Q1 2025 Xometry Inc Earnings Call
Speaker Change: Good day, and thank you for standing by. Welcome to the Xometry Q1 2025 earnings call.
At this time, all participants are in this listen only mode.
Speaker Change: After the presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You'll then hear an automated message advising that your hand is raised.
Please limit yourself to one question per person.
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Speaker Change: I would now like to hand the conference over to your first speaker today, Shawn Milne, VP of IR.
Speaker Change: Good morning, and thank you for joining us on Zometry's Q1 2025 earnings call. Joining me are Randy Altschuler, Archief Executive Officer, Sanjeev Sonny, our President, and James Miln, Archief Financial Officer.
Speaker Change: During today's call, we will review our financial results for the first quarter 2025 and discuss our guidance for the second quarter in full year 2025.
Speaker Change: 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.
Speaker Change: Such statements may be identified by terms such as belief, expect, intent, and may. These statements are subject to recent uncertainties which could cause them to differ materially from actual
Speaker Change: 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 10Q for the quarter-ended March 31st, 2025.
Speaker Change: We caution you not to place undue reliance on for-looking statements and undertake no duty or obligation to update any for-looking statements as a result of new information, future events or changes in our expectations.
Speaker Change: We'd also like to point out that on today's call, we will report gap 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.
Speaker Change: non-GAAP financial Measures are presented in addition to and not as a substitute or a superior to measures of financial performance prepared in accordance with U.S. Gap.
Speaker Change: To see the reconciliation of these non-GAAP measures , please refer to our earnings press release distributed today and our investor presentation, both of which are available on the investors section of our website at investors.sometry.com.
Speaker Change: 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.
Randy Altschuler: Thanks, Shawn. Good morning, everyone, and thank you for joining our Q1 2025 earnings call.
Randy Altschuler: In Q1, revenue increased 23% year-over-year to a record 151 million, a 700 basis point acceleration from 16% year-over-year revenue growth in Q4 2024.
Marketplace growth accelerated to 27% driven by continued enterprise adoption.
Randy Altschuler: We delivered better than expected operating leverage, generating positive adjusted EBITDA alongside investments to accelerate our global sourcing strategy.
Randy Altschuler: The current volatile and complex international trade and supply chain environment further validates our marketplace model.
Randy Altschuler: In addition, there is renewed recognition of the importance of maintaining strong domestic manufacturing bases, which is consistent with their approach of building 18 like localized marketplaces in the United States, Europe and Asia.
Randy Altschuler: Xometry provides buyers real-time access to unprecedented manufacturing capacity, whether here or abroad.
Randy Altschuler: Likewise, we're enabling our manufacturing partners to grow their businesses by capping into that domain.
Randy Altschuler: We worked directly with more than 71,000 buyers and over 4,375 manufacturers across the world, giving us real-time data and insights into changing trends such as domestic reshoring and shifts in preferred geographies.
Randy Altschuler: For U.S. customers, vast majority of their demand was already fulfilled by our U.S. Manufacturing Network.
Randy Altschuler: and Q2, we're seeing an incremental shift in our mix to domestic sourcing.
Randy Altschuler: between our domestic network and our industrial sourcing platform Thomas, were well positioned to support the push for more US manufacturing.
Randy Altschuler: Low cost, offshore manufacturing does remain an important lever for some of our customers and we're working with them to identify alternative geographies and solutions to help manage their supply chain costs.
Xometry has navigated this kind of situation before.
Randy Altschuler: During COVID, not only the global supply chains get severed, local ones were upended as individual US states had different policies around business closures.
Randy Altschuler: with our marketplace versus an asset-based approach, we can respond to our customers' needs in real time.
Randy Altschuler: We continue to invest in the technology and network, which today spans 51 countries across four continents that meet customer's needs.
Randy Altschuler: In addition, here's what we're focused on in Q2 to further address the situation.
