10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 001-40546

 

XOMETRY, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

32-0415449

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

 

 

7529 Standish Place

Suite 200

Derwood, MD

20855

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (240) 335-7914

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Class A common stock, par value $0.000001 per share

 

XMTR

 

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No ☐

As of May 4, 2022, the registrant had 44,304,775 shares of Class A common stock, $0.000001 par value per share, outstanding.

 

 

 

 


 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements (Unaudited)

1

 

Condensed Consolidated Balance Sheets

1

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

2

 

Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders' Equity (Deficit)

3

 

Condensed Consolidated Statements of Cash Flows

4

 

Notes to Unaudited Condensed Consolidated Financial Statements

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

33

Item 4.

Controls and Procedures

33

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

34

Item 1A.

Risk Factors

34

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

34

Item 3.

Defaults Upon Senior Securities

34

Item 4.

Mine Safety Disclosures

34

Item 5.

Other Information

34

Item 6.

Exhibits

35

Signatures

36

 

 

i


 

 

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “can,” “will,” “would,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “forecasts,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

 

 

 

our expectations regarding our revenue, expenses and other operating results;

 

 

 

the anticipated growth of our business, including the anticipated growth of revenue from supplier services, our ability to effectively manage or sustain our growth and to achieve or sustain profitability;

 

 

 

the ongoing effects of the COVID-19 pandemic and any other periods of global economic uncertainty, such as the geopolitical tensions associated with Russia's recent invasion of Ukraine;

 

 

 

future investments in our business, our anticipated capital expenditures and our estimates regarding our capital requirements;

 

 

 

our ability to attract new buyers and suppliers and successfully engage new and existing buyers and suppliers;

 

 

 

the costs and success of our sales and marketing efforts, and our ability to promote our brand;

 

 

 

our reliance on key personnel and our ability to identify, recruit and retain skilled personnel;

 

 

 

our ability to effectively manage our growth, including any international expansion;

 

 

 

our ability to obtain, maintain, protect and enforce our intellectual property or other proprietary rights and any costs associated therewith;

 

 

 

our ability to compete effectively with existing competitors and new market entrants; and

 

 

 

the growth rates of the markets in which we compete.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled Risk Factors Part II, Item 1A, and elsewhere in this Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Form 10-Q. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Form 10-Q. And while we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

The forward-looking statements made in this Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Form 10-Q to reflect events or circumstances after the date of this Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments.

ii


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

XOMETRY, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

(unaudited)

 

 

(audited)

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

58,969

 

 

$

86,262

 

Marketable securities

 

 

309,694

 

 

 

30,465

 

Accounts receivable, less allowance for doubtful accounts of $1.0 million as of March 31, 2022 and $0.8 million as of December 31, 2021

 

 

38,471

 

 

 

32,427

 

Inventory

 

 

2,200

 

 

 

2,033

 

Prepaid expenses

 

 

6,086

 

 

 

6,664

 

Deferred sales commissions

 

 

6,708

 

 

 

5,283

 

Other current assets

 

 

917

 

 

 

297

 

Total current assets

 

 

423,045

 

 

 

163,431

 

Property and equipment, net

 

 

11,634

 

 

 

10,287

 

Operating lease right-of-use assets

 

 

25,804

 

 

 

27,489

 

Investment in unconsolidated joint venture

 

 

4,231

 

 

 

4,198

 

Intangible assets, net

 

 

40,871

 

 

 

41,736

 

Goodwill

 

 

255,231

 

 

 

254,672

 

Other assets

 

 

511

 

 

 

773

 

Total assets

 

$

761,327

 

 

$

502,586

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

9,930

 

 

$

12,718

 

Accrued expenses

 

 

28,195

 

 

 

30,905

 

Contract liabilities

 

 

10,008

 

 

 

7,863

 

Operating lease liabilities, current portion

 

 

5,662

 

 

 

5,549

 

Finance lease liabilities, current portion

 

 

 

 

 

2

 

Total current liabilities

 

 

53,795

 

 

 

57,037

 

Operating lease liabilities, net of current portion

 

 

15,518

 

 

 

16,920

 

Convertible notes

 

 

278,511

 

 

 

 

Income taxes payable

 

 

1,532

 

 

 

1,468

 

Other liabilities

 

 

1,792

 

 

 

1,678

 

Total liabilities

 

 

351,148

 

 

 

77,103

 

Commitments and contingencies (Note 13)

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

Additional paid-in capital

 

 

602,360

 

 

 

597,641

 

Accumulated other comprehensive income

 

 

104

 

 

 

149

 

Accumulated deficit

 

 

(193,353

)

 

 

(173,341

)

Total stockholders’ equity

 

 

409,111

 

 

 

424,449

 

Noncontrolling interest

 

 

1,068

 

 

 

1,034

 

Total equity

 

 

410,179

 

 

 

425,483

 

Total liabilities and stockholders’ equity

 

$

761,327

 

 

$

502,586

 

See accompanying notes to the unaudited condensed consolidated financial statements.

