Q3 2023 Xometry Inc Earnings Call
Good day, and thank you for standing by.
Welcome to the Zama, three Q3, 2023 earnings call.
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I would now like to hand, the conference over to your first speaker today, Sean now VP of Investor Relations.
Good morning, and thank you for joining us on geometries Q3, 2023 earnings call.
Joining me are Randy I'll, Ciulla, our Chief Executive Officer, and Jim Rallo, Our Chief Financial Officer.
During today's call, we will review our financial results for the third quarter of 2023 and discuss our guidance for the fourth 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 maybe 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, 2022, and our Form 10-Q for the quarter ended September 32023 that will be filed later today.
We caution you to not 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 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.
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 web site.
Right at investors that solitary dot 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.
Thank you Sean.
Good morning, everyone and thank you for joining our Q3 2023 earnings call.
In Q3, we had record financial results, including our highest revenue and gross profit in geometry history, we reduced our adjusted EBITDA loss by 51% from the prior quarter on our path to profitability.
Kind of strong results with record additions of active buyers in orders and leverage on all of our operating expenses.
With momentum from Q3 carrying into Q4, we are successfully executing what we set out to do in the beginning of this year.
Return to our historical marketplace revenue growth of 40% plus.
Expand gross margins improve operating efficiencies and reduced fixed costs. So we could go from a $11 8 million or adjusted.
Adjusted EBITDA loss in Q1 to potentially breakeven in Q4.
Disposition zama tree for robust growth in full year adjusted EBITDA profitability in 2024.
We continue to innovate and expand.
October we launched teen space, a collaboration tool to augment our enterprise sales efforts and increase our organic buyer growth <unk>.
Additionally, today, we announced a new exciting partnership with Google cloud to leverage verdicts AI to accelerate instant quoting for new markets and geometries AI powered marketplace.
Our outline each in more detail later in the call.
Here are some of the financial highlights from Q3 and their expected impact on Q4.
Let's start with revenue, we grew revenue, 15% year over year to $119 million driven by strong 22% year over year growth in marketplace revenue offset by 16% year over year decline in supplier services revenue, primarily due to the discontinuation of our sale of tools and materials.
Marketplace revenue included 78% year over year growth in our international segment, primarily in our European markets.
We had forecast even more revenue growth in international in Q3, but some of that has been pushed into Q4 due to the timing of certain orders.
U S marketplace Q3 revenue was also strong with the highest sequential quarterly growth in last 12 months growing $9 million quarter over quarter from Q2 of this year.
In both the U S and internationally growth was across many customer verticals, including general manufacturing industrial equipment Aerospace and defense.
Growth remained strong in injection molding as recent investments in technology and processes are driving an expanding pipeline of business.
Underlying activity in the marketplace is strong with active buyers in orders in Q3 growing over 40% year over year.
In Q4, we expect marketplace revenue growth and active buyer growth to converge as quarterly revenue per active buyer remains stable year over year.
This will power overall marketplace growth of approximately 40% in Q4 Cup.
Coupled with relatively flat quarter over quarter supplier services revenue, we expect overall revenue growth in Q4 in the range of 30%.
Next is gross profit.
Gross profit increased 13% year over year to $46 2 million driven by 25% growth in marketplace gross profit.
Over the last two years, we've expanded marketplace gross margins by 550 basis points in.
In Q4, we expect marketplace gross margins to increase sequentially quarter over quarter, driven environment Sheen learning algorithms and the growth of our network of suppliers.
Finally, as our adjusted EBITDA as I noted earlier in Q3, we further improved our operating leverage reducing our adjusted EBITDA loss from Q2 by 51% or $4 4 million.
This is a result of higher revenue and gross profits increased operating efficiency and cuts we've made in our fixed costs in.
In Q3, we balanced our advertising investments against profitability goals with advertising spend down 7% year over year.
Our marketplace unit economics, continuing to improve driven by expanding gross margins and increasing advertising efficiencies, partly driven by the strong growth in our Seo traffic.
