Xometry going public

[drcoelho]

They just filed their S1 with SEC, details here: Xometry, Inc. SEC Registration

Really rapid growth over past 2 years, doing approx $140M in revenue with approx $30M loss this past year.

 

[Fancuku]

doing approx $140M in revenue with approx $30M loss this past year.

I can't wrap my head around this one. How can they lose money as the middle man?

 

[drcoelho]

I can't wrap my head around this one. How can they lose money as the middle man?

They are investing in their platform, in market growth, etc....if their growth rates continue, this looks like a very successful company. They are more than a middle man, they are creating a market platform, similar to Amazon.

 

[john.k]

Owners are deciding to cash out before it becomes profitable ?.....maybe there is a finite supply of desperate machine shopowners ,and just maybe they see the model crash and burn when the economy improves......Did Bezos cash out ?

 

[drcoelho]

Owners are deciding to cash out before it becomes profitable ?.....maybe there is a finite supply of desperate machine shopowners ,and just maybe they see the model crash and burn when the economy improves......Did Bezos cash out ?

Don't think so. Annual revenue as follows: $17M, $38.4M, $80.2M, $141.4M. That's pretty amazing growth. They just went international about 2 years ago. Despite not being profitable, they will be rewarded in the stock market for this kind of revenue growth. Keep in mind that many tech IPOs lose money at IPO time as long as they have rapid revenue growth.

 

[jz79]

the growth numbers you mention - does that growth look sustainable to you considering current economic climate?

I suspect they themselves predict slowing down, which wouldn't help them if they delay this, hence doing it now

and I also don't see how it is similar to Amazon, one is a sales platform, where suppliers offer their products (which implies that profit and growth is counted into the price of the product), the other one is a middle man taking a cut from ones who are already desperate enough to use their services, which can work out because they don't need to invest in their own marketing, but very risky if that is their main income and for one reason or another they are dropped by Xometry, then it is pretty much game over for them

 

[Clive603]

$64,000 question is whether they are going to develop into an honest agency platform matching suppliers and buyers is a mutually profitable way or continue with the current "vulture" perception of preying on the weak and desperate.

In a world where fast, relatively low cost transport and production of small(ish) quantities is pretty easy and straightforward to arrange there is an obvious market niche for selling and buying 1/2 a day to a week or so worth of work. Formal marketing costs are rather uneconomic at such levels. To make money, rather than reduce losses from an idle machine, needs the equivalent of walk in or "heard you did a good job for Joe" style contacts. Preferably with decent drawings for easy quoting.

Small quantities tend to come with crap drawings. If the Xometry process forces decent, reliable standards it could almost be worth the premium for that alone.

Clive

 

[michiganbuck]

According to the filing, Xometry generated $141.4 million in revenue in 2020, a year-over-year growth of 76%. The new year is also off to a strong start, with $43.9 million generated in Q1, accounting for 65% growth.

Qt drcoelho: Annual revenue as follows: $17M, $38.4M, $80.2M, $141.4M. and next year perhaps 200m.

Yes with adding a little growth to the 43.9 revenues generated in the last quarte

Seems interesting.

 

[Limy Sami]

Or their books and figures make Enron look straight.

 

[michiganbuck]

Good to know the debt amount and cost of debt at the time of the offering.
loss of 20 cents for each dollar of revenues is a little tight.
Doubling revenues might mean double loss amount.
I would like to see the prospectus in a stock offering.

Alro Steel is developing a big manufacturing portion, yes not a listed company.

looks like Xometry has $200 million existing debt.
They could sell 50 million shares at $2.00 and pay down $100m of that debt.
50m shares at $4 and pay down all the debt.
*50m at $5 and have $50m for expansion.

50m shares would/may be $4 revenues per share (next year).
manufacturing normally needs a lot of RPS to hold a high stock price.

High growth can support stick price but that gets old.. positive earning are the key to a decent stock price. $200m in debt might be 10 or 20m in costs out the window.

50m shares would/may be $4 revenues per share and so perhaps an $8.00 stock price if showing some profit, positive EPS... yes next year.

