreement, you know, there's not a revenue share. In terms of when it gets rolling, it'll run through our marketplace revenue and KPI.

I know we've discussed this, but I still am not perfectly clear. Does that just mean that they're basically directing you leads and the revenue and margin opportunity for Xometry is the same as it is in your legacy marketplace, or is it different? Is this going to be revenue at similar marketplace margin?

Yeah, we know, I mean, again, our margins, you know, particularly as we're standing up, we talk about this, we're saying geographies don't necessarily reflect, you know, don't necessarily mirror the margins exactly in our mature markets, but yes, it will In terms of the way it functions, it will be similar to the way it functions in Europe or in the United States or North America. So very, very similar.

Yeah, and just a quick follow-up. I know you said direct leads, but, again, just for what on the call, I mean, our instant quote technology is embedded within their marketplace. So it's not as if, you know, a customer is being redirected to a different platform. So it's embedding that technology on their marketplace in a seamless experience.

So if you're on 1688 and now we'll be able to offer for people on 1688 the ability to instant quote their parts, you're using our technology to do that. And that is part of being built into what 1688 can offer. So we're pretty excited about it.

Yeah, I guess I've used the wrong word, but I'm just thinking it's generating leads for you. You're basically stepping into this massive flow of 30 million users annually. And when you say there's not revenue share, it means you're not sharing, Thometry is not sharing revenue with them. Is that what you're?

Yeah, we're not sharing revenue with 1588. So it's, you know, Holly, 1688 makes fees by, you know, handling transactions for people, et cetera. They're not getting a piece of this transaction, Brian.

Yeah, they make money on the float, Brian. So the checkout will be through their process, and that's how they make their money.

Yeah, can you elaborate on that, Jim, and just define what you mean by float in this context? I think I've just got a lot of questions on this. It would be a good time to clear it up.

Yeah, Brian, so just that when people, one of the things that happens in 1688, and it's just different there, is people will pay that will be then held by 1688, and then once the order is shipped, in our case, then they would release the funds. So that's similar on Alibaba and other platforms. So they're holding the funds from the buyer, and then they release them when the seller delivers.

Right. So in the interim, when they're holding those funds, they can invest them or generate some interest on that and make some money off of this. But in terms of the transactional revenue and margin, that goes to Xometry.

It's not any different, Brian. It's the same as we've got everywhere.

Yep. Okay. All right. Thank you for that. And then just quickly, the supplier services down, revenue down 3% year over year. It sounds like that you're pulling back some marketing expense there and maybe just not focusing on selling the services as aggressively going forward. Is that just an ROI type of decision? And how big a drag on revenue for 23? Is this just a million or two?

Brian, and yeah, so there is a specific service that we offer, which is selling supplies, you know, supplier services, the bulk of our supplier services is marketing, you know, marketing services, you know, that we've got with ThomasNet. But as you know, historically, Xometry has sold supplies to suppliers, you know, whether it's materials and tools. So that is a segment of supplier services that we're pulling back from its It's got significantly lower gross margins. And so we're not actively marketing it to the suppliers. So that's why we thought about in Q2, you're going to see year-over-year revenue from suppliers just go down because we're not actively marketing that to our suppliers. Ultimately, that's a more profitable, it's going to help our margins. So it's a proactive thing that we're doing. But of course, the other marketing services, Inspire Services, we are investing in the technologies we talked about and building our sales and marketing capabilities around those.

Okay. I got it. Thanks a lot.

Thanks, Brian.

Thank you. One moment, please. Our final question comes from the line of Greg Palm from Craig Hallam.

Your line is now open.

Yeah, good morning. Thanks for taking the questions here. I wanted to start with active buyers because it was a nice pickup again in terms of net ads for the quarter. And I guess my first question is, are you seeing a different sort of mix in some of the new net ads this quarter, last quarter versus maybe historical levels? And I guess your comment about Going deeper into the top 200, should we assume that, you know, a big portion of these net ads are just that? It's increasing wallet share within a certain company or enterprise? Or are you actually seeing good net ads in different or separate enterprises as well?

Yeah, great question. So we are seeing, you know, we've got a big funnel. We are seeing a really nice addition of new logos. You know, people say new accounts. And the behavior of these accounts in Q4, the makeup or the demographic of it is similar to accounts that we've added in previous quarters. We're just, you know, we're getting more efficient with our marketing spend. We've got more organic growth. And so, we're just adding more active buyers each quarter. And, you know, yes, we are certainly, you know, we've got a five-point strategic plan going deeper and wider into the top 200 accounts. We are adding more buyers there, but the funnel of new logos is very strong.

And, Greg, Randy meant to say Q1, but the other thing you're seeing is broad-based strength and active buyer growth, but not only in the U.S., but remember Europe is growing at a very fast rate, so we're seeing good buyer growth over there as well.

And in terms of the assumptions, you know, behind the Q2 revenue guide, I Does it assume another sequential increase in net ads or maybe a similar level of what you saw between Q4 and Q1?

Yeah, I mean, we don't guide specifically to that metric, but you should expect healthy net ads going forward. And, you know, Greg, as you play that out, this is something we talked about the last few calls. As you play that out through 2023, that drives good, strong growth year over year in active buyers.

Understood.

Okay, I'll leave it there. Thanks. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.