Xometry, Inc. Price & Performance (XMTR)

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'd 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.zometry.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. Thanks, Sean.

Good morning, everyone, and thank you for joining our Q4 twenty twenty four earnings call. We had a strong Q4 and we're off to a strong start in 2025.

I will go into our results and outlook in more detail in just a moment. Powered by AI, our manufacturing marketplace continues to gain convenience and resilience of our platform. The Xometry marketplace enables our customers to fulfill all their needs across the full lifecycle. Our extensible technology platform provides a broad deep marketplace that reduces costs and delivery dates for customers and improves throughput and profits for suppliers. In a world with increasingly volatile supply chains, Xometry provides customers surety of delivery. Q4 was a record quarter for Xometry across many fronts capping a pivotal year as we scaled to adjusted EBITDA profitability. Driven by the strong execution of our teams, we grew marketplace revenue 23% in 2024, ahead of our initial 20% expectations despite the manufacturing contraction. The strength of our results in Q4 and the full year underscore our confidence in strong growth and scale 2025. In Q4, our AI powered marketplace delivered record revenue record gross profit and record marketplace gross margin. We generated positive adjusted EBITDA an important milestone in our mission to digitize the multi trillion dollar global custom manufacturing industry. In Q4, we delivered strong growth with revenue increasing 16% year over year to a record $149,000,000 MarketPlace revenue grew 20% year over year ahead of expectations driven by 23% growth in active buyers, reaching over 68,000.

Active buyer net additions were over 3,400 in Q4, the strongest quarter in 2024 driven by improved marketing efficiency. We saw strength across many end markets including aerospace, consumer, industrial equipment and engineering. International growth was robust in Q4 increasing 42% year over year reaching the $100,000,000 run rate Xometry Europe introduced new materials and added dozens of finishes providing customers with even more tailored solutions for their manufacturing needs. Xometry expanded express manufacturing options across Europe for dozens of materials reducing lead times for CNC machining and sheet metal fabrication. We're driving deeper enterprise adoption in as large companies increasingly leverage our technology and global supplier network to build resilient supply chains and increase speed to market. In 2024, we enhanced our marketplace offerings through new auto quote options, [indiscernible] We also expanded our enterprise sales capabilities accelerating our land and expand strategy with key accounts and giving customers more reasons to rely on us for lifecycle management. Our investments are clearly paying off given robust 40% revenue growth in 2024 from our largest accounts with annual spend with Xometry of at least $500,000 In our Q4 earnings presentation, we highlighted several enterprise case studies which underscore strong buyer and revenue growth across many verticals, including aerospace, medical devices.

Q4 gross profit increased 20% year over year to a record $59,000,000 Q4 marketplace gross profit increased robust 32% year over year driven by our AI powered marketplace and increasing network of active suppliers. As we scale our data, our machine learning AI model gets better pricing and match which in turn fuels gross profit dollar growth. We grew active suppliers by 28% year over year to 4,375 manufacturers driving improvements in our AI matching algorithm. As a result, Marketplace gross margin expanded three twenty basis points year over year to a record 34.5% in Q4. Over the last three years, we expanded our marketplace gross margin by over 10 points from 23.5% to 34.5% in Q4, underscoring the power of our AI driven model. Strong marketplace revenue and marketplace gross profit growth drove adjusted EBITDA profitability of $1,000,000 a $3,900,000 improvement year over year. As I look ahead to the rest of 2025, I'm also excited about the recent additions to our executive team. These executives have proven experience scaling e commerce and marketplace businesses and will help us drive further automation and operational excellence across our global [indiscernible] Our vision is to be the global marketplace the digital rails for buyers and suppliers in the $2,000,000,000,000 custom manufacturing market and we continue to make great strides towards that goal.

In 2025, we remain focused on our key growth initiatives. First, expand our buyer and supplier networks. We expect our active buyer growth to remain healthy as there are millions of potential buyers and Xometry's brand awareness is growing but still low. In 2025, we plan to enhance our customer segmentation efforts leveraging AI capabilities in our advertising tech stack, to increase marketing efficiency through better personalization, targeting and customer engagement. We're also improving the supplier experience through our work center software as we rapidly scale our network across the globe, including new regions such as India. We've grown our active supplier network by over threefold since the beginning of 2021 as our technology allows manufacturers to digitally monetize their manufacturing capacity, prove their profitability and access global demand at minimal cost. Our supplier network stands out due to its size and reach, spanning three continents enabling our customers react quickly to changing customer demands, and global trade policy. Second, drive deeper enterprise engagement. Some of our biggest customers are the largest companies in the world, The Xometry marketplace is increasingly becoming the go to trusted platform custom manufacturing. Over the past four years, we have grown marketplace accounts with last twelve months spend of at least $50,000 by approximately a 30% CAGR to nearly 1,500 in 2024.

