Xometry(US:XMTR)2023-03-01 19:15Financial Data and Key Metrics Changes - In Q4 2022, revenue increased by 46% year-over-year to $98.2 million, driven by marketplace growth and expanding supplier services [11][32] - Q4 marketplace revenue was $79.1 million, reflecting a 32% year-over-year growth [11][33] - Gross profit increased by 72% year-over-year to $36 million, with a gross profit margin of 36.7% [12][35] - Adjusted EBITDA loss for Q4 was $14.2 million, or 14.5% of revenue, compared to 17.7% in Q4 2021 [12][37] - The company experienced a sequential decline in marketplace gross margins for the first time since Q1 2021, with Q4 gross margin at 27.1% [12][35] Business Line Data and Key Metrics Changes - Active buyers increased by 45% year-over-year to 40,664, with a record addition of 3,875 active buyers in Q4 [11][33] - Active suppliers grew by 22% in 2022, with spend per supplier also increasing by 22% year-over-year [12][12] - Supplier services revenue declined by 2% quarter-over-quarter in Q4, primarily due to seasonality [12][35] Market Data and Key Metrics Changes - International revenue grew by 89% year-over-year in Q4, driven mainly by growth in the European market [12][39] - The company reported a record quarter for international business, with revenue from international operations at $10.1 million [39] Company Strategy and Development Direction - The company aims to significantly expand the number of processes, materials, and finishes offered to customers, positioning itself as a one-stop destination for custom manufacturing [20] - Plans for aggressive growth in Europe include a recent expansion to the UK and a tuck-in acquisition in Turkey to enhance the supplier network [21][81] - The company is focused on modernizing advertising products and expanding self-service options on the thomasnet.com platform [26] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging Q4 but expressed confidence in the 2023 outlook, expecting marketplace revenue growth of approximately 30% and adjusted EBITDA profitability by Q4 2023 [19][40] - The company is taking steps to mitigate issues from Q4, including price optimization efforts and a focus on top accounts [12][19] - Management noted that the macroeconomic environment has influenced supplier behavior, with suppliers accepting lower prices, impacting average order value [14][50] Other Important Information - The company reduced its workforce by 6% in January to streamline operations and improve efficiency, expecting to save approximately $8 million annually [28] - Cash and cash equivalents at the end of Q4 were $319.4 million [39] Q&A Session Summary Question: Insights on supplier behavior and job acceptance rates - Management noted that suppliers were more willing to accept lower prices, which drove down average order value [44][50] Question: Clarity on supplier acceptance rates and competitive factors - Management indicated that the macro environment has influenced supplier behavior, with more open capacity leading to lower prices [50] Question: Plans for Thomasnet to drive faster conversion - Management is focused on optimizing the search process for buyers and streamlining communication between buyers and suppliers [50] Question: Visibility on macroeconomic impacts and excess capacity - Management believes that prices have bottomed out and is seeing improvements in average order values [54][55] Question: Incremental margins and cost structure - Management expects to gain leverage on fixed and semi-fixed costs, with improvements in gross profit margins anticipated [56][58] Question: Specifics on price optimization efforts - Management confirmed that price optimization was wide-ranging, with ongoing testing to ensure effective pricing strategies [91][92] Question: Existing account revenue percentage and active buyer growth - Management explained that new buyers typically spend less initially, which affects the existing account revenue percentage [95]