What changed in Xometry, Inc.'s 10-K — 2022 vs 2023
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Paragraph-level year-over-year comparison of Xometry, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.
+141 added−108 removedSource: 10-K (2024-02-29) vs 10-K (2023-03-16)
Top changes in Xometry, Inc.'s 2023 10-K
141 paragraphs added · 108 removed · 93 edited across 1 sections
- Item 7. Management's Discussion & Analysis+141 / −108 · 93 edited
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
93 edited+48 added−15 removed70 unchanged
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
93 edited+48 added−15 removed70 unchanged
2022 filing
2023 filing
Biggest changeYear Ended December 31, 2022 2021 Net loss $ (76,009 ) $ (61,381 ) Addback (deduct) Interest expense, interest and dividend income and other expenses 2,486 2,736 Depreciation and amortization 7,819 3,596 Amortization of lease intangible 1,332 — Income tax benefit 36 — Stock based compensation expense 19,172 7,395 Acquisition and other (676 ) 5,696 Charitable contribution of common stock 2,272 2,242 Income from unconsolidated joint venture (570 ) (41 ) Impairment of assets 824 — Restructuring charge 1,549 — Adjusted EBITDA $ (41,765 ) $ (39,757 ) Non-GAAP Net Loss We define Non-GAAP net loss, as net loss adjusted for depreciation and amortization, stock-based compensation expense, amortization of lease intangible, amortization of deferred costs on convertible notes, losses on marketable securities, loss on sale of property and equipment, charitable contributions of common stock, impairment charges, restructuring charges and acquisition and other adjustments not reflective of the Company's ongoing business, such as adjustments related to purchase accounting, the revaluation of contingent consideration and transaction costs.
Biggest changeNon-GAAP Net Loss We define Non-GAAP net loss, as net loss adjusted for depreciation and amortization, stock-based compensation, amortization of lease intangible, amortization of deferred costs on convertible notes, loss on marketable securities, loss on sale of property and equipment, charitable contributions of common stock, impairment of assets, lease abandonment and termination, restructuring charges, costs to exit the supplies business and acquisition and other adjustments not reflective of our ongoing business, such as adjustments related to purchase accounting, the revaluation of contingent consideration and transaction costs. 51 For the Year Ended December 31, 2023 2022 Non-GAAP Net Loss: Net loss (1) $ (67,465 ) $ (79,043 ) Add (deduct): Depreciation and amortization 10,738 7,819 Stock-based compensation 22,118 19,172 Amortization of lease intangible 950 1,332 Amortization of deferred costs on convertible notes 1,860 1,718 Loss on marketable securities — 1,855 Acquisition and other 824 (676 ) Loss on sale of property and equipment 92 47 Charitable contribution of common stock 1,029 2,272 Lease abandonment and termination 8,778 — Impairment of assets 397 824 Restructuring charge 738 1,549 Costs to exit the supplies business 586 — Non-GAAP Net Loss $ (19,355 ) $ (43,131 ) (1) Net loss for the year ended December 31, 2022 increased by $3.0 million as a result of an immaterial correction of errors.
Financing Activities Cash provided by financing activities was $281.0 million during the year ended December 31, 2022, primarily resulting from $287.5 million of proceeds from the issuance of the 2027 Notes and $3.7 million of proceeds from the exercise of stock options, partially offset by $9.3 million of issuance costs in connection with the issuance of the 2027 Notes.
Cash provided by financing activities was $281.0 million during the year ended December 31, 2022, primarily resulting from $287.5 million of proceeds from the issuance of the 2027 Notes and $3.7 million of proceeds from the exercise of stock options, partially offset by $9.3 million of issuance costs in connection with the issuance of the 2027 Notes.
Holders of the 2027 Notes may convert all or a portion of their 2027 Notes at their option prior to November 1, 2026, in multiples of $1,000 principal amounts, only under the following circumstances: • if the last reported sale price of our Class A common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the preceding calendar quarter is greater than or equal to 130% of the applicable conversion price of the 2027 Notes on each such trading day; • during the five-business day period after any ten consecutive trading day period in which the trading price per $1,000 principal amount of the 2027 Notes for each day of that ten consecutive trading day period was less than 98% of the product of the last reported sale price of our Class A common stock and the applicable conversion rate of the 2027 Notes; • on a notice of redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, in which case we may be required to increase the conversion rate for the 2027 Notes so surrendered for conversion in connection with such redemption notice; or 55 • on the occurrence of specified corporate events.
Holders of the 2027 Notes may convert all or a portion of their 2027 Notes at their option prior to November 1, 2026, in multiples of $1,000 principal amounts, only under the following circumstances: • if the last reported sale price of our Class A common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the preceding calendar quarter is greater than or equal to 130% of the applicable conversion price of the 2027 Notes on each such trading day; • during the five-business day period after any ten consecutive trading day period in which the trading price per $1,000 principal amount of the 2027 Notes for each day of that ten consecutive trading day period was less than 98% of the product of the last reported sale price of our Class A common stock and the applicable conversion rate of the 2027 Notes; • on a notice of redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, in which case we may be required to increase the conversion rate for the 2027 Notes so surrendered for conversion in connection with such redemption notice; or • on the occurrence of specified corporate events.
Impairment of assets Impairment of assets of $0.8 million related to incomplete software projects that were abandoned, furniture, fixtures and equipment and/or other assets to be disposed of during the year ended December 31, 2022. No impairments were recorded on our long-lived assets during the years ended December 31, 2021.
Impairment of assets Impairment of assets of $0.8 million related to incomplete software projects that were abandoned, furniture, fixtures and equipment and/or other assets to be disposed of during the year ended December 31, 2022. No impairments were recorded on our long-lived assets during the year ended December 31, 2021.
Our business benefits from a virtuous network liquidity effect, because adding buyers to our platform generates greater demand on our marketplace which in turn attracts more suppliers to the platform, allowing us to rapidly scale and increase the number of manufacturing processes offered on our platform.