As I mentioned, our enterprise investments are paying strong dividends revenue from marketplace accounts with last twelve months spend of at least $500,000 increased by over 40% year over year in 2024. In 2025, we are focused on driving further penetration in our largest accounts, each with an estimated potential spend of at least $10,000,000 annually. Third, expand the marketplace menu Our goal is to be the primary destination for our customers' and supply chain needs. Our pricing and sourcing models leverage AI to provide instant quoting for as many manufacturing processes and materials as possible. In 2024, we launched instant quoting for laser tube cutting and tube bending, We expect to add new processes to our marketplace in 2025. Within our marketplace, we are investing in next generation enhanced AI models to improve cost and lead time optimization. We're working on cutting edge applications of generative AI to incorporate customer behavior, segmentation real time market data and manufacturing complexities to our marketplace algorithms In addition, we believe that Zometry can be a leader in developing and applying multimodal models to process different types of data. Such as images, text and three d CAD at the same time, allowing Xometry to more fully support the buyer workflow from design to manufacturing.

Fourth, growing internationally. We will continue to drive growth in Europe with increased penetration within our large Based on investments in 2024, we expect APAC to continue to ramp and become a more material driver to overall revenue growth in 2025. In 2024, international revenue represented 18% of total marketplace revenue. Long term, we believe international can represent 30% to 40% of marketplace revenue consistent with many other global online marketplaces. Fifth, enhancing supplier services. We are investing to restore Thomas Advertising growth given the 85% plus gross margin and strong contribution margin opportunity. By improving the underlying platform technology, we will enhance the experience for both users and advertisers providing opportunities for growth and engagement. We're launching a new ad server technology platform in 2025 to drive improved supplier engagement as we aim to improve monetization of Thomas. One of our top goals is to drive increasing advertiser penetration on the platform which is approximately 1% today of the roughly 500,000 suppliers listed on Thomas. Together, based on these initiatives, we expect to grow revenue faster in 2025 and 2024, As I said, Q1 is off to a strong start. And we expect total revenue growth year over year to accelerate to 20% to 21%.

Through improved technology and automation led by AI, we will continue to drive strong operating leverage. We remain in the early innings of the secular digital shift in manufacturing. One of the largest economic sectors. Enzymaticry is the leading online marketplace. Many companies talk about AI Xometry is powered by AI. We will expect to continue to drive global scale market share gains and improving profitability. I'm proud of our team's accomplishments their talent, our extensible technology platform rapidly growing network of buyers and suppliers and expanding data lake together are fueling our competitive advantage and powering our strong growth. Many of the world's greatest companies turn to us to drive innovation and create supply chain resiliency, that they need in an increasingly dynamic global trade environment. I'll now turn the call over to James for a more detailed review of Q4 and our business outlook. Thanks, Randy, and good morning, everyone. As Randy mentioned, Q4 was a record quarter for Ziometry across many fronts. And we expect significant growth and operating leverage to continue in 2025. Q4 revenue increased 16% year over year to $149,000,000 driven by strong marketplace growth. Q4 marketplace revenue was 135,000,000 and supplier services revenue was $14,000,000 Q4 marketplace revenue increased 20% year over year ahead of our 16% to 18% expectations.

Driven by strong execution growth with larger accounts, and international growth as we continue to capture significant market share Q4 marketplace revenue was impacted by approximately $500,000 to $1,000,000 due to a stronger U. S. Dollar since we provided Q4 guidance, on November. Q4 active buyers increased 23% year over year to 68,267 with a net addition of 3,416 active buyers. Our highest net additions in 2024. Q4 marketplace revenue per active buyer was down 3% year over year due to a tough comparison from Q4 twenty twenty three, and up 1% quarter over quarter. In Q4, the number of accounts with last twelve month spend of at least $50,000 on our platform increased 12% year over year to fourteen ninety five We view accounts with at least $50,000 spend as the top of the enterprise funnel we expect to continue to grow this base of accounts over time. Growth in enterprise was strong in 2024, with revenue increasing over 40% for marketplace accounts with last twelve months spends of at least $500,000 As Randy mentioned, our enterprise strategy focused on our largest accounts, which we believe each have $10,000,000 plus in potential annual account revenue. Supplier services revenue declined 13% year over year in Q4 primarily driven by the wind down of our non core services, and to a lesser extent Thomas Advertising and Marketing Services due to manufacturing contraction in The U. S. As Randy mentioned, we are focused on improving engagement and monetization on the platform.

