Xometry’s Gross Margin Trajectory and Siemens Partnership Timelines Don’t Match in 2026 Q2 Call

Date of Call: Aug 4, 2026

Financials Results

• Revenue: $229 million, up 41% YOY, 500 basis points sequential acceleration
• Gross Margin: 34.7% for Marketplace, flat quarter-over-quarter

Guidance:

• Revenue growth for second half of 2026 expected to be ~30% YOY with incremental adjusted EBITDA of 20%.
• Q3 revenue expected in range of $234 to $236 million, or 30% to 31% growth YOY.
• Full year 2026 revenue growth outlook raised to 33% to 34% from 27% to 28%.
• Full year 2026 adjusted EBITDA expected in range of $60 to $62 million.
• Marketplace gross margins expected to be higher in second half than first half and continue expanding into target range of 35% to 40%.
• Services revenue expected to return to YOY growth beginning in Q3 2026.

Business Commentary:

Record Revenue Growth:

• Xometry reported record revenue of $229 million in Q2, up 41% year-over-year.
• Marketplace revenue growth accelerated to 45% year-over-year.
• The growth was driven by broad-based strength across many verticals, improving conversion rates, increasing adoption by new buyers, and growing wallet share of existing buyers.

AI Model Enhancements:

• The company enhanced its AI models for costing, sourcing, and process recommendations, resulting in a 15% improvement in CNC cost prediction accuracy.
• Buyers accepted AI process recommendations more than 85% of the time.
• These improvements are attributed to the integration of more data insights and advancements in AI capabilities, facilitating better conversion rates and buyer growth.

Enterprise and Active Buyer Growth:

• Revenue from larger customers increased by more than 40%, with a record net addition of 175 accounts spending over $50,000.
• Active buyers increased by 20% year-over-year to over 89,000.
• This growth was driven by successful enterprise sales execution, AI model optimizations, and efficient marketing strategies.

Expansion and Partnerships:

• Xometry expanded its U.S. injection molding offerings and added new suppliers in international markets like India and Vietnam.
• The company is making significant progress on its partnership with Siemens, integrating its AI-native intelligence into Siemens Design Center.
• These efforts are aimed at capturing new market opportunities and enhancing marketplace capabilities, supporting long-term growth.

Improved Profitability and Cash Flow:

• Adjusted EBITDA improved by $10.2 million year-over-year to $14.1 million, with a margin expansion of 380 basis points.
• The company generated $17 million in operating cash flow in the first half of 2026.
• Profitability improvements were driven by strong revenue growth, gross profit, and operating efficiencies, alongside enhanced cash flow conversion.

Sentiment Analysis:

Overall Tone: Positive

• "Q2 was a record quarter for Xometry across many fronts including revenue, gross profit, and adjusted EBITDA." "We are again raising our outlook for the second half of this year." "The strength we saw in Q2 has continued in Q3, and we are off to a strong start in the quarter." "We have real momentum, a large market in front of us, and a team that has demonstrated it can deliver. That combination gives us genuine confidence in what's ahead."

Q&A:

• Question from Andrew (Firm not specified): Can you expand upon how AI unlocks incremental demand and how model improvements roll through? Also, how are partner conversations going outside of Siemens?
  Response: AI models are interconnected and drive broad-based growth across categories, improving conversion rates and buyer growth. For Siemens, excellent progress is being made; the collaboration is fundamentally changing how pricing appears in CAD tools, with continuous customer feedback shaping the rollout.

• Question from Brian (Firm not specified): Can you elaborate on changes to the pricing algorithm and its impact on gross margin?
  Response: The pricing algorithm extensively mines proprietary production data to optimize models, creating a feedback loop that strengthens pricing intelligence. This is expected to drive marketplace gross margin expansion into the 35% to 40% target range.

• Question from John/John Ron (Firm not specified): What are the drivers of conversion rate improvements and sales/marketing leverage? Also, discuss self-service for injection molding and potential for other products.
  Response: Conversion improvements are driven by marketing technology that uses customer behavior signals to optimize sales follow-ons. Self-service injection molding has increased adoption; similar self-service capabilities are being explored for other products to reduce friction and improve conversion.

• Question from Don (Firm not specified): Could you give thoughts on M&A focus—software tuck-ins or owning equipment?
  Response: M&A is focused on tuck-ins to drive product-led growth and enhance technology capabilities. The company is disciplined and selective, looking to complement its marketplace model and expand its platform.

• Question from Troy (Firm not specified): Can you discuss profitability leverage from the international side and investments to accelerate it?
  Response: International marketplace unit economics are strong and similar to the U.S.; the company plans to apply the successful U.S. product-led playbook to international markets to drive similar growth and profitability improvements.

