Q2 2021 Xometry Inc Earnings Call

August 12, 2021

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Pardon me. This is the operator today's conference is scheduled to begin shortly please continue to standby. Thank you for your patience.

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Good day, and thank you for standing by and welcome to the summit tweet second quarter 2021 earnings call. At this time all 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 that session you will need to press star one on your telephone.

If you require any further assistance. Please press star zero I would now like to hand, the conference over to your Speaker, Sean meal, Vice President Investor Relations.

Good afternoon, and thank you for joining us on Zama <unk> Q2, 2021 earnings call. Joining me are already all sugar, our Chief Executive Officer, and Jim Rallo, Our Chief Financial Officer. During today's call. We will review our financial results for the second quarter.

2021, and discuss our guidance for the third quarter and full year fiscal 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 <unk>.

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 June 30.

2021 that will be filed with the SEC on or before August 16th we caution you not to place undue reliance on forward looking statements and undertakes 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 reach.

For 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 investors section of our website at investors <unk> Zama <unk> Dot 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.

Thanks, Sean.

Good afternoon, everyone and thank you for joining us for our first earnings call as a public company since.

Since many of you are new design Metairie I'll spend some time, introducing you to our business after reviewing our second quarter financial performance and business progress.

Before we begin I'd like to take this opportunity to thank our sellers, our buyers and our employees for making commentary the leading marketplace for on demand manufacturing as we further our mission to digitize one of the largest sectors of the global economy I would also like to thank our new public market <unk>.

<unk> as well as our existing investors for their support.

To start with a review of our second quarter performance, we had a strong Q2 with $56 million of revenue as we continued to see rapid adoption of our marketplace by both buyers and sellers.

This represents revenue growth of 45% year over year, and 15% quarter over quarter.

In Q2 active buyers increased 66% year over year.

Alongside strong new buyer growth, we continue to see robust growth within existing accounts, driven by our land and expand strategy that.

The number of accounts with the last 12 months spend of at least $50000 increased 54% year over year to 508.

On top of strong revenue growth gross profit increased 21% quarter over quarter with gross margins expanding 100 basis points to 23, 5%.

This was 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 us improve our gross margins.

In the first half of 2021, we added over 60, new materials finishes and processes to our instant quoting engine.

This allows us to widen the use cases for all of our buyers across key manufacturing processes and to attract new buyers, which underscores the extensibility of our on demand manufacturing marketplace.

In the second quarter, we released digital storefronts, the latest offering and our growing basket of seller services.

Adding a customized professional digital presence predominantly sellers increases their overall engagement visibility and prestige as they look to attract new buyers.

The storefront is integrated into our transaction engine, enabling our sellers to efficiently bring their own buyers and transactions to the geometry marketplace.

We monetize these transactions through our financial payment products.

Recently run Gina Clark, who is currently head of global transaction banking and Mitsubishi <unk> Financial group and is the former chief customer and marketing officer at Paypal joined our board of directors to help guide our payment strategy as I mentioned earlier since many of you are new to the story.

I'd like to take a few minutes to provide a brief overview of our marketplace and to discuss key opportunities for growth in areas of investment Zama tree is the leading on demand manufacturing marketplace.

Since our founding in 2013 growth has been tremendous including 92% compounded annual growth from 2018 to 2020 with $141 million of revenue in 2020.

Today, roughly 30% of fortune 500 companies or Zama tree buyers. Our mission is to accelerate innovation by providing real time equitable access to global manufacturing capacity and demand our vision is to drive efficiency sustainability and innovation by lowering the barriers to.

Entry to the manufacturing ecosystem and to digitize one of the largest industries in the world.

<unk> platform is a two sided marketplace connecting buyers and sellers of custom manufactured parts through our transparent online experience. The market is ripe for disruption and digitization with a highly fragmented regionalized base of sellers and highly inefficient opaque.

Process for buyers.

Not only is procurement traditionally slow and expensive. There is an increased focus from buyers on ESG issues as corporation supply chains produced five and a half times more emissions and their direct operations.

For buyers, we provide immediate pricing delivery estimates and quality assurance for sellers, we provide global access to buyers and jobs and a growing basket of seller services to help small local machine shops more efficiently run their businesses, including supplies shifting in a suite of financial.

Underpinning our marketplace is a proprietary artificial intelligence or AI powered marketplace enables instant competitive pricing and lead times across a constantly increasing number of choices and combinations of processes materials and finishes it starts with our software which enables.

<unk> three D geometry and feature recognition.

Our machine learning algorithms trained on a huge number of features enabling their platform to become smarter with each transaction driving higher revenue efficiency and margins as pricing and lead times improve we drive more buyers and higher engagement, resulting in more demand for sellers, creating a powerful <unk>.

Work effect for Us Hometree.

The power and value of our marketplace is evidenced by over 23000 active buyers, including leading brands in aerospace defense robotics medical devices consumer products automotive and space.

At the same time, we continue to ramp up our network of active sellers, which grew 82% from 2019 to 2020 to over 1410 active sellers.

With so many disruptions to our global supply chains.

The expanded breadth and resilience of our seller network has proved crucial to our buyer base our market opportunity is massive with a global Tam of $260 billion in custom on demand manufacturing a subset of the multi trillion dollar manufacturing industry.

Given the massive market opportunity and our scalable marketplace platform, we will be bold and aggressive in our sales marketing and technology investments, we're just getting started.

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, we have partnerships with leading CAD platforms, including solid works inventor and our recent March 'twenty, one launch of a new integration with Autodesk fusion three.

60, which enables users to get instant pricing and lead time estimates from geometry, without leaving fusion 360. Another key area of focus is expanding our basket of seller services.

In 2019, we launched seller services, beginning with zama tree supplies, which enables our sellers to buy competitively priced goods from leading brands.

In mid 2020, we introduced financial products, including the Zama treated dance card, which gives sellers immediate access to 30% of the value of the zama three jobs they accept <unk>.

Recently in March of this year, we launched <unk>, a new suite of payment products that allows sellers to quickly accept credit cards and offer payment terms for their customers that buy geometry.

These financial products offer sellers the opportunity to improve their cash flow.

Giving them capital to buy materials tooling and other expenses needed for business operations. Our seller services have been well received with 40% of our active sellers purchasing supplies or utilizing at least one of our financial products in 2020 in late 2019, we acquired a small team.