IMHO

 

[reggie_obe]

Why are they in debt? What assets do they hold? How much could it have cost to develop their E-commerce platform. Looking at "About Us" page, lots of corporate pencil dicks. How many with both a business and manufacturing background?

 

[michiganbuck]

Somewhere saw 250 employees so if 200 workers on machines and modern cost of shops and machines could eat up $20-$30m pretty darn quick.

 

[Garwood]

and I also don't see how it is similar to Amazon, one is a sales platform, where suppliers offer their products (which implies that profit and growth is counted into the price of the product), the other one is a middle man taking a cut from ones who are already desperate enough to use their services, which can work out because they don't need to invest in their own marketing, but very risky if that is their main income and for one reason or another they are dropped by Xometry, then it is pretty much game over for them

How is it not like Amazon? I totally fail to see your point.

Amazon and Xometry are both complex sales platforms.

I have never done Xometry, but I have been an Amazon seller for years. All the stories I read about Xometry sound exactly like what Amazon does behind the scenes. Go to the Amazon seller forums and read for awhile, they're public.

 

[michiganbuck]

Amazon gets high performance for workers and is very tight with product sellers...but it took a number of years to get that efficient.

One amazon employee told me that if your product sits too long at amazon you may have to pay for storage.... also said that amazon takes over 30% on many if not most products, a pretty tight outfit there.

Yes, Xometry could become the one-stop-shop with best management skills,

 

[DDoug]

Maybe in a year or so...A private equity frim will take them private, and gut them.....

 

[richard newman]

I'd be interested to hear from shops that have worked with them, both as suppliers and customers. Was it a good /profitable experience. Do they retain accounts, or are they constantly churning? Seems like that would give clues to sustainability of growth and business model.

 

[richard newman]

Maybe in a year or so...A private equity frim will take them private, and gut them.....

What assets could they liquidate and steal?

 

[Garwood]

Amazon gets high performance for workers and is very tight with product sellers...but it took a number of years to get that efficient.

One amazon employee told me that if your product sits too long at amazon you may have to pay for storage.... also said that amazon takes over 30% on many if not most products, a pretty tight outfit there.

Yes, Xometry could become the one-stop-shop with best management skills,

Amazon is way more complex than that. There is FBA and FBM sales channels. They have different structures. FBA you are paying for storage no matter what, but you pay more if your product is a poor performer or you overestimate your sales potential.

Amazon makes money coming and going. They charge you to sell on their platform, take a percentage of sales, they make a shitload from being the middleman on shipping and skirting any liability for the shipping.

Amazon doesn't make 30%, but the seller probably isn't seeing more than 70% of what an item sells for overall.

Bad customers are Amazon's biggest problem. Gaming Amazon is a hobby for many people who've figured out the massive loopholes in Amazon's A-Z policy. Amazon does their darndest to stick it to the sellers and that's why you figure a higher cost of doing biz on Amazon.



Totally different thing here, but the similarity I see with Xometry and Amazon is that they are a barrier between end user and supplier. They offer some safety nets for both parties, but they also have a mega downside-

There is no brand recognition or loyalty or personal attention.

When you whore your business with these pimps they take all the credit when you do good. When anything goes wrong it's your fault.

 

[jz79]

Garwood,
my opinion about how Amazon differs from Xometry is that a buyer on Amazon doesn't ask for something to be made, he goes there to purchase things that are already made - which implies that the manufacturer has optimized their process to increase their profit margin as much as they can

Xometry on the other hand receives the order from the customer, calculate their price, and then look for someone to make it for as little as possible, and as I understand from the other topic - there is little chance of negotiating the price, you either accept or you don't

so if you make something for Amazon, you can plan your production to minimize the cost and sell at your price to the middle man, but in Xometry case - the middle man is dictating how much you'll profit from taking the job, the bigger they'll get, the more data they'll have and the less they'll offer to the manufacturers to get it done to the point where they'll start to see slow down and then adjust accordingly to still have someone accepting the jobs on regular basis

that is the difference as I see it, from a buyers perspective - there is little difference, yes, but the production side of things is quite different

 

[DDoug]

What assets could they liquidate and steal?

I'm sure they will find everything, and then some.