Xometry Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 10, 2023

There are 9 speakers on the call.

Operator

Good day and thank you for standing by. Welcome to the Xometry Incorporated Q1 2023 Earnings Call. At this time, the participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded.

Operator

I would now like to hand the conference over to your speaker today, Sean Milne, Vice President of Investor Relations. Please go ahead.

Speaker 1

And thank you for joining us on Xometry's Q1 2023 earnings call. Joining me are Randy Alschuler, our Chief Executive Officer and Jim Rollo, our Chief Financial Officer. During today's call, we will review our financial results for the Q1 of 2023 we will discuss our guidance for the Q2 and full year 2023. During today's call, we will make forward looking statements, including statements related to the 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.

Speaker 1

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 ks for the year ended December 31, 2022 and our Form 10 Q for the quarter ended March 31, 2023 that will be filed later today. 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.

Speaker 1

We'd also like to point out in 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.

Speaker 1

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 in 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'd like to turn the call over to Randy.

Speaker 2

Thanks, Sean. Good morning, everyone, and thank you for joining us for our Q1 2023 earnings call. In Q1, we had the highest revenue in Xometry's history. We grew revenue 26% year over year, including 35% year over year growth in marketplace revenue. We added a record number of active buyers as we continue to gain market share.

Speaker 2

We significantly increased gross margins and operating leverage, reducing our adjusted EBITDA loss in Q1 from Q4 by 17% and by 23%, excluding non recurring Sarbanes Oxley Act Implementation Compliance Costs. The continuing shift to digital is inevitable and is a leading two sided marketplace, Xometry's asset light digital marketplace creates efficiencies and value for buyers and suppliers alike. Artificial intelligence is at the heart of Xometry, generating prices for buyers and suppliers across a range of on demand manufacturing processes. We continue to develop our proprietary machine learning algorithms, adding support for additional features such as new materials and finishes And training our models on an increasingly large data set of custom manufactured parts. Our technology helps buyers significantly reduce their time to market and strengthen their supply chains and enable small and medium sized suppliers to fill their capacity with work that can boost their growth and profitability.

Speaker 2

With our market leading position and increasingly global footprint and a total addressable market of $2,000,000,000,000 we expect to continue to grow rapidly for many years to While there are no shortcuts, we are steadily and methodically executing on our vision of becoming the de facto digital rails for custom manufacturing. In Q1, revenue increased 26% year over year to 105,300,000 Q1 marketplace revenue was $86,700,000 representing 35% year over year growth. We saw strength across all processes and many verticals, including electric vehicles, energy, industrial equipment and robotics. Our value proposition continues to resonate strongly across all sizes of businesses, especially large enterprise customers. Supplier services revenue was $18,600,000 down 3% year over year.

Speaker 2

Gross profit increased 20% year over year points year over year and 170 basis points quarter over quarter to 28.8%. Active buyers increased 46% year over year to 44,716, driven by a record addition of 4,052 the buyers in Q1. Active paying suppliers grew by 11% year over year in Q1 2023 to 7,621 driven by growth in Thomas marketing products including self serve. Starting this quarter, we will provide a number of active paying suppliers on a quarterly basis to give an additional KPI for our Supplier Services segment. An active paying supplier is defined as a supplier who purchased 1 or more of our supplier services, including digital marketing services, data services, financial services or supplies during the last 12 months.

Speaker 2

International revenue grew 77% year over year and 13% quarter over quarter, driven almost entirely by the growth in our European business. Xometry Asia is growing with strong momentum, Including the planned launch with Alibaba1688.com in Q2. In Q1, we continued we will be conducting a few questions on the 5 point strategic plan we outlined during our Q4 2022 earnings call. Here's an update on our progress. We refocused sales efforts on our top 200 accounts, which represented approximately 50% of 2022 U.

Speaker 2

S. Marketplace revenue. The collective spend of these 200 accounts in manufacturing far exceeds Xometry's current revenue. So in early 2023, we redirected salespeople and customer support to them. Given the higher spend we have with these accounts and the potential to grow that spend significantly in the years to come, we are pushing deeper and wider into them.