Which remains a leader in industrial sourcing supplier selection and digital marketing solutions. The number of active paying suppliers in our Supplier Services segment was 6,582 for Q4 on a trailing twelve month basis, a decrease of 9% year over year. Q4 gross profit was $59,000,000 increase of 20% year over year with gross margin of 39.7%. Q4 gross margin for marketplace was a record 34.5%, up three twenty basis points year over year. Q4 marketplace gross margin expansion underscores the success of our machine learning AI powered economic model with more data and improved matching, with an expanding supplier network. Q4 marketplace gross profit dollars increased 32% year over year, We are focused on driving marketplace gross profit dollar growth through the combination of top line growth, and gross margin expansion. Q4 gross margin for Supplier Services remained strong at 89.7% driven by our increasing focus on the higher gross margin Thomas app Moving on to Q4 operating costs. Q4 total non GAAP operating expenses increased 12% year over year to $58,200,000 well below revenue growth. We are applying strong discipline and rigor to our capital and we saw allocation across teams. In Q4 twenty twenty four, this resulted in non GAAP operating expenses growing less than 3% quarter over quarter driving strong leverage across sales and marketing, and other operating expenses.

After investing in our enterprise sales efforts, we delivered four eighty basis points of sales and marketing leverage from Q1 to Q4 twenty twenty four. Marketplace advertising spend decreased 4% year over year was 5.6% of marketplace revenue, is down 140 basis points year over year as we balance growth and profitability, in uncertain macro. Key for adjusted EBITDA was $1,000,000 0.7% of revenue compared with a loss of $2,900,000 or 2.2% of revenue in Q4 twenty twenty three. Q4 adjusted EBITDA improved $3,900,000 year over year driven by growth in revenue, gross profit and operating efficiencies. For 2024, we delivered incremental adjusted EBITDA margin of 22%. Slightly higher than our long term target of 20%. Starting in Q4, we provided adjusted EBITDA for both The U. S. And international operating segments In Q4, U. S. Segment adjusted EBITDA was $4,000,000 or 3.3% of revenue, a $4,800,000 improvement year over year driven by expanding gross margin and strong operating expense leverage. International segment adjusted EBITDA loss was $3,000,000 in Q4 twenty twenty four, compared to a loss of $2,100,000 in Q4 twenty twenty three, due to investments in sales and technology, to drive further scale, In Europe, and Asia Pacific.

At the end of the fourth quarter, cash and cash equivalents and marketable securities were $240,000,000 increasing $5,800,000 twenty twenty four. The increase in cash was driven by positive adjusted EBITDA of $1,000,000 CapEx of $4,500,000 and positive changes in working capital as we aligned our partner payments more closely with receivable days. We are focused on improving working capital efficiency and cash flow conversion Given our asset light and limited capital spending. Q4 demonstrates the ability of our AI powered marketplace to deliver strong gross margin expansion and gross profit growth. We remain focused on operating expense discipline while investing in our growth initiatives. In 2024, we delivered 22% year over year incremental adjusted EBITDA [indiscernible] As we scale towards $1,000,000,000 of revenue, we expect continued 20% plus incremental adjusted EBITDA leverage Given our large market opportunity and low penetration rates, will continue to balance investing in the future with driving operating leverage. Now moving on to guidance. For the first quarter, we expect revenue in the range of $147,000,000 or 20% to 21% growth Year over year, an acceleration from 16% in Q4 twenty twenty four. We estimate that the stronger US dollar negatively impact Q1 revenue by approximately $1,000,000 on a year over year basis.

