Executive Summary / Key Takeaways

• Xometry's AI-powered marketplace is rapidly gaining market share in the fragmented custom manufacturing industry, demonstrating robust growth even amidst macroeconomic headwinds.
• The company achieved record Q3 2025 revenue of $181 million, with marketplace revenue accelerating 31% year-over-year, driven by expanding buyer/supplier networks and enterprise engagement.
• Technological differentiation, including advanced AI for pricing and matching, and new tools like the Workcenter mobile app and auto-quoting for injection molding, is fueling significant marketplace gross margin expansion (35.7% in Q3 2025).
• Xometry delivered positive Adjusted EBITDA of $6.1 million in Q3 2025, with a raised full-year 2025 Adjusted EBITDA guidance of $16 million to $17 million, reflecting strong operating leverage.
• The company projects at least 20% total revenue growth in 2026, underpinned by its "land-and-expand" enterprise strategy and continued international expansion, despite ongoing macro uncertainties.

The Digital Rails of Custom Manufacturing

Xometry, Inc. (NASDAQ:XMTR) operates a global artificial intelligence (AI) powered online manufacturing marketplace, complemented by the Thomasnet industrial sourcing platform and cloud-based services like Workcenter and Teamspace. The company's mission is to accelerate innovation by providing real-time, equitable access to global manufacturing capacity and demand, aiming to drive efficiency, sustainability, and innovation by lowering barriers to entry in the manufacturing ecosystem. This strategic vision positions Xometry at the forefront of digitizing the manufacturing industry.

The custom manufacturing market is a vast and highly fragmented sector, estimated at $2 trillion globally. Xometry's growth trajectory is notable within this landscape, as it continues to gain significant market share even during an ongoing manufacturing contraction that has persisted for at least two years. This market share capture is a testament to the efficacy of its AI-powered marketplace model.

Xometry's core strength lies in its two-sided marketplace, powered by proprietary machine learning algorithms and extensive datasets. This AI-enabled platform helps buyers efficiently source custom-manufactured parts and assemblies with instant pricing and lead times, while enabling a rapidly growing network of manufacturers to select optimal jobs to fill their capacity. Each interaction on the marketplace enriches Xometry's data insights, continuously improving its AI models and fostering powerful network effects.

Competitive Moat and Strategic Positioning

Xometry's marketplace structure is a key differentiator, driving industry-leading growth and significant adoption among customers and suppliers. The company's "efficacy and competitive moat continues to increase as we grow our networks of buyers and suppliers and gain more data to continuously train our algorithms." This asset-light model, with a global network of over 4,500 active suppliers across four continents, provides flexibility and resilience, a stark contrast to many e-commerce players whose supply chain networks are concentrated in a few sourcing markets. This diversified network allows Xometry to offer supply chain resiliency and agility, a critical advantage in the rapidly changing global trade environment.

When comparing Xometry directly to ProtoLabs (PRLB), Xometry's offerings emphasize a more integrated digital marketplace that connects buyers with a wide network of suppliers, potentially providing greater variety in services like sheet metal forming and assembly. Xometry's platform is designed for scalability across both prototyping and high-volume production, whereas PRLB has historically emphasized quick-turn, low-volume projects. While ProtoLabs focuses on rapid prototyping and on-demand production with a streamlined, in-house approach, Xometry's expansive supplier network and AI-driven matching can lead to greater efficiency in sourcing for diverse manufacturing needs.

Against 3D Systems (DDD) and Stratasys (SSYS), both pioneers in 3D printing, Xometry differentiates itself by offering a full suite of manufacturing services beyond just 3D printing, including CNC machining, injection molding, and sheet metal forming. This positions Xometry as a more versatile, one-stop platform for integrated manufacturing solutions, potentially leading to stronger customer loyalty and recurring revenue streams compared to the hardware-centric or specialized 3D printing models of DDD and SSYS. While DDD and SSYS excel in technological innovation within specialized 3D applications, Xometry's strength lies in its operational execution and user-friendly platform that aggregates diverse manufacturing capabilities.