Our business benefits from a virtuous network effect, because adding buyers to our platform generates greater demand on our marketplace which in turn attracts more suppliers to the platform, allowing us to rapidly scale and increase the number of manufacturing processes offered on our platform.
Our determination of the fair value of the intangible assets acquired involves the use of significant estimates and assumptions. Refer to our the “Business Combinations” disclosure below. We believe that the fair value assigned to the assets acquired and liabilities assumed are based on reasonable assumptions and estimates that a market participant would have use.
Our determination of the fair value of the intangible assets acquired involves the use of significant estimates and assumptions. Refer to our the “Business Combinations” disclosure below. We believe that the fair value assigned to the assets acquired and liabilities assumed are based on reasonable assumptions and estimates that a market participant would use.
Refer to Note 12, Debt Commitments and Contingencies—Restructuring to of our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. 45 Key Operational and Business Metrics In addition to the measures presented in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we use the following key operational and business metrics to help us evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and develop forecasts, and make strategic decisions: Active Buyers We define Active Buyers as the number of buyers who have made at least one purchase on our marketplace during the last twelve months.
Refer to Note 12, Debt and Commitments and Contingencies—Restructuring to of our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. 47 Key Operational and Business Metrics In addition to the measures presented in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we use the following key operational and business metrics to help us evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and develop forecasts, and make strategic decisions: Active Buyers We define Active Buyers as the number of buyers who have made at least one purchase on our marketplace during the last twelve months.
Impairment indicators may include any significant changes in the manner of our use of the assets or the strategy of our overall business, certain restructuring initiatives, significant negative industry or economic trends and significant decline in our share price for a sustained period.
Impairment indicators may include any significant 64 changes in the manner of our use of the assets or the strategy of our overall business, certain restructuring initiatives, significant negative industry or economic trends and significant decline in our share price for a sustained period.
As a percent of total revenue, general and administrative expenses decreased to 15.2% for the for the year ended December 31, 2022 from 16.0% for the year ended December 31, 2021. During the year ended December 31, 2022, $0.2 million of restructuring charge is recorded in general and administrative.
As a percent of total revenue, general and administrative expenses decreased to 15.3% for the year ended December 31, 2022 from 16.0% for the year ended December 31, 2021. During the year ended December 31, 2022, $0.2 million of restructuring charge is recorded in general and administrative.
Total segment loss from our International operating segment for the year ended December 31, 2022 and 2021, was $17.3 million and $10.1 million, respectively. Total segment interest expense from our U.S. operating segment for the year ended December 31, 2022 and 2021, was $4.4 million and $0.7 million, respectively.
Total segment loss from our International operating segment for the year ended December 31, 2022 and 2021, was $17.3 million and $10.1 million, respectively. 61 Total segment interest expense from our U.S. operating segment for the year ended December 31, 2022 and 2021, was $4.4 million and $0.7 million, respectively.
The majority of our revenue is derived from the sale of part(s) and assemblies to our customers on our marketplace, which we refer to as marketplace revenue. The suppliers on our platform offer a diversified mix of manufacturing processes.
The majority of our revenue is derived from the sale of part(s) and assemblies to our customers on our marketplace, which we refer to as marketplace revenue. The suppliers on our platform offer a diversified and expanding mix of manufacturing processes.
We believe the repeat purchase activity from existing accounts reflects the underlying strength of our business and provides us with substantial revenue visibility and predictability. 47 Accounts with Last Twelve-Month Spend of At Least $50,000 Accounts with Last Twelve-Month, or LTM, Spend of At Least $50,000 means an account that has spent at least $50,000 on our marketplace in the most recent twelve-month period.
We believe the repeat purchase activity from existing accounts reflects the underlying strength of our business and provides us with substantial revenue visibility and predictability. 49 Accounts with Last Twelve-Month Spend of At Least $50,000 Accounts with Last Twelve-Month, or LTM, Spend of At Least $50,000 means an account that has spent at least $50,000 on our marketplace in the most recent twelve-month period.
Performance of the qualitative impairment assessment requires judgment in identifying and considering the significance of relevant events and circumstances including external factors such as macroeconomic and industry conditions and the legal and regulatory environment, as well as entity-specific factors such as actual and planned financial performance, that could impact the fair value of our reporting units.
Performance of the qualitative impairment assessment requires judgment in identifying and considering the significance of relevant events and circumstances including external factors such as macroeconomic and industry conditions and the legal and regulatory environment, as well as entity-specific factors such as market capitalization, actual and planned financial performance, that could impact the fair value of our reporting units.
The increase in gross profit was primarily due to the acquisition of Thomas, increases in revenue from marketplace and improved marketplace gross margin as compared to the prior year period. Gross margin for marketplace was 28.6% for the year ended December 31, 2022 which was an improvement over the prior year in part due to our AI-driven platform.
The increase in gross profit was primarily due to the acquisition of Thomas, increases in revenue from marketplace and improved marketplace gross margin as compared to the prior year period. Gross margin for marketplace was 28.2% for the year ended December 31, 2022 which was an improvement over the prior year in part due to our AI-driven platform.
Foreign Currency Exchange Risk Our revenue and costs are principally denominated in U.S. dollars and are not subject to foreign currency exchange risk. Our International operating segment generates revenue outside of the United States that is denominated in currencies other than the U.S. dollar. Our results of operations could be impacted by changes in exchange rates.
Foreign Currency Exchange Risk Our U.S. revenue and costs are principally denominated in U.S. dollars and are not subject to foreign currency exchange risk. Our International operating segment generates revenue outside of the United States that is denominated in currencies other than the U.S. dollar. Our results of operations are impacted by changes in exchange rates.
The key drivers of Active Buyer growth are continued account and buyer engagement and the success of our strategy to attract new buyers. 46 Percentage of Revenue from Existing Accounts We define an existing account as an account where at least one buyer has made a purchase on our marketplace.
The key drivers of Active Buyer growth are continued account and buyer engagement and the success of our strategy to attract new buyers. 48 Percentage of Revenue from Existing Accounts We define an existing account as an account where at least one buyer has made a purchase on our marketplace.