We reduced our cost to acquire a net new active buyer by 27% year over year.
Powering our strong Q3 financial results and the outlook for Q4 with progress we made in different areas of our business here are some of the highlights one.
After a successful pilot with several large customers in Q3 and Q4, we integrated team space into the <unk> platform for all of our buyers to use teen space moves the dominant marketplace from a focus on individual buyers and parts to procurement teams managing assemblies and products.
Team space further expands our enterprise solutions and land and expand strategy.
We expect team space to drive organic user growth on the marketplace and further drive advertising efficiency. The early feedback is positive with rapid adoption, including over 300 teams created since launch.
Two.
We continue to expand aggressively internationally customers and orders are ramping at a solid pace and recently launched markets, including the United Kingdom.
In Q3, we added Portuguese to our European site and launched new automated inspection reports for buyers.
In early Q4, Vomitory Asia in collaboration with Alibaba group's $60 88, Dot Com launched our instant quoting technology on 16, 80, eights BTB wholesale marketplace mobile app.
Through geometry that EU, <unk> dot UK and geometry that Asia, we've leveraged <unk> core technology to provide localized marketplaces in 14 different languages with networks of suppliers across Europe, and Asia as well as North America.
Three we made further progress expanding our marketplace menu with new processes materials finishes and certifications.
In Q3, we launched a new certification on the platform.
9100, which is an important quality management standard for the global aerospace industry.
This further expands our capabilities in this vertical and it's particularly relevant for our customers ordering flight parts.
Fourth we continue to modernize advertising products and expand self service options and the Thomas net platform, making it easier for suppliers to start their advertising journey.
In Q3, we made further investments to move to a pay for performance advertising model and Thomas net Dot com.
Five today, we announced a partnership with Google cloud leveraging verdicts AI to help accelerate deployment of new auto quoting models within <unk> AI powered instant quoting engine.
Since our inception, we've been utilizing AI to instantly quote a growing number of categories in our marketplace <unk>.
Leveraging verdicts AI vomitory expects to accelerate the deployment of new auto quoting models.
With the data we have for hundreds of additional unique categories, including many in Thomas and then we can further grow our customer share of wallet and the giant custom manufacturing market. This partnership represents a formidable combination.
<unk> is a technology company disrupting an addressable market that can be measured in multi trillion dollars and millions of buyers.
As we continue to expand the application of our AI increased the breadth of what we can offer and grow our international footprint, we are serving more and more buyers.
Likewise, as we continue to gain market share, we expect more and more suppliers to participate.
<unk> Johnson buyers adverts.
Advertising and Thomas net and using our work centers software catheter.
Capitalizing on those trends, we not only expect accelerated revenue growth in Q4. This year, we expect robust growth in 2024 and for many years thereafter.
We went public in 2021 with the goal of driving significant shareholder value by building, a large disruptive leading technology company and one of the largest global industries the shift to the digital which has happened and so many other industries is inevitable and custom manufacturing.
We are the market leader and everyday we continue to expand our competitive mode by improving upon our proprietary pricing and matching algorithms growing our data lake enlarging our network of buyers and suppliers and increasing our global footprint.
Throughout 2023, our sequential revenue growth and profitability have improved each quarter in Q4, we expect accelerating revenue growth of approximately 30% and the potential to be adjusted EBITDA breakeven settings homage rehab for a powerful 2024.
With that I'll now turn the call over to our CFO Jim Rallo.
Thanks, Randy and good morning, everyone. As Randy mentioned Q3 was a record revenue and gross profit quarter for <unk>, and we significantly reduced our adjusted EBITDA loss quarter over quarter by 51%.
Q3 revenue increased 15% year over year to $119 million driven by strong marketplace growth Q3 marketplace revenue was $102 million and supplier services revenue was $16 5 million, reflecting the discontinuation of the sale of supplies Q.
Q3 revenue growth adjusting for the exit of the supplies business increased 17% year over year.
