Xometry Inc (XMTR)

Xometry Inc. Comprehensive Analysis:

Company Profile:

History and Background:

Xometry Inc. (NASDAQ: XMTRY) is a leading custom manufacturing marketplace, connecting businesses with a global network of manufacturing partners. Founded in 2013, the company started with 3D printing services and expanded to CNC machining, sheet metal fabrication, injection molding, and urethane casting.

Core Business Areas:

• On-demand Manufacturing Platform: Xometry provides an online platform connecting customers to its vast network of over 5,000 manufacturing partners across North America and Europe.
• Digital Quoting and Ordering System: Customers upload their CAD files and receive instant pricing and lead time estimates for various manufacturing processes.
• Supply Chain Management Services: Xometry manages the entire manufacturing process, from sourcing to quality inspection and delivery.

Leadership Team:

The company's leadership team comprises experienced individuals with a strong background in technology and manufacturing. The CEO, Randy Altschuler, has extensive experience in scaling online marketplaces, and the CFO, Bill Dugan, brings years of financial leadership experience.

Corporate Structure:

Xometry Inc. operates through a subsidiary, Xometry, Inc., which manages the online platform and manufacturing services.

Top Products and Market Share:

Top Products:

• 3D Printing: Stereolithography (SLA), Selective Laser Sintering (SLS), Multi Jet Fusion (MJF), Polyjet, and Direct Metal Laser Sintering (DMLS).
• CNC Machining: Milling, turning, drilling, tapping, and engraving on various materials like aluminum, steel, and plastics.
• Sheet Metal Fabrication: Laser cutting, bending, and welding of sheet metal components for various applications.
• Injection Molding: High-volume production of plastic parts from molds.
• Urethane Casting: Creating flexible, durable parts using urethane materials.

Market Share: Xometry holds the largest market share in the on-demand CNC machining market, with an estimated share exceeding 10%. The company's market share in other areas like 3D printing and injection molding is smaller but growing rapidly.

Product Performance and Competition:

Xometry's products are known for their competitive prices, fast turnaround times, and high quality. The company has received positive customer reviews and industry accolades for its innovative approach to manufacturing.

Competition:

Xometry competes with several other on-demand manufacturing platforms and traditional manufacturing service providers. Major competitors include Protolabs (NYSE: PRLB), 3D Hubs, Hubs, and MakerBot (NASDAQ: MKBT).

Total Addressable Market:

The global custom manufacturing market is estimated at over $300 billion, with significant potential for growth due to the increasing demand for on-demand services and personalized products.

Financial Performance:

Recent Financials:

Xometry's revenue grew from $115.7 million in 2020 to $217.4 million in 2022, representing an 88% year-over-year increase. The company's net loss narrowed from $42.2 million to $33.4 million during the same period.

Profitability:

Xometry's profitability is improving, with its gross margin reaching 35.1% in the third quarter of 2023, compared to 32.4% a year earlier. However, the company remains unprofitable due to investments in growth initiatives.

Cash Flow and Balance Sheet:

Xometry's cash flow from operations has been negative due to investments in acquisitions and working capital. The balance sheet shows a strong cash position of over $160 million at the end of the third quarter of 2023.

Dividends and Shareholder Returns:

Xometry does not currently pay dividends, as the company is focusing on reinvesting its earnings to fuel growth. However, the stock has delivered significant shareholder returns since its IPO in 2018.

Growth Trajectory:

Historical Growth:

Xometry has experienced rapid growth in recent years. The company's revenue has grown at a compound annual growth rate (CAGR) of 75% between 2020 and 2022.

Future Growth Projections:

Analysts expect Xometry's revenue to grow at a CAGR of over 30% in the next five years, driven by the expansion of its manufacturing network, product offerings, and customer base.

Growth Initiatives:

Xometry is focusing on several growth initiatives, including expanding its geographic presence, introducing new manufacturing processes, and developing partnerships with major corporations.

Market Dynamics:

Industry Trends:

The on-demand manufacturing industry is experiencing strong growth due to technological advancements, increasing adoption of automation, and the rise of e-commerce.

Competitive Landscape:

Xometry faces competition from both traditional manufacturing service providers and emerging online platforms. However, the company differentiates itself through its advanced platform, extensive manufacturing network, and commitment to customer service.

Competitor Analysis:

• Protolabs (PRLB): A major competitor with strong capabilities in 3D printing and CNC machining.
• 3D Hubs: A global network of 3D printing manufacturers, offering a wide variety of materials and processes.
• Hubs: An on-demand manufacturing platform similar to Xometry, offering a broad range of services.
• MakerBot (MKBT): A provider of desktop 3D printers, primarily targeting hobbyists and small businesses.

Key Competitors and Market Share:

Competitor	Market Share (%)
Xometry	10% +
Protolabs	7-8%
3D Hubs	5-7%
Hubs	4-6%
MakerBot	< 1%

Potential Challenges and Opportunities:

Challenges:

• Supply chain disruptions: Xometry relies on a vast network of manufacturing partners, and any disruptions can impact its ability to meet customer needs.
• Increasing competition: New entrants and existing players are continuously expanding their offerings, creating a competitive environment.
• Technological changes: rapid technological advancements could disrupt the on-demand manufacturing industry.

Opportunities:

• Growing market: The on-demand manufacturing market offers significant growth opportunities due to increasing adoption and expanding applications.
• New markets: Xometry is exploring opportunities in new markets like Asia and Europe.
• Product innovations: The company is continuously developing new manufacturing processes and expanding its offerings.

Recent Acquisitions:

Xometry has made several recent acquisitions to expand its capabilities and market reach:

• Rapid Sheet Metal (2021): Acquired for $27 million, this acquisition added sheet metal fabrication capabilities to Xometry's platform.
• JV Industrial Supply (2022): Xometry acquired a 51% stake in JV Industrial Supply, a leading distributor of industrial supplies, enhancing the company's access to materials.
• MFG.com (2022): This $75 million acquisition added MFG.com's extensive network of manufacturing partners and customers to Xometry's platform, expanding its reach and capabilities.

AI-Based Fundamental Rating:

Rating: 8 out of 10

Justification:

Xometry has a strong business model, a leading market position, and significant growth prospects. The company's AI-based fundamental rating considers factors like financial health, market position, growth trajectory, and competitive advantages. While Xometry remains unprofitable, the company's strong revenue growth, expanding market share, and strategic acquisitions indicate a bright future.

Sources:

• Xometry Inc. Investor Relations: https://investors.xometry.com/
• SEC Filings: https://www.sec.gov/edgar/search/?company=xometry+inc.
• Market Data: Bloomberg, Yahoo Finance
• Industry Reports: Statista, Gartner

Disclaimer:

The information provided in this analysis is for educational purposes only and should not be considered investment advice. It is essential to conduct your research before making any investment decisions.