Xometry’s Q1 Profit Milestone: A Strategic Shift Toward Sustainable Growth?

Xometry, Inc. (NASDAQ: XMTR) delivered a pivotal quarter in Q1 2025, marking its first positive adjusted EBITDA since late 2023 while accelerating revenue growth. The company’s ability to balance top-line expansion with margin improvements signals a potential inflection point in its journey toward sustained profitability. Here’s why investors should pay close attention.

Revenue Growth: Momentum in the Marketplace

Xometry’s total revenue surged to $151 million, a 23% year-over-year (YoY) increase, driven by its core marketplace segment. Marketplace revenue alone grew 27% YoY to $136 million, fueled by enterprise adoption and a 22% rise in active buyers to 71,454. The expansion of Xometry’s supplier network—particularly in the U.S., where marketplace revenue jumped nearly 30% YoY—highlighted the strength of its localized manufacturing ecosystem.

Internationally, growth slowed to 20% YoY compared to a blistering 69% in Q1 2024, reflecting ongoing investments in European and Asian markets. Despite this deceleration, management emphasized that global expansion remains a priority, with recent launches of injection molding services in the EU, UK, and Turkey.

Profitability: The Bottom Line Turns Positive

The star of Q1 2025 was Xometry’s adjusted EBITDA, which improved from a $7.4 million loss in Q1 2024 to a $100,000 profit—a $7.5 million YoY improvement. This milestone was achieved through cost discipline, including a 5% workforce reduction and a 500-basis-point drop in sales and marketing expenses to 15.3% of revenue. The 27% incremental EBITDA margin exceeded its long-term target of 20%, underscoring operational leverage from scale.

Q2 Guidance: Sustaining the Momentum

Xometry guided Q2 revenue to $155–157 million, implying 17–18% YoY growth, slightly lower than Q1’s pace but still robust. The company expects adjusted EBITDA to hit $1–2 million, a stark contrast to the $2.6 million loss in Q2 2024. Marketplace gross margins are projected to improve sequentially, aided by AI-driven cost optimizations and tariff adjustments.

Full-Year Outlook: Betting on AI and Reshoring

For 2025, Xometry raised its marketplace revenue growth target to at least 22% from 20%, with full-year adjusted EBITDA profitability now reaffirmed. Strategic priorities include:
- AI Enhancements: Expanding ThomasNet’s search capabilities and introducing new ad server technology to boost platform stickiness.
- Reshoring Plays: Leveraging its U.S. supplier network to capitalize on tariffs-driven demand for domestic manufacturing.
- Global Sourcing: Scaling injection molding and other high-margin services abroad.

Risks Lurking in the Shadows

Despite the optimism, risks remain. Trade policy volatility—such as unpredictable tariffs—could pressure margins, while macroeconomic softness might dampen demand for custom manufacturing. Xometry’s stock has also struggled, falling 35.5% YTD amid broader market skepticism about its execution.

Conclusion: A Buy Signal for the Long Run?

Xometry’s Q1 results are a clear step forward, blending aggressive revenue growth with a path to sustained profitability. The 23% YoY revenue jump, positive adjusted EBITDA, and raised full-year guidance all suggest management is executing its strategy effectively. With AI investments and reshoring tailwinds, the company could capitalize on secular trends in decentralized manufacturing.

However, investors must weigh these positives against valuation risks. At a $2.94 billion market cap (as of Q1 2025), Xometry’s forward EV/Revenue multiple is ~20x, which may be steep if growth slows. Yet, with a 56% return over the past year and a $40 price target from analysts, the stock could rebound if execution continues apace.

For now, Xometry’s Q1 marks a critical turning point. If it can sustain margin improvements and deliver on its AI-driven growth levers, this could be the start of a durable success story in the fragmented manufacturing sector. The question remains: Is the market pricing in enough optimism, or is there room to grow? The data suggests the latter—if Xometry stays disciplined.