The manufacturing industry is undergoing a secular shift towards digitalization, irrespective of macroeconomic conditions. Macroeconomic events, including inflation, interest rates, geopolitical uncertainties, and volatile market conditions, are driving customers to seek resilient and agile supply chains. There is also a renewed recognition of the importance of maintaining strong domestic manufacturing bases and a growing trend towards multi-sourcing to mitigate risks, trends Xometry is well-positioned to support.

Technological Edge and Innovation Driving Value

Xometry's foundational technology is its proprietary AI, which powers its instant quoting engine. This engine processes complex variables like volume, manufacturing process, material, and location to provide instant pricing and lead times. The AI also intelligently matches each order with the best-fit supplier based on quality, speed, and cost, optimizing the utilization of its global network of over 4,500 active suppliers. This continuous optimization has driven significant and steady increases in marketplace gross margins, from 25% four years ago to 35.7% in Q3 2025.

The company is accelerating product development to embed technology and AI across its organization. In early Q4 2025, Xometry launched the Workcenter mobile app, its proprietary all-in-one quote-to-cash solution for suppliers. This app enables partners to manage job offers, production workflows, and shop performance on-the-go, providing easier access to the job board and facilitating seamless data capture. This is expected to deepen supplier engagement and enhance data for further marketplace gross margin expansion.

Teamspace, an enterprise-wide collaboration software, was launched in Europe in Q2 2025 and now serves over 7,000 teams. It enhances collaboration for enterprise customers and is driving deeper engagement and viral buyer growth. Furthermore, Xometry launched auto-quote for injection molding services in the United States in early Q4 2025, following a successful launch in Europe earlier in the year. This capability simplifies the injection molding process, offering a seamless digital experience from design to finished part, with options for prototype to high-volume production in over 35 different materials, colors, and finishes.

Xometry has also advanced its AI-powered design for manufacturing capabilities by expanding its automated extraction engine, which interprets technical drawings and CAD files. This enhancement improves the accuracy of quotes and supplier matching, further reducing friction and improving the buyer experience. Looking ahead, the company is investing in next-generation enhanced AI models to improve cost and lead time optimization, including cutting-edge applications of generative AI and multimodal models to process images, text, and 3D CAD simultaneously. These technological advancements are critical to Xometry's competitive moat, directly contributing to higher marketplace gross margins, operational efficiencies, and sustained market share gains.

Financial Performance and Operational Momentum

Xometry reported record Q3 2025 revenue of $180.72 million, marking a 28% increase year-over-year. For the nine months ended September 30, 2025, total revenue reached $494.23 million, up 24% from the prior year. Gross profit for Q3 2025 was $72.03 million, a 29% increase year-over-year, with a gross margin of 39.9%. The company also achieved positive Adjusted EBITDA of $6.14 million in Q3 2025, a significant improvement from a loss of $0.63 million in Q3 2024.

Marketplace revenue surged 31% year-over-year to $166.59 million in Q3 2025, accelerating by 500 basis points from Q2. This segment's gross margin reached a record 35.7% in Q3 2025, up 210 basis points year-over-year, driven by AI pricing and an expanding supplier network. In contrast, supplier services saw a 4% year-over-year revenue decrease in Q3 2025 to $14.12 million, primarily due to reductions in Thomas advertising and non-core services, partially offset by growth in financial services. Despite this, supplier services maintained a strong gross margin of 88.7% in Q3 2025.

The U.S. segment's revenue grew 28.5% year-over-year to $151.09 million in Q3 2025. Its Adjusted EBITDA was $10.35 million in Q3 2025, a $9 million improvement year-over-year, with a 6.8% Adjusted EBITDA margin. International revenue increased 23% year-over-year to $29.62 million in Q3 2025. However, the International segment reported an Adjusted EBITDA loss of $4.21 million in Q3 2025, compared to a $2.02 million loss in Q3 2024, reflecting ongoing investments for global scale.

Active buyers grew 21% year-over-year to 78,282 as of September 30, 2025. Marketplace revenue per active buyer increased 9% year-over-year in Q3 2025, largely due to strong enterprise growth. Accounts with last twelve-month (LTM) spend of at least $50,000 increased 14% year-over-year to 1,724. Revenue from existing accounts constituted 98% of total revenue for Q3 2025, highlighting strong customer stickiness. Xometry's Adjusted EBITDA margin for Q3 2025 was 3.4% of revenue, up from 0.4% in Q3 2024. The company has demonstrated approximately 21% incremental Adjusted EBITDA margin year-to-date, driven by strong marketplace gross margin expansion and operating efficiencies.