Randy Altschuler: First, utilizing our AI-driven marketplace to dynamically optimize sourcing strategies and help mitigate cost increases by identifying competitive pricing across our global supplier network.
Randy Altschuler: Our pricing algorithms account for changes in tariffs, consistent with how we manage changes in shipping costs.
Randy Altschuler: Two, working with our enterprise customers to secure ample domestic supply and, when requested, provide alternative all-shore solutions to meet their specific needs.
Randy Altschuler: Continuing a strategy that we initiated in Q1, which has proven to be an even more advantageous decision post the Liberation Day terrorist.
Randy Altschuler: and then three, delivering coordinated advertising and communication campaigns across Zometry and Thomas, underscoring thought leadership and education for our customers and manufacturing partners.
Randy Altschuler: and Q1We launched Instant Quoting for Injection Molding in the EU, UK, and Turkey as we further expand our marketplace platform and aim to be the one-stop shop for our customers.
Randy Altschuler: and proved our highly successful team's space software with enhanced collaboration for enterprise customers.
Randy Altschuler: Main improvements in our work center supplier software, including the launch of a new partner success score algorithm.
Randy Altschuler: On ThomasNet, started testing a new search experience for buyers in April using natural language algorithms to infer intent and offer improved search results. In the next couple of months, we will complement the enhanced search with a new ad server technology platform that increases the inventory of advertising we can sell on ThomasNet.
Speaker Change: Since I co-founded Zometry in 2013, we've had durable growth in multiple macro environments, including a U.S. manufacturing contraction for the past two years.
Randy Altschuler: In 2025, we expect revenue growth to be faster than 2024.
Randy Altschuler: We remain confident in our long-term secular growth outlook, given first the shift to digital sourcing and custom manufacturing is happening irrespective of the macro.
Randy Altschuler: Our growth demonstrates that we are a beneficiary of that trend in driving market share games.
2.
The custom manufacturing market is extremely large.
Randy Altschuler: Even if that overall market were to shrink, our share is still so small that we can continue to have robust growth rates for many years to come.
Randy Altschuler: and then three. Because we're leading two-sided marketplace and a marketplace powered by AI, our efficacy and competitive mode continues to increase as we grow our networks of buyers and suppliers and gain more data to continuously train our algorithms.
Randy Altschuler: Each quarter of growth and improvement in our technology helps to incrementally power the quarters to follow.
Randy Altschuler: We have a clear strategic path forward. For buyers, it's an unrelenting quest to provide a compelling triad of price, selection, and speed. Backed by our expanding supplier network and AI-powered sourcing optimization.
Randy Altschuler: or acid light, extensible technology platform and global scope can enable us to do just that.
Randy Altschuler: For suppliers, it's enabling them to effectively access buyer demand and provide them with the software, marketing tools, and financial products through Workcenter to grow their businesses.
Randy Altschuler: We expect for 2025 to be a year of accelerated growth and an increasing adjusted EBITDA profitability.
Randy Altschuler: Thanks to my amazing, talented and hard-working colleagues and our ever-increasing networks of buyers and suppliers, we continue to build an important and exciting AI-nabel marketplace in one of the world's largest and most critical sectors of the economy.
James Milne: I'll now turn the call over to James for a more detailed review of Q1 in our business outlook.
James Milne: Thanks Randy and good morning everyone. Q1 was a strong quarter for Zometry, delivering accelerated revenue growth and strong operating leverage, as our marketplace responds to customer's needs in real time.
James Milne: Xometry is becoming their digital rails in its massively fragmented and largely offline custom manufacturing market.
James Milne: Q1 revenue increased 23% year-over-year to 151 million driven by strong market place growth
James Milne: 21 Marketplace revenue was 136 million and supplier services revenue was 14.6 million dollars.
James Milne: Q1 marketplace revenue increased 27% year-over-year, a 700 basis points acceleration from 20% in Q4, driven by strong execution and growth with larger accounts as we continue to capture significant market share.