Q3 marketplace revenue increased 22% year over year, driven by strong growth in the number of active buyers, partly offset by lower average revenue per buyer on a year over year basis Q.
Q3 active buyers increased 43% year over year to 52467 with a record net addition of 4173 active buyers.
Our active buyer and order growth were much stronger than our reported marketplace revenue growth rate in Q3 and.
In Q4, we expect marketplace revenue growth and active buyer growth to converge as quarterly revenue per active buyer remains stable year over year.
This will drive overall marketplace revenue growth of approximately 40% in Q4 year over year.
In Q3, the percentage of revenue from existing accounts was 96% underscoring the efficiency and transparency of our business model that leads to increasing accounts stickiness and spend over time.
Once an account joins our platform, we aim to expand the relationship and increase engagement and spending activities from the account over time.
The number of accounts with last 12 months spend of at least $50000 on our platform reached 1223 at the end of Q3 up 26% year over year.
In Q3, we accelerated the growth of net new accounts with LTM spend of at least $50000 with 64 versus <unk> 50 in Q2.
Supplier services revenue declined 16% year over year in Q3, we discontinued the sale of supplies in the U S. In Q2, which negatively impacted supplier services revenue by approximately $2 million year over year in Q3.
Our core advertising and marketing services revenue remained stable in Q3 quarter over quarter.
The number of active paying suppliers for Q3 2023 was 7415 on a trailing 12 month basis, a decrease of 2% year over year.
Excluding the impact of the exit of the supplies business active paying suppliers increased 4% year over year.
Active paying suppliers is the number of suppliers, who have purchased one or more of our supplier services, including digital marketing or financial services. During the last 12 months.
Q3, gross profit was $46 2 million, an increase of 13% year over year.
Total gross profit margin was 38, 9%.
Q3 gross margin for marketplace was 31, 1% up 70 basis points year over year.
Q3 marketplace gross profit dollars increased 25% year over year.
We are focused on driving marketplace gross profit dollar growth.
In Q3 incremental marketplace gross margin was 34% year over year, providing further visibility to our long term gross margin expectations of 35% to 40%.
We expect marketplace gross margin to expand sequentially from Q3 to Q4.
Q3 gross margin for supplier services was an all time high of 87, 2% driven by the high gross margin of Thomas marketing and advertising services and growing financial services.
Supplier services gross margin increased 740 basis points quarter over quarter due to the discontinuation of the sales of supplies, which carried a significant lower gross margin.
Moving onto Q3 operating costs Q3, total non-GAAP operating expenses increased 6% year over year to $55 million.
Q3, non-GAAP operating expenses declined $2 million quarter over quarter, reflecting the full quarter impact of the 4% reduction in workforce and consolidation of office space, We announced in Q2 2023.
Additionally, based on our cost savings and operating efficiency initiatives, we are seeing improving profitability and our Thomas advertising and marketing services businesses.
Within our operating expenses sales and marketing is our largest component in Q3, non-GAAP sales and marketing expenses increased 9% to $21 2 million as compared to $19 5 million in Q3 2022.
This increase in non-GAAP sales and marketing expense on a year over year basis was driven by hiring of additional salespeople to support growth in our land and expand strategy.
We delivered record growth in new net active buyers in Q3, leveraging increasing brand awareness and efficient marketing.
Q3 advertising spend decreased 7% year over year, as we continue to balance growth and profitability goals.
Q3, adjusted EBITDA loss was $4 2 million or three 5% of revenue compared with six 3% of revenue in Q3 2022.
Turning to segment reporting in Q3 revenue from our U S and international operating segments was $103 million and $15 5 million respectively.
As Randy mentioned earlier, we saw strong order growth in Europe, we.
We had forecast even more European revenue growth in Q3, but some of that has been pushed into Q4 due to the timing of certain orders, we therefore expect particularly strong quarter over quarter International revenue growth in Q4.
Segment loss from our U S and international operating segments for Q3 was $7 9 million and $4 1 million respectively.