Speaker 2

Accounts are increasingly engaging us we are pleased to report that our production business and to manage their tailspin. While the sales cycle for these efforts are longer, the potential spend from these transactions This does not change our goal of rapidly expanding our base of buyers through digital marketing and other marketing efforts. In fact, we're seeing strong signs of increasing brand awareness as our organic search volume is growing at a rapid clip, helping fuel record growth of new active buyers. In Q1, we made significant progress in expanding our marketplace menu. As we grow the number of processes, materials and finishes we can offer our customers, we are increasingly able to serve as their one stop destination.

Speaker 2

In Q1, we added more than 3 dozen materials and finishes, including galvanized steel, stainless steel and custom CNC materials. Additionally, we launched instant quotes for parts with multiple finishes. We also launched a new quick turn injection molding service for quotes in as fast as 2 hours and parts in as little as 5 business days. For U. S.

Speaker 2

Buyers, we introduced a new domestic economy shipping option, Which offers lower pricing and longer lead times than the standard shipping option, but with higher pricing than our traditional offshore economy option. We are pleased with the adoption of the domestic economy. In Q2, we will continue to expand the menu And we'll offer buyers the ability to select an increasing number of manufacturing technologies, leveraging the tremendous breadth of what the 100 of 1000 suppliers listed on thomasnet.com can offer. This depth and breadth is critical since our market is not defined by commodity parts or SKUs, but instead is made up of thousands of different use cases. This is one of the reasons the custom manufacturing market is so fragmented.

Speaker 2

Our marketplace is unique in its ability to meet these needs. We continue to expand aggressively internationally. We delivered strong growth in Europe and launched in the UK, which is the 3rd largest manufacturing market in the region. In the UK, we are seeing early strong demand in such industries as medical, electric vehicles, autonomous related technologies, Renewable Energy and Propulsion Systems. Additionally, in early Q1, we made a small tuck in acquisition in Turkey to further expand our alternative call supplier network to serve the European market, we launched zometry.com.tr, a localized marketplace introducing the instant quoting engine to Turkish customers.

Speaker 2

Since launch, Turkish customers for machine building, engineering and other industries are ramping up the use of our technology. In late Q1, Xometry Asia signed an agreement to Instant Quoting for Alibaba's Group's 1688 dotcomb2bwholesale marketplace in China. Xometry's AI powered instant quoting engine is the sole provider of real time pricing and lead time for custom parts on 1688.com. The industrial section of the 1688 marketplace had annual traffic of 30,000,000 visitors in 2022. This should be fully operational shortly and we are excited by the opportunity and the trust given by 1688 in our instant quoting technology.

Speaker 2

The upcoming launch with 1688 notwithstanding, we remain pleased with the ramp in buyer demand in China as we're seeing strong order growth across many verticals, including medical devices, biotech, material production, machine building and sensor technology. We expect China to contribute to revenue growth in 2023 and stronger in 2024. Through xometry. Eu, xometry. Ukandxometry.asia, we have leveraged Xometry's core technology to provide localized platforms in 13 different languages with networks of suppliers across Europe and Asia as well as North America.

Speaker 2

In Q1, we invested approximately an incremental $1,000,000 to fund expansion into the UK and launch the Turkey localized marketplace. We believe these investments will pay off with continued strong international growth over the years to come. In Q1, we invested in, enhanced and continue to drive adoption of our new products, including work center In the industrial buying engine platform, increasing our footprint with both buyers and suppliers and enabling us to scale cost effectively. For our suppliers, we made important progress on WorkCentre, the SaaS like operating system that is the digital foundation for manufacturers. In Q1, we expanded the work center job management tools and capabilities, including support for custom job workflows, job scheduling, communication tools and accounting integrations.

Speaker 2

For buyers, we took significant steps towards improving the industrial buying engine. The industrial buying engine digitizes the cumbersome and time consuming request for quote process, taking what was once off platform and integrating it In Q1, we made it easier for buyers to initiate requests and for buyers and suppliers to engage by consolidating all communication onto a single unified UX and technical platform. While the revenue from industrial buying fees on thomasnet.com is not yet significant to Xometry's overall revenue. As we more tightly integrate it with our instant quoting engine, we can increase our buyer share of wallet and be their one stop shop. We continue to modernize the marketing products expand self serve options on the thomasnet.com platform, making it easier for suppliers to start their marketing journey.