James Milne: Q1 Active Buyers increased 22% year-over-year to 71,454, with a net addition of 3,187 active buyers.
James Milne: Q1 marketplace revenue per active buyer increased 4% year of a year due to strong enterprise growth in the US.
James Milne: In Q1 2025, the US Marketplace Revenue Growth Accelerated to nearly 30% year-over-year, the strongest since Q4 2023.
James Milne: International Revenue increased 20% year-over-year compared with 69% growth in Q1 of 2024.
James Milne: We expect strong international growth in 2025 and continue to expand our marketplace platforms, including the recent launch of Instant Quotes for Injection Molding in Europe .
James Milne: In Q1, the number of accounts with the last 12 months spend of at least $50,000 on our platform increased 12% year-over-year to 1545, an increase of 50 from Q4 2024.
James Milne: We view accounts for at least $50,000 spend as the top of the enterprise funnel. We expect to continue to grow the space of accounts over time.
James Milne: Enterprise investments continue to show returns with strong revenue growth in Q1 for marketplace accounts with last 12 months spend at least $500,000.
James Milne: Our Enterprise Strategy focuses on our largest accounts, which we believe each has ten million dollar plus in potential annual account revenue.
James Milne: Supply services revenue declined 6% year-over-year in Q1 due to macro-related softness in Thomas advertising and the weighing down of non-course services.
James Milne: We are focused on improving engagement and monetization on the platform, which remains a leader in industrial sourcing, supply selection, and digital marketing solutions.
Randy Altschuler: In Q1 we made progress on enhancing experience for both buyers and suppliers and as Randy mentioned, we are testing new search on Thomas in Q2 and expect to deploy the new ad server in the coming months.
Randy Altschuler: Q1 gross profit with $56.3 million and increase of 18% year-over-year with gross margin of 37.3%.
Randy Altschuler: Q1, a growth margin for marketplace was 31.8%, down 20 basis points year of the year, due to the investments to accelerate our global sourcing strategy, which we discussed on our Q4, 2024 Ernie's call, and a makeshift to US marketplace revenue.
Randy Altschuler: Q1 marketplace gross profit dollars increased 26% year-over-year, approximately in line with revenue
Randy Altschuler: We are focused on driving marketplace growth profit dollar growth through the combination of top line growth and growth margin expansion.
Randy Altschuler: Q1 growth margin for supplier services remains strong at 89.1 percent, driven by an increasing focus on the higher growth margin Thomas advertising and marketing services.
Moving on to Q1 Operating Coss [inaudible]
Randy Altschuler: Q1 non-GAAP operating expenses increased 2% year-over-year to $56.4 million, well below revenue growth.
Randy Altschuler: We are applying strong discipline and rigor to our capital and resource allocation across teams.
Randy Altschuler: In Q1, sales and marketing spent was down 500 basis points year over year to 15.3%, underscoring improving enterprise sales execution and disciplined advertising spent.
Randy Altschuler: Marketplace Advertising Spend was 4.5% of Marketplace revenue, which is down 280 basis points here every year as we balance growth and profitability.
Randy Altschuler: We are pleased for the organic and viral growth of buyers in enterprise and team space adoption.
Randy Altschuler: Q1 Adjusted EBITDA was $0.1 million, compared with a loss of $7.4 million in Q1 2024.
Randy Altschuler: Q1 Adjusted A Bit Diet Improved $7.5 million U of a year driven by growth in revenue, growth profit and operating efficiencies.
Randy Altschuler: In Q1, we delivered an incremental just a bit down margin of 27%, higher than our long-term target of at least 20%.
Randy Altschuler: Q1 Adjusted EBITDA excludes $1.5 million related to a restructuring charge.
Randy Altschuler: In March 2025, we initiated a restructuring action to help improve efficiency and align resources by reducing our workforce by approximately 5%.
Randy Altschuler: We are reinvesting these savings primarily into technology to drive further automation and scale.