No goodwill asset impairment charges were recorded as a result of our annual impairment test during the year ended December 31, 2022. Intangibles assets Most of our identifiable intangible assets were recognized as part of business combinations we executed in prior periods.
No goodwill asset impairment charges were recorded as a result of our annual impairment test during the year ended December 31, 2023. Intangibles assets Most of our identifiable intangible assets were recognized as part of business combinations we executed in prior periods.
Our annual goodwill impairment test was performed as of October 1, 2022 using a qualitative assessment, the results of which indicated that it is more likely than not that the fair values of our reporting units exceeded their carrying values.
Our annual goodwill impairment test was performed as of October 1, 2023 using a qualitative assessment, the results of which indicated that it is more likely than not that the fair values of our reporting units exceeded their carrying values.
Product Development Product development costs which are not eligible for capitalization are expensed as incurred. This account also includes compensation expenses, including stock-based compensation expenses to our employees performing these functions and certain depreciation and amortization expense.
Product Development Product development costs that are not eligible for capitalization are expensed as incurred. This account also includes compensation expenses, including stock-based compensation expenses to our employees performing these functions and certain depreciation and amortization expense.
We define “buyers” as individuals who have placed an order to purchase on-demand parts or assemblies on our marketplace. Our buyers include engineers, product designers, procurement and supply chain personnel, inventors and business owners from businesses of a variety of sizes, ranging from self-funded start-ups to Fortune 100 companies.
We define “buyers” as individuals who have placed an order to purchase custom-manufactured, on-demand parts or assemblies on our marketplace. Our buyers include engineers, product designers, procurement and supply chain personnel, inventors, entrepreneurs and business owners from businesses of a variety of sizes, ranging from self-funded start-ups to Fortune 100 companies.
We believe the efficiency and transparency of our business model leads to increasing account stickiness and spend over time. Buyers can utilize our marketplace for both one-off and recurring manufacturing opportunities.
We believe the efficiency and transparency of our business model leads to increasing account loyalty and spend over time. Buyers can utilize our marketplace for both one-off and recurring manufacturing opportunities.
Total revenue from our U.S. and International operating segments for the years ended December 31, 2022 and 2021, was $347.8 million and $202.0 million, respectively, for the U.S., and $33.2 million and $16.3 million, respectively, for International.
Total revenue from our U.S. and International operating segments for the years ended December 31, 2022 and 2021, was $347.7 million and $202.0 million, respectively, for the U.S., and $33.2 million and $16.3 million, respectively, for International.
These manufacturing processes include computer numerical control (“CNC”) manufacturing, sheet metal forming, sheet cutting, 3D printing (including fused deposition modeling, direct metal laser sintering, PolyJet, stereolithography, selective laser sintering, binder jetting, carbon digital light synthesis and multi jet fusion), die casting, stamping, injection molding, urethane casting, tube cutting, tube bending, as well as finishing services, rapid prototyping and high-volume production.
These manufacturing processes include computer numerical control (“CNC”) manufacturing, sheet metal forming, sheet cutting, 3D printing (including fused deposition modeling, direct metal laser sintering, PolyJet, stereolithography, selective laser sintering, binder jetting, carbon digital light synthesis, multi jet fusion and lubricant sublayer photo-curing), die casting, stamping, injection molding, urethane casting, tube cutting, tube bending, as well as finishing services, rapid prototyping and high-volume production.
A buyer may also recommend our marketplace to other engineers within their organizations who are designing other products and who may use an entirely different set of manufacturing processes, deepening our reach and stickiness with an account. For the quarter ended December 31, 2022, 96% of our revenue was generated from existing accounts.
A buyer may also recommend our marketplace to other engineers within their organizations who are designing other products and who may use an entirely different set of manufacturing processes, deepening our reach and loyalty with an account. For the quarter ended December 31, 2023, 96% of our revenue was generated from existing accounts.
As a percent of total revenue, sales and marketing expenses increased to 21.8% for the year ended December 31, 2022 from 18.1% for the year ended December 31, 2021. During the year ended December 31, 2022, $0.5 million of restructuring charge is recorded in sales and marketing.
As a percent of total revenue, sales and marketing expenses increased to 22.1% for the year ended December 31, 2022 from 18.1% for the year ended December 31, 2021. During the year ended December 31, 2022, $0.5 million of restructuring charge is recorded in sales and marketing.
Adjusted EBITDA and Non-GAAP net loss should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. 49 Components of Results of Operations Revenue Our marketplace revenue is primarily comprised of sales to customers through our platform.
Adjusted EBITDA and Non-GAAP net loss should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. 52 Components of Results of Operations Revenue Our marketplace revenue is primarily comprised of sales of parts and assemblies to customers through our platform.
Total cost of revenue from marketplace and supplier services for the year ended December 31, 2022 was $216.3 million and $17.2 million, respectively. Marketplace cost of revenue was driven by increased payments to suppliers on our platform due to the growth in our buyer base and increased activity by existing accounts on our marketplace.
Total cost of revenue from marketplace and supplier services for the year ended December 31, 2022 was $217.8 million and $17.2 million, respectively. Marketplace cost of revenue was driven by increased payments to suppliers on our platform due to the growth in our buyer base and increased activity by existing accounts on our marketplace.
We review the carrying amounts of our intangible assets for potential impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
We monitor events and changes in circumstances that could indicate carrying amounts of intangible assets may not be recoverable. We review the carrying amounts of our intangible assets for potential impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
This growth was primarily a result of an increase in marketplace revenue and an increase in supplier services revenue due to our acquisition of Thomas. Total revenue from marketplace and supplier services for the year ended December 31, 2022 was $303.1 million and $77.9 million, respectively.
This growth was primarily a result of an increase in marketplace revenue and an increase in supplier services revenue due to our acquisition of Thomas. Total revenue from marketplace and supplier services for the year ended December 31, 2022 was $303.2 million and $77.7 million, respectively.