As of September 30, 2025, Xometry held $224.5 million in cash, cash equivalents, and marketable securities. In June 2025, the company issued $250 million in 0.75% Convertible Senior Notes due 2030, using a portion of the $241.4 million net proceeds to repurchase $201.7 million of its 2027 Notes. This refinancing extended debt maturities, lowered the coupon, and reduced potential dilution, fortifying the balance sheet.

Operating cash flow was positive at $5.8 million in Q3 2025, with capital expenditures of $7.4 million, primarily for software development.

Outlook, Guidance, and Growth Catalysts

For Q4 2025, Xometry expects revenue between $182 million and $184 million, representing 23% to 24% year-over-year growth. Marketplace growth is projected at 25% to 27% year-over-year. Adjusted EBITDA is guided to be $6 million to $7 million. For the full year 2025, Xometry raised its marketplace growth outlook to 27% to 28% and its total revenue outlook to $676 million to $678 million. Full-year Adjusted EBITDA guidance was also raised to $16 million to $17 million.

Management anticipates "strong secular growth to continue in 2026 and in coming years as we rapidly scale to $1 billion plus." The company believes its growth initiatives can drive at least 20% total revenue growth in 2026, leveraging the large fragmented market opportunity, expanding wallet share with strategic accounts, and further international expansion. This optimistic outlook is tempered by a "mindful" approach to the uncertain macroeconomic environment, with no assumption of improvement in macro conditions. Key growth drivers include continued investment in the "land-and-expand" enterprise strategy, which focuses on accounts with over $10 million in potential annual revenue, and further international expansion, aiming for international revenue to eventually represent 30% to 40% of marketplace revenue. Enhancements to Thomasnet, including a new ad server technology and improved natural language search, are expected to restore advertising growth.

Risks and Challenges

Xometry faces ongoing risks from changes in U.S. and international trade policies, including tariffs and restrictive measures, which create an unpredictable trade landscape. These policies can increase raw material costs, impact profitability if price increases cannot be passed on, and exacerbate broader macroeconomic challenges like inflation and foreign exchange volatility. Retaliatory trade policies could also lead to increased preference for local competitors and heightened regulatory scrutiny.

A portion of Xometry's revenue is derived from the U.S. government. An extended government shutdown, such as the one that began on October 1, 2025, could delay funding, disrupt cash flows, and postpone new contract awards. International operations, primarily in Euros, expose Xometry to foreign currency exchange risk. A 10% unfavorable change in the Euro exchange rate would have decreased revenues by $1.3 million for the nine months ended September 30, 2025. While not yet material, significant inflationary pressures could prevent Xometry from fully offsetting higher costs through price increases, potentially harming its financial condition.

Conclusion

Xometry's journey from a 2013 startup to a leading AI-powered manufacturing marketplace underscores a compelling investment thesis centered on its ability to digitize a vast, fragmented industry. The company's core strength lies in its extensible technology platform and proprietary AI, which continuously optimizes pricing, speed, and selection for buyers while empowering a growing global network of suppliers. This technological edge, combined with a strategic "land-and-expand" approach to enterprise customers and robust international growth, is driving significant market share gains and improving profitability, even in a challenging macroeconomic environment.

With record Q3 2025 performance, including accelerated marketplace revenue growth and expanding gross margins, Xometry is demonstrating strong operating leverage and a clear path to sustained Adjusted EBITDA profitability. The company's proactive investments in product innovation, such as the Workcenter mobile app and auto-quoting for injection molding, further solidify its competitive moat. While macroeconomic uncertainties and trade policy risks persist, Xometry's flexible, asset-light model and diversified global network position it as a resilient solution for customers seeking agile and reliable supply chains. The outlook for at least 20% total revenue growth in 2026, alongside continued incremental Adjusted EBITDA margin expansion, suggests that Xometry is well-positioned to scale towards its $1 billion revenue target, making it a noteworthy consideration for discerning investors.