Speaker 2

In Q1, we implemented auto renewal for all Thomas Net marketing programs. In 2023, we're working to move to a pay for performance advertising model on thomasnet.com. Most search and listing engines that support advertising use a pay per click or other performance based advertising model, which aligns the interest of buyers and suppliers. As we improve search, we expect to see a higher level of buyer engagement, improving the opportunity for search monetization. This will help drive growth of our higher margin supplier services as well as boost use of the industrial buying engine.

Speaker 2

We are continuing to increase efficiency and reduce expenses across our organization. In January, we reduced our workforce by 6% to better streamline operations. We are finding additional savings, including to our fixed costs to continue our progress throughout the year to help Xometry become adjusted EBITDA positive in Q4. The underlying metrics of the marketplace were robust with strong additions of active buyers and record order accounts, including from existing accounts. Our international business had a record quarter in Europe And it's building momentum in Asia.

Speaker 2

We made good progress with the rollout and adoption of WorkCentre and building integrations to enable Thomas Anxometry users alike to access the breadth and depth of thomasnet.com's 500,000 suppliers, the full value of which we are continuing to unlock. As a result, we are once again delivering strong sequential growth in marketplace revenue, marketplace gross margin and reduced adjusted EBITDA losses. For 2023 overall, we expect our momentum to continue and to remain in strong growth mode. With that, I will turn the call over to our CFO, Jim Rollo, for a closer look at Q1 financial results and our business outlook.

Speaker 3

Thanks, Randy, and good morning, everyone. As Randy mentioned, we delivered strong marketplace growth in Q1 despite macro headwinds. Q1 revenue increased 26 percent year over year to $105,300,000 driven by marketplace growth. The stronger U. S.

Speaker 3

Dollar negatively impacted revenue by $500,000 on a year over year basis. Q1 marketplace revenue was $86,700,000 and supplier services revenue was 18,600,000 Q1 marketplace revenue increased 35% year over year driven by strong growth in the number of active buyers. Q1 active buyers increased 46% year over year to 44,716 with 4,052 new active buyers. In Q1, the percentage of revenue from existing accounts was 96%, underscoring the efficiency and transparency of our business model that leads to an increasing account stickiness and spend over time. Once an account joins our platform, we aim to expand the relationship and increase engagement And spending activities from that account over time.

Speaker 3

The number of accounts with the last 12 month spend of at least 50,000 on our platform reached $119,000 at the end of Q1, up 40% year over year. Supplier services revenue declined approximately 100,000 or 3% year over year in Q1. As Randy mentioned in his remarks, part of our strategic plan for 2023 is to modernize the Thomas advertising platform and expand the self-service marketing products on thomasnet.com. We expect these efforts to grow the number of digital marketing customers and to reduce the sales costs associated with acquiring them. This quarter, we are introducing a new KPI for supplier services.

Speaker 3

The number of active paying suppliers for Q1 2023 was 7,621 on a trailing 12 month basis, an increase of 11% year over year. Active paying suppliers is the number of suppliers who have purchased 1 or more of our supplier services including digital marketing services, data services, financial services or supplies during the last 12 months. We believe this KPI will help investors to better understand how we operate the Supplier Services segment and track its performance. Q1 gross profit was $39,400,000 an increase 20% year over year. Total gross profit margin was 37.4%, down 200 basis points year over year, primarily driven by a mix shift to marketplace revenue.

Speaker 3

Q1 gross margin for marketplace was 28.8%, up 140 basis points year over year and 170 basis points quarter over quarter. Q1 gross margin for supplier services was 77.4 percent driven by the high gross margin of Thomas Marketing and Advertising Services In growing financial services, supplier services gross margin increased 110 basis points quarter over quarter due to a higher mix of Thomas Marketing Services revenue. Moving on to Q1 operating costs, Q1 total non GAAP operating expenses increased 12% year over year to $51,200,000 driven by continued investments in the business And public company costs. Q1 operating expenses included $800,000 of incremental non recurring accounting and legal costs associated with Within our operating expenses, sales and marketing is our largest variable component. In Q1, non GAAP sales and marketing expenses were $20,600,000 excluding stock based compensation and amortization, an increase of 15% as compared to $17,900,000 and Q1 2022.

