XMTR Q2 2025: Record 35.4% Gross Margin Fueled by AI Pricing
- Innovative Product Enhancements: Management’s focus on rapidly deploying AI-driven enhancements—such as expanding instant quoting capabilities, improved mobile experiences for suppliers, and dynamic pricing—indicates that the company is well poised to reduce friction in its marketplace and drive better conversion and deeper customer engagement.
- Robust Marketplace Fundamentals: The Q&A highlighted strong net buyer additions and record gross margins (e.g., 35.4% marketplace margin), underscoring a resilient business model backed by expanding domestic and international supplier networks, which positions the company for continued top-line growth.
- Enterprise and Global Expansion: The discussions emphasized significant traction with enterprise accounts and robust international growth (with international revenue up 31% year over year), reflecting the company’s ability to capture market share and drive sustainable, diversified revenue growth.
- Macroeconomic uncertainty: Concerns remain over a weak macro environment as evidenced by the discussion around the ISM index staying below 50 for 30 months and ongoing tariff and pricing pressures, which could dampen revenue growth and margin improvements.
- Reliance on new product initiatives: The heavy emphasis on expanding AI-powered features (such as instant quoting and mobile app enhancements for suppliers) introduces execution risk if these innovations fail to drive the anticipated adoption and conversion improvements.
- Margin and pricing pressure risks: While gross margins have recently rebounded, the need to continually adjust pricing in response to tariffs and cost fluctuations poses a risk of margin compression if these external pressures persist.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue ($USD Millions) | Q3 2025 | $155–$157 million | $167–$169 million | raised |
Marketplace Growth (YoY %) | Q3 2025 | 20%–22% | 20%–22% | no change |
Supplier Services Revenue (YoY %) | Q3 2025 | Down 5%–7% | Down 2%–4% | raised |
Marketplace Gross Margin (YoY %) | Q3 2025 | Improvement (approx. 33.5% in Q2 2024) | Improvement | no change |
Adjusted EBITDA ($USD Millions) | Q3 2025 | $1–$2 million | $4–$5 million | raised |
Stock-Based Compensation Expenses | Q3 2025 | $9 (6% of revenue) | $9 (6% of revenue) | no change |
Marketplace Growth (YoY %) - FY 2025 | FY 2025 | At least 22% growth | Raised to 24% | raised |
Overall Growth (YoY %) - FY 2025 | FY 2025 | Expected to exceed 2024 growth | At least 20% | no change |
Supplier Services Revenue (YoY %) - FY 2025 | FY 2025 | Approximately 5% decline | Down 5% | no change |
Adjusted EBITDA - FY 2025 | FY 2025 | Incremental margin ≈20% | Incremental margin ≈21% | raised |
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Product & Manufacturing
Q: Which products drove impact amid slowdown?
A: Management emphasized that AI-driven product rollouts—including enhanced instant quoting, mobile app testing in WorkCenter, and the launch of TeamSpace—are delivering strong momentum. Despite caution over manufacturing signals, these initiatives are expected to further improve buyer and supplier engagement. -
Gross Margin
Q: How did gross margin recover from Q1?
A: The company rebounded with a record 35.4% gross margin in Q2. They attributed the rebound to AI-powered pricing adjustments and normalized international operations, which helped overcome earlier pressures. -
Instant Quoting & Pricing
Q: How is instant quoting enhancing conversion?
A: Management noted that expanding the scope of instant quoting—by covering more materials, processes, and post-processing—coupled with dynamic pricing algorithms that adjust for tariffs, is reducing friction and improving conversion rates. -
Sales & Enterprise Growth
Q: What drove uptick in sales and large accounts?
A: A normalization in marketing spend, along with strategic investments in enterprise integrations like TeamSpace and ERP enhancements, led to impressive net additions, particularly in accounts with over $50,000 in spend. -
Supply Chain Resiliency
Q: How is supply chain resilience influencing performance?
A: The digital marketplace leverages a strong domestic supplier network of over 4,300 providers, offering buyers the flexibility to mitigate tariff and global supply chain uncertainties, which supports sustained growth.
Research analysts covering Xometry.