The net decrease in operating assets and liabilities is primarily driven by an increase in accounts receivable of $16.9 million primarily due to our continued growth, a $7.0 million increase in other assets, a $1.6 million increase in prepaid expenses and a $5.7 million decrease in lease liabilities.
The net decrease in operating assets and liabilities is primarily driven by an increase in accounts receivable of $17.0 million primarily due to our continued growth, a $4.1 million increase in other assets, a $1.6 million increase in prepaid expenses and a $5.7 million decrease in lease liabilities.
Our inability or failure to do so could harm our business, results of operations and financial condition. 58
Our inability or failure to do so could harm our business, results of operations and financial condition. 65
If the asset or assets group are determined to be impaired, an impairment charge is recorded in the amount by which the carrying amount of the asset or assets group exceed their fair value. Business Combinations During the fourth quarter of 2021, we acquired three businesses that we accounted for as business combinations.
If the asset or assets group are determined to be impaired, an impairment charge is recorded in the amount by which the carrying amount of the asset or assets group exceed their fair value. Business Combinations During the fourth quarter of 2021 and the first quarter of 2023, we acquired four businesses that we accounted for as business combinations.
Inflation Risk We do not believe that inflation has had a material effect on our business, results of operations, or financial condition. If our costs were to become subject to significant inflationary pressures such as those caused by the conflict in Ukraine, we may not be able to fully offset such higher costs through price increases.
Inflation Risk We do not believe that inflation has had a material effect on our business, results of operations, or financial condition. If our costs were to become subject to significant inflationary pressures such as those caused by geopolitical tensions, we may not be able to fully offset such higher costs through price increases.
We accounted for the issuance of the 2027 Notes as a single liability measured at its amortized cost, as no other embedded features require bifurcation and recognition as derivatives. As of December 31, 2022, the 2027 Notes have a carrying value of $279.9 million with an effective annual interest rate of 1.6%.
We accounted for the issuance of the 2027 Notes as a single liability measured at its amortized cost, as no other embedded features require bifurcation and recognition as derivatives. As of December 31, 2023, the 2027 Notes have a carrying value of $281.8 million with an effective annual interest rate of 1.6%.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” Interest and Dividend Income Interest and dividend income consists of interest on our cash and cash equivalents and dividend income from our investments. Other Expenses Other expenses consist primarily of realized and/or unrealized losses, losses on the extinguishment of debt and other expenses.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” Interest and Dividend Income Interest and dividend income consists of interest and dividends on our cash, cash equivalents and marketable securities. Other Expenses Other expenses consist primarily of realized and/or unrealized losses on marketable securities, losses on the extinguishment of debt and other expenses.
Investing Activities Cash used by investing activities was $238.6 million during the year ended December 31, 2022, primarily due to the purchase of $284.1 million of marketable securities with proceeds from the 2027 Notes issuance and $13.7 million of purchases of property and equipment offset by proceeds of $58.9 million from the sale of marketable securities.
Cash used by investing activities was $238.6 million during the year ended December 31, 2022, primarily due to the purchase of $284.1 million of marketable securities with proceeds from the 2027 Notes issuance and $13.7 million of purchases of property and equipment (which includes internal-use software development costs) offset by proceeds of $58.9 million from the sale of marketable securities.
As of December 31, 2022, our cash and cash equivalents and marketable securities totaled $319.4 million. We believe our existing cash and cash equivalents and marketable securities will be sufficient to support our working capital and capital expenditure requirements for at least the next twelve months and over the long-term.
As of December 31, 2023, our cash and cash equivalents and marketable securities totaled $268.8 million. We believe our existing cash and cash equivalents and marketable securities will be sufficient to support our working capital and capital expenditure requirements for at least the next twelve months and over the long-term.
In addition to being able to manage existing orders, the software is designed to integrate seamlessly with the AI-driven Xometry marketplace and with the Thomasnet platform, giving suppliers a one-stop view into all of their orders.
In addition to being able to manage existing orders, Workcenter is designed to integrate seamlessly with the AI-driven Xometry marketplace, giving suppliers a one-stop view into all of their orders.
We have included Adjusted EBITDA and Non-GAAP net loss in this filing because they are key measures used by our management to evaluate our operating performance.
Adjusted EBITDA and Non-GAAP net loss are non-GAAP financial measures that we use, in addition to our GAAP financial measures, to evaluate our business. We have included Adjusted EBITDA and Non-GAAP net loss in this filing because they are key measures used by our management to evaluate our operating performance.
General and Administrative General and administrative expense increased $23.1 million, or 66%, from $34.9 million for the year ended December 31, 2021 to $58.0 million for the year ended December 31, 2022. The primary driver of the increase was due to our acquisition of Thomas in December 2021.
General and Administrative General and administrative expense increased $23.3 million, or 67%, from $34.9 million for the year ended December 31, 2021 to $58.2 million for the year ended December 31, 2022. The primary driver of the increase was due to our acquisition of Thomas in December 2021.
We intend to continue investing in acquiring new buyers through traditional paid sales and marketing techniques as well as leveraging our organic referral network to drive awareness and build trust. The number of Active Buyers on our platform reached 40,664 as of December 31, 2022, up 45% from 28,130 as of December 31, 2021.
We intend to continue investing in acquiring new buyers through traditional paid sales and marketing techniques as well as leveraging our organic referral network to drive awareness and build trust. The number of Active Buyers on our platform reached 55,458 as of December 31, 2023, up 36% from 40,664 as of December 31, 2022.
Operating Expenses Sales and Marketing Sales and marketing expense increased $43.8 million, or 111%, from $39.4 million for year ended December 31, 2021 to $83.2 million for the year ended December 31, 2022, primarily as a result our acquisition of Thomas in December 2021, increases in marketing and advertising spend, additional sales employees and their compensation costs including stock-based compensation, consulting expenses and software and maintenance costs for the sales and marketing department.