At the end of the third quarter cash and cash equivalents and marketable securities were $276 8 million.
Now moving onto guidance.
We are widening our revenue and adjusted EBITDA guidance range slightly given the rapid growth and increasing size of our business in particular for revenue. Our range encompasses the recent strengthening of the U S dollar, which creates a potential incremental headwind in Q4 revenue versus our prior guidance on a spot basis.
Yes.
We expect Q4 2023 revenue in the range of $126 million to $130 million, representing year over year growth of 28% to 32%.
We expect marketplace revenue growth to accelerate in Q4 on a year over year basis to the 40% range.
As previously mentioned in Q4, we expect our marketplace revenue growth to largely converge with the active buyer growth rates that we have consistently delivered this year.
In Q4, we expect adjusted EBITDA to be in the range of breakeven to a loss of $2 million Q4, adjusted EBITDA loss will be lower quarter over quarter, driven by sequential growth in marketplace revenue improving marketplace gross profit increased operating efficiency and further measures to tighten the operating expenses.
We are continuing to invest in key growth initiatives, including enterprise sales and international.
In Q4, we expect stock based compensation expense to be approximately $5 million to $6 million, which we will exclude from adjusted EBITDA.
With that operator can you. Please open up the call for questions.
Thank you very much.
As a reminder to ask a question you will need to press star one one and your telephone and wait for your name to be announced.
To withdraw your question. Please press star one again.
Please standby, while we compile the Q&A roster.
Our first question today comes from Brian Drab with William Blair. Your line is open.
Brian Your line is open.
Okay.
Operating income actually broke consecutive Vietnam.
Pardon me.
We can come back to Brian in a second if he jumps back on let's let's go to the next color okay.
Our next caller is Nick Jones from JMP Securities. Your line is open.
Great. Thank you for taking the questions.
Two I guess first on.
The buyer growth can you speak to how much.
The team is basically contributing to the buyer growth I think in this year.
The weather was over 300 teams have been created.
Just kind of structurally changed the type of kind of net adds we should expect.
On the active buyer number and then I guess a follow up on that would be what is the spin.
The spending behavior of active buyers coming in through team space do they spend similarly, if youre going to increase maybe the net adds from.
This solution does this maybe weigh on.
Marketplace revenue per active buyer near term as you kind of ratchet up the number of active buyers, adding thanks.
Thanks, Nick training and Great question. So we didnt release T phase until October so in Q3, it was going Dana with and for our customers. So the record net adds in Q3 was not the same space, but we certainly think that came face in Q4 and beyond will contribute to net.
The growth in active buyers at this point, we don't expect there to be any change negative change in.
Revenue per quarter from active buyers of the teen space potential upside, but at this point, we show you expect any downside.
Yes, Nick it's Sean I would just add in Q3, what we saw is ready set record net additions, we're seeing really strong growth in Seo traffic.
One of the things we called out on the call was that our cost of our net new <unk>.
Active buyer was down 27% year over year, so seeing very strong efficiency and advertising.
We're also seeing very good growth in Europe, as well and just saying across the board our brand awareness is improving and you should continue to see very healthy net adds going forward.
Great if I can I say it as a quick follow up on Internet.
Still strong year over year growth, but sequentially it was kind of flat.
<unk> anything to call out on what's happening internationally.
Things may be slowing down a little bit.
Actual basis or just any extra color that'd be great. Thanks.
Yes, Nick.
It's very healthy and internationally again this year as we kind of internationally, it's primarily Europe order growth environment is very strong. It was really just a timing issue. So as we call out in the call on the call you're going to see some really strong quarter.
Quarter over quarter revenue growth in international, particularly in Europe in Q4, So everything's got it right. It's more of a timing issue and you should see a nice uptick in Q4.
And it's showing in and just to double click on that I mean again that was a very slight timing issue all of that revenue we recognized in October.
And we have good visibility there and we expect strong sequential growth and as Randy said top of the funnel in Europe in Q3 year over year was very strong in terms of buyer in order growth.
