A Primer on Xometry
Company Overview
Xometry, Inc. Xometry, Inc. (Xometry) operates a global artificial intelligence (AI)-powered online manufacturing marketplace and a suite of cloud-based services, including Workcenter and Teamspace, aimed at digitizing the manufacturing industry. Xometry also owns Thomasnet®, a leading North American industrial sourcing platform. These platforms collectively provide manufacturers with critical resources for business growth and enable buyers to establish resilient supply chains.
Core Business: Xometry's marketplace leverages proprietary AI to help buyers efficiently source custom-manufactured parts and assemblies, providing instant pricing and lead times. For suppliers, the AI assists in selecting optimal jobs to fill their capacity.
Marketplace Reach: The AI-enabled marketplace is available in 18 local languages.
Thomasnet Functionality: Thomasnet connects buyers with over 500,000 North American manufacturers and industrial service providers. It also offers advertising, marketing, and financial services to help manufacturers and industrial service providers grow their businesses
Stakeholder Definitions:
Buyers: Individuals who have placed an order for custom-manufactured, on-demand parts or assemblies on the marketplace, ranging from small businesses to Fortune 500 companies.
Accounts: An individual entity that has purchased at least one part on the marketplace.
Suppliers: Individuals or businesses approved to manufacture products or utilize Xometry's supplier services, including financial services or purchasing tools and materials.
Industry Landscape
The manufacturing industry is one of the largest globally and is in the early stages of digitization. It is highly fragmented and regionalized, leading to inefficient, unpredictable, and unreliable procurement processes due to opaque pricing, long lead times, and lack of quality controls. Suppliers face challenges like limited customer access, inconsistent demand, and volatile costs.
Market Need: There is an urgent need for resilient, localized, and compliant supply chains, highlighted by recent global events. The industry is at an inflection point for digital transformation, driven by anticipated labor shortages and new technologies.
ESG Focus: The industry is increasingly focused on Environmental, Social, and Governance (ESG) issues, particularly supply chain carbon emissions and the need for greater transparency.
Addressable Market: Xometry estimates its addressable market at approximately $275 billion, based on key manufacturing processes offered, further expanded by Thomasnet's 80,000 industrial processes.
Business model
Xometry facilitates transactions and business growth through two primary platforms:
Xometry Marketplace:
Buyer Process: Buyers upload 3D design specifications (CAD files). The proprietary AI-enabled Xometry Instant Quoting Engine® provides instant pricing based on volume, manufacturing process, material, and location.
Collaboration Tools: Teamspace is an embedded collaborative workspace that enhances team collaboration and expedites order management, providing access to quotes, order statuses, and tracking.
Environmental Features: Buyers can purchase carbon credits to offset the carbon footprint of their orders.
AI Foundation: The marketplace is powered by proprietary AI machine learning that continuously learns from millions of data inputs, improving efficiency and enabling new products.
Extensibility: The platform is extensible, offering a wide range of traditional and emerging manufacturing processes, materials, and comprehensive quality assurance options. It ensures rigorous quality and certification standards.
Thomasnet Platform
Sourcing and Discovery: A leading platform for industrial buyers and suppliers in North America, featuring an extensive online directory and allowing direct quotes.
Digital Marketing: Offers a suite of digital marketing services, including SEO, content creation, and data-driven advertising, to help industrial companies increase online visibility and generate leads.
Supplier Services
Xometry empowers suppliers with various supporting products and services.
Workcenter: A cloud-based manufacturing execution system that helps suppliers optimize productivity, manage all Xometry and non-Xometry work, and offers expedited payment terms.
Financial Services: Provides financial services to enhance supplier cash flows through accelerated payouts and seamless digital invoicing.
Competitive advantage
Rich Data and Constantly Improving AI Technology: Xometry's platform interactions generate millions of data inputs, which are reinvested to continuously refine its proprietary predictive algorithms, machine learning, and data analytics models, leading to improved sourcing, pricing, and lead times.
Custom-Built, Extensible Platform: Tailored for complex manufacturing needs, supported by a diverse and growing supplier network and scalable cloud infrastructure, allowing rapid addition of new processes.
Powerful Network Effects: As the largest AI-enabled digital manufacturing marketplace by revenue, Xometry benefits from a self-reinforcing cycle where interactions generate data that further improves its AI, fueling growth in active buyer and supplier bases.
Buyer Engagement and Expansion: Flexible ordering drives customer loyalty and increased spend over time; 97% of Q4 2024 marketplace revenue came from existing accounts, with a 12% year-over-year increase in accounts with at least $50K annual spend.