Speaker 3

The increase in non GAAP sales and marketing expenses on a year over year basis was driven by continued investment to Our network of buyers and suppliers and hiring of additional sales people to support strong growth in our land and expand strategy. We delivered strong growth in new active buyers in Q1, leveraging increasing brand awareness and efficient marketing spend. As Randy mentioned, we invested approximately an incremental $1,000,000 in Q1 to fund expansion in Europe, including the launch of the UK and Turkey marketplaces. Our adjusted EBITDA loss for Q1 was $11,800,000 or 11.2 percent of revenue compared with 15.2% of revenue in Q1 2022. One quick note on GAAP EPS in Q1, as part of the IPO, we pledged 1% of the company's capitalization we're approximately 403,000 shares to xometry.org for charitable contributions to non profit organization.

Speaker 3

As a result, we recorded a non operating charge in general and administrative expenses, which is Excluded from adjusted EBITDA, in Q1 we recorded a charge of $400,000 Turning to segment reporting, In Q1, revenue from our U. S. And international operating segments was $93,900,000 $11,400,000 respectively. Segment loss from our U. S.

Speaker 3

And international operating segments for Q1 was $12,900,000 $5,400,000 respectively. We continue to invest in our international business, which grew 77% year over year in Q1 and 87% year over year on an FX neutral constant currency basis. At the end of the Q1, cash and cash equivalents and marketable securities was 296,200,000 Now moving on to guidance, we expect Q2 2023 revenue in the range of $109,000,000 to $111,000,000 representing year over year growth of 14% to 16%. We expect marketplace revenue growth to remain healthy in Q2 2023. As a reminder, Q222 is the toughest year over year marketplace revenue comparison with 56% growth in the prior year period.

Speaker 3

Given the significantly lower gross margin of supplies, we are not going to proactively offer this service to our partners And we expect supplier services revenue to be down year over year. This change creates a drag reflected in our Q2 2023 revenue guidance. We expect marketplace and supplier services gross margins to improve in Q2 quarter over quarter. In Q2, we expect adjusted EBITDA loss to be in the range of $8,500,000 to $9,500,000 a significant 19% to 28% improvement quarter over quarter. Q2 adjusted EBITDA loss will be lower quarter over quarter driven by sequential growth in marketplace revenue, improving marketplace gross margins and further measures to tighten operating expenses, particularly fixed costs.

Speaker 3

In Q2, we expect stock based compensation to be approximately $5,000,000 to $6,000,000 which we will exclude from adjusted EBITDA. As Randy mentioned, we expect robust marketplace growth And gross profit growth in 2023. We reiterate 2023 revenue guidance of $470,000,000 to $480,000,000 representing 23% to 26% growth year over year. We expect marketplace revenue growth of approximately 30% in 2023. We expect to be profitable on an adjusted EBITDA basis in Q4 2023.

Speaker 3

We expect significantly improved operating leverage in the second half of twenty twenty Driven by strong buyer and order growth and further improvement in gross margins driving faster gross profit growth, we expect significant leverage over fixed and semi fixed costs, including public company costs. We expect 2023 adjusted EBITDA loss in the range of $24,000,000 to $26,000,000 given the incremental non recurring costs in Q1 and the additional international investments we discussed previously. With that, operator, can you please open up the call for questions?

Operator

Thank please standby while we compile the Q and A roster. Our first question comes from the line of Ron Josey of Citibank. Your line is now open.

Speaker 4

Great. Thanks for taking the questions. I've got 2, please. Randy, I guess coming out of last year, we talked a little bit about supplier behavior. I'm just wondering if you can talk to us about supplier behavior as they're turning to more normalized trends In terms of taking jobs and overall pricing, that would be helpful on number 1.

Speaker 4

And the second key point on gross profit, Jim, you talked about margins expanding in the back half of the year, but we also saw margins expand in 1Q. So talk to us a little bit more about what's driving that overall gross margin, particularly in the marketplace side? Thank you, guys.

Speaker 5

Yes. And good morning. And Ron, good to speak with you. Just calling about the change from Q4 to Q1, we saw marketplace revenue growing stronger even than we expected and we saw saw strength in active buyer growth and strong growth in orders and suppliers continue to react well and participate well in the marketplace. So I think we're we saw strength across all processes and many verticals and as we saw with our record add of net active buyers in the quarter, we also saw our competitive position continue to strengthen as well.