Operating Expenses Sales and Marketing Sales and marketing expense increased $44.9 million, or 114%, from $39.4 million for year ended December 31, 2021 to $84.4 million for the year ended December 31, 2022, primarily as a result our acquisition of Thomas in December 2021, increases in marketing and advertising spend, additional sales employees and their compensation costs including stock-based compensation, consulting expenses and software and maintenance costs for the sales and marketing department.
General and Administrative General and administrative expenses primarily consist of compensation expenses, including stock-based compensation expenses, for executive, finance, legal and other administrative personnel, professional service fees and certain depreciation and amortization expense. We expect our general and administrative expenses to increase.
General and Administrative General and administrative expenses primarily consist of compensation expenses, including stock-based compensation expenses, for executive, finance, legal and other administrative personnel, professional service fees and certain depreciation and amortization expense.
Gross margin for our supplier services was 78.0% for the year ended December 31, 2022 primarily due to our acquisition of Thomas.
Gross margin for our supplier services was 77.9% for the year ended December 31, 2022 primarily due to our acquisition of Thomas.
For further discussion of the potential impacts of macroeconomic events on our business, financial condition, and operating results, see the section titled “Risk Factors.” December 2022 Restructuring In December 2022 , we initiated a restructuring action to help manage our operating expenses by reducing our workforce by approximately 6%.
For further discussion of the potential impacts of macroeconomic events on our business, financial condition, and operating results, see the section titled “Risk Factors.” Restructurings In May 2023 and December 2022 , we initiated restructuring actions to help manage our operating expenses by reducing our workforce by approximately 10%.
An increase or decrease in the number of Active Buyers is a key indicator of our ability to attract, retain and engage buyers on our platform. Active Buyers has consistently grown over time. The number of Active Buyers on our platform reached 40,664 as of December 31, 2022, up 45% from 28,130 as of December 31, 2021.
An increase or decrease in the number of Active Buyers is a key indicator of our ability to attract, retain and engage buyers on our platform. Active Buyers has consistently grown over time. The number of Active Buyers on our platform reached 55,458 as of December 31, 2023, up 36% from 40,664 as of December 31, 2022.
Product Development Product development expense increased $13.2 million, or 74%, from $17.8 million for the year ended December 31, 2021 to $31.0 million for the year ended December 31, 2022, primarily as result of our acquisition of Thomas in December 2021, hiring additional development employees and their compensation costs including stock-based compensation, consulting and software and 53 maintenance expenses.
During the year ended December 31, 2022, $0.4 million of restructuring charge is recorded in operations and support. 60 Product Development Product development expense increased $13.2 million, or 74%, from $17.8 million for the year ended December 31, 2021 to $31.0 million for the year ended December 31, 2022, primarily as result of our acquisition of Thomas in December 2021, hiring additional development employees and their compensation costs including stock-based compensation, consulting and software and maintenance expenses.
The number of active suppliers, which we define as suppliers that have used our platform at least once during the last twelve months to manufacture a product or buy tools or supplies, has grown 22% from 2,010 for the year ended December 31, 2021 to 2,447 for the year ended December 31, 2022.
The number of active suppliers, which we define as suppliers that have used our platform at least once during the last twelve months to manufacture a product or buy tools or supplies, has grown 36% from 2,529 1 for the year ended December 31, 2022 to 3,429 for the year ended December 31, 2023.
The number of accounts with LTM Spend of at least $50,000 on our platform reached 1,027 as of December 31, 2022, up 47% from 701 as of December 31, 2021.
The number of accounts with LTM Spend of at least $50,000 on our platform reached 1,331 as of December 31, 2023, up 30% from 1,027 as of December 31, 2022.
(“Xometry”, “Company”, “our” or “we”) was incorporated in the State of Delaware in May 2013. Xometry is a global online marketplace connecting buyers with suppliers of manufacturing services, transforming one of the largest industries in the world.
(“Xometry”, “Company”, “our” or “we”) was incorporated in the State of Delaware in May 2013. Xometry is a global artificial intelligence (“AI”) powered online marketplace connecting buyers with suppliers of manufacturing services, driving the digital transformation of one of the largest industries in the world.
Cost of Revenue Total cost of revenue increased $72.3 million, or 45%, from $161.2 million for the year ended December 31, 2021 to $233.5 million for the year ended December 31, 2022. This increase was primarily the result of an increase in marketplace cost of revenue and increase in supplier service costs of revenue due to our acquisition of Thomas.
Cost of Revenue Total cost of revenue increased $73.7 million, or 46%, from $161.2 million for the year ended December 31, 2021 to $234.9 million for the year ended December 31, 2022. This increase was primarily the result of an increase in marketplace cost of revenue and increase in supplier service costs of revenue due to our acquisition of Thomas.
These services help suppliers manage their business more efficiently, even on jobs that they source outside of our platform. In December 2021, we acquired Thomas which significantly expanded our supplier services to including marketing and data services for our suppliers. Our suite of marketing and data services provided by Thomas help suppliers grow and more efficiently run their business.
These services help suppliers manage their business more efficiently, even on jobs that they source outside of our platform. In December 2021, we acquired Thomas which significantly expanded our supplier services to include digital advertising, marketing services and data solutions for our suppliers.
Should current conditions differ from management’s estimates at the time of the acquisition, including changes in future revenue, growth rates and margins, or changes in market factors outside of our control, such as discount rates could result in a material write-downs of our intangible assets, which would adversely affect our operating results. 57 We monitor events and changes in circumstances that could indicate carrying amounts of intangible assets may not be recoverable.
Should current conditions differ from management’s estimates at the time of the acquisition, including changes in future revenue, growth rates and margins, or changes in market factors outside of our control, such as discount rates could result in a material write-downs of our intangible assets, which would adversely affect our operating results.
Our supplier services cost of revenue increased primarily as a result of our acquisition of Thomas in December 2021. Gross Profit and Margin Gross profit increased $90.4 million, or 158%, from $57.1 million for the year ended December 31, 2021 to $147.6 million for the year ended December 31, 2022.
