XMTR Q2 2024: 33.5% Gross Margin and 27% Buyer Growth
- Strong Underlying Growth Metrics: Q&A participants emphasized robust market performance with active buyers increasing 27% and over 3,000 new buyers added, supporting a guidance of at least 20% marketplace growth for 2024 despite an uncertain macro environment.
- AI-Driven Gross Margin Expansion: Executives highlighted that the AI-powered pricing model drove the marketplace gross margin to a record 33.5% in Q2, with a target to reach 35% by year-end, underpinning improved profitability through advanced tech enhancements.
- Enhanced Customer Engagement & Platform Innovation: The call noted strong adoption of innovation initiatives such as Teamspace (over 3,300 teams) and accelerated auto-quote capabilities via Google Vertex AI, driving deeper enterprise engagement and paving the way for further market share gains.
- Narrowing Margins and Slower Growth: Q3 guidance implies a potential slowdown in growth with revenue and margin improvements not matching the first-half momentum, which could delay the path to profitability.
- Decline in Supplier Services Revenue: The outlook expects supplier services revenue to be down 5%-10% YoY due to the wind down of non-core services, signaling pressure on revenue diversification.
- Dependence on AI-Driven Optimization: The anticipated gross margin expansion towards 35% hinges on the successful deployment of AI models and new auto-quote technologies; any delays or underperformance in these initiatives could adversely impact margins.
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Margin Outlook
Q: Expected marketplace margin performance?
A: Management highlighted a strong quarterly marketplace gross margin of 33.5% and expressed confidence in reaching 35% by year end driven by AI improvements. -
EBITDA Guidance
Q: Why adjust Q3 EBITDA guidance?
A: Leadership explained that disciplined investments and controlled operating expenses are supporting Q3 adjusted EBITDA in the $1.5M to $3.5M range, paving the path toward profitability as revenue nears $600M. -
Q3 Outlook
Q: How is early Q3 performing?
A: Executives noted strong early Q3 trends with consistent marketplace growth of at least 20%, despite challenging year-over-year comparisons. -
Outperformance Drivers
Q: What drove results above guidance?
A: Management attributed the outperformance to disciplined expense control and robust gross profit gains, with quarterly gross profit improving by 33%, reflecting solid operational execution. -
Buyer & S&M
Q: How are buyer trends and spending evolving?
A: The team reported a 27% increase in active buyers with healthy net additions while keeping sales and marketing spend efficient, as seen with advertising at 6.9% of revenue. -
Instant Quoting
Q: How is instant quoting affecting conversions?
A: Leaders indicated that the integration of Vertex AI has streamlined auto-quoting, reducing friction and enhancing conversion rates, which contributes to margin expansion. -
Intl & Semis Trends
Q: What are the trends internationally versus U.S.?
A: Management noted that while international revenue growth experienced a strong comp effect, it remains healthy, and robust domestic semiconductor demand is buoyed by renewed investments. -
Macro Impact
Q: How does the macro environment affect operations?
A: Executives stressed that the current economic uncertainty reinforces the need for resilient, digitized supply chains, benefiting both buyers and suppliers. -
Teamspace Engagement
Q: What is the feedback on Teamspace usage?
A: Management shared that customer feedback on Teamspace has been highly positive with over 3,300 teams engaging actively, highlighting improved procurement collaboration.
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