Xometry Inc. has grown steadily since launching in 2013 as an online marketplace, where more than 43,000 buyers from companies including auto manufacturer BMW, pharmaceutical company Moderna and ABL Space Systems purchase manufacturing services through an international network of more than 5,000 manufacturers of all sizes.

For the first quarter ended March 31, Xometry reported a 65% year-over-year increase in revenue to $43.9 million, following a 76.3% year-over-year surge in 2020 revenue to $141.4 million. During the COVID-19 pandemic, Xometry said it handled a significant increase in demand for custom manufacturing in medical and other industries.

Now the company is primed for a new level of growth, after generating more than $300 million this week through its initial public offering of 6.9 million shares at $44 per share. Trading under the symbol XMTR on the Nasdaq Global Select Market, Xometry’s stock traded at $65 at the close of markets yesterday, a 48% jump from its offering price of $44 per share on Wednesday.

AI technology helps connect buyers and sellers

Randy Altschuler, co-founder and CEO, Xometry Inc.

Xometry, which has also raised about $200 million in venture capital, operates a technology platform that uses artificial intelligence to match orders for manufacturing services with the producers in its network. “From the day we started, our goal was to digitize manufacturing, connect supply with demand, and provide a better sourcing solution to both buyers and sellers,” co-founders Randy Altschuler and Laurence Zuriff, respectively Xometry’s CEO and chief strategy officer, said in a note included in Xometry’s S-1 filing with the U.S. Securities and Exchange Commission for the IPO.

The company says it plans to continue driving its growth through further development of its technology platform and its presence in international markets. In addition to its markets in Europe and Asia, Xometry says it is entering other markets worldwide. Over the past two years, it says it has completed sales to customers in 51 countries, “with over 95% of our revenue generated from buyers located in the United States.”

“We are accelerating innovation by providing real-time, equitable access to global manufacturing demand and capacity,” Xometry says in the S-1 filing with the U.S. Securities and Exchange Commission for its IPO, adding, “We estimate our global market opportunity to be over $260 billion based on the estimated market size of our sellers’ six key manufacturing processes, which include CNC manufacturing, sheet metal manufacturing, 3D printing die casting, injection molding and urethane casting.”

Xometry earns most of its revenue from the fees it charges buyers to use its marketplace. When buyers order manufacturing services, Xometry agrees to pay a price to the seller and then acts as the seller of record to buyers. “We act as the seller to our buyers, and we agree to pricing in advance of sourcing the order from a manufacturer,” Xometry says. “We bear the risk that a buyer is not satisfied or that we are required to pay the seller more than anticipated to manufacture the order.”

Eyeing new growth through services to sellers

The company expects to grow revenue through additional services. In 2019, for example, it launched Xometry Supplies where the sellers of manufacturing services on Xometry marketplace can purchase tools and supplies at discount prices. Last year, Xometry launched a suite of financial products and services, including the Xometry Advance Card, which provides sellers advances on the payments they receive for manufacturing services, and FastPay, which provides sellers accelerated payments for a fee.

Xometry had 386 employees as of March 31. For the first quarter, it reported that gross profit increased by 81.4% year over year to $98 million, resulting in a gross profit margin of 22%, up from 20%. It reported a net loss for the quarter of $10.5 million, compared with $8.6 million a year earlier.

In the S-1 filing, Xometry noted the 2020 compensation of its three top executives for the fiscal year ended Dec. 31, 2020: Co-founder and CEO Randy Altschuler, $225,000, including a $100,000 bonus; chief financial officer James Rallo, $1,972,521, including option awards of more than $1.67 million; and chief operating officer Peter Goguen, $616,069, including stock option awards of $182,500.

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