Our supplier services cost of revenue increased primarily as a result of our acquisition of Thomas in December 2021. Gross Profit and Margin Gross profit increased $88.9 million, or 155%, from $57.1 million for the year ended December 31, 2021 to $146.0 million for the year ended December 31, 2022.
Adjusted EBITDA We define Adjusted EBITDA as net loss, adjusted for interest expense, interest and dividend income and other expenses, income tax benefit, and certain other non-cash or non-recurring items impacting net loss from time to time, principally comprised of depreciation and amortization, stock-based compensation, charitable contributions of common stock, income from an unconsolidated joint venture, impairment charges, restructuring charges and acquisition and other adjustments not reflective of the Company's ongoing business, such as adjustments related to purchase accounting, the revaluation of contingent consideration and transaction costs.
Excluding the supplies business, Active Paying Suppliers on our platform remained flat year-over-year. 50 Adjusted EBITDA We define Adjusted EBITDA as net loss, adjusted for interest expense, interest and dividend income and other expenses, income tax provision (benefit), and certain other non-cash or non-recurring items impacting net loss from time to time, principally comprised of depreciation and amortization, amortization of lease intangible, stock-based compensation, charitable contributions of common stock, income from an unconsolidated joint venture, impairment of assets, lease abandonment, restructuring charges, costs to exit the supplies business and acquisition and other adjustments not reflective of our ongoing business, such as adjustments related to purchase accounting, the revaluation of contingent consideration and transaction costs.
Supplier services revenue includes the sale of marketing and advertising services, and to a lesser extent SaaS based solutions, the sale of supplies and financial service products.
Supplier services revenue includes the sale of marketing and advertising services, and to a lesser extent financial service products, SaaS-based solutions and the sale of supplies which was discontinued during the second quarter of 2023.
The following table sets forth our statement of operations data for the years indicated: Year Ended December 31, 2022 2021 (in thousands) Revenue $ 381,053 $ 218,336 Cost of revenue 233,487 161,195 Gross profit 147,566 57,141 Operating expenses: Sales and marketing 83,222 39,422 Operations and support 48,572 23,683 Product development 31,013 17,780 General and administrative 57,992 34,942 Impairment of assets 824 — Total operating expenses 221,623 115,827 Loss from operations (74,057 ) (58,686 ) Other (expenses) income: Interest expense (4,418 ) (852 ) Interest and dividend income 4,115 982 Other expenses (2,183 ) (2,866 ) Income from unconsolidated joint venture 570 41 Total other expenses (1,916 ) (2,695 ) Loss before income taxes (75,973 ) (61,381 ) Benefit for income taxes (36 ) — Net loss (76,009 ) (61,381 ) Net income (loss) attributable to noncontrolling interest 16 (2 ) Net loss attributable to common stockholders $ (76,025 ) $ (61,379 ) 51 The following table sets forth our statement of operations data expressed as a percentage of total revenue for the years indicated: Year Ended December 31, 2022 2021 Revenue 100.0 % 100.0 % Cost of revenue 61.3 % 73.8 % Gross profit 38.7 % 26.2 % Operating expenses: Sales and marketing 21.8 % 18.1 % Operations and support 12.7 % 10.8 % Product development 8.1 % 8.1 % General and administrative 15.2 % 16.0 % Impairment of assets 0.2 % — % Total operating expenses 58.0 % 53.0 % Loss from operations (19.3 )% (26.8 )% Other (expenses) income: Interest expense (1.2 )% (0.4 )% Interest and dividend income 1.1 % 0.4 % Other expenses (0.6 )% (1.3 )% Income from unconsolidated joint venture 0.1 % — % Total other expenses (0.6 )% (1.3 )% Loss before income taxes (19.9 )% (28.1 )% Benefit for income taxes — % — % Net loss (19.9 )% (28.1 )% Net income (loss) attributable to noncontrolling interest — % — % Net loss attributable to common stockholders (19.9 )% (28.1 )% The following tables present our disaggregated revenue and cost of revenue.
The following table sets forth our statement of operations data for the years indicated: Year Ended December 31, 2022 2021 (in thousands) Revenue $ 380,921 $ 218,336 Cost of revenue 234,930 161,195 Gross profit 145,991 57,141 Operating expenses: Sales and marketing 84,371 39,422 Operations and support 48,628 23,683 Product development 31,013 17,780 General and administrative 58,246 34,942 Impairment of assets 824 — Total operating expenses 223,082 115,827 Loss from operations (77,091 ) (58,686 ) Other income (expenses): Interest expense (4,418 ) (852 ) Interest and dividend income 4,115 982 Other expenses (2,183 ) (2,866 ) Income from unconsolidated joint venture 570 41 Total other expenses (1,916 ) (2,695 ) Loss before income taxes (79,007 ) (61,381 ) Provision for income taxes (36 ) — Net loss (79,043 ) (61,381 ) Net income (loss) attributable to noncontrolling interest 16 (2 ) Net loss attributable to common stockholders $ (79,059 ) $ (61,379 ) 58 The following table sets forth our statement of operations data expressed as a percentage of total revenue for the years indicated: Year Ended December 31, 2022 2021 Revenue 100.0 % 100.0 % Cost of revenue 61.7 % 73.8 % Gross profit 38.3 % 26.2 % Operating expenses: Sales and marketing 22.1 % 18.1 % Operations and support 12.8 % 10.8 % Product development 8.1 % 8.1 % General and administrative 15.3 % 16.0 % Impairment of assets 0.2 % — % Total operating expenses 58.5 % 53.0 % Loss from operations (20.2 )% (26.8 )% Other income (expenses): Interest expense (1.2 )% (0.4 )% Interest and dividend income 1.1 % 0.4 % Other expenses (0.6 )% (1.3 )% Income from unconsolidated joint venture 0.1 % — % Total other expenses (0.6 )% (1.3 )% Loss before income taxes (20.8 )% (28.1 )% Provision for income taxes — % — % Net loss attributable to common stockholders (20.8 )% (28.1 )% Net income (loss) attributable to noncontrolling interest — % — % Net loss attributable to common stockholders (20.8 )% (28.1 )% The following tables present our disaggregated revenue and cost of revenue.