Randy Altschuler: In Q1, US segment-adjusted EBITDA was $3 million, or 2.4% of revenue, and $8.5 million improvement year over year, driven by expanding growth profit and strong operating expense leverage particularly in sales and marketing.
Randy Altschuler: International segment, Adjusted EBITDA loss, was $2.9 million in Q1 2025, compared to a loss of $2 million in Q1 2024, due to our continuing investments to drive further scale in a mere ad
Randy Altschuler: At the end of the first quarter, cash and cash equivalents and marketable securities were $231 million, decreasing approximately $8 million from Q4 2024. The decreasing cash was driven by CAPEX, primarily software related of $5.5 million and our annual bonus payouts.
Randy Altschuler: We are focused on improving working capital efficiency and cash flow conversion given our asset light model and limited capital spending.
Randy Altschuler: Q1 demonstrates the ability of our AI-powered marketplace to deliver strong revenue, growth profit growth, and operating leverage, as we remain disciplined in our execution even as we continue to invest in our growth initiatives.
Randy Altschuler: As we scale towards $1 billion of revenue, we expect continue 20% plus incremental adjustity, but that leverage on an annual basis.
Randy Altschuler: Given our large market opportunity and low penetration rates, we will continue to balance investing in the future with driving operating leverage.
Now, moving on to guidance.
Randy Altschuler: For the second quarter, we expect revenue in the range of 155 million to $157 million, or 17-18% growth year-of-year.
We expect Q2 marketplace growth to be approximately 20 to 22% year-of-year.
Randy Altschuler: As Randy mentioned, trends remain strong in Q2, even as we are mindful of the uncertain macro environment. We have adjusted our pricing to reflect changing tariffs and our AI cost algorithms update regularly to reflect changes in our supplier network.
Randy Altschuler: We expect Q2 supplier services revenue to decrease approximately 5-7% year-of-year.
Randy Altschuler: We expect Q2 marketplace growth margins to improve significantly caught over quarter to roughly the same range as Q2 of 2024, and continue to expect full-year marketplace growth margin to increase year-of-year.
Randy Altschuler: and Q2 we expect adjusted a bit of $1 to $2 million compared to a loss of $2.6 million in Q2 2024.
Randy Altschuler: In Q2 we expect stoppage compensation expenses, including related payroll taxes, to be approximately $9 million, or approximately 6% of revenue.
Randy Altschuler: For the four year 2025, we are raising our marketplace growth outlook from our previous guidance of at least 20% to at least 22% growth, driven by our growth initiatives in our large rep-rended market, even as we remain mindful of the macro environment.
Randy Altschuler: We continue to expect overall growth in 2025 to exceed 2024 growth.
We expect supplier services to be down approximately 5% year-over-year.
Randy Altschuler: Lastly, we expect to be adjusted in Badaal positive for the full year 2025 and expect incremental adjusted Badaal margins of approximately 20% on a full year basis for 2025.
Randy Altschuler: I want to close by thanking our dedicated Zometry team members around the world. Their commitment to our buyers and suppliers is instrumental to our continued growth and core to our mission of digitizing manufacturing.
Randy Altschuler: With that, operator, can you please open up the call for questions.
Speaker Change: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you need to press star 11 on your telephone and wait for your name to be announced.
To withdraw your question, please press star one one again.
Please limit yourself to one question per person.
Please stand by while we compile the Q&A roster.
[inaudible]
Speaker Change: Our first question today comes from Brian Drab with William Blair. Your line is open.
Hi, good morning. Thanks for taking my questions.
Speaker Change: I just wanted to start by asking if you could make any comments regarding what you've seen over the last five weeks, so since the April 2nd tariff announcements are seeing...
Speaker Change: New customers coming to Zometry and or existing customers lean on you more just send any comments on customer behavior given the disruption. Thank you very much.
Speaker Change: Yeah, good morning, Brian . So, as we said in our prepared march, we're definitely seeing robust growth and demand here in the second quarter.