• Question from Eric (Firm not specified): How do new verticals and innovation open up customer growth? Also, how should investors think about capital allocation and balance sheet flexibility?
  Response: New verticals like robotics attract digitally-native buyers. The company sees an opportunity to provide design intelligence infrastructure for zero-touch manufacturing. Capital allocation is disciplined, with a strong balance sheet ($517M cash) providing flexibility for sustainable, profitable growth and selective M&A.

• Question from Matt (Firm not specified): As PMI indicators improve, are you noticing any notable business pickup?
  Response: Strong enterprise growth and product-led strategy have driven growth; PMI turning positive is a tailwind, and the company is prepared to capture outsized market share as manufacturing activity increases.

• Question from Jackson Trader (on for Greg Palm): Is PMI affecting buyer/supplier behavior (e.g., price sensitivity, capacity)? Also, how is international growth trending?
  Response: Growth is broad-based, capturing both price-sensitive and urgent buyers. International growth is picking up, especially in EMEA, and the company is ready to apply its playbook to drive those conversations.

• Question from Unnamed Analyst (Firm not specified): What drove the slight YOY gross margin decline in Q2, and what is driving the expected second-half improvement? Also, is Siemens in the guidance?
  Response: Gross margin expansion into the target range is driven by confidence in AI model improvements. Some product-related costs for the Siemens partnership are embedded in second-half guidance, with more impact expected in 2027.

Contradiction Point 1

Gross Margin Improvement Drivers and Timeline

It involves conflicting statements on what drives gross margin expansion and when it will be realized, impacting financial expectations.

Unnamed - Unnamed

2026Q2: The confidence in gross margin expansion to the 35%-40% target range is driven by the continuous improvement from AI models, which are already showing results in accelerating growth rates and improving unit economics. The first half saw marketplace gross margin up ~100 bps. - Sanjeev Singh Sani(CEO), James Milne(CFO)

What factors drove the slight YoY gross margin decline in Q2 and the expectation for improvement in H2? - Brian

2026Q2: These changes are expected to drive marketplace gross margins further into the target range of 35% to 40%. - Sanjeev Singh Sani(CEO)

Contradiction Point 2

Siemens Partnership Financial Impact and Timeline

It involves inconsistency regarding whether partnership costs are in current guidance and the expected benefit timeline, affecting financial forecasting.

Unnamed - Unnamed

2026Q2: There are some slightly increased product costs embedded in the second-half 2026 guidance related to the partnership. The collaboration is being built for a positive impact on 2027 operating results. - James Milne(CFO)

What is the expected contribution of Siemens components to the 2026 guidance next year? - Matt Swanson (RBC Capital Markets)

2026Q2: The work is being prepared for operational impact starting in 2027. - Sanjeev Singh Sahni(CEO), James Miln(CFO)

Contradiction Point 3

Gross Margin Trajectory and Expectations

It involves contradiction on the direction and drivers of gross margin improvement, impacting financial expectations.

Unnamed - Unnamed

2026Q2: The confidence in gross margin expansion to the 35%-40% target range is driven by the continuous improvement from AI models, which are already showing results in accelerating growth rates and improving unit economics. The first half saw marketplace gross margin up ~100 bps. - Sanjeev Singh Sani(CFO) & James Milne(CFO)

What drove the slight YoY gross margin decline in Q2, what factors are expected to drive improvement in H2, and what is the Siemens component's role in the 2026 guidance along with its expected contribution for next year? - Stacy Rasgon (Bernstein Research)

2025Q4: Gross margins for Q3 are expected around 75%, with full-year guidance in the mid-70s. - Colette M. Kress(CFO)

Contradiction Point 4

The Impact and Timing of the Siemens Partnership

It involves contradiction on the financial inclusion and impact timeline of a major partnership, affecting financial forecasting.

Andrew - Andrew

2026Q2: The partnership is expected to positively impact 2027 operating results. - Sanjeev Singh Sani(CFO)

How is AI driving incremental demand on the platform, what specific areas is it enhancing, how should we think about future AI model improvements, and how are broader partner discussions for CAD platform functionality progressing outside of Siemens? - Andrew Boone (Citizens JMP Securities)

2025Q4: The full-year guide reflects this caution but was also increased. - Randy Altschuler(CEO)

Contradiction Point 5

Siemens Partnership's Financial Impact and Contribution Timeline

It involves conflicting statements on when the partnership's benefits will be reflected in financial results, affecting financial forecasting.

Unnamed - Unnamed

2026Q2: There are some slightly increased product costs embedded in the second-half 2026 guidance related to the partnership. The collaboration is being built for a positive impact on 2027 operating results. - James Milne(CFO)

What drove the Q2 YoY gross margin decline and the expectation for H2 improvement, and is there a Siemens component in the 2026 guidance with the expected contribution for next year? - Greg Palm (Craig-Hallum)

2026Q1: The guidance does not include any impact from the Siemens partnership. ... The full-year guidance was increased to 27-28% growth, implying higher growth in the second half than previously guided. ... will provide updates as the year progresses. - Randy Altschuler(CEO) & James Miln(CFO)