As a percent of total revenue, operations and support expenses increased to 12.7% for the year ended December 31, 2022 from 10.8% for the year ended December 31, 2021. During the year ended December 31, 2022, $0.4 million of restructuring charge is recorded in operations and support.
As a percent of total revenue, operations and support expenses increased to 12.8% for the year ended December 31, 2022 from 10.8% for the year ended December 31, 2021.
Income from Unconsolidated Joint Venture Income from unconsolidated joint venture consists of our share of the joint venture's income. Results of Operations The following is our discussion of the consolidated results of operations for the year ended December 31, 2022 as compared to the year ended December 31, 2021.
The following is our discussion of the consolidated results of operations for the year ended December 31, 2022 as compared to the year ended December 31, 2021.
We expect to incur additional general and 50 administrative expenses as a result of operating as a public company, including as a result of increased legal, accounting, and directors’ and officers’ insurance expenses. Other (Expense) Income Interest Expense Interest expense consists of interest incurred on our outstanding borrowings under our outstanding convertible notes or other borrowings.
We expect general and administrative expenses to fluctuate as a result of operating as a public company. 53 Other Income (Expenses) Interest Expense Interest expense consists of interest incurred on our outstanding borrowings under our outstanding convertible notes or other borrowings.
For the year ended December 31, 2021, net cash used in operating activities was $68.6 million, primarily due to a net loss of $(61.4) million adjusted for non-cash charges of $16.5 million and a net decrease in our operating assets and liabilities of $23.6 million.
For the year ended December 31, 2022, net cash used in operating activities was $62.6 million, primarily due to a net loss of $(79.0) million adjusted for non-cash charges of $42.9 million and a net decrease in our operating assets and liabilities of $26.5 million.
Adjusted EBITDA is a performance measure that we use to assess our operating performance and the operating leverage in our business.
Adjusted EBITDA is a performance measure that we use to assess our operating performance and the operating leverage in our business. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA for a period by revenue for the same period.
The workforce reduction focused on realigning our staffing levels to help us meet the current and future objectives of our business. For the year ended December 31, 2022, we incurred $1.5 million for employee termination costs related to this restructuring. The majority of these costs will be paid by the Company in the first quarter of 2023.
The workforce reduction focused on realigning our staffing levels to help us meet the current and future objectives of our business. For the years ended December 31, 2023 and 2022, we incurred $0.7 million and $1.5 million, respectively for employee termination costs related to our restructuring.
For the year ended December 31, 2022, Adjusted EBITDA decreased to (11.0)% of revenue, as compared to (18.2)% of revenue in 2021, driven primarily by increased operating efficiencies as we continue to scale our business.
For the year ended December 31, 2023, Adjusted EBITDA loss was $(27.5) million, compared to Adjusted EBITDA loss of $(44.8) million in 2022. For the year ended December 31, 2023, Adjusted EBITDA decreased to (5.9)% of revenue, as compared to (11.8)% of revenue in 2022, driven primarily by increased operating efficiencies as we continue to scale our business.
We plan on providing this order management system to our supplier community which allows shops and shop owners to digitize and automate their operations so they can focus on growing their business.
In November 2021, we acquired FactoryFour a cloud-based manufacturing execution system. We provide this order management system to our supplier community which allows shops and shop owners to digitize and automate their operations so they can focus on growing their business.
Cash Flows Year Ended December 31, 2022 2021 (in thousands) Net cash used in operating activities $ (62,575 ) $ (68,571 ) Net cash used in investing activities (238,630 ) (212,748 ) Net cash provided by financing activities 280,972 307,768 Operating Activities For the year ended December 31, 2022, net cash used in operating activities was $62.6 million, primarily due to a net loss of $(76.0) million adjusted for non-cash charges of $42.9 million and a net decrease in our operating assets and liabilities of $29.5 million.
Cash Flows Year Ended December 31, 2023 2022 (in thousands) Net cash used in operating activities $ (29,877 ) $ (62,575 ) Net cash provided by (used in) investing activities 16,806 (238,630 ) Net cash provided by financing activities 1,067 280,972 Operating Activities For the year ended December 31, 2023, net cash used in operating activities was $29.8 million, primarily due to a net loss of $(67.5) million adjusted for non-cash charges of $51.2 million and a net decrease in our operating assets and liabilities of $(13.6) million.
The non-cash adjustments primarily relate to stock-based compensation of $19.2 million, depreciation and amortization of $7.8 million, $7.2 million reduction to our right of use lease assets, donated common stock of $2.3 million, losses on marketable securities of $1.9 million, $1.7 million of amortization of deferred costs on convertible notes and a $1.5 million restructuring charge.
The non-cash adjustments primarily relate to stock-based compensation of $19.2 million, depreciation and amortization of $7.8 million, $7.2 million reduction to our right of use lease assets and donated common stock of $2.3 million.
Our vision is to drive efficiency, sustainability and innovation for industries worldwide by lowering the barriers to entry to the manufacturing ecosystem.
Our mission is to accelerate innovation by providing real time, equitable access to global manufacturing capacity and demand. Our vision is to drive efficiency, sustainability and innovation for industries worldwide by lowering the barriers to entry to the manufacturing ecosystem.
Goodwill Our annual impairment assessment of goodwill is generally performed using a qualitative approach to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
Intangible assets with finite lives are amortized over their estimated useful lives and tested for impairment if indicators are present. Goodwill Our annual impairment assessment of goodwill is generally performed using a qualitative approach to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
We use our proprietary technology to create a marketplace that enables buyers to efficiently source manufactured parts and assemblies, and empower suppliers of manufacturing services to grow their businesses. Xometry's corporate headquarters is located in North Bethesda, Maryland.
We use our proprietary AI, machine learning and cloud-based services, including our Thomasnet® platform, to help buyers efficiently source custom-manufactured parts and assemblies, and empower suppliers of manufacturing services to grow their businesses. Xometry’s corporate headquarters is located in North Bethesda, Maryland.