Speaker Change: and we are seeing an increase to more people sourcing domestically, and we're seeing our enterprise customers in particular reaching out to us to discuss their sourcing strategies, whether that's pivoting to more domestic or looking at alternative geographies.
Brian Drabb: Yvette Dommargin. It looks like you're below that maybe just a little bit in terms of what you're applying with the second quarter of guidance. Is that right? Is there anything we should be thinking about? What's respect to that?
Yeah, thanks Brian , it's James.
Brian Drabb: That's correct. I think their midpoint would be a little under. I think we look at the first half though with the default strong performance in Q1. It would be in the low 20s there as we're looking at that performance for the first half and
Brian Drabb: You know, as you know, and as we've talked about, that's really, you know, we're managing this on an annual basis. We're making, you know,
Brian Drabb: Right balance of growth and profitability as we look at our growth initiatives. And so we feel really good about the progress we've made here in Q1, the 27% incremental margins there, and we'll still be in the low 20s as we look at the full first half.
The low 20s incremental is the expectation for the...
Speaker Change: What's the expectation for the full year for incremental?
Yeah, it's still the 20% level for the full year.
Speaker Change: Yeah, got it. Okay, I'll follow up more later. Thanks very much.
Oh, thank you, Brian .
Thank you.
Speaker Change: Our next question comes from Nature Assistance. The line is open.
Speaker Change: Thank you for taking our questions. First, I wonder if you could talk a little bit about the improvement that you've been seeing in supplier services. Is that more of just a function of increased advertising or what's kind of driving the foyer improvement in the outlook?
James Milne: Hey Tim, it's James. I'll kick that off and then hand it over to Randy in terms of some of the key initiatives.
James Milne: Now, as I talked about on the call, really pleased with their performance in Q1 here. On a Q over Q basis, we saw some improvement.
James Milne: Part of that was given by our offering on the financial services.
James Milne: We have an offering there where we're able to support our cash flow needs of our suppliers. So it's good to see some strong adoption there.
James Milne: I think on the advertising side. Still a challenging macro out there for advertising and so we're working on the improvement of the product for search and the advertising model to set us up for growth in the future.
James Milne: Yeah, and just to add to that, so as we talked about, you know, we started an April testing new search on Thomas.
James Milne: Enhanced Search There, and then we talked about a couple of months.
James Milne: There were going to be launching the new ad server technology that will enable us to sell more of the advertising inventory. So I think between both of those, we're optimistic here about how we're going to be doing on the advertising side for Thomas.
Speaker Change: Great, and I just wanted to see if you could give us a little bit of detail on kind of work center. You can mention focus on enterprises, large accounts. Just any updates on how work center's been trending, any enhancements you've been making to the platform, and just some of the trends you've been seeing there.
Speaker Change: Yeah, and James, I think if you're asking about Enterprise, I think you're thinking about Team Space with the you know that work center is the platform that we have for our suppliers, would that be right?
Yeah, sorry about that.
Speaker Change: and just to remind everyone or people who might be new to our story, team spaces are a software that enables groups of buyers who are collaborating in either a project or an entire product to work together with Xometry.
Speaker Change: You're over a year that's customers with excess of $500,000 of LTM spend and those customers continue to lean in and team space and we've made enhancements to it, you know, additional communication features, additional collaboration features and that's being well received in the market.
That it, thank you very much.
Thank you for your question.
Speaker Change: Our next question comes from Ron Josie with City. Your line is open.
Ron Josie: Great, thanks for taking the question. I wanted to ask maybe, maybe see if I can get away with three things. Just, Randy, on the terrace, I know you just got a question on that and seeing incremental two-queue demand and
Ron Josie: to shift to domestic sourcing, but any other insights on where this could go, call it longer term, or we're seeing just a structural change, I guess, this question number one. And then James, on gross profit, given a little bit light on the marketplace's business and wanted to dive into a little bit more on that. And then Sanjeev, I think it's your first quarter in, would love to hear your thoughts as you join as a president and sort of how you're seeing things relative to where we can go. Thank you guys, appreciate it.