Speaker 5

Yes. Just on your question about gross margins going up, we did talk about how in Q4 we've been doing experimentation testing the price elasticity of customers. We ended that at the end of January. So you saw a nice rebound in gross margins from Q4 to Q1 of 28 170 basis points to almost 29%. And as we've also mentioned in this call, we've guided to increased gross margins for marketplace And supplier services in Q2 as well.

Speaker 1

Yes, Ron, and it's Sean. I just want for the year, we also talked about Gross margin being for the marketplace 30% plus.

Speaker 4

Thank you.

Operator

Thank you. One moment please for the next question. Our next question comes from the line of Nick Jones of JMP Securities. Your line is now open.

Speaker 6

Great. Thanks for taking the questions. 2 if I can. I guess first kind of high level, how much is some of these industry Trends and metrics we're seeing reported impacting the overall business. Is that kind of a factor we're seeing?

Speaker 6

Or is Amistur still kind of Able to grow through some of these macroeconomic pressures?

Speaker 5

Yes. Look, I think with our investments in technology, Investments in international and you're seeing in Q1 that we've been gaining market share by adding a record number of active buyers. So and we saw strength across all processes and across many verticals. I think we as we gain market share and as our investments continue to pay off, we're excited to continue to grow.

Speaker 6

Great. And then maybe just as we think about the back half and the full year guide, revenue up to kind of accelerate to hit Can you kind of speak to what gives you confidence in the full year number? Are you seeing kind of similar behavior in active buyer LTV to CAC or cohort curves, it gives you confidence in kind of that performance and this kind of uptick in active buyers you've had?

Speaker 5

Yes. Look, again, I think in the second half, we expect our investments that we've been talking about to continue to bear fruit, including continued strong active buyer growth, order growth and international growth and we think those combined will enable us to reach that guidance that we provided. Great. Thanks, Randy.

Operator

Thank you. One moment, please. Our next question comes from the line of Brian Drab of William Blair. Your line is now open.

Speaker 7

Good morning. Thanks for taking the questions. I was wondering if you could talk first A little bit more about the Alibaba 1688 opportunity. Just some more detail there would be helpful. I mean, the big question is What's the revenue opportunity there longer term?

Speaker 7

And can you talk about how that agreement and how the business model is structured? And have they ever tried providing custom parts in the past? Thanks.

Speaker 5

Yes. And Brian, good morning and thank you for the question. So We've not baked in, just to be clear in our guidance here, anything related to $1688,000,000 As we talked about during our prepared remarks, Notwithstanding $16.88 our China marketplace has been growing very strongly. So we're very happy about that. We expect it to be a revenue contributor this year and even a strong revenue contributor And the year that follows, we are excited.

Speaker 5

That said, we're very excited about the 1688 opportunity. It will be fully operational later this quarter. And it will actually be they're 68 is using our technology to provide the instant quoting for custom parts and we're the exclusive provider of that and then, Donatree, Asia will be the fulfillment for that. I actually don't know, Brian, if they've ever offered it before. I don't think so.

Speaker 5

But and I believe the answer is they've never offered it before, but I couldn't tell you 100%, but I Sean, we may have never operated before.

Speaker 1

Yes. Brian, it's Sean. And just On the agreement, there's not a revenue share. So when it will in terms of when it gets rolling, it will run through our market

Speaker 7

I know we've discussed this, but I still am not perfectly clear on it. Does that just mean that they're basically directing new leads and the revenue and margin opportunity For Xometry is the same as it is in your legacy marketplace or is it different? Like is this going to be revenue at Similar marketplace margin?

Speaker 5

Yes, it will be no I mean, again, our margins, particularly in as we're We've talked about this, we're saying geographies don't necessarily reflect don't necessarily mirror the margins exactly in our mature markets. But yes, it will In terms of the way it functions, it will be similar to the way it functions in Europe or in the United States or North America. So very, very similar.

Speaker 1

Yes. And just to follow-up, I know you said direct leads, but again, just so for 1 on the call, I mean, our Instincote technology is embedded within their market So it's not as if a customer is being redirected to a different platform. So it's embedding that technology on their marketplace in a seamless experience.

Speaker 5

So if you're on 1688 and now we'll be able to offer for people on 1688 the ability to instant quote their parts. You're using our technology to do that and that is part now being built into what the Indian VA can offer. So we're pretty excited about it.