Okay. Thanks, Randy Thanks, Sean.
Thanks, Nick.
Thank you.
We will now return to Brian drab with William Blair. Your line is open.
Mr Geraldo.
We have periods.
No.
Can you hear me yes.
Yes.
Sorry, sorry, sorry that that's what you heard first so I was about to say something else.
Yes, I think we need an announcement about that we're going to be muted when when we get introduced.
Star six I guess fixes that.
So anyway it would be.
Very interesting it will be very interesting to see how you guys perform when manufacturing environment is actually a little more favorable impress.
Impressive results in this environment.
Randy I Wonder can you talk at all about the trends that youre seeing in the in some of the different services different service lines, you mentioned injection molding was positive.
Can you comment on.
Trajectory in CNC, and three D printing as well.
Yes, Brian It really has been strong growth across the board.
Injection molding, and particularly strong, but we're really seeing good upticks in all categories.
So it's pretty Brian as we said also it's across many industries.
Okay, great and.
I guess, you called out financial services and the good margins.
Now that you have in the financial services.
Is that.
It feels like that has yet to really gain the traction that it that it might at some point.
Can you just talk more about what you expect for that component of the business in the future.
Yes, Brian I think financial services actually have continued to expand.
That's being driven obviously by the addition of suppliers.
The marketplace and the adoption of that I think what we really call it out in the quarter. It was.
The increase in margin on the supplier services side of the business. So we're again the fin serve sits so you saw increasing margins. There. This period and we expect that to continue a lot of that had to do with obviously the exit of supplies and materials.
So with that part of the <unk> with that part of the business being gone now.
We'll lap that obviously in this quarter here.
Yeah, we feel really good about where the margins are going in the business overall and the advertising just to add to what you said the advertising business is very high margin, Brian So the fem care business obviously.
It seems like the advertising business, so and of course, the biggest product we have an ancillary services is very high margin.
Okay. Thanks, and then.
For now just lastly.
You're adding more manufacturing partners all the time.
It is a challenging.
Environment and.
The industrial World right now and.
Even heard.
One of your competitors talking about how their manufacturer partner base.
It has some.
Extra capacity in certain regions.
Yes.
Just wondering can you comment at all about.
Trends in how fast your manufacturing partners are accepting jobs are prices trend in prices at which they are accepting jobs.
And what kind of bearing that that is having on marketplace gross margin.
Yes.
Okay. So in terms of market based gross margin just to jump on that we've indicated that we expect gross margin for marketplace to grow sequentially from Q3 to Q4 and again just to point to.
Just to be clear.
Incremental gross margin in Q3 for marketplace to 34%. So very strong there I do want to say, Brian So our revenue per active buyer for our quarter has been flat. This year was slightly up in Q3 by basically flat since Q4 of last year, we do not expect that to change we don't see any.
Trends in that changing.
No.
Irrespective, if there's a little bit more capacity here or there or pricing.
Dividual part goes up or down we expect revenue per active buyer to be to be flat and stable.
Okay. Thanks very much.
Thanks, Brian.
Okay.
Thank you for your question.
One moment.
Okay.
Our next question comes from Eric Sheridan with Goldman Sachs. Your line is open.
Thanks, so much for taking the question, maybe if I could just ask one that's more bigger picture with the partnership with Google Cloud just to better understand a little bit of implementation of that partnership how we should see it showing up in the numbers as we look into 2024 and what you think it was implied in your prepared remarks, but how we should be thinking of.
About sort of bringing more density into the marketplace and potentially.
Finding out some of the vertical exposure effects.
Yeah, Eric Thanks. Thanks for the question. So we're very excited about this partnership and this will help us accelerate the expansion and deployment of new categories in our auto quoting engine.
And think about it things that have taken us my fears will now go weeks combined in terms of how quickly we can deploy and we think it will have a material impact in a number of categories and different processes that we can auto quote.
It's going to be happening over a period of months.
And as you see us deploy new category during that period.
We can provide updates.
Great. Thank you.
