Shares of manufacturing marketplace business Xometry (NASDAQ: XMTR) jumped on Tuesday after the company reported financial results for the third quarter of 2024 that significantly outpaced expectations. As of 12:40 p.m. ET, Xometry stock was up 18%.
Take the magnitude of the jump today with a grain of salt -- Xometry stock usually has low trading volume and any news can cause large swings in the stock price. But Q3 results were quite good. Revenue of $142 million was up 19% year over year and well ahead of management's guidance of $138 million, at best.
Xometry's revenue guidance wasn't necessarily amazing, but it didn't put a damper on investors' party. The company believes it can grow the top line by 14% year over year in the upcoming fourth quarter. That's a big step down from its Q3 growth and its 31% growth in the fourth quarter of 2023.
That said, Xometry lost less than $1 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in Q3, which is a meaningful improvement. And in Q4, it expects an adjusted EBITDA profit. That's something that it hasn't done before and this adjusted profitability is something for investors to rally behind.
There are too many key business metrics to note here. But several important numbers are improving for Xometry. The company's software provides instant pricing for customers looking for manufacturing services and it then outsources the work to small shops. The difference between the bid and what it pays the shop is its gross profit.
In Q3, Xometry's gross margin for its marketplace business improved, which is what investors want to see. Moreover, its base of active buyers jumped an impressive 24% year over year to almost 65,000.
In summary, Xometry's customer base is growing and its software may be getting better at pricing jobs. This is leading to revenue growth and profit improvement. And if these trends continue, things are looking good for Xometry's business long-term.
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Jon Quast has positions in Xometry. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.