We expect Q1 marketplace growth to be approximately 24% to 26% year over year an acceleration from 20% in Q4 twenty twenty four. As Randy mentioned, 2025 is off to a strong start. We expect Q1 supply services to be approximately flat quarter over quarter. In early twenty twenty five, in the face of volatile global trade policies, accelerated our global sourcing strategy including scaling up suppliers in different geographies. As we ramp up order volume in these geographies, This investment has temporarily dampened gross margin in Q1 on a quarter over quarter basis. We expect marketplace gross margin to improve into Q2 and continue to expect marketplace gross margin to expand year over year 2025. In Q1, we expect adjusted EBITDA loss of approximately $1,500,000 compared to a loss of $7,500,000 in Q1 twenty twenty four. We expect Q1 incremental adjusted EBITDA margin to be approximately 22% to 24% year over year. In Q1, we expect stock based compensation expenses including related payroll taxes, to be approximately $8,000,000 to $9,000,000 or approximately 6% of revenue.

We expect overall revenue growth in 2025 to exceed 2024 growth, Based on FX rates, Quarter to date, we estimate that the stronger U. S. Dollar could impact revenue by approximately $4,000,000 in 2025 on a year over year basis. For the full year 2025, we expect marketplace growth of at least 20% across each quarter driven by our growth initiatives in our large fragmented market. We expect supplier services to be down approximately 5% to 10% year over year.

We remain focused on driving marketplace gross profit dollar growth through the combination of top line growth, and gross margin expansion. And lastly, we expect to be adjusted EBITDA positive for the full year 2025 and expect incremental adjusted EBITDA margins of approximately 20% for 2025. I want to close by thanking our dedicated Xometry team members around the world. Their commitment to our buyers and suppliers is instrumental to our continued growth and core to our mission of digitizing manufacturing. With that, operator, can you please open up the call for questions?

Thank you. At this time, we will conduct the question and Our first question comes from the line of Eric Sheridan with Goldman Sachs. Your line is now open.

Thank you so much for taking the questions. Two if I could. Coming back to the priorities you laid out, talk a little bit about how we should be thinking about the pathway to that kind of penetration or mix from international in the years ahead? What needs to be built? What needs to be scaled? How do you think about that mix of your revenue internationally continuing to evolve to the numbers you pointed out there? And then maybe just a quick second one, you threw out multimodal AI and how it might capture more of the buyer process and improve friction and conversion of the buyer process as well. Can you talk a little bit about the building blocks of getting from where we are today to multimodal AI helping the buyer process? Thank you.

Hey, Eric. It's Randy. Good morning. So we talked about that international, we expect that to be about 30% to 40% of our marketplace revenue, sort of consistent with what you see with other global marketplaces. I think there's sort of two fold. One, in EMEA, we've had some strong growth. We expect that growth to continue. And even though we've gone from back in 2019 $1,000,000 revenue to now 100,000,000 run rate last twelve months.

There's still lots of room to grow in EMEA.

Then in Asia Pac, it's still early days there. We did call out today that we think that's going to make a more meaningful impact in 2025 and we expect that to also a bigger and bigger role in our international growth. In terms of your question about the multimodal, so just today when somebody gets an instant quote on the Domitry site, they upload a three d CAD file and we need that CAD file to generate the quote. As we move to a multimodal model, customers would have the ability to upload a file, a flat file or a drawing and they get an instant flow from that. Versus just using a three d CAD file. So in the world of manufacturing, there are still many parts that aren't done in three d CAD. There are millions of three d CAD users, but there are still many parts, particularly legacy parts that there's just a drawing and this just will open up a large universe of things that can get instant quote in our site. It will reduce friction, It will it's more profitable for us. And it's a better customer experience.

Great.

Thank you.

Thank you. One moment for our next question. Our next question comes from the line of Cory Carpenter with JPMorgan. Your line is now open.

Good morning. Thanks. Randy, I had one for you and Jay, maybe a follow-up for you.

So Randy, you mentioned a few times 2025 off to a strong start.

Just hoping you could expand a bit on what you're seeing in the broader manufacturing environment how the chasing tariff land landscape is impacting your conversations with buyers and suppliers? Thank you.

Yes. So I think a couple of things. One is, and we sort of talked about this in the transcript, we're seeing increasing success in our enterprise segment of our business. I think that's first, it's reaction from our customers, from our technology, team space, we've been adding more and more features to that. That is being very well received by all of our customers, but particularly our enterprise customers. And also our integration with ERP systems our three d CAD add ins. So that's very powerful reducing frictions Our enterprise customers are really embracing those. We're seeing wonderful growth there. And then also in this volatile environment, there is a a push for safety and for our customers in this heavily fragmented market which has historically been dominated by small and local manufacturers, The fact that Dommetry is a public company that we have the technology backbone, we have strength, that's increasingly appealing to customers across many verticals.