Speaker 7

Yes. I guess I used the wrong word, but I'm just thinking it's generating leads for you. You're basically stepping into this massive flow of 30,000,000 users Annually, and when you say there's not revenue share, it means you're not sharing, Dimitri is not sharing revenue with them. Is that what you're?

Speaker 5

Yes, we're not paying revenue with $16.88 So it's Hollysixteen.88 makes fees by You're handling transactions for people, etcetera. They're not getting a piece of this transaction, Brian.

Speaker 6

Yes, they make money on the float, Brian. So the checkout will be through their process and that's how they make their money.

Speaker 7

Yes. Can you elaborate on that, Jim, just define what you mean by float in this context. I think I've just gotten a lot of questions on this. It'd be a good time to clear it

Speaker 5

Yes. Brian, just that when people one of the things that happened in $16.88 and it's just different there is People will pay, that will be then held by 16.88 and then once the system the order is shipped in our case, then they would release the funds. So that's similar on Alibaba and other platforms. So they are the they're holding the funds from the buyer and then they release them when the seller delivers.

Speaker 7

Right. So in the interim, when they're holding those funds, they can invest them or generate some interest on that and make some money off of this. But in terms of the transactional revenue and margin that goes to Xometry? Is

Speaker 5

that It's not any different, Brian. It's The same as we've got here.

Speaker 7

Yes. Okay. All right. Thank you for that. And then just quickly, the supplier services down, Revenue down 3% year over year.

Speaker 7

It sounds like that you're pulling back some marketing expense there and Maybe just not focusing on selling the services as aggressively going forward. Is that just an ROI type of decision? And how big a drag on revenue for 2023? Is this just $1,000,000 or $2,000,000

Speaker 5

Yes, Brian. And yes, so there is a specific service That we offer, which is selling supplies, supplier services, the bulk of our supplier services is marketing services that we've got with Thomas Net, but as you know historically, Tometry has sold supplies Two suppliers, whether it's materials and tools. So that is a segment of supplier services that we're pulling back from. It's got significantly lower gross margins. And so we're not actively marketing it to the suppliers.

Speaker 5

So that's why we thought about in Q2 that's going to you're going to see year over year revenue from suppliers go down because we're not actively Marketing that to our suppliers, ultimately that's a more profitable it's going to help our margins. So it's a proactive thing that we're doing. But of course, the other marketing services, Inspire services, we are investing in the technologies we've talked about and building our sales and marketing capabilities around those.

Speaker 7

Okay. I got it. Thanks a lot.

Speaker 5

Thanks, Brian.

Operator

Thank you. One moment, please. Our final question comes from the line of Greg Palm from Craig Hallum. Your line is now open.

Speaker 8

Yes. Good morning. Thanks for taking the questions here. I wanted to start with active buyers because it was a nice some pickup again in terms of net adds for the quarter. And I guess my first question is, are you seeing a different Sort of mix in some of the new net adds this quarter, last quarter versus maybe historical levels.

Speaker 8

And I guess your comment about going deeper into the top 200, should we assume that a big portion of these net adds Are just that it's increasing wallet share within a certain company or enterprise? Or are you actually seeing Good net adds in different or separate enterprises as well?

Speaker 5

Yes, great question. So we are seeing We've got a big funnel and we're seeing really nice addition of new logos, people say new accounts. And the behavior of these accounts in Q4, the makeup or the demographic of it is similar to accounts that we've added in previous quarters. We're just we're getting more efficient with our marketing spend. We've got more organic growth.

Speaker 5

And so we're just adding more active buyers Each quarter. And yes, we are certainly we talked about our 5 point strategic plan going deeper and wider into the top 100 accounts. So We are adding more buyers there, but the funnel of new logos is very strong.

Speaker 1

Greg, Randy meant to say Q1, but the other thing you're seeing is broad based strength in active buyer growth, but not only in the U. S, But remember Europe is growing at a very fast rate, so we're seeing good buyer growth over there as well.

Speaker 8

And in terms of the assumptions behind the Q2 revenue guide, does it assume another sequential Increase in net adds or maybe a similar level of what you saw between Q4 and Q1?

Speaker 1

Yes. I mean, we don't guide specifically to that metric, but you should expect healthy net adds going forward. And Greg, as you play that out, This is something we were talking about the last few calls as you play that out through 2023 that drives good strong growth year over year in active buyers.

Operator

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

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Xometry Q1 2023
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