Speaker Change: Thanks, Ron. So I'll jump in here on the question about this, you know, the terror. I think, you know, we did talk about this slight shift to more domestic and folks looking at alternative geographies, and this will tie into your question about the growth margin. We've been investing in those geographies in Q1.
Speaker Change: I think one of the more enduring trends you may see is multi-sourcing, so folks that are going to...
and the strong demand that we have today.
Speaker Change: and Ron James on the gross profit and gross margin. Maybe you just take a little bit of step back. So overall gross margin to the quarter was at 37.3 percent. That was down.
Speaker Change: Driven primarily by the mix shift between, you know, we had a very strong marketplace growth quarter marketplace growing to 27% and then so the mix shift between that and supplier service.
Speaker Change: was a little accentuated this quarter and we'd expect that to rebalance as we move forward, so be back into our sort of...
you know, long-term range of 38 to 40 [inaudible]
Randy Altschuler: Marketplace gross margin as Randy was talking about and as we talked about on the on the prior call, Q4 earnings call in early 25.
Randy Altschuler: We accelerated that global sourcing strategy. We did see that thrive, good success in the quarter, helping us, you know, meeting the strong demand that we're seeing out there as we scale up suppliers in different geographies.
Randy Altschuler: As we ramp up the order bottom there, that did temporary down from the gross margin in Q1 on the marketplace.
Randy Altschuler: We're now expecting our micro-based growth margin to improve significantly in Q2. I'd say that we think it'll be roughly around the same level that we were a year ago in the mid-30s, 33s, sorry.
Randy Altschuler: So about 33.5% and we'll continue to expect Rose Miden to expand your over-year.
Randy Altschuler: So, you know, I think that's where we're at, and actually that will lead quite nicely, and I'll pop it on to San G even terms of areas of his focus. Just before that, and they just make it, you know, simple, so we invest a couple million dollars into those markets in Q1, you know, to create liquidity in the marketplace and to train our models. So, you know, there was an impact in Q1, but as James saw...
Randy Altschuler: said, you know, our guidance now for Q2 reflects the trends that we're seeing and that includes a strong bounce back and those investments are paying off.
Speaker Change: Are you ready? And thanks for the question, Dawn, in the early days that I've been here.
Randy Altschuler: I've been of course talking to our customers, our partners and engaging our teams [inaudible]
Clearly the moat.
Randy Altschuler: that Xometry has built around AI, quality, and speed of manufacturing is something that stands out.
Randy Altschuler: Big time to me, even in these early days. The few big stents that I do want to point out are one, the proprietary AI technology. It is pretty clear that
The technology around AI is integrated in the supply chain.
Randy Altschuler: from the entire starting of the motorcycle to the final delivery of the product.
It's in the...
Randy Altschuler: Assessment of the manufacturability of the item. It's in pricing of the jobs accurately and instantly.
Randy Altschuler: It's in the intelligent matching of each order with the best fit, supplier for quality speed and cost, so it's...
Speaker Change: Suley Impressive, how that is Suley part of the end-to-end supply chain. What I will say actually is even more impressive to me is that the strength of our supplier network.
Randy Altschuler: In my experience, most e-commerce players have built a supply, chain network or a supply
Speaker Change: and therefore any supply chain or status-related disruptions take them years to address.
Speaker Change: At Zometry in contrast, our supply and network is not tied to such a dependency on 203-large international
Speaker Change: To me, that is a real strength because that means we have a vast network of supplies in the US.
Speaker Change: Balanced by a well-spread out international network in 50 additional countries and and therefore you can see how our suppliers can benefit in conversations with us in driving that to their to to get the right outcomes for them.
Oh.
Thank you.
That's great. Thank you guys.
Thank you.