<unk> in Munich, Germany to launch our European operations since that time, we've seen a strong ramp in revenue in Europe as that platform Leverages. The AI learnings from our U S marketplace, we have a massive opportunity for international growth International revenue was just over $3 million for the year 2020 and is.

<unk> roughly $6 million in the first half of 2021 alone currently over 90% of our revenue is generated in the United States, We see an enormous global opportunity and are rapidly scaling up our operations in Europe and intend to build out similar capabilities in Asia Pacific as with other leading global online marketplaces.

International revenue could be 40% or more of total sales over the next several years.

Most of our public offering our pro forma cash balances roughly $346.8 million, providing strong liquidity to grow our business organically and the opportunity for strategic tuck in acquisitions to add to our platform, including new geographies or new services.

In Q3, and Q4, we're going to capitalize on our leadership position in the fragmented nature of our $260 billion market by accelerating investments in new marketing channels, creating a small dedicated sales team focused on our basket of seller services and stepping up our efforts to expand in new International G.

The AGA fees, including Asia Pacific, We're also increasing our investments in our machine learning algorithms and the application of them throughout the marketplace Zama tree is committed to promoting environmental sustainability across our services and to reducing the carbon footprint of manufacturing.

With the geometry go Green initiative, we purchase carbon credits to offset 100% of the estimated impact of the shipment of parts and we offer our buyers the ability to instantly calculate the price to purchase carbon credits to offset the C. O two omitted through the manufacturing of their parts.

Our stakeholders expect us to be good stewards, not only of our business, but of the world in which we all live so with a recent IPO, we founded geometry dot org.

Which supports the pledge 1% movement in is committing our equity overtime to support charitable organizations.

With that I'll turn the call over to our CFO, Jim Rallo for a closer look at second quarter financial results and our business outlook.

Thanks, Randy and good afternoon, everyone I'd like to Echo Randy's comments that we're excited to discuss our first results as a public company and to share our outlook for the business as Randy mentioned, we generated Q2 revenue of $50.6 million, a 45% year over year increase and up 15% quarter over quarter.

This increase was driven by strong growth in the number of active buyers, resulting from our continued investment in sales and marketing as we leverage our attractive unit economics.

As a reminder, we disclosed in our S. One that one customer associated with PPE products accounted for 11% of revenue in 2020 revenue growth in Q2 'twenty one.

Was approximately 53% excluding revenue from that one customer.

As Randy mentioned Q2 active buyers increased 66% year over year to 23942 in Q2, the percentage of revenue from existing accounts was 95% underscoring the efficiency and transparency of our business model that it leads to increasing accounts stickiness and spend over.

Time.

We believe the repeat purchase activity from existing accounts reflects the underlying strength of our business and provides us with substantial revenue visibility and predictability. 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.

There are accounts with the last 12 months spend of at least 50000 on our platform reached 508 at the end of Q2 'twenty one.

54% year over year, and 23, 3% quarter over quarter.

Q2, gross margin was 23, 5% down 30 basis points compared to 23, 8% in Q2 'twenty.

Q2 gross margin increased 100 basis points from Q1, 'twenty, one and early Q1, 'twenty, one we dampened our pricing algorithms to smooth out the impact of rapid commodity price increases to our buyers lowering gross margin at the start of the year.

Towards the end of Q1, we reversed the dampening adjustment driving improved gross margins quarter over quarter. We expect this trend of gross margin improvement to continue quarter over quarter in Q3, and Q4 as our marketplace continues to scale and as the number of transactions grow our machine learning become.

Smarter driving better matches for our buyers and sellers and increasing our gross margin over time moving onto Q2 operating costs Q2, 'twenty. One total operating expenses increased 69% year over year to $23.7 million, representing 46, 8% of revenue.

Q2, 'twenty one operating expenses included stock based compensation expense.

Of $2 million that is allocated across SG&A line items.

Additionally, Q2 operating expenses include approximately $5 million and public company costs.

Within our operating expenses sales and marketing is our largest variable component.

Given our large $260 billion Tam, we intend to aggressively grow our marketplace, including buyer and seller networks.

Sales and marketing costs were $8.9 million in Q2, an increase of 73% year over year, driven by continued investment to expand our network of buyers and sellers are hiring of additional salespeople and increased stock based compensation expense.

Sales and marketing as a percentage of revenue was 17, 5% compared to 14, 7% in the same period a year ago, we expect to invest more aggressively in sales and marketing in the second half of 'twenty, one, including new marketing channels increased digital marketing and further hiring in our sales team.

Our adjusted EBITDA loss for Q2 was $9.1 million or 17, 9% of revenue in.

In Q2 revenue from our U S and Europe operating segments was $47.2 million and $3.4 million respectively.

Segment loss from our U S and Europe operating segments for Q2 was $9.4 million and $2.8 million respectively.

We continue to invest in our European business, which is growing rapidly and improving gross margins as transaction volume increases.

At the end of the second quarter cash and cash equivalents.

Were $37.4 million with $15.9 million in debt in early July we raised approximately $325 million in net proceeds from our IPO and subsequently have paid down our debt, leaving a June 30, 'twenty, one pro forma cash balance of $346.7 million.

Now moving on to guidance, we expect Q3 revenue in the range of 53 to 55 million representing year over year growth of 26% to 31% as I mentioned previously one customer accounted for 11% of revenue in 2020 with the majority of those revenues in Q3.2020, excluding revenue from that customer revenue.

Growth guidance is 66% to 72% for Q3, 'twenty, one as compared to Q3 'twenty.

Our Q3 'twenty one revenue guidance assumes minimum revenue from that one customer we expect Q3, adjusted EBITDA loss to be in the range of $12 million to $13 million, reflecting the previously mentioned higher spending around sales and marketing accelerated international investments and higher public company costs that we estimate to be approximately.

<unk> 3 million per quarter moving forward in Q3, we expect stock based compensation expense in the range of two to $2.5 million, which we will exclude from adjusted EBITDA. Additionally, as Randy previously discussed as part of the IPO, we pledged 1% of the company's capitalization or approximately 403000 shares pedometer data.

For charitable contributions to nonprofit organizations.

As a result, each quarter, we will record a non operating charge to general and administrative expenses, which will be excluded from adjusted EBITDA. We estimate the discharge and Q3 'twenty one will be approximately one three to $1.6 million for.

