Xometry at Citi’s 2025 Global TMT Conference: Strategic Expansion Insights

Xometry Inc. (XMTR) highlighted robust Q2 performance at Citi’s 2025 Global TMT Conference, reporting a record overall gross margin over 40% and a 26% increase in marketplace revenue, largely driven by AI-powered matching. Despite a challenging manufacturing environment, the company is gaining market share by leveraging AI-driven solutions, expanding its international business which grew 31% and reached a $100 million run rate faster than in the U.S., and enhancing its marketplace through initiatives like TeamSpace and ERP integrations. Xometry aims for 30-40% of revenue from international markets and projects a 20% incremental adjusted EBITDA margin as revenue scales toward $1 billion, signaling continued profitability expansion.

Analysis

Xometry (XMTR) presented a compelling case for market share expansion and operating leverage at the Citi Global TMT Conference, demonstrating robust performance despite a contracting manufacturing environment. The company reported a record overall gross margin exceeding 40% in Q2, with marketplace revenue growing 26% and marketplace gross margin hitting a record 35.4%, a 200 basis point year-over-year increase. This margin expansion is attributed directly to the increasing sophistication of its AI-driven pricing and supplier-matching algorithms, which benefit from network effects as transaction volume and the supplier base—which grew 28% last year—expand. Growth is accelerating in key customer segments, particularly accounts with Last Twelve Months (LTM) spending over $50,000, and the top 100 enterprise customers grew over 40% in 2024. Strategically, Xometry is successfully executing on its international expansion, with this segment growing 31% last quarter and now targeted to contribute 30-40% of total revenue. Platform enhancements like the European launch of TeamSpace, now with over 8,500 teams adopted, and deeper ERP integrations are reducing customer friction and solidifying its ecosystem. The company has guided for continued annual gross margin increases and a 20% incremental margin on an adjusted EBITDA basis as it scales, signaling a clear path to enhanced profitability.

Key Decisions for Investors

• Investors should consider Xometry's demonstrated ability to gain significant market share and expand margins during a period of industrial contraction as evidence of a strong competitive moat built on its AI-powered platform.
• Monitor the growth rate of international revenue and the number of accounts with LTM spending over $50,000 as key performance indicators for the success of the company's expansion strategy.
• Given the explicit guidance for a 20% incremental adjusted EBITDA margin, focus on the company's operating leverage and its progress toward the $1 billion revenue target as a primary driver for future valuation.
• While the company reports no noticeable impact from tariffs and sees reshoring as a potential tailwind, investors should remain cognizant of macroeconomic risks, though Xometry's current growth trajectory provides a substantial buffer against sector-wide weakness.