1


 

XOMETRY, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(In thousands, except share and per share data)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

 

 

 

 

Revenue

 

$

83,671

 

 

$

43,922

 

Cost of revenue

 

 

50,732

 

 

 

34,087

 

Gross profit

 

 

32,939

 

 

 

9,835

 

Sales and marketing

 

 

19,285

 

 

 

7,563

 

Operations and support

 

 

12,358

 

 

 

4,330

 

Product development

 

 

7,290

 

 

 

3,664

 

General and administrative

 

 

12,959

 

 

 

4,327

 

Total operating expenses

 

 

51,892

 

 

 

19,884

 

Loss from operations

 

 

(18,953

)

 

 

(10,049

)

Other (expenses) income

 

 

 

 

 

 

Interest expense

 

 

(769

)

 

 

(330

)

Interest and dividend income

 

 

96

 

 

 

 

Other expenses

 

 

(962

)

 

 

(122

)

Income from unconsolidated joint venture

 

 

34

 

 

 

 

Total other expenses

 

 

(1,601

)

 

 

(452

)

Loss before income taxes

 

 

(20,554

)

 

 

(10,501

)

Benefit for income taxes

 

 

559

 

 

 

 

Net loss

 

 

(19,995

)

 

 

(10,501

)

Net income attributable to noncontrolling interest

 

 

17

 

 

 

 

Net loss attributable to common stockholders

 

$

(20,012

)

 

$

(10,501

)

Net loss per share, basic and diluted

 

$

(0.43

)

 

$

(1.33

)

Weighted-average number of shares outstanding used to compute
   net loss per share, basic and diluted

 

 

46,789,585

 

 

 

7,924,848

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss:

 

 

 

 

 

 

Foreign currency translation

 

$

(28

)

 

$

30

 

Total other comprehensive (loss) income

 

 

(28

)

 

 

30

 

Net loss

 

 

(19,995

)

 

 

(10,501

)

Comprehensive loss

 

 

(20,023

)

 

 

(10,471

)

Comprehensive income attributable to noncontrolling interest

 

 

34

 

 

 

 

Total comprehensive loss attributable to common stockholders

 

$

(20,057

)

 

$

(10,471

)

See accompanying notes to the unaudited condensed consolidated financial statements.

2


 

XOMETRY, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(Unaudited)

Three months ended March 31, 2022 and 2021

(In thousands, except share and per share data)

 

Convertible Preferred Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Seed-1, Seed-2, Series A-1, Series A-2, Series B, Series C, Series D, Series E

 

Common Stock

 

Class A - Common Stock

 

Class B - Common Stock

 

Additional Paid-In

 

Accumulated Other Comprehensive

 

Accumulated

 

Total Stockholders'

 

Noncontrolling

 

Total

 

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Capital

 

Income (Loss)

 

Deficit

 

(Deficit) Equity

 

Interest

 

(Deficit) Equity

 

Balance, December 31, 2020

 

27,758,941

 

$

160,713

 

 

7,755,782

 

$

 

 

 

$

 

 

 

$

 

$

503

 

$

210

 

$

(111,962

)

$

(111,249

)

$

 

$

(111,249

)

Conversion of common stock in connection with the initial public offering

 

 

 

 

 

483,712

 

 

 

 

 

 

 

 

 

 

 

 

846

 

 

 

 

 

 

846

 

 

 

 

846

 

Stock based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

505

 

 

 

 

 

 

505

 

 

 

 

505

 

Comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30

 

 

 

 

30

 

 

 

 

30

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,501

)

 

(10,501

)

 

 

 

(10,501

)

Total comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,471

)

Balance, March 31, 2021

 

27,758,941

 

$

160,713

 

 

8,239,494

 

$

 

 

 

$

 

 

 

$

 

$

1,854

 

$

240

 

$

(122,463

)

$

(120,369

)

$

 

$

(120,369

)

Balance, December 31, 2021

 

 

$

 

 

 

$

 

 

43,998,404

 

$

 

 

2,676,154

 

$

 

$

597,641

 

$

149

 

$

(173,341

)

 

424,449

 

$

1,034

 

 

425,483

 

Exercise of common stock options

 

 

 

 

 

 

 

 

 

246,263

 

 

 

 

 

 

 

 

1,263

 

 

 

 

 

 

1,263

 

 

 

 

1,263

 

Stock based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,456

 

 

 

 

 

 

3,456

 

 

 

 

3,456

 

Comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(45

)

 

 

 

(45

)

 

17

 

 

(28

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20,012

)

 

(20,012

)

 

17

 

 

(19,995

)

Total comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20,057

)

 

34

 

 

(20,023

)

Balance, March 31, 2022

 

 

$

 

 

 

$

 

 

44,244,667

 

$

 

 

2,676,154

 

$

 

$

602,360

 

$

104

 

$

(193,353

)

$

409,111

 

$

1,068

 

$

410,179

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

3


 

XOMETRY, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

Net loss

 

$

(19,995

)

 

$

(10,501

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

1,799

 

 

 

734

 

Reduction in carrying amount of right-of-use asset

 

 

1,765

 

 

 

266

 

Stock based compensation

 

 

3,456

 

 

 

505

 

Non-cash interest expense

 

 

 

 

 

56

 

Revaluation of contingent consideration

 

 

434

 

 

 

 

Income from unconsolidated joint venture

 

 

(34

)

 

 

 

Unrealized loss on marketable securities

 

 

858

 

 

 

 

Non-cash income tax benefit

 

 

(559

)

 

 

 

Loss on sale of property and equipment

 

 

71

 

 

 

 

Amortization of deferred costs on convertible notes

 

 

312

 

 

 

 

Deferred taxes benefit

 

 

(2

)

 

 

 

Changes in other assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

(6,145

)

 

 

(5,525

)

Inventory

 

 

(180

)

 

 

792

 

Prepaid expenses

 

 

567

 

 

 

(875

)

Deferred commissions

 

 

(1,425

)

 

 

 

Other assets

 

 

(362

)

 

 

(224

)

Accounts payable

 

 

(2,752

)

 

 

1,856

 

Accrued expenses

 

 

(2,843

)

 

 

1,645

 

Contract liabilities

 

 

2,145

 

 

 

1,595

 

Lease liabilities

 

 

(1,369

)

 

 

(