For the full year, we expect fiscal year 'twenty, one revenue in the range of $207 five to $211.5 million representing year over year growth of 47% to 50%, we expect fiscal year 'twenty, one adjusted EBITDA loss to be in the range of $41 million to $43 million.

Reflecting the previously mentioned higher public company costs and further investments in sales and marketing.

With that operator can you. Please open up the call for questions.

Secondly, and as a reminder to ask a question simply press star one on your telephone to withdraw the question Christa Husky are the pound key.

One moment, while we compile the Q&A roster.

Our first question comes with a Sterling Auty with JP Morgan.

Yeah. Thanks, Hi, guys. So well first of all welcome to the public markets and then in terms of cost.

You talked about the 30% of the Fortune 500 that are customers I'm curious if you could talk to us about the trends.

How you are increasing penetration, especially within those larger companies what did you experience here in the quarter.

Yeah, Hey, it's Randy and thank you for the question I'm excited to be a public company now so.

I think as we mentioned earlier on we saw a great uptake.

An increase of 54%.

Two 508 accounts with more than $50000 and LTM basis, and as you can imagine most of those accounts are larger corporations, where we've been focusing our land and expand strategy.

So I think that's been very successful plus we've also begun rolling out technology tools, including integrations are what people call <unk> with ERP systems, which is also making those relationships stickier.

And as we grow.

The amount of materials and tools and in Q2, we added over 60, new processes materials and finishes that also allows us more and more to be that one stop shop for those corporations.

Right and then as a follow up you talked about the international investments that you are.

Making.

Where do you feel you are in terms of the needed president.

In the region to be able to scale that business.

Yeah. So we're very excited that if you look at the first six months, we've been focused in Europe and the revenue in the first six months of 2021 versus the first six months of 2020, we've seen growth of over five <unk>. So that's great and we think we can.

Take advantage of that success and move you move quicker, particularly in Asia Pacific.

Where.

We don't we've got a small number of sellers, there, but where we do not have a domestic presence. So we think we have some terrific opportunity. There we've seen that great success in Europe. So we're going to we're going to work faster to duplicate that kind of success in Asia Pacific in particular.

Got it thank you.

Thank you. Our next question comes from Mike <unk> with Goldman Sachs.

Hey, good afternoon, and congratulations on the first quarter as a public company.

I was just wondering if you could talk a little bit more about gross margins and the gross margin trajectory for the rest of the year, Jim you mentioned that.

The dampening adjustments and the sequential improvement I was just wondering if you could expand on that.

A little bit more thank you.

Sure Thanks, Mike No problem.

So again I think when you look at.

What happened in the first quarter right, we talked about.

The inflation that we saw in commodity pricing that commodity pricing was pretty quick in the beginning of the quarter, we decided to dampen the model in the beginning of the quarter and then realize that this is not a this isn't isn't.

A onetime thing this is a trend that's going to continue which we've seen continue we therefore remove that dampening off the model.

And at that point gross margins started to climb again and what you see is right. We had significant improvement right about 110 basis points actually.

Quarter over quarter as we as.

As we move through the second quarter of this year so.

The model is doing what it's supposed to do its adjusting for those prices.

The increase in commodities that is and so we expect to see continued performance around that over the rest of the year. So I would tell you that Q3 Q4, we expect to continue to get improvement in gross profit margin.

And again, we feel we feel very confident in our long term growth model and being able to achieve the margins that we've put out there.

Great. Thank you.

And I was just wondering if you could talk a little bit more about some.

Some of the Mega trends that Youre seeing that will help.

The on demand platform.

That's near shoring and Deglobalization or the proliferation of Skus.

Are you still seeing that momentum then are there any changes to either of those things.

Reopening continues to happen. Thank you.

Yes, I think we're beginning to see a secular shift.

Into digital manufacturing.

We're also we were one of the benefits of our marketplace.

Very technology extensible, so we've seen a lot of success in different verticals.

And in particular, a couple to call out.

In Q2, our consumer.

And we're also seeing an emerging industry, such as space and as in Green technology as well, so I think youre seeing more and more industries adopting this.

And again, there is sort of greater acceptance.

The secular shift to digital manufacturing model.

Yes, Mike I said, we're still right now trying to understand exactly how the infrastructure Bill that was passed will affect us I think.

On the surface, obviously, we feel like it's going to be positive for the business certainly not negative we will try to have a better update on that on our next call but.

Clearly, there's going to be an infusion of dollars coming through the U S economy, that's going to be focused on manufacturing a lot of that is going to be focused on small businesses.

And obviously, we're empowering small businesses. So we do expect to see.

Some positive impacts of that but again, we need to really study that that that bill and we'll give you more feedback on the next call.

Excellent. Thank you so much for the thoughts really appreciate it Jim and Randy.

Thank you and our next question comes from Brian Drab with William Blair.

Hi, Thanks for taking my questions.

I'm on two conference calls at the same time. So let me just ask two questions here in case that he's jumped to the other one for a second.

Or are you still expecting gross margin.

Step up in the second half of the year.

The.

Presentations that you showed at the head of the IPO It looks like Youre expecting about 25% in the third quarter and 26.

In the fourth quarter is that still the case and then my second question is.

Can you remind me how your.

Handling the digital storefront service in terms of is that.

Our revenue generating service or is that kind of more just to create more attachment with the sellers.

Yes, thanks, Brian So I think we will continue where we are.

I mean.

It will continue to see sequential gross margin improvement from Q2 to Q3 and from Q3 to Q4, and then as Jim said from beyond that as well. So we're seeing a nice trend there and we expect that to continue.

The digital store fronts are very exciting and.

As I mentioned in my remarks, they are being powered by our suite of financial products. So while there is no charge to the <unk>.

Our sellers to have a digital storefront the transactions that go through that storefront, where their financial products and we do it or we are able to monetize those.

Brian that answer your question.

He may be on his other call operator. Thank you. Thank you very much.

Alright, Thanks, Brian.

Next question comes from Karl Keirstead with UBS.

Thank you both and congrats on this first quarter, maybe one for both of you.

Randy you talked a couple of times about the desire to invest overseas to drive the business I'm wondering if you could just describe what the expected lag is between the time frame for those investments and when you would expect them to translate into sort of a needle moving impact on <unk> revenues and then perhaps I'll.