Thank you. And James, you mentioned in your 1Q guidance comments you were accelerating global sourcing strategy given the uncertainty. Could you just talk about that, expand on that a little bit more?

And how that's impacting your 1Q guide? Yes. Thanks, Corey.

So we're excited about the growth ahead here in Q1 here. We're guiding to marketplace growth of 24% to 26%. So we're seeing, as Randy was saying, good penetration with enterprise accounts, good momentum there. As part of our strategy, you know, it's been expanding our supplier network. We've got to nearly 4,400 supply network globally. We've been expanding that into different geographies. We've talked about India, Turkey, And so we continue to do that. But we've accelerated some of that and the volume going to those geographies in Q1. And that's having some dampening impact on a quarter over quarter basis for That really is we wanted to highlight that because in terms of our guide of $1,500,000 loss for adjusted EBITDA, That was a that's a component of that. We'd expect this as our algorithms pick up on the data and the supplier network. We'll continue to help us improve our gross margin from Q1 into Q2 and continue to expect us to have healthy gross margin improvement over the year. And really this is all about driving gross profit dollars. I mean at the end of the day, the combination of data with our strong supplier network [indiscernible] well positioned as a flexible resilient network in this environment to be a great solution to our customers and to drive growth [indiscernible] And Cory, this is Randy.

Let me just jump in with a couple of extra things as well. Just to remind everybody, in Q1 of last year, we lost $7,500,000 in adjusted EBITDA basis this is an incremental adjusted EBITDA margin of approximately 23% at the midpoint of our guidance. And also just to pick Jan Pigna, we think this will be temporary in the first quarter and we expect that you'll see in 2025 a higher gross margin both from a margin perspective and obviously from a dollar perspective than you had in '24. So was an investment that was worthwhile making in the first quarter and And as I said, the year is off to a strong start and we'll continue to be benefit from that as the year progresses.

Thank you. One moment for our next question. Our next Hi, good morning. Thanks for taking my questions.

I was wondering if you could give us any sense for how order growth has been in the fourth quarter or 2024 overall? Any insight into the difference between order growth and increases in Brian, we usually we don't talk about order growth per se. I do want to point out that we had a record number of ad for 2024 of active buyers of over 3,400. So that was a record quarterly ad for us. 2024. So we're seeing an expanded base of buyers And so we're seeing growth in orders obviously, but we're also seeing growth in particularly enterprise and other segments of our business.

So I think across the board it's been strong. And as I indicated in the call, Q1 of twenty five twenty five is also off the strong start as well. So I think Great. So just to be clear that orders have been growing well in 2024 and you're expecting when you say first quarter twenty twenty five off strong start. Does that include expectation for for strong orders year over year? Yes, we grew orders obviously in Q4 and we're growing orders in Q1.

Mean, again, we don't report out order growth specifically, Brian, but yes, we're growing our order account And again, just to point to in Q4, they record add of active buyers in the fourth quarter for the year, So yes, we're seeing strength across the board.

Okay, great. Yes, I mean, obviously still a very generally very tough industrial environment and tough macro environment. So when that gets better, I imagine the orders will will accelerate. And then just I wanted to ask about Thomas. Can you talk about the relationship between Thomas and the the legacy business a little bit and where we stand now. As Thomas creating leads for for Xometry's Xometry quoting It just kind of feels like when we're talking about it and the opportunity that we're talking about Thomas as separate from somewhat separate from the legacy business today. Yes. And Brian, if you want to just report back, I mean, let's be clear, in Q1, we are guiding accelerated revenue growth of 20%, 21% from where we were in the fourth quarter.

And then marketplace growth of anywhere from 24% to 26%. So again, just to answer your original question between orders and new customers and enterprise customers we're seeing great growth on the marketplace side in terms of our revenue growth. Not only in Q4, but what we're expecting in Q1. And Thomas, we do get some referrals. We do have a loan complain about more synergies between the Thomas platform and the Zomka platform, but right now our focus is Don.

On the integration of the new ad server and the technology. So that's our focus right now. We want to get higher penetration. We're only at about 1% of the advertiser of the listeners on the Thomas site are advertisers. That's a very high margin business for us.

