Xometry, Inc.

Good day and thank you for standing by. Welcome to the Xometry Q3 2024 earnings 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 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Sean Milne, VP of Investor Relations.

Good morning, and thank you for joining us on Xometry's Q3 2024 earnings call. Joining me are Randy Altshuler, our Chief Executive Officer, and James Milne, our Chief Financial Officer. During today's call, we will review our financial results for the third quarter and discuss our guidance for the fourth 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 our filings with the U.S. Securities and Exchange Commission, including our Form 10-Q for the quarter ended September 30, 2024. 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 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 on 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 our Q3 2024 earnings call. Q3 was a strong quarter for Xometry across many fronts. Our AI-powered marketplace delivered record revenue, record gross profit, and record marketplace gross margin. And in Q4, we expect to be slightly adjusted EBITDA profitable, which is another important milestone in our mission to to digitize the multi-trillion dollar global custom manufacturing industry. We expect strong secular growth and continued operating leverage as we scale to $1 billion and beyond, driven by our key growth initiatives. Powered by AI, our manufacturing marketplace continues to gain significant market share globally as buyers and suppliers realize the value, convenience, and resiliency of our platform. Xometry is increasingly embedded in our customer supply chains. digitizing inefficient and cumbersome processes, and delivering value and reliability for buyers. We've made great progress in Q3 and are focused on driving further penetration in this massive market. In Q3, we expanded within strategic accounts, deepening our relationships across their buyer base. For example, one of the largest global technology companies is leveraging the Xometry Marketplace as a source for 3D printing, machining, and assembly for their consumer technology products. This move reduces the burden and risk of maintaining their broader supplier network. Similarly, suppliers use Xometry's platform to digitally monetize their manufacturing capacity, improve their profitability, and access global demand at minimal cost. In Q3, active suppliers surpassed 4,200, growing nearly threefold since the beginning of 2021. Our network spans all 50 states and three continents, enabling our marketplace to react quickly to changing customer demands. Our supplier network is a key differentiator and further expands our competitive moat, providing buyers with resilient supply chain solutions and geographic flexibility. Our network has a broad range of expanding capabilities, including CNC, injection molding, sheet metal, urethane casting, additive manufacturing, and the recently released tube bending and cutting. In Q3, we delivered strong growth with revenue increasing 19% year-over-year to a record $142 million, driven by our marketplace business. Q3 marketplace revenue grew 24% year-over-year and a robust 8% quarter-over-quarter. We saw strength across many end markets, including engineering, aerospace, consumer, and robotics. Q3 gross profit increased 21% year-over-year to a record $55.8 million. Q3 marketplace gross profit increased 34% year-over-year, driven by our AI-powered marketplace and increasing network of active suppliers. As we scale our data, our machine learning AI model gets better at pricing and matching, which in turn fuels gross profit dollar growth. Q3 marketplace gross margin expanded 250 basis points year-over-year to a record 33.6%. In the past three years, we expanded our marketplace gross margin from 23.5% to 33.6%, underscoring the power of our AI-driven model. Strong marketplace revenue and marketplace gross profit growth drove an 85% improvement in our adjusted EBITDA loss to a record low of approximately $600,000. We delivered strong leverage in our U.S. marketplace while making investments to drive international growth and scale. In order to drive sustained market share gains, we are focused on these growth initiatives. First, expanding our network of active buyers and suppliers. In Q3, active buyers increased 24% year-over-year with net additions of over 3,300. We expect our active buyer growth to remain healthy as there are millions of potential buyers and Xometry's brand awareness is growing but still low. We continue to increase the breadth and depth of our supplier network, which, as I mentioned earlier, reached over 4,200 in Q3. In Q3, we expanded our supplier base in the U.S. with a focus on adding new suppliers with key quality certifications to serve the production needs of our larger customers. We're also growing our supplier reach in new instant quoting categories, including tube cutting, tube bending, and other tooling-based processes to support anticipated areas of