I'll just ask the second question to Jim Jim just so I understand the fourth quarter sequential growth dynamics.

The guidance you gave implies <unk> revenue growth sequentially of about 13% in <unk> 'twenty. It was negative 9% so quite a big difference I think the answer to why it's so different.

The <unk> 20 for the reasons you described was so big given that one client and perhaps that perhaps that pulled revenues from <unk> and so that makes for a much tougher sequential compare but I just wanted to make sure that that's in fact, the right way to think about it. Thank you both.

Yes.

Yes, So let me answer the first question Karl Thank you for that and then I'll hand, it off to Jim for the second so we expect within the next six months to formally launch our platform locally in the Asia Pacific market and Thats, what I think will begin to.

Two to generate revenue locally within Asia Pacific.

And now I'll hand off to Jim on the second question.

Yes, so I think.

As we talked about we had one significant customer last year that accounted for about 11% of our revenue so.

Backing that out obviously the growth rates will be stronger as I as I highlighted before.

I don't see it back to back to the revenue growth. So we don't see really at this point.

A slowing of revenue growth, we feel confident that we continue to grow strongly.

Grow strongly that is in Q3 and Q4 and beyond.

Jim So it sounds maybe like the fourth quarter implied guidance is a more more normalized revenue growth for the company.

Agreed yes.

Okay terrific. Thank you Bob.

Thank you. Our next question comes from Nick Jones with Citi.

Great. Thanks, Let me maybe kind of a bigger picture question on the the marketplace can you talk about the challenges it has to get more supply on the platform.

Is it is it.

What are the pressures and getting them to kind of come on and stay on why would they churn off.

I guess trying to understand kind of the supply versus demand constraint dynamics of the platform today and how youre working to solve that.

Yeah, Thanks, Nik I think.

A couple of things.

We've got a very.

Robust network of sellers already in the marketplace and so but one of our focus is to continue to grow our share of their capacity. We're also introducing new services such as our basket of financial services and others that are attracting new sellers in marketplace. So I think we're seeing growth in both ends both are growing.

Within the existing sellers their capacity and their spend and we're also attracting new sellers and thats been very successful work in fact, one of the reasons.

Last year, we saw 40% of our sellers use multiple use multiple products, we're kind of working on that success to invest even more this year and grow a small direct sales force.

And so therefore for gasoline on that buyer.

Yeah.

Great and can you maybe just touch on that.

The sellers, who are using some of the ancillary services that you have as well and what kind of attach rate and uptake you're seeing on those.

Okay.

Yes sure.

I'll take that Nick so as we disclosed in our S. One.

40% last year of our sellers adopted.

Our solar marketplace services, which includes obviously buying supplies all of our financial products and so forth we've seen an uptick in that number recently will.

We will give a stronger update on that when we get towards the towards the end of the year, but we continue to see improvement and the number of sellers adopting our seller services.

Great. Thank you.

Thank you.

Next question comes from Nat Schindler with Bank of America.

Yeah.

Yes, hi, guys. Thank you.

Just hoping if you could give a little bit more detail on how COVID-19 has impacted the business.

Other than the P P seller, which isn't obvious.

Direct impact, but any other broader impacts of changes were.

Were there any move by design engineers to look online for products early on because of COVID-19 or blocked out.

Yeah, I think just to go back what I was mentioning before this sort of secular adoption now digital manufacturing and because of concerns about supply chain agility.

And the potential impact of COVID-19 or or climate changes, we're seeing a lot of that.

Summer I think people are certainly more and more concerned about that particularly larger corporation. Sorry, I think you will continue to see a shift towards the digital and towards <unk>.

Supply chains or marketplace like dominant tree.

It gives you.

That gives you robustness and backup resiliency in case, there is a failure in one particular state or region of the world.

Now what I would say is the one thing we learned from Covid right.

Is that the the focus supply chains or concentrated supply chains that.

Typical.

Customers had with their manufacturers right that prove to be problematic during COVID-19 and what happened was right. We were open for business. The entire time during COVID-19. So obviously parts of the world shut down right I mean, China shutdown first.

Then Europe and then the U S and in parts of the U S right because certain states where open certain states were not we were able to use our global network right and we flex that network to be open for business. All the time for our customers. So what happened was right people realized that the marketplace that we operate.

Provides them the resilience that they need and Thats why <unk> seen an uptick right and a lot of the kpis like active.

Active buyers LTM and the number of accounts that are spending over 50000, right. It's the stickiness of that marketplace and the resilience of the marketplace that we proved during COVID-19, which which is helping drive those increases.

Great and related to that marketplace buildup and that global.

Seller base that you have when you move this business more internationally what types of Europe do you how much time do you need to build up local.

Manufacturing or is that just not necessary can you just move.

Pushing on the sales side of just one side of the equation the buyer side.

I think.

We want to offer our customers.

Buyers, both a local and international option so.

I think there is definitely for various reasons for time there may be.

Data issues et cetera, where it needs to be purchased locally within country or within region. So when we think about providing our buyers with the optimal experience and with the maximum number of options I think it's important to have a local network as well.

Great.

And I think that's what's great about our technology platform, and we're able to build that for them.

Okay.

Great. Thanks.

Thank you and our next question comes from Matt Hedberg with RBC capital markets.

Oh, Hey, guys. Thanks for taking my questions and congrats on the on the IPO.

Tim I wanted to circle back to a prior question and your comments, 40% of active sellers purchasing.

Our purchase of suppliers the purchase one or more financial service. When you look at some of those those sellers that have leveraged even more in other words, it really taken advantage of that.

And off harm moment that they had where they started to use it and then they realize I'm going to use this a lot more just sort of curious what that tipping point was on maybe expanded usage.

Yes.

I think look we've rolled out our products sequentially.

Matt So I think what we've seen is we've seen an uptake in the adoption as we've continue to rollout products as Randy described earlier in his comments right. We've continued to rollout products and Thats driving continued adoption and so.

We would expect that we would expect that to continue so we've just rolled out additional financial products.

Expanded our network of suppliers of MRO providers. So we feel confident that the adoption rate will continue as we talked about earlier the financial services piece of the business for US is very high margin, so 90% to 95%.

Gross profit margins and.