Speaker Change: Our next question comes from Matt Plaunton with RBC Capital Market. Your line is open.
Speaker Change: Hey, this is Zimmern on Vermont Swanson. Thanks for taking our question and congrats on the quarter. Just one for me.
Speaker Change: Would you be able to double click on some of these customer conversations that you're having around domestic sourcing and how these conversations start and then ramp up from there and then just the general trajectory of the platform becoming a permanent piece.
of these customers on Shoring Strategy. Thanks.
Yeah, thanks you for the question, so...
Speaker Change: you know I think for our customers there's a couple of questions they're trying to get answered and this is you know what we're seeing I've been traveling around
Speaker Change: You know, meeting with lots of our customers across the country. And first, you know, they're digging into where to find that domestic. If they're going to drive more manufacturing here in the United States, where does that capacity exist?
Speaker Change: is being able to find that best supplier irrespective of the geography, in this case, irrespective of what state they're in.
Speaker Change: and so, you know, a lot of the questions, the conversations we're having with our customers are, where do I find that domestic extra suppliers? Where can I build that supply base? And again, they've come to us because that is inherent to what our model is as a distributed marketplace. [inaudible]
Speaker Change: So that's where a lot of the flavor of the conversation ends up being. And again, there's also the conversation around risk mitigation and multi-sourcing alongside of that.
Thanks.
Thank you for your questions.
Speaker Change: Our next question comes from Greg Palm with Craig Holling. Your line is open.
Yeah, thanks. Good morning.
I, I guess just-
Maybe...
Speaker Change: Looking at the Q2 guide a little bit more on the revenue side, I mean you talked about, I think what your words were, robust growth, the man so far.
Court of the Day. I mean,
Speaker Change: usually like seasonality-wise in Q2. If you go back, there's a pretty big sequential jump from Q1 to Q2. So I guess I'm just trying to tie out the guide and the commentary and the normal seasonality to, you know, kind of what the, you know, maybe the lack of like meaningful sequential growth in terms of the revenue outlets. Maybe we can dig in that a little bit more. Thanks.
Thanks, Greg. Thanks for the questions, James.
Speaker Change: Yeah, so I think, you know, as you say, we're expecting Q2 revenue growth is 17 to 18% versus the 25% in Q1. You know, Q2 marketplace growth, we said is 20 to 22%, versus the 27% in Q1.
Speaker Change: and we have seen a good strong start to the quarter. There's about a hundred base point type of and QT versus the year ago.
Speaker Change: but based on the strength of what we are seeing in Q1 and Q2, we did raise our view for that full year, so from at least 20% to at least 22% for the full year for the marketplace.
Speaker Change: So I think that reflects what we're seeing in the business and the strong performance that we saw in Q1.
Speaker Change: and consistent with prior guidance with taking into account those recent trends.
Speaker Change: and the opportunities and risks that we're seeing ahead, you know, it does remain on certain manufacturing environment and the manufacturing indices continue to suggest that some buyers remain cautious.
Randy Altschuler: but I think as you've heard from us today and Randy's prepared remarks and answers, Xometry is very well placed for this environment, for providing flexible, resilient, sourcing, and so we're feeling good about where we are and that's reflected in our outlook.
Speaker Change: but I guess maybe just to be a little bit more specific, and if I could, you know, if we look at 24, you know, revenue sequentially from March to June , you know, up 8%, you know, overall, you know, the guy this, you know, at the midpoint is more like three. And so I'm just trying to kind of tie out the.
Speaker Change: The commentary about what you're seeing versus what you've normally seen historically. Maybe it's just a matter of, you know, we're being a little bit more conservative, just given the uncertainty, but it just feels overly conservative, just given the commentary.
Speaker Change: Greg, it's Shawn. Just keep in line in 2024. We talked about Q1.
Speaker Change: was a little bit of a slower start in January , so be careful with that quick analogy, but again it's James's...