Thank you.
And as a reminder.
Please mute your phone when you are.
<unk> said that you were able to ask your question.
Our next question comes from Ron Josey from Citi. Your line is open great. Thanks for taking the question I had two maybe Randy and Jim can you just walk us through a little bit more on the revenue per active buyer I know it was down.
More here in <unk>, but then I think the guidance was for B stable flat to stable and <unk> would love to hear more insights on that in terms of what Youre seeing and then any thoughts on just around the top 200 largest accounts the penetration there you're seeing call it expansion of buyers across those active.
Top 200, thank you.
Yes. Thank you. So just just to be clear to everybody. We saw last year from Q3 last year was a high watermark for us for revenue monthly revenue per active buyer marketplace and then we saw a sharp reduction from Q3 of last year to Q4.
Q4 of last year, our revenue per active buyer each quarter has been flat.
So when we gave the comment about year over year that was because last year was a high watermark, but most important it's been flat and we expect it to be flat again in Q4. So now as we are now and sort of it.
Flat basis from Q4 of last year, that's why we got better at how we expect the.
Growth in active buyers to mirror our growth in marketplace revenue.
And we've been training there in the 40% plus range.
This year and we expect as we talked about in the call circa 40% marketplace growth in Q4. So since Q4 of last year that metric has been very stable and we expect it to continue to be stable.
Yeah.
On the second question can you repeat the second question sure. It was just about <unk>.
Expanding in the top 200 largest accounts given given the focus there and Randy that was very helpful.
On the revenue per active buyer comment, but just topped 200 largest accounts and the progress there.
Yes, I think the one thing I would say is.
We saw very strong growth quarter over quarter in the U S.
And then part of that is we are as we've talked about focusing on the top 200 accounts.
As Randy mentioned on the call. We just introduced heme space and that's for all of our buyers, but in particular, we think this is going to be very helpful. For our top 200 accounts and so again, we're really pleased with the traction thus far and we'll keep you up to up to date on that.
Okay. Thank you.
Thank you.
Our next question comes from Cory Carpenter with Jpmorgan. Your line is open.
Hey, this is Danny <unk> on for Cory Carpenter, Thanks for the questions.
On the first can you just talk about if there's anything to call out in particular on what led to the sequential decline of marketplace gross margins in <unk> and then on the second is there any update on the Alibaba 16, 88 partnership and how that's performing and maybe if you could size any current or potential revenue contribution. Thanks.
Yes, hey, thanks, Thanks for the questions. Jim So I think I think a couple of things one on the Alibaba relationship. So that we continue to that to continue to evolve I think we have just rolled out recently.
But for that mobile so that's been a big change recently and we first rolled out obviously, we share everything that was all laptop base, which is not really used very much in China. So the mobile is really helpful. We started to get starting to get orders are rolling out. There. So we do expect that to continue to be a bigger piece of the China.
But to be clear that's very immaterial at this point in time, we don't really see a lot of that in the next quarter, but we are making we are making good good progress there.
In terms of the gross margin so.
Refresh that was up 70 basis points year over year.
We do expect the gross margin sequentially for marketplace to grow from Q3 to Q4 and again, if you look at the incremental gross margin. It was 34% in the third quarter. So we feel again, we feel good about exiting 2020 forward that 35% to 40%.
There can be some slight variability, but theres really nothing of note.
<unk> declined sequentially I think also though what we've said gross margin is going to continue to increase but it's not going to increase in the straight line. So we will have better quarters in a slower growth quarters, and so forth. So I think again, we're moving in the right direction, we feel solid about our guidance of 35% to 40%.
And we're certainly well on our path to get there.
Thanks.
Yes.
Thank you.
Okay.
Our next question comes from Matt Hedberg with RBC. Your line is open.
Great guys. Thanks for the question.
Maybe a high level question, either Randy or Jim.
I think Randy on the call. You noted you expect to you expect robust growth in 'twenty four and obviously you haven't really given us a ton of parameters around that but wondering if you could sort of outline for us key building blocks.