Again, we're getting good traction in that area from the business and the sellers, Yes, I think just to answer your question to dig a little bit deeper into that.

When a seller starts using our SaaS pay product for example, where they pay a fee to get paid even quicker you'll see that seller once he or she starts using it they use it from us for most of the future transactions. So when we talk about where we're making our investments one of the reasons, we're investing in it and a small.

<unk> force.

To sell this basket of seller services is to get more of those sellers into a because it becomes quite addictive. So our biggest.

The stickiness there has been really strong in the repeat rate of them using it has been a very high so when you're just going to get more people to taste. It and then and then.

I hope we continue to use it.

That awareness is going to be very important.

Once they once they sampled.

Want more that's great Randy and then you guys support several key manufacturing process P&C dicast check injection molding et cetera.

Curious.

I think you've got a lot of success in P&C.

Maybe just confirm that and we look forward to the future where do you see.

Some of the most interesting aspects of additional adoption of manufacturing processes I'm, just really curious sort of what people are leveraging the platform maybe today and maybe looking forward to how might that change.

Okay.

Yeah.

Yes.

We've seen really strong growth in all of our different.

Technologies and processes.

It's been a sort of an overall growth growth across the board.

I think whats and but I think when you look at the $260 billion market, it's still with many different.

Use cases in lots of different flavors. So I think as we continue to add more processes more technologies more finishes. We added over 60 last quarter I think that's what we're seeing that customers, particularly as we're trying to be that one stop shop as we're trying to grow that number of 50000 dollar accounts.

The key to that will be to be.

To have a big basket of options available for them and also as you move to end use products in production products that becomes increasingly important as well and so again thats why our marketplace approach and with their technology infrastructure, it's ideally suited for it.

Got it thanks a lot.

That's on the results too.

Thank you. Thank you.

Thank you and ladies and gentlemen, this concludes our Q&A and program for today. We thank you for your participation and you may now disconnect have a wonderful day.

[music].

Yes.

[music].

Good day and thank you for standing by welcome to the Cemetery second quarter 2021 earnings call. At this time all 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 that session you will need to press star one on your telephone.

If you require any further assistance. Please press star zero I would now like to hand, the conference over to your Speaker, Sean meal, Vice President Investor Relations.

Good afternoon, and thank you for joining us on <unk> Q2, 2021 earnings call. Joining me are already all sugar, our Chief Executive Officer, and Jim Rallo, Our Chief Financial Officer. During today's call. We will review our financial results for the second quarter.

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 all available in the investors section of our website at investors <unk> Dot 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.

Thanks, Sean and good afternoon, everyone and thank you for joining us for our first earnings call as a public company.

Many of you are new design commentary I'll spend some time, introducing you to our business after reviewing our second quarter financial performance and business progress.

Before we begin I'd like to take this opportunity to thank our sellers, our buyers and our employees for making any commentary the leading marketplace for on demand manufacturing as we further our mission to digitize one of the largest sectors of the global economy I would also like to thank our new public market.

Investors as well as our existing investors for their support I'm going to start with a review of our second quarter performance. We had a strong Q2 with $50.6 million of revenue as we continue to see rapid adoption of our marketplace by both buyers and sellers.

This represents revenue growth of 45% year over year, and 15% quarter over quarter.

In Q2 active buyers increased 66% year over year alongside strong new buyer growth, we continue to see robust growth within existing accounts driven by our land and expand strategy.

The number of accounts with the last 12 months spend of at least $50000 increased 54% year over year to 508.

On top of strong revenue growth gross profit increased 21% quarter over quarter with gross margins expanding 100 basis points to 23, 5%.

This was driven by improvements in pricing and seller matching on our AI powered marketplace.

In the first half of 2021, we added over 60, new materials finishes and processes to our instant quoting engine.

This allows us to why Didnt you use cases for all of our buyers across key manufacturing processes and to attract new buyers, which underscores the extensibility of our on demand manufacturing marketplace.

In the second quarter, we released digital storefronts, the latest offering our growing basket of seller services.

Adding a customized professional digital presence for <unk> sellers increases their overall engagement visibility and prestige as they look to attract new buyers.

The storefront is integrated into our transaction engine, enabling our sellers to efficiently bring their own buyers and transactions to the geometry marketplace.

We monetize these transactions through our financial payment products.

I'd like to take a few minutes to provide a brief overview of our marketplace and to discuss key opportunities for growth in areas of investment.

<unk> is the leading on demand manufacturing marketplace.

Since our founding in 2013 growth has been tremendous including 92% compounded annual growth from 2018 to 2020 with $141 million of revenue in 2020.

Today, roughly 30% of fortune 500 companies or Omics buyers. Our mission is to accelerate innovation by providing real time equitable access to global manufacturing capacity and demand our vision is to drive efficiency sustainability and innovation by lowering the barriers to.

Entry to the manufacturing ecosystem and to digitize one of the largest industries in the world.

<unk> platform is a two sided marketplace connecting buyers and sellers of custom manufacturing parts through our transparent online experience. The market is ripe for disruption and digitization with a highly fragmented regionalized base of sellers and highly inefficient opaque.

Process for buyers.

Geometry, and future recognition.

At work effect for Us Army tree.

The power and value of our marketplace as evidenced by over 23000 active buyers, including leading brands in aerospace defense robotics medical devices consumer products automotive and space.

At the same time, we continue to ramp up our network of active sellers, which grew 82% from 2019 to 2022 over 1410 active sellers with.

With so many disruptions to our global supply chains, the expanded breadth and resilience of our seller network has proved crucial to our buyer base our market opportunity is massive with a global Tam of $260 billion in custom on demand manufacturing a subset of the multi chip.

Billion dollar manufacturing industry give.

Given the massive market opportunity and our scalable marketplace platform, we will be bold and aggressive in our sales marketing and technology investments, we're just getting started.

60, which enables users to get instant pricing and lead time estimates for XOMA tree without leaving fusion 360. Another key area of focus is expanding our basket of seller services and.

In 2019, we launched seller services, beginning with <unk> supplies, which enables our sellers to buy competitively priced goods from leading brands.

In mid 2020, we introduced financial products, including the Zama tree dance card, which gives sellers immediate access to 30% of the value of the zama three jobs. They accept and recently in March of this year, we launched <unk>, a new suite of payment products that allows sellers to quickly accept credit cards.

