Xometry, Inc. Class A Common Stock 2026 Q2 Earnings Call

Please go ahead. Good morning, and thank you for joining us on Xometry's Q2 2026 earnings call.

Joining me are Sanjeev Singh Sahni, our Chief Executive Officer, and James Miln, our Chief Financial Officer. During today's call, we will review our financial results for the second quarter of 2026 and discuss our guidance for the third quarter and full year 2026. During today's call, we will make forward-looking statements, including statements related to the expected performance of our business, future financial results, strategy, long-term growth, and overall future prospects. Such statements may be identified by terms such as believe, expect, intend, and may. These statements are subject to risks and uncertainties, which could cause them to differ materially from actual results.

Information concerning those risks is available in our earnings press release distributed before the market opened today, and in our filings with the U.S. Securities and Exchange Commission, including our Form 10-Q for the quarter ended June 30, 2026. We caution you to not place undue reliance on forward-looking statements and undertake no duty or obligation to update any forward-looking statements as a result of new information, future events, or changes in our expectations. We would also like to point out that on today's call, we will report GAAP and non-GAAP results. We use these non-GAAP financial measures internally for financial and operating decision-making purposes and as a means to evaluate period-to-period comparisons. Non-GAAP financial measures are presented in addition to and not as a substitute or superior to measures of financial performance prepared in accordance with U.S. GAAP. To see the reconciliation of these non-GAAP measures, please refer to our earnings press release distributed today and our investor presentation, both of which are available on the investors section of our website at investors.xometry.com.

A replay of today's call will also be posted on our website. With that, I would like to turn the call over to Sanjeev.

Thanks, Shawn. Good morning, and thank you for joining our Q2 earnings call. Our accelerating growth and record Q2 results demonstrate the growing strength of our AI-native marketplace. Q2 was a record quarter for Xometry across many fronts, including revenue, gross profit, and adjusted EBITDA. Q2 revenue increased 41% year-over-year to a record $229 million. Marketplace revenue growth accelerated to 45% year-over-year, driven by broad-based strength across many verticals, improving conversion rates, increasing adoption by new buyers, and growing wallet share of existing buyers. We continued to see strong enterprise growth. Q2 marks our fourth consecutive quarter of accelerating revenue growth. Our AI models are effectively optimizing conversion, buyer growth, and market share gains. On top of the revenue growth, Q2 adjusted EBITDA improved $10.2 million year-over-year to $14.1 million.

We delivered record results in the first half of 2026. We are again raising our outlook for the second half of this year. The strength we saw in Q2 has continued in Q3. We are off to a strong start in the quarter. We expect strong compounding growth and operating leverage to continue through the second half of 2026 and for years to come. I reiterate this point every quarter because it remains fundamental to our long-term growth thesis. We have penetrated less than 1% of our massive $275 billion custom manufacturing TAM. This is a market that remains largely offline today, still run on email quotes and multi-day turnarounds. The majority of it is still sourced within 30-50-mile radius of a factory floor. To me, that gap is the opportunity.

We are in the opening innings of a digital transformation. Our ability to capture this massive untapped opportunity gives us strong confidence in our long-term growth trajectory. Beyond the shift from offline to online, we see a long-term tailwind in physical AI. The rapid growth of robotics, autonomous systems, and defense platforms creates a new category of customers needing fast on-demand parts. Our marketplace is well-positioned to capture this demand. The four consecutive quarters of accelerating growth are direct evidence that the product-led strategy put in place last year is working. We are defining the e-commerce playbook in custom manufacturing and raising the experience bar for buyers and suppliers everywhere. We will structure our calls going forward to provide updates on our key focus areas. First, I will talk about establishing Xometry as the infrastructure for custom manufacturing.

