Xometry, Inc. (NASDAQ:XMTR) Q3 2023 Earnings Call Transcript

Nick Jones: Thanks Randy. Thanks Shawn.

Shawn Milne: Thanks, Nick.

Operator: Thank you. We will now return to Brian Drab with William Blair. Your line is open. Mr. Drab?

Brian Drab: Hello, can you hear me?

Operator: Yes, sir.

Shawn Milne: We can hear you now, Brian

Brian Drab: Sorry, sorry, sorry, that that’s what you heard first. So it’s about to say something else. Yes, I think we need announcement about how that we’re going to be muted, when we get introduced. Star 6 I guess fixes that. So anyway it be very interesting. It will be very interesting to see how you guys performed when manufacturing environment is actually little more favorable. This is an impressive results in this environment. Randy I wonder, can you talk at all about the trends that you’re seeing in some of the different services and different service line you mentioned injection molding was positive. Can you comment on trajectory and CNC and 3D printing as well?

Randy Altschuler: Yes, Brian, it really has been strong growth across the board injection molding has been particularly strong. But we’re really seeing good upticks in all categories. So it’s pretty broad. As we said also it’s across many industries.

Brian Drab: Okay. Great. And I guess you called out, financial services and the good margins that you have in the financial services, is that it feels like that has yet to really gain the traction that it might at some point. Can you talk more about what you expect for that component of the business in the future?

Randy Altschuler: Yes, Brian, I think, financial services is actually have continued to expand that’s being driven obviously by the addition suppliers in the marketplace, and the adoption of that. I think what we really call out in the quarter was the increase in margin on the supplier services side of the business. So where again to Finserv sits. So you saw increasing margins there. This period and we expect that to continue. A lot of that had to do with obviously the exit of supplies and materials. So with that part of that part of the business being gone now and will add that obviously in this quarter here, we feel really good about where the margins are going to business overall.

Shawn Milne: And the advertising just to add what you said the advertising business is very high margin, Brian. So Finserv business obviously is very high too, but the advertising business. So the core, the biggest product we have in supplier services is very high margin.

Brian Drab: Okay, thanks. And then for now. Just lastly you’re adding more manufacturing partners all the time, it is a challenging environment in the industrial world right now, and even heard one of your competitors is talking about how they’re manufacturer partner base has some extra capacity in certain regions and I’m just wondering, can you comment at all about trends and how fast your manufacturing partners are accepting jobs are prices, trend in prices at which they’re accepting jobs, and what kind of bearing that is having on marketplace gross margin? Thanks.

Randy Altschuler: Yes, okay so in terms of marketplace gross margin, just to jump on that we’ve indicated that we expect gross margins for marketplace to grow sequentially from Q3 to Q4 and again just to just be clear, the incremental gross margin in Q3 for marketplace was 34%. So very strong there. I do want to say Brian. So our revenue per active buyer per quarter has been flat this year was slightly up in Q3. But basically flat since Q4 of net – of last year. We do not expect that to change. We don’t see any trends in that changing. So irrespective if there is a little bit more capacity here or there or price in some individual part goes up or down. We expect revenue per active buyer to be to be flat and stable.

Brian Drab: Okay, thanks very much.

Randy Altschuler: Thanks, Brian.

Operator: Thank you for your question. One moment. Our next question comes from Eric Sheridan with Goldman Sachs. Your line is open.