And offer payment terms for their customers that buy geometry.

These financial products offer sellers the opportunity to improve their cash flow, giving them capital to buy materials tooling and other expenses needed for business operations. Our seller services have been well received with 40% of our active sellers purchasing supplies or utilizing at least one.

One of our financial products in 2020 in late 2019, we acquired a small team in Munich, Germany to launch our European operations since that time, we've seen a strong ramp in revenue in Europe as that platform Leverages. The AI learnings from our U S marketplace, we have a massive opportunity for international growth.

International revenue was just over $3 million for the year 2020, and has generated roughly $6 million in the first half of 2021 alone currently over 90% of our revenue is generated in the United States, We see an enormous global opportunity and are rapidly scaling up our operations in Europe and intend to build out similar.

Capabilities in Asia Pacific as with other leading global online marketplaces international revenue could be 40% or more of total sales over the next several years poster.

Post our public offering our pro forma cash balances roughly $346.8 million providing.

Strong liquidity to grow our business organically and the opportunity for strategic tuck in acquisitions to add to our platform, including new geographies or new services.

In Q3, and Q4, we're going to capitalize on our leadership position in the fragmented nature of our 260 billion dollar market by accelerating investments in new marketing channels, creating a small dedicated sales team focused on our basket of seller services and stepping up our efforts to expand in new international.

Fees, including Asia Pacific.

We're also increasing our investments in our machine learning algorithms and the application of them throughout the marketplace.

Commentary is committed to promoting environmental sustainability across our services and to reducing the carbon footprint of manufacturing.

With the geometry go Green initiative, we purchase carbon credits to offset 100% of the estimated impact of the shipment of parts and we offer buyers the ability to instantly calculate to price to purchase carbon credits to offset the seo to omitted through the manufacturing of their parts.

Our stakeholders expect us to be good stewards, not only of our business part of the world in which we all live.

With our recent IPO, we founded geometry, dot org, which supports the pledge, 1% movement and is committing our equity over time to support charitable organizations.

With that I'll turn the call over to our CFO, Jim Rallo for a closer look at second quarter financial results and our business outlook.

Thanks, Randy and good afternoon, everyone I'd like to Echo Randy's comments. They were excited to discuss our first results as a public company and to share our outlook for the business as Randy mentioned, we generated Q2 revenue of $50.6 million, a 45% year over year increase and up 15% quarter over quarter.

This increase was driven by strong growth in the number of active buyers, resulting from our continued investment in sales and marketing as we leverage our attractive unit economics.

As a reminder, we disclosed in our S. One that one customer associated with PPE products accounted for 11% of revenue in 2020 revenue growth in Q2 'twenty one.

Was approximately 53% excluding revenue from that one customer.

As Randy mentioned Q2 active buyers increased 66% year over year to 23942 in Q2, the percentage of revenue from existing accounts. It was 95% underscoring the efficiency and transparency of our business model that it leads to increasing accounts stickiness and spend over.

Time.

There are accounts with the last 12 months spend of at least 50000 on our platform reached 508 at the end of Q2 'twenty one.

54% year over year, and 23, 3% quarter over quarter.

Q2, gross margin was 23, 5% down 30 basis points compared to 23, 8% in Q2 'twenty.

Q2, 'twenty one operating expenses included stock based compensation expense of $2 million that is allocated across SG&A line items. Additionally, Q2 operating expenses include approximately $5 million and public company costs within our operating expenses sales and marketing is our largest variable component given our.

A large $260 billion Tam, we intend to aggressively grow our marketplace, including buyer and seller networks.

Adjusted EBITDA loss for Q2 was $9.1 million or 17, 9% of revenue.

In Q2 revenue from our U S and Europe operating segments was $47.2 million and $3.4 million respectively.

Segment loss from our U S and Europe operating segments for Q2 was $9.4 million and $2.8 million respectively.

We continue to invest in our European business, which is growing rapidly and improving gross margins as transaction volume increases.

At the end of the second quarter cash and cash equivalents.

Were $37.4 million with $15.9 million in debt in early July we raised approximately 325 million in net proceeds from our IPO and subsequently have paid down our debt, leaving a June 30, 'twenty, one pro forma cash balance of $346.7 million.

Guidance is 66% to 72% for Q3, 'twenty, one as compared to Q3 'twenty.

Approximately $3 million per quarter moving forward in Q3, we expect stock based compensation expense in the range of two to $2.5 million, which we will exclude from adjusted EBITDA. Additionally, as Randy previously discussed as part of the IPO, we pledged 1% of the company's capitalization were approximately 403000 shares <unk>.

Dot org for charitable contributions to nonprofit organizations.

As a result, each quarter, we will record a non operating charge to general and administrative expenses, which will be excluded from adjusted EBITDA. We estimate the discharge in Q3 'twenty one will be approximately one three to $1.6 million.

For the full year, we expect fiscal year 'twenty, one revenue in the range of 207, 5% to $211.5 million representing year over year growth of 47% to 50%, we expect fiscal year 'twenty, one adjusted EBITDA loss to be in the range of $41 million to $43 million.

Reflecting the previously mentioned higher public company costs and further investments in sales and marketing.

With that operator can you. Please open up the call for questions.

Secondly, and as a reminder to ask a question simply press star one on your telephone to withdraw the question Christa husky or the pound key.

One moment, while we compile the Q&A roster.

Our first question comes with a Sterling Auty with JP Morgan.

Yeah. Thanks, Hi, guys. So well first of all welcome to the public markets and then in terms of cost.

You talked about the 30% of the Fortune 500 that are customers I'm curious if you could talk to us about the trends.

How you're increasing penetration, especially within those larger companies what did you experience here in the quarter.

Yeah, Hey, Sterling, it's Randy and thank you for the question I'm excited to be a public company now so.

I think as we mentioned earlier on we saw a great uptake.

An increase of 54%.

Two 508 accounts with more than $50000 and LTM basis, and as you can imagine most of those accounts are larger corporations, where we've been focusing our land and expand strategy.

So I think that's been very successful plus we've also begun rolling out technology tools, including integrations or what people call <unk> with ERP systems, which is also making those relationships stickier.

And as we grow.

The amount of materials and tools and in Q2, we added over 60, new processes materials and finishes that also allows us more and more to be that one stop shop for those corporations.