Globally Distributed Supplier Network: A network of 4,375 active suppliers (as of Dec 31, 2024), expanded by the Thomas acquisition to include over 500,000 North American suppliers.
Mission-Driven Culture: Focused on empowering local businesses, enabling new product development, and driving sustainability in manufacturing.
Why Buyers Win
Instant and Competitive Pricing and Lead Times: AI-fueled technology improves efficiency, pricing, and lead times.
Ease of Purchase: Simplified procurement with e-commerce experience, including CAD file uploads, material/finish/certification access, and integrations with CAD programs and ERP systems.
Access to a Growing Network of Suppliers: Provides access to a global network of suppliers capable of unique components and specifications, with credentialing for industry standards.
Broad Suite of Industry-Specific Solutions: Offers a wide range of processes and materials for customized solutions across diverse industries like Aerospace, Medical Devices, Automotive, and Defense.
Reliability and Quality: Consistently high-quality products and certainty of order fulfillment, with embedded AI intelligence.
Production Flexibility: Allows purchasing any number of parts (from one to millions) for rapid prototyping, product development, or high-volume production, with diverse finishes and material combinations.
Why Suppliers Win
Cost-Efficient, Real-Time New Business Generation: Access to a large, diverse buyer base without increasing sales and marketing spend, lowering customer acquisition costs.
Repeat, High-Quality Customers: Exclusive opportunity for repeat orders, stabilizing demand.
Operational Excellence: A digital one-stop-shop for workflow solutions via Workcenter, improving order process efficiency and allowing management of all projects.
Financial Stability and Security: Enhanced cash flows through accelerated payouts and digital invoicing, addressing analog payment delays in the industry.
Advertising, Marketing and Data Solutions: Thomasnet services offer targeted advertising, website building, and SEO.
Increased Utilization: Provides manufacturing opportunities to fill available capacity, encouraging investment in new equipment or staff.
Supplier Community: A dedicated Community Portal for interaction, support, and sharing best practices.
Growth Strategy
Xometry's growth strategy focuses on:
Attracting New Buyers and Growing Wallet Share: Investing in sales and marketing, leveraging referrals, and increasing loyalty and spend within existing accounts.
Developing New Auto-Quote Categories: Expanding marketplace processes (e.g., tube cutting and bending) through partnerships like Google Cloud Vertex AI.
Driving Deeper Enterprise Engagement: Expanding revenue with enterprise accounts via sales and technology initiatives, including Teamspace and ERP integrations. Accounts with over $50,000 annual spend grew approximately 28% CAGR over the past four years to 1,495 in 2024.
Continuing International Expansion: Expanding sales and marketing efforts to develop supplier networks and attract buyers in global markets, supported by 18 localized platforms.
Deepening and Expanding Supplier Partnerships: Actively attracting new suppliers to grow the network. Active suppliers increased 28% to 4,375 in 2024.
Becoming an Enterprise Solution for Suppliers: Providing sophisticated data insights, workflow management software (Workcenter), and other services to help suppliers manage all their business.
Enhancing Supplier Services: Continuing to market marketing, advertising (via Thomasnet), and financial service products to suppliers. Supplier services revenue was approximately 11% of total revenue for the year ended December 31, 2024.
Pursuing Strategic Acquisitions: Targeting investments and acquisitions to strengthen its competitive position and processes.
Finances
Revenue Breakdown:
Marketplace revenue: ~89% of total revenue.
Supplier services revenue: ~11% of total revenue.
Active Suppliers: 4,375 active suppliers.
Employees: 1,088 employees.
Legal and Intellectual Property (IP)
Regulatory Compliance: Xometry is subject to various federal, state, local, and foreign laws and regulations, including those pertaining to privacy, data protection, taxation, sanctions, intellectual property, advertising, environmental, labor, consumer protection, and cybersecurity. Compliance costs may increase, and non-compliance could lead to significant liabilities.
Data Privacy and Security: Faces evolving and increasingly stringent data privacy and security obligations globally, requiring significant resources for compliance.
Intellectual Property: Relies on a combination of patent, trademark, copyright, and trade secret laws, as well as contractual protections, to safeguard its proprietary technology and brand.
Owns eleven issued US patents related to machine learning for manufacturing predictions, expiring between 2036 and 2037.
Has approximately 45 registered US trademarks and over 100 registered foreign trademarks.
Employs confidentiality agreements with employees and third parties, and actively monitors access to proprietary technologies.
Licenses third-party software and open-source software.
While steps are taken to protect IP, there is a risk of unauthorized use, reverse engineering, or independent development of competing technologies. Enforcement can be difficult and costly.
Stay tuned for our Quick Take discussing the financials and investment prospects.