We expect revenue from supplier services to grow over time and have a favorable impact on our gross margin. 44 Expansion of Our International Operations In 2019, we launched Xometry in Europe, followed by Xometry Asia in 2022 and Xometry United Kingdom in 2023. We believe there is significant opportunity in the global manufacturing ecosystem for our marketplace.
Expansion of Our International Operations In 2019, we launched Xometry in Europe, followed by Xometry Asia in 2022 and Xometry United Kingdom in 2023. We believe there is significant opportunity in the global manufacturing ecosystem for our marketplace.
For example, macroeconomic events, including the COVID-19 pandemic, rising inflation, the U.S. Federal Reserve raising interest rates and the Russia-Ukraine war, have led to economic uncertainty globally. Historically, during periods of economic uncertainty and downturns, businesses may slow spending on information technology and manufacturing, which may impact our business and our customers’ businesses.
For example, macroeconomic events, fluctuations in inflation, the Russia-Ukraine war, conflict in the Middle East and other geopolitical tensions, have led to economic uncertainty globally. Historically, during periods of economic uncertainty and downturns, businesses may slow spending on information technology and manufacturing, which may impact our business and our customers’ businesses.
We offer suppliers a full slate of marketing services, including website building, search-engine optimization ("SEO") and targeted advertising to buyers, which are resources that will help them further grow their business. In November 2021, we acquired FactoryFour a cloud-based manufacturing execution system.
Our suite of marketing and data services provided by Thomas help suppliers grow and more efficiently run their business. We offer suppliers a full slate of marketing services, including website building, search-engine optimization ("SEO") and targeted advertising to buyers, which are resources that will help them further grow their business.
Provision for Income Taxes Provision for income taxes increased by $36,000 due to income taxes resulting from our acquisition of Thomas. Additional Segment Considerations Total segment loss from our U.S. operating segment for the year ended December 31, 2022 and 2021, was $58.8 million and $51.2 million, respectively.
Additional Segment Considerations Total segment loss from our U.S. operating segment for the year ended December 31, 2022 and 2021, was $61.8 million and $51.2 million, respectively.
Revenue and cost of revenue is presented in the following tables for the year ended December 31, 2022 (in thousands, amounts for the year ended December 31, 2021, were not considered material): For the Year Ended December 31, 2022 Marketplace Revenue $ 303,134 Cost of revenue 216,336 Gross Profit $ 86,798 Supplier services Revenue $ 77,919 Cost of revenue 17,151 Gross Profit $ 60,768 52 Comparison of the Years Ended December 31, 2022 and 2021 Revenue Total revenue increased $162.7 million, or 75%, from $218.3 million for the year ended December 31, 2021 to $381.1 million for the year ended December 31, 2022.
Revenue and cost of revenue is presented in the following tables for the year ended December 31, 2022 (in thousands, amounts for the year ended December 31, 2021, were not considered material): For the Year Ended December 31, 2022 Marketplace Revenue $ 303,223 Cost of revenue 217,779 Gross Profit $ 85,444 Gross Margin 28.2 % Supplier services Revenue $ 77,698 Cost of revenue 17,151 Gross Profit $ 60,547 Gross Margin 77.9 % 59 Comparison of the Years Ended December 31, 2022 and 2021 Revenue Total revenue increased $162.6 million, or 74%, from $218.3 million for the year ended December 31, 2021 to $380.9 million for the year ended December 31, 2022.
We may not recognize benefits from these investments, and we may not effectively manage additional risks relating to operating outside the United States, including increased operational and regulatory risks. Macroeconomic Conditions Unfavorable conditions in the economy both in the United States and abroad may negatively affect the growth of our business and our results of operations.
We may not recognize benefits from these investments, and we may not effectively manage additional risks relating to operating outside the United States, including increased operational and regulatory risks.
Valuation of Goodwill and Intangible Assets Goodwill has indefinite useful life and is not amortized. Goodwill is tested for impairment at least annually on the first day of the fourth quarter, or more frequently if impairment indicators are present. Intangible assets with finite lives are amortized over their estimated useful lives and tested for impairment if indicators are present.
Historically, our assumptions, judgments and estimates relative to our critical accounting estimates have not differed materially from actual results. Valuation of Goodwill and Intangible Assets Goodwill has indefinite useful life and is not amortized. Goodwill is tested for impairment at least annually on the first day of the fourth quarter, or more frequently if impairment indicators are present.
Holders of the 2027 Notes who convert the 2027 Notes in connection with a make-whole fundamental change, as defined in the indenture governing the 2027 Notes, or in connection with a redemption are entitled to an increase in the conversion rate.
On or after November 1, 2026, the 2027 Notes are convertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. 62 Holders of the 2027 Notes who convert the 2027 Notes in connection with a make-whole fundamental change, as defined in the indenture governing the 2027 Notes, or in connection with a redemption are entitled to an increase in the conversion rate.
The net decrease in operating assets and liabilities is primarily driven by an increase in accounts receivable of $11.1 million and prepaid expenses of $4.0 million and a decrease in accrued expenses of $12.0 million and contract liabilities of $1.6 million. These decreases are partially offset by increases in accounts payable of $5.2 million.
The net decrease in operating assets and liabilities is primarily driven by changes in accounts receivable of $20.6 million primarily due to our continued growth, lease liabilities of $5.5 million and contract liabilities of $1.4 million, offset by changes in accrued expenses of $7.5 million, accounts payable of $6.7 million and prepaid expenses of $1.7 million.
We believe that the critical accounting estimates listed below are the most difficult management decisions as they involve the use of significant estimates and assumptions as described above. Historically, our assumptions, judgments and estimates relative to our critical accounting estimates have not differed materially from actual results.
A thorough understanding of these critical accounting estimates is essential when reviewing our financial statements. We believe that the critical accounting estimates listed below are the most difficult management decisions as they involve the use of significant estimates and assumptions as described above.
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