Alright, and then as a follow up you talked about the international investments that you are.

Making.

Where do you feel you are in terms of the needed president.

In the region to be able to scale that business.

Yes. So we're very excited that if you look at the first six months, we've been focused in Europe and the revenue in the first six months of 2021 versus the first six months of 2020, we've seen growth of over five <unk>. So that's great and we think we can.

Take advantage of that success and move even quicker, particularly in Asia Pacific.

Where.

We don't we've got a small number of sellers, there, but where we do not have a domestic presence. So we think we have some terrific opportunities. There we've seen that great success in Europe. So we're going to we're going to work faster to duplicate that kind of success in Asia Pacific in particular.

Got it thank you.

Thank you. Our next question comes from Mike <unk> with Goldman Sachs.

Hey, good afternoon, and congratulations on the first quarter as a public company.

I was just wondering if you could talk a little bit more about gross margins and the gross margin trajectory for the rest of the year Jimmy mentioned.

Dampening adjustments and the sequential improvement I was just wondering if you could expand on that.

A little bit more thank you.

Sure Thanks, Mike No problem.

Again, I think when you look at it.

What happened in the first quarter right, we talked about.

The inflation that we saw in commodity pricing commodity pricing was pretty quick in the beginning of the quarter, we decided to dampen the model in the beginning of the quarter and then <unk>.

This is not a this isn't isn't.

A one time thing this is a trend that's going to continue which we've seen continue we therefore would remove that dampening off the model.

And at that point gross margins started to climb again and what you see is right. We had significant improvement right about 110 basis points actually.

Quarter over quarter as we as.

As we move through the second quarter of this year so.

The model is doing what it's supposed to do its adjusting for those prices.

The increase in commodities that is.

So we expect to see continued performance around that over the rest of the year. So I would tell you that Q3 Q4, we expect to continue to get improvement in gross profit margin.

And again, we feel we feel very confident in our long term growth model and being able to achieve the margins that we've put out there.

Great. Thank you.

And I was just wondering if you could talk a little bit more about.

Some of the Mega trends that Youre seeing that will help.

The on demand platform.

Whether thats near shoring and deglobalization or the proliferation of Skus.

Are you still seeing that momentum then are there any changes to either of those things.

Reopening continues to happen. Thank you.

Yes, I think we're beginning to see a secular shift.

Into digital manufacturing.

We're also we were one of the benefits of our marketplace.

Barry Technology extensible, so we've seen a lot of success in different verticals.

And in particular, a couple to call out.

In Q2, our consumer.

And we're also seeing an emerging industry such as space.

And as in Green technology, as well, so I think youre seeing more and more industries adopting this.

Again, theres sort of greater acceptance as the SEC.

<unk> shift to digital manufacturing model.

Yes, Mike I said, we're still right now trying to understand exactly how the infrastructure Bill that was passed will affect us I'd say.

On this on the surface, obviously, we feel like it's going to be positive for the business certainly not negative.

Try to have a better update on that on our next call but.

Clearly, there's going to be an infusion of dollars coming through the U S economy, that's going to be focused on manufacturing a lot of that is going to be focused on small businesses.

And obviously, we're empowering small businesses. So we do expect to see.

Some positive impacts of that but again, we need to really study that that that bill and we'll give you more feedback on the next call.

Excellent. Thank you so much for the thoughts really appreciate it Jim and Randy.

Thank you and our next question comes from Brian Drab with William Blair.

Hi, Thanks for taking my questions.

I'm on two conference calls at the same time. So let me just ask two questions here in case that he's jumped to the other one for a second.

Or are you still expecting gross margin to <unk>.

Step up in the second half of the year in the.

Presentations that you showed at the head of the IPO It looks like Youre expecting about 25% in the third quarter and 26.

In the fourth quarter is that still the case and then my second question is can.

Can you remind me how you are.

Handling the digital storefront service in terms of is that.

Our revenue generating service or is that kind of more just to create more attachment with the sellers.

Yes, thanks, Brian So I think we will continue where we are.

That's mainly it will continue to see sequential gross margin improvement from Q2 to Q3 and from Q3 to Q4, and then as Jim said from beyond that as well. So we're seeing a nice trend there and we expect that to continue.

The digital store fronts are very exciting and.

As I mentioned in my remarks, they are being powered by our suite of financial products.

So while there is no charge to <unk>.

Our sellers.

A digital storefront the transactions that go through that store front with our financial products and we do it or we are able to monetize those.

Brian that answer your question.

You may be on his other call operator. Thank you. Thank you very much.

Alright, Thanks, Brian.

Next question comes from Karl Keirstead with UBS.

Thank you both and congrats on the first quarter, maybe one for both of you.

Just ask the second question to Jim Jim just so I understand the fourth quarter sequential growth dynamics.

The guidance you gave implies <unk> revenue growth sequentially of about 13% in <unk> <unk>. It was negative 9% so quite a big difference I think the answer to why it's so different it's just the <unk> 20 for the reasons. You described was so big given that one client and perhaps that.

Perhaps that pulled revenues from <unk> and so that makes for a much tougher sequential compare but I just wanted to make sure that thats in fact, the right way to think about it. Thank you both.

To generate revenue locally within Asia Pacific.

And now I'll hand off to Jim on the second question.

Yes, so I think.

As we talked about we had one significant customer last year that accounted for about 11% of our revenue.

So.

Backing that out obviously the growth rates would be stronger as I as I highlighted before.

I don't see it back to back to the revenue growth. So we don't see really at this point.

A slowing of revenue growth, we feel confident that we continue to grow strongly will grow strongly that is in Q3 and Q4 and beyond got it Tim So it sounds maybe like the fourth quarter implied guidance is a more more normalized revenue growth for the company.

Agreed yes, okay terrific. Thank you Bob.

Thank you. Our next question comes from Nick Jones with Citi.

Great. Thanks.

Have a bigger picture question on the the marketplace can you talk about the challenges it has to get more supply on the platform.

That is it.

What are the pressures and getting them to kind of come on and stay on why would they churn off.

I guess trying to understand kind of the supply versus demand constraint dynamics of the platform today and how youre working to solve that.

Yeah, Thanks, Nik I think.

A couple of things.

We've got a very.

Our robust network of <unk>.