Speaker Change: and consistent in the way he laid out his guidance over the last five quarters. You know, mindful of the operating environment, but we're seeing robust demands so far in Q2.
Yeah, okay, we'll hit congrats on the quarter, thanks.
Thanks, Greg.
Thank you.
Speaker Change: Our next question comes from Georgia with Cantor Fitzgerald. Your line is open.
Speaker Change: Hey gentlemen, thanks for taking my questions here. I guess I want to hit on you know production revenues versus prototyping revenues. For me for you guys really sustained growth you know for several years you're going to have to be pretty successful in production.
Speaker Change: $2,000 is kind of an average order from your marketplace customers. To me, it just speaks that there is a very, very high level of prototype in there. So I'm curious if you guys could touch on production. If you guys could, you know, maybe start providing what your production numbers are on a quarterly basis.
Speaker Change: Yeah, he Troy, Shawn, thanks for the question, and I'll turn it over to Randy to give a little bit more.
Randy Altschuler: More qualitative on what we're seeing in terms of production and certainly enterprise growth. Just keep in mind, the number that you're looking at is a quarterly number.
Randy Altschuler: and in terms of our revenue provider, so you'd look to analyze that if you're trying to compare.
Randy Altschuler: Compared numbers, you know, the revenue for buyer for us this quarter.
Randy Altschuler: was actually up 4% year over year and we're seeing good strong growth for my enterprise customers.
Randy Altschuler: and certainly part of that is our production continues to grow, which we've talked about [inaudible]
Randy Altschuler: Randolph, you want to give it a little more?
Randy Altschuler: Volta de Vona. Yeah, Troy, and we did, you know, we put into the presentation and, you know, rapid to talk through that with, you know, tough, it's right there in the presentation, but talk about it. But, you know, we've got a whole bunch of examples of where we are doing more production. And, you know, one of the nice things is that our platform is very extensible, so you're seeing it across.
Multiple Technologies Cheese
Speaker Change: and also, Troy, to look at the evolution of Xometry over time in the way we've been adding manufacturing processes.
Speaker Change: You can see, you know, starting with where technologies that are fewer prototyping, like 3D printing and then evolving over time into more, you know, things like injection molding, die cast, things stamping, which are usually production, you know, production level technologies. And so we are doing more and more of that. And again, as Shawn said, we, you know, work through the math a little bit from that quarterly number. It may look like a, as you analyze it, it looks like a different number. [inaudible]
Speaker Change: Is there any way you guys can take a guesstimate on how much of Revenue's is production?
Speaker Change: Yeah, what we said historically is that, you know, if you look at the mix of our business relative to US manufacturing, we mirror that type of mix.
Speaker Change: We've said repeatedly that 3D is a very small percentage of that mix.
Speaker Change: As you know, Troy, I mean, not all prototyping is additive, but if you use that as a proxy, you'll get a sense that prototype is a small piece of our mix.
Speaker Change: And I guess the final thing is, there are other companies and we've got, there are other great companies out there, but those...
Speaker Change: You know, those that are probably more reliant on, you know, for the time being, you know, you've seen them struggle with growth or even shrinking. I think our growth rates are speaking for itself. You know, and again, I think that that that calls and that we have had success on the production side as well. [inaudible]
Speaker Change: I gotcha. If I could sneak in one more question, I just be curious to know what percentage of your revenues are coming from marketplace partners that are overseas that will be impacted by tariffs and stopped them.
So, we said Troy that the vast majority of our
Speaker Change: U.S. of our U.S. marketplace revenue, which is roughly 80% or something of our marketplace, is fulfilled domestically.
Speaker Change: in the U.S. by U.S. partners. And then, if anything, we've actually seen, we thought about a slight makeshift to even more of that domestic, but it is the overwhelming majority of our revenue. It's fulfilled by U.S. partners for U.S. customers.
Thank you so much for your question.
Speaker Change: This does conclude the question-and-answer session. Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect. Have a good day.