For next year's growth just so we can kind of make sure that we're kind of thinking about the trajectory appropriately next year before the Q4 call.
Hey, Matt, it's Sean I'll take that.
We're not going to guide there, obviously, specifically today, but the building blocks are and as we called out before you should continue to expect to see strong robust net active buyers being added every quarter. So you can build that into your model.
We put up we delivered over 4000 this quarter and that did not have the impact of team space. So we'll have to update you as we get into 2024 on that impact.
And then against that we're seeing very stable marketplace revenue per active buyer. So as we called out on this call you're now going to see that marketplace revenue is converging with buyer growth and order growth and I would think that that's the kind of building block you should look into for 2024 and that is supplier <unk>.
Offices, we expect to grow that in 2024 modestly, but we've put in investments this year to modernize the Thomas AD platform, we brought in a new head of sales.
And we expect some of these moves to bear some fruit next year and that's a very high margin business.
Yes, I would just I would add on that too.
The penetration of our top 200 accounts, we continue to see strong penetration of our top 200 accounts and really.
And we've done.
A great job here with team space team space as our fastest adopted.
Service or product that we rolled out since the company has been found that it's it's unbelievable the adoption of that especially with our two top 200 accounts, we're seeing great adoption throughout the organization.
A lot more engineers getting involved and frankly, we feel real good about that and driving revenue next year.
Thanks, guys Super helpful. Yes, It really does seem like team space could be could be a nice incremental boost to 'twenty four and beyond. Thanks. Thanks. Thanks again guys for the time.
Okay.
Thank you for your question.
Our next question comes from Greg Palm with Craig Hallum Capital Group. Your line is open.
Yes. Good morning, Thanks for taking the questions just broadly speaking I am curious if you have noticed any kind of change in buyer behavior.
Over.
<unk> months relative to kind of what you've seen on.
Year to date basis, whether that be.
Buy more parts, whether that be utilizing standard reverse priority shipping et cetera.
And then just specifically.
In the month of October any change in trends relative to sort of what you saw over the course of Q3.
Yes, So let me try the first one and good morning. So we really haven't seen any change in buyer behavior and again just to reiterate we expect our revenue.
Revenue per active buyer each quarter to be to be relatively flat quarter over quarter and into next year as well October at this wrong. So.
Yes.
And Greg It's Sean one thing Jim mentioned in his script just look in terms of the Q4 revenue range. We're just being mindful of recent currency changes Jim talked about it but if the dollar were to be 5% stronger for the entire quarter. It would be about a $1 million impact. So we're just being mindful of that.
Yeah. Okay. Thanks, Thanks for that clarification, and then I am curious as you look out whether it's next year or at some point if you've given this metric with accounts last 12 month's spend of over 50000.
I'm curious if you have you know I'm sure you've got the information whether that's over 100 or over 200000 of spend and how that's growing I know you've been trying to go deeper within those sort of top accounts and I'm just sort of curious if we'll get some more sort of metrics like that that show that the amount of money that some.
Of your top customers are.
Spending is accelerating maybe you can maybe give us a little bit of detail on what youre seeing there.
Yes, I think thats a good question.
We've been talking about at the right time, adding another metric at a higher dollar amount so.
To be seen but we hear you and we think its a smart idea.
And Greg the other thing is.
We've talked about with you before us.
As certainly investing in our enterprise sales efforts in 2023 as you know we have a new leader in that group.
But we're really trying to move to in 2024 is again, our largest accounts with committed spend so not only is there a potential tranche of <unk>.
Potential new Kpis are higher spend number.
We'll update as you update you as we get further along we're really trying to get with our biggest customers and have them drive can drive committed spend which would add a lot of visibility certainly for a for you guys.
Yeah makes sense, Okay, I will leave it there thanks.
Yeah.
Thank you very much.
This concludes our question and answer session.
We do thank you for your participation in today's conference. This concludes the program and you may now disconnect and have a good day.
Okay.
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