Xometry’s Turnaround Gains Momentum: Strong Q1 Results and an Elevated Growth Path

Xometry, the on-demand manufacturing marketplace, has delivered a pivotal quarter that underscores its transition from a high-growth, high-loss startup to a company capable of sustaining profitability. In Q1 2025, Xometry notched its first positive Adjusted EBITDA of $0.1 million—sharply reversing a $7.5 million loss in the prior-year period—and reported 23% year-over-year revenue growth to $151 million. These results, paired with elevated full-year guidance, position the company as a compelling investment story in an industrial sector still navigating post-pandemic volatility.

Financial Breakdown: Revenue Growth and Margin Progress
Xometry’s top-line momentum is clear. Marketplace revenue grew 27% year-over-year, outpacing the 23% overall revenue increase, signaling stronger demand for its supplier network. Gross profit rose 18% to $56.3 million, though marketplace gross margins dipped slightly to 31.8% due to investments in global sourcing initiatives. Management attributed this dip to short-term costs of expanding into new markets, but emphasized margin recovery in Q2 and beyond.

Operational metrics also shine: active buyers grew 22% to 71,454, and active suppliers rose 28% to 4,375. Twelve-month revenue (LTM) hit $574 million, with enterprise customers (those spending over $50,000 annually) up 12% to 1,545. These figures suggest Xometry is effectively scaling its network and deepening relationships with large clients.

The stock’s 4.76% premarket jump on May 6, 2025—pushing it to a closing price of $28.81—reflects investor optimism. Year-to-date, shares have risen over 40%, but a longer view shows volatility: from a 52-week low of $18.23 to its recent peak, the stock has struggled to sustain momentum until now.

Strategic Leverage: AI, International Expansion, and Tariff Mitigation
Xometry’s AI platform is central to its value proposition. The system now dynamically adjusts pricing to account for tariff changes, a critical advantage as global trade tensions persist. By optimizing global supplier networks and reducing costs for buyers, the platform is helping Xometry capture 1% of its $500 billion addressable market.

International expansion is a key growth lever. Q1 2025 international revenue rose 20%, now accounting for 17% of marketplace revenue—well below the long-term target of 30–40%. With regional hubs in Munich and Shanghai, and support for 18 languages, Xometry is primed to capitalize on underpenetrated markets.

Updated Guidance: A Milestone for Sustained Profitability
Xometry raised its FY2025 outlook, projecting marketplace revenue growth of at least 22% (up from a prior 20% target) and full-year Adjusted EBITDA positivity—a stark turnaround from a $27.5 million loss in 2024. Q2 guidance calls for $155–$157 million in revenue (17–18% growth) and $1–$2 million in Adjusted EBITDA.

Long-term targets are ambitious but achievable: management aims for gross margins of 40–45%, operating expenses at 15–20% of revenue, and Adjusted EBITDA margins of 20–30%. With an asset-light model and 90% gross margins in its supplier services segment, Xometry has the flexibility to invest in growth without overextending capital.

Risks and Considerations
Despite the progress, challenges remain. The slight dip in marketplace margins highlights execution risks as Xometry scales globally. The supplier services segment, which includes Thomasnet, faces a projected 5% revenue decline this year—a potential drag on profitability. Additionally, macroeconomic headwinds in manufacturing could slow demand, though Xometry’s focus on enterprise clients—less cyclical than small businesses—buffers against this risk.

Conclusion: A Turning Point for Xometry’s Investment Narrative
Xometry’s Q1 results and revised guidance mark a critical inflection point. The company has proven it can grow revenue while improving margins—a rare feat in the industrial sector—and its AI-driven platform gives it a competitive edge in a fragmented market. With enterprise customers driving 40% year-over-year revenue growth and international markets underpenetrated, Xometry has multiple avenues to scale toward its $1 billion revenue target.

The stock’s valuation—currently trading at ~4x forward revenue—remains reasonable for a company with a 23% annual growth rate and a path to profitability. While margin execution and global expansion will be watched closely, the data points to a company that has mastered its unit economics and is now poised to capitalize on its own success. For investors seeking exposure to a high-margin, tech-enabled industrial disruptor, Xometry’s story is worth watching closely.