Xometry, Inc.

Hello and thank you for standing by. Welcome to Xometry Q4 and four-year 2023 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. I will now like to hand the conference over to your speaker, Sean Mill. You may begin.

Good morning, and thank you for joining us on Xometry's Q4 and full year 2023 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 fourth quarter and full year 2023 and discuss our guidance for the first quarter and full year 2024. 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 31, 2023, that will be filed later today. 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 investors 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 Q4 and full year 2023 earnings call. In Q4, we had the highest revenue and gross profit in Xometry's history, beating our previous highs from Q3 of 2023. We grew revenue 31% year-over-year to $128 million, driven by accelerating 42% year-over-year growth in marketplace revenue. Q4 marketplace gross profit increased 68% year-over-year, driven by our AI-powered marketplace. Q4 marketplace gross margin improved 500 basis points year over year. Overall in 2023, we delivered 30% marketplace growth and stronger active buyer and order growth despite an ongoing contraction in U.S. manufacturing. We are gaining significant market share. On top of strong marketplace revenue and gross profit growth, we improved our operating leverage. reducing our adjusted EBITDA loss in Q4 by 32% from Q3 to $2.9 million as we continued to balance growth and profitability goals. On a year-over-year basis, Q4 adjusted EBITDA improved by $12.8 million, driven by significant leverage in our core U.S. marketplace, partly offset by investments internationally. Over the past few years, we have rapidly grown our networks and expanded our marketplace globally, further strengthening our competitive mode. At the same time, we made significant investments in product development and technology infrastructure and selected acquisitions. We now offer tools to digitize work for both buyers and suppliers, as well as provide software and information for customers to improve decision-making and increase efficiency. In 2023, we significantly expanded our networks of buyers and suppliers. We added over 14,000 net new active buyers in 2023, an 18% increase over the 2022 period, even as we spent 6% less on advertising. Active suppliers increased 36% year over year to 3,429. There is strong demand to join our rapidly growing platform. Our increased focus on top customers and investment in our sales team drove progress in our enterprise strategy. In Q4, Accounts with last 12 months spend of at least $50,000 grew 30% year over year to 1,331. We added an all-time high 108 quarterly net additions in Q4. In 2023, we significantly expanded our marketplace menu, including new processes, materials, finishes, and certifications, enabling us to increasingly serve as our customers' one-stop destination. We saw a strong growth in production work, including our revamped quick turn injection molding offering. We expanded the marketplace to include instant coating of inserts, multi-part assemblies, and expanded sheet cutting processes. We made significant progress across product development and technology, including new products and services such as TeamSpace, and important foundational work on the Thomas advertising platform. After a successful pilot with several large customers in Q3, in Q4 we integrated TeamSpace into the Xometry platform for all of our buyers to use. TeamSpace moves the Xometry marketplace from a focus on individual buyers and parts to procurement teams managing assemblies and products. The early feedback remains positive, with rapid adoption including over 1,500 teams created since launch. We continue to expand aggressively internationally. In Q4, we launched SOLIDWORKS CAD software plugins for customers in the EU, UK, and Turkey. We ended 2023 with accelerating growth. However, January was much weaker than we had anticipated, particularly as the number of large orders declined significantly. While revenue trends improved from January to February, we expect Q1 year-over-year marketplace growth will be slower than that in Q4. Since we are still so early in the year and we want to be prudent, we are providing a full-year outlook that assumes a similar trend as Q1 for the remainder of the year. This equates to at least 20% growth in marketplace and adjusted EBITDA profitability beginning in Q3 and onwards. Since underlying marketplace metrics are healthy, we're going to continue to execute on our roadmap. We will, of course, tightly control operating expenses, as well as make strategic investments in technology and growth to help us achieve our long-term growth and operating margin goals. In 2024, these include, first, expanding our network of active buyers and suppliers, Second, driving deeper enterprise engagement. Third, expanding the marketplace menu. Four, growing internationally. And five, enhancing supplier services solutions. We expect to focus on these growth initiatives and on further operating efficiency to drive profitability and improve margins over time. In 2024, we expect our active buyer growth to remain strong. In Q4, active buyers grew 36% year over year even as we balanced advertising investments against profitability goals. In Q1, we expect there to be higher quarter-over-quarter net buyer ads. We continue to invest in our enterprise sales efforts in 2024. Over the past several months, we expanded our sales force to service and grow with our enterprise customers. We're making progress with Fortune 500 companies as they look for a technology partner to help manage dispersed, fragmented, and complex supply chains. We will continue to improve marketplace functionality and expand the marketplace menu, including our new partnership with Google Verdicts AI. Xometry and Google are deeply engaged, working together to accelerate deployment of new auto-quoting models within Xometry's AI-powered instant quoting engine. In 2024, we will push deeper into our existing international markets versus entering new geographies. Through Xometry EU, Xometry.UK, and Xometry.Asia, we have leveraged Xometry's core technology to provide localized marketplaces in 14 different languages with networks of suppliers across Europe and Asia, as well as North America. Finally, we are enhancing supplier services, including modernizing the Thomas advertising platform. We are focused on making it easier for suppliers to start their advertising journey and on increasing adoption of ThomasNet. For our suppliers, we continue to enhance WorkCenter, the digital operating system for manufacturers. We are focusing on improving the overall experience for suppliers, reducing the effort required to accomplish their daily tasks. Xometry is a technology company disrupting a massive addressable market with millions of buyers. As we continue to expand the applications of our AI and increase the breadth of what we can offer we are serving more and more buyers. Capitalizing on these trends, we expect robust growth in 2024 and for many years thereafter. The shift to the digital, which has happened in so many other industries, is inevitable in custom manufacturing. We continue to expand our competitive moat by improving upon our proprietary pricing and matching algorithms, growing our data lake, enlarging our networks of buyers and suppliers, and increasing our global footprint. Before handing the call over to Jim, I want to thank him and wish him well. Jim successfully executed our initial public offering and helped drive growth and scale in our business, including expanding internationally. Today, we announced that James Milne will be our new Chief Financial Officer, effective March 1st. James was previously at Yelp, where he was Senior Vice President of Finance and Investor Relations. James has significant experience across marketplaces, search and advertising, and will help us capitalize on our leadership position in digitizing manufacturing. He brings extensive operational excellence to Xometry and will help us achieve our long-term operating margin targets. With that, I'll now turn the call over to Jim Rolla.