Our confidence in driving the next S-curve of our growth stems from our ability to apply our core AI models to a decade plus of proprietary data. The intelligence we derive from our data gives our customers the confidence in manufacturability of their part, the instant pricing options we present, and Xometry's ability to source the part optimally. The depth of our data and the intelligence is unrivaled in custom manufacturing. That same intelligence is now extending beyond our marketplace. Embedding natively into partnership environments like Siemens Design Center proves that intelligence itself, not just the marketplace around it, is the infrastructure other platforms want to build on. More broadly, we see this as Xometry becoming the connective layer between design intent and actual physical production. Siemens is the first, not the only place we expect to integrate our intelligence.

Deep technical integration is a critical pillar of our product-led growth strategy. Establishing seamless AI-native digital threads that remove friction from the custom manufacturing workflows will be an ongoing focus. We are making excellent progress on the Siemens collaboration, with both teams moving at the pace we expected. We are building real integration, bringing Xometry's manufacturability and pricing insight directly into Siemens Design Center. In addition to the work within Design Center, there's also active collaboration between Siemens Supplyframe and Thomas, extending the value both teams can bring to their customers. We will share more as we hit milestones, and we expect the Siemens partnership to positively impact our 2027 operating results. Our second focus area is improving our AI-native marketplace experiences. Our customer and supplier online journeys are rapidly defining the e-commerce playbook in custom manufacturing.

As I've shared before, one of our core beliefs is that the B2B buying experience should be every bit as good as what people experience in their personal lives. The days of clunky B2B software, multi-step checkout processes, and waiting days for an email quote are simply over. What we are seeing is a generational shift in who is making manufacturing purchasing decisions. The engineers, procurement buyers, and supply chain lead roles are now full of dynamic, digitally native individuals. They expect the same frictionless experience at work that they have in their personal lives. When they find that Xometry can deliver, they become Xometry champions inside their organizations. In Q2, we made significant upgrades to our proprietary AI models that power our marketplace. Specifically, we enhanced model capabilities in costing, sourcing, and process recommendations.

These comprehensive upgrades deploy a new generation of high-capacity interconnected models that span the entire manufacturing journey. The upgrades enable additional data insights across five elements of our data architecture: geometry, manufacturability, certifications, supplier capability, and production outcomes. The smarter the platform gets, the faster we can turn complex engineering inputs into manufacturing decisions. As part of our AI model upgrades, we launched a new generation cost prediction model that considers a greater breadth and depth of inputs, including geometry, material, finish, and whether the part is a standalone part or one of several in a job. This granular input leads to more accurate pricing. The model understands the specific parameters each part requires, delivering an approximately 15% improvement in CNC cost prediction accuracy. In addition, in Q2, we launched a new adaptive sourcing model that uses our proprietary data to price jobs dynamically for our suppliers.

The new model incorporates an upgraded partner suitability score for each job, measured against partners' specific machine capabilities, quality, and on-time shipping history. By matching jobs to the right machines, we ensure our suppliers receive a curated flow of better-fitting work, which strengthens our network overall. Lastly, we launched an upgraded context-aware AI process recommender. It reads a part's industry application to anticipate needs like tighter tolerances for aerospace components. By factoring in material and geometry, it closes a real gap for first-time customers. Buyers are now accepting the recommendation more than 85% of the time, with the biggest gains coming from exactly those first-time customers. I will now share advances we made in our third focus area, expanding our buyer and supplier networks. Our focus is on becoming the most expansive custom manufacturing e-commerce platform for buyers and suppliers. We delivered strong active buyer growth during the quarter.

The active buyers increasing 20% year-over-year to over 89,000. Our marketing teams have strengthened our martech and personalization capabilities, helping drive almost 4,000 net adds. Their efforts, combined with our AI model optimizations, are driving conversion rate improvements and continued robust buyer growth. At the same time, these efforts are also steadily decreasing our marketing costs as a percentage of revenue, which is improving marketplace unit economics. There are still millions of potential buyers to convert. We expect continual improvements in marketing technology and AI models will enable us to steadily increase our conversion rates and net adds. Our partnership with Siemens and our other initiatives to become the infrastructure layer in custom manufacturing will further accelerate these trends. In Q2, we further strengthened our U.S. injection molding offering. We added new auto quotable materials to expand choices for our buyers.