growth. Second, expanding the marketplace menu. Our goal is to be the primary destination for our customers' manufacturing and supply chain needs. To help accomplish that, we need to provide instant quoting for as many manufacturing processes and materials as possible. In Q3, we made progress doing just that, driven by our continued investments in next-gen AI and our partnership with Google Verdicts. We launched laser tube cutting and tube bending instant quoting, which is a differentiator for these large processes. We are seeing early customer interest for these processes, including production orders from a strategic aerospace customer. Third, driving deeper enterprise engagement. Some of our biggest customers are the largest companies in the world. In Q3, we made strong progress with our land and expand efforts as the number of marketplace accounts with last 12 months spend of at least $50,000 increased 23% year over year to 1,506. While our growth with these accounts has been strong over the years, there's a terrific opportunity to significantly accelerate their adoption of Xometry. To make that happen, we have a two-pronged approach of technology and enterprise solutions. Technology features include Xometry's TeamSpace and integrating directly into our customers' ERPs. Fourth, growing internationally. In Q3, international revenue grew 55% year-over-year, driven by strong growth in Europe. It is now approaching a $100 million annual run rate. Currently 19% of total marketplace revenue. We believe international can represent 30% to 40% of marketplace revenue, consistent with many other global online marketplaces. Xometry EU expanded its marketplace with the addition of a suite of collaboration tools. These tools enable engineers, procurement professionals, and project managers to collaborate and manage higher volume complex orders. In Q3, a French design and manufacturing company specializing in unmanned vehicles and robotics leveraged Xometry's manufacturing solutions to strengthen their supply chain and reduce operating costs by streamlining procurement. Xometry Asia continues to expand, including the recent launch of an English site in APAC. This is already bearing fruit with a small consumer product company in Australia choosing Xometry's marketplace to move from prototype to production for an entire assembly, including CNC and 3D processes. This production order is our first seven-figure order in APAC and will deliver over a number of quarters. Through Xometry EU, Xometry UK, and Xometry Asia, We've leveraged Xometry's core technology to provide localized marketplaces in 16 different languages with networks of suppliers across Europe and Asia, as well as North America. Fifth, enhancing supplier services solutions. In Q3, we continue to invest in important foundational work to modernize the Thomas advertising platform. We are focused on restoring Thomas advertising growth, given the 85% plus gross margin and strong contribution margin opportunity. By improving the underlying platform technology, we will enhance the experience for both users and advertisers, providing opportunities for growth and engagement. One of our top goals is to drive increasing advertiser penetration on the platform, which is approximately 1% today out of the roughly 500,000 suppliers listed on Thomas. In Q3, we enhanced self-serve advertising capabilities on the Thomas platform. With these enhanced tools, Businesses of all sizes can leverage the platform to instantly define and enable custom campaigns to reach targeted audiences. Modernizing Thomas' technology will enable us to grow its profitable advertising services and further realize synergies between our supplier services and marketplace businesses. These include, but are not limited to, our efforts to be the one-stop destination for our customers' custom manufacturing needs, and leveraging the Thomas Supplier Network to aid in expanding our marketplace menu. For example, we jump-started the launch of tube cutting and tube bending processes with many Thomas suppliers. Driven by our growth initiatives, we expect to deliver marketplace growth in the range of 22% to 23% for the full year 2024, ahead of our prior outlook of at least 20%. We believe these initiatives can drive at least 20% marketplace growth in 2025, given the large fragmented market opportunity and secular shift to the digital. In addition, we expect overall revenue growth in 2025 to exceed that of 2024. I'm proud of the collective efforts of our global team. Our continued strong execution and growth demonstrates the significant strides we're making to digitize supply chains. Our momentum demonstrates the trust buyers and suppliers place in Xometry. The combination of our extensible technology platform, expanding data lake, and rapidly growing networks of buyers and suppliers will continue to fuel strong growth and margin expansion. Our competitive mode is expanding each day. I'll now turn the call over to James for a more detailed review of Q3 and our business outlook.