<unk> is already in the marketplace and so but one of our focuses is to continue to grow our share of their capacity. We're also introducing new services such as our basket of financial services and others that are attracting new sellers to marketplace. I think we're seeing growth in both ends both we're growing within the existing sellers their capacity and their staff.

And we're also attracting new sellers and Thats been very successful work in fact, one of the reasons last year, we saw 40% of our sellers use multiple use multiple products, we're kind of working on that success to invest even more this year and grow a small direct sales force.

And so therefore for gasoline on that buyer.

Yeah.

Great and can you maybe just touch on that.

The sellers, who are using some of the ancillary services that you have as well and what kind of attach rate and uptake you're seeing on this thanks.

Okay.

Yes sure.

I'll take that Nick so as we disclosed in our S. One we had 40% last year of our sellers adopted.

So our marketplace services, which includes obviously you're buying supplies all of our financial products and so forth we've seen an uptick in that number recently will.

We will give a stronger update on that when we get towards the towards the end of the year, but we continue to see improvement and the number of sellers adopting our seller services.

Great. Thank you.

Thank you.

Next question comes from Nat Schindler with Bank of America.

Yeah.

Yes, hi, guys. Thank you.

Just hoping if you could give a little bit more detail on how COVID-19 has impacted the business.

Other than the P. P seller, which is an obvious.

Direct impact, but any other broader impacts of changes.

Or were there any move by design engineers to look online for products early on because of COVID-19 or blocked out.

Yeah, I think just to go back what I was mentioning before this sort of secular adoption now digital manufacturing and because of concerns about supply chain agility.

And the potential impact of COVID-19 or or climate changes, we're seeing a lot of that.

Summer I think people are certainly more and more concerned about that.

Typically larger corporation, sorry, I think you will continue to see a shift towards digital and towards <unk>.

Supply chains or marketplace like dominant tree.

It gives you.

That gives you robot Smith and backup resiliency in case, there is a failure in one particular state or region of the world.

Now what I would say the one thing we learned from Covid right.

Is that the focus supply chains or concentrated supply chains that.

Typical customers had with their manufacturers right that proved to be problematic during COVID-19 and what happened was right. We were open for business. The entire time during COVID-19. So obviously parts of the world shut down right I mean, China shutdown first.

And then Europe, and then the U S and in parts of the U S right because certain states where open certain states were not we were able to use our global network right and we flex that network to be open for business. All the time for our customers. So what happened was right people realized that the marketplace that we operate.

Provides them the resilience that they need and Thats why <unk> seen an uptick right and a lot of the kpis like active active buyers LTM and the number of accounts that are spending over 50000, right. It's the stickiness of that marketplace and the resilience of the marketplace that we proved during COVID-19, which which is helping drive those increases.

Great and related to that marketplace buildup and that global.

Seller base that you have when you move this business more internationally what sites in Europe do you how much time do you need to build up local.

Manufacturing or is that just not necessary can you just move with.

By pushing on the sales side of just one side of the equation the buyer side.

I think.

We want to offer our customers.

Buyers, both a local and international option. So I think there is definitely for various reasons for time, there may be data issues et cetera, where it needs to be purchased locally within country or within region. So when we think about providing our buyer.

As with the optimal experience and with the maximum number of options I think it's important to have a local network as well.

Great.

And I think that's what's great about our technology platform, and we're able to build that for them.

Okay.

Great. Thanks.

Thank you and our next question comes from Matt Hedberg with RBC capital markets.

Oh, Hey, guys. Thanks for taking my questions and congrats on the on the IPO.

Jim I wanted to circle back to a prior question and your comments, 40% of active sellers purchasing.

Our purchase of suppliers to purchase one or more financial service. When you look at some of those those sellers that have leveraged even more in other words, it really taken advantage of that.

Was there an aha moment that they had where they started to use it and then they realize I'm going to use us a lot more just sort of curious what that tipping point was on maybe expanded usage.

Yes.

We've rolled out our products sequentially.

Matt So I think what we've seen is we've seen an uptake in the adoption as we've continue to rollout products as Randy described earlier in his comments right. We've continued to roll out products and Thats driving continued adoption and so we.

We would expect that we would expect that to continue so we've just rolled out additional financial products. We have expanded our network of suppliers are of MRO providers. So we feel confident that the adoption rate will continue as we talked about earlier the financial services piece of the business for US is very high margin.

So 90% to 95%.

Profit margins and.

Again, we're getting good traction in that area from the business and the sellers.

I think just to answer your question, we did take a little bit deeper into that.

When a seller starts using our SaaS pay product for example, where they pay a fee to get paid even quicker you'll see that seller once he or she started using it they use it from us for most of the future transactions. So when we talk about where we're making our investments one of the reasons, we're investing in it and a small <unk>.

<unk> for us.

To salvage that Covid seller services is to get more of those sellers into a because it becomes quite addictive. So our biggest.

The stickiness there has been really strong in the repeat rate of them using it has been very high. So we just got to get more people to taste. It and then and then.

I hope we continue to use it.

That awareness is just going to be variable.

Great.

Once they once they samples they want more thats, great Randy and then Andy you guys support several key manufacturing process C&C dicast check injection molding et cetera.

Curious.

I think you've got a lot of success in P&C.

Maybe just confirm that and we look forward to the future where do you see.

Some of the most interesting aspects of additional adoption of manufacturing process I'm, just sort of curious sort of what people are leveraging the platform maybe today and maybe looking forward to how might that change.

Yes.

We've seen really strong growth in all of our different <unk>.

Technology and processes, it's been it's been a sort of an overall growth growth across the board.

I think whats.

But I think when you look at the $260 billion market, it's still with many different.

Use cases and lots of different flavors. So I think as we continue to add more processes more technologies more finishes. We added over 60 last quarter I think that's what we're seeing that customers, particularly as we're trying to be that one stop shop as we're trying to grow that number at 50000 dollar accounts part.

Part of the key to that will be to be to.

To have a big basket of.

The options available for them and also as you move to end use products in production products that becomes increasingly important as well and so again thats why our marketplace approach them with our technology infrastructure, it's ideally suited for it.

Got it thanks a lot.

That's on the results too.

Thank you. Thank you.

Thank you and ladies and gentlemen, this concludes our Q&A and program for today. We thank you for your participation and you may now disconnect have a wonderful day.

Q2 2021 Xometry Inc Earnings Call

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