So we think about prioritization, let's get that technology integration let's ramp up that number and then we will of course turn to those synergies and integrations with the broader Xometry ecosystem. Right. Makes sense. Okay. Thanks, Randy.

Thank you. In the opening remarks, it's about progress in land expand and focus on increasing penetration to your core accounts this year. Love to understand how the changes you made to improve the selling motion have driven that and or just expanding the standard and sales function and marketplace menu, that would be really helpful. And then James, I want to understand gross margins a little bit more. Understood the investments in volumes going to new geographies and that's impacting 1Q. I wanted to hear what gives the confidence that we'll see margins improve? I understand scale and everything else, but what are you seeing any improvements thus far in these new geos that give you confidence in gross margins expanding? Thank you. Yes, Ron, let me jump on that first question. So so when we talk about our success so far with enterprise, we mentioned in their remarks about segmentation. So we've been investing all last year we talked about investing in our enterprise sales team. As well as the technology tools, which are critical to the team space [indiscernible] plug in.

So that whole package marry together with this increased segmentation of our sales team and making sure that we're taking it as a economic approach to this. So really applying those resources to those enterprise accounts We called out a number of accounts now with more than $500,000 of LTM spend and that's a strong number for us. So I think that segmentation and that focus and the investments that we made throughout 2024 the enterprise sales team have been reaping benefits for us. In terms of on the site itself, we did expand to add tube bending and tube cutting We're constantly adding new materials, new features And I think when you combine that together with Teamspace and the segmented approach on the sales side and the investments that we've made in enterprise that's also rolled into greater success on the enterprise side. And we've identified that that can be a huge growth for us engine for us moving forward. Ron, this is James. So on gross margin, just to remind us, we ended the year Q4 gross margin at a record 34.5% to three twenty basis points year over year.

We saw fantastic annual progress over the last few years. We've grown large That is a combination of us growing out our supplier network, growing out our orders, more data, giving our algorithms more opportunity to match to the right supplier. For the right manufacturing. So that's the strategy we're on. We continue to do that. I think what we're seeing right now is in the face of more volatility on global trade policies, we wanted to accelerate into some of our global sourcing. We're scaling up those different geographies a bit faster. And so as we ramp that, as our algorithms learn, then there is a temporary dampening on the gross margin in Q1. But what gives us confidence is the track record we've had over the last few years. We've continued to drive out margin. We know what we're doing here and we think it's the right thing to do to position us for the full year ahead. And I think that the ongoing again, development of our supply network of more data of continuing to improve our marketplace menu and underlying product is going to continue us on that path of increasing gross profit dollars through a combination of the revenue top line and gross margin improvement.

Yes. And Ron, just to double click on that again, our marketplace gross margin is not linear quarter to quarter. And if you could look at just that to the track record that James referred to, if you look at consistently year over year, we're growing that gross margin in 2024. That grew by 2.5 points. So two fifty basis points. So we're confident. We'll continue to see growth in '25 versus '24 and you'll see that jump increase from Q1 to Q2. So and again, if you just look at we thought it was a well, a good investment to make, we're still showing adjusted incremental adjusted EBITDA margin of 23% versus last year, a loss of 7.5% to just 1.5%. So we think that's well worth it. Thank you, Randy. Thank you, James.

Thank you. Thank you. Our next question comes from the line of Matt Swanson with RBC.

Your line is now open.

Yes. Thank you so much for taking my questions. Two kind of about the current tariff situation. The first, I guess, would be are you seeing specifically in the enterprise segment and being more proactive or reactive very quickly evolving and unevolving landscape. And then in terms of just your conversations with enterprise customers, are you starting to get any sense for how they want to deal I guess, with the changing tariff landscape, Yes. I think it's it's certainly top of mind for many customers. And for them, it's about risk mitigation. So that's one of the things that's so attractive about our marketplace, the fact that we're not a vertically integrated manufacturer, but but we're an asset light technology company. So the ability for them to deploy into different geographies seamlessly with Domitry is very appealing. And again, just going back to our strong Q4 and what we're seeing here in the Q1 with accelerated growth, I think that's certainly appealing to those customers, particularly the larger customers.

Yes. Matt, I think at this stage, it's in terms of like how it's impacting our guidance, it's still early. And so I think we're watching carefully the situation as I said, I think on our core business, we just feel good about how we finished the year and starting. But I think Zometry positioned as a flexible and resilient solution. And as we adapt ourselves to be able to service our customers as well and best, then I think we're in a good position here.

Thank you. That's really helpful. And then it was nice to see the acceleration from an absolute number of ads for Team Space. Collaboration tools in general seem like they would kind of benefit from some of the of the current environment Do you think that's any part of the team space acceleration or is it more about awareness in the features that you've added?

Think it's probably more about just awareness. And also as we penetrate deeper in these enterprise customers, we're moving more and more away from single parts to entire assemblies of products. We also gave you look in the earnings deck, we gave some nice examples of some of these larger orders that are coming through the Zomato system. So I think team face just really facilitates that nicely. And as we also mentioned, we've been constantly adding features to it. So I think it's more just reducing friction for the customer, making it easier, reducing risk.

Thank you.

Thank you.

Our next question comes from the line of Greg Palm with Craig Hallum. Your line is now open.

Yes. Good morning. Maybe just following up on some of the tariff rhetoric, are you seeing any changes in behavior from kind of your buyers just given what's going on? I mean, whether that's sourcing parts from different geographies and they were previously shipping timelines. Anything sort of note on the buyer side of things?

Yes, I think there's definitely a much more awareness and our customers are definitely looking to mitigate risk by using in some cases multiple geographies. Sometimes it's about switching from international sourcing to domestic sourcing, sometimes it's about moving into different geographies. And again, we're very well suited to that and we're meeting our customers where they are. So yes, I think there's definitely increased awareness there and it's a great opportunity for Xometry.

Yes. And Greg, I just our strategy on the global sourcing side and continuing to build that out, obviously positions us well to again, as Randy said, meet our customers where they are.

And in terms of that sourcing, the supplier network, are you able to give us the proportion of revenue that's currently being supplied or imported from China specifically and is the whole move to other geographies and focus on investments in countries like India. Is that part of what's going on here or is it something different?

Well, we don't break that out. I think though that again, Greg, this is positive in terms of as a global marketplace positioned internationally. By having multiple countries and geographies being able to source and supply That positions the marketplace to provide the most value to our customers. So [indiscernible] We're positioned well for being flexible and resilient with any changes some initial tariffs. As those progress, we're able to input those onto our be reflected in our pricing and in the marketplace and help buyers make [indiscernible] So our strategy here is that we're over 4,300 suppliers at the end of last year. That's been growing very healthy over the last few years and we'll continue to grow that so that we can offer our which is always been important, but even more so [indiscernible] Yes, makes sense. All right. I will leave it there.

Thanks. Thank you. Next question comes from the line of Josh Chan with UBS. Your line is now open.

Hi, good morning, Randy, James, Sean. Thanks for taking my questions. Just two quick ones, I guess. Mentioned adding 3,400 active fires this quarter. I guess what went right in terms of your marketing initiatives? And how do you think about the those factors potentially continuing into 2025?

And then I guess my second one is on the temporary gross margin headwind in Q1. I guess What's the confidence that it takes one quarter for the algorithm to learn the new dynamics and that gross margin kind of progresses back to the original track after Q1? Yes. So let me jump into both of those questions. So first, I think what you're seeing in terms of new buyers that record add for 2024 back to new buyers in the quarter. Is really led by product led growth. Our technology platform, whether it's in The United States or Europe, or Asia Pac, we're reducing friction, we're making it easier, we're enhancing team space, all these sorts of things when customers are looking for solutions, technology led ones in our marketplace are very, very appealing. Very differentiated from from what they would normally find. So I think that investments we've been making in technology over the years are really paying off. I think we're also getting smarter about our marketing as well as we're as we're thinking about more personalization higher segmentation, that's also where we can benefit. In terms of the gross margin, in Q1, again, we expect to grow 2025 over 2024.

We've done that every year. We We don't expect to be a big deal going into Q2 because we've consciously made this investment. So it's not a it's an incidental thing, but we do see that customers want to to in the face of this unsteady environment, they want to be deeper in certain geographies. And so we made that investment. But it's a conscious decision and we're very confident that we'll see a nice uptick right away in Q2 and continue that trend that you've seen every year now since we went public of growing gross profit margins. So Great. Thank you for the color and good luck next year.

Thank you. I'm showing no further questions at this time. Thank you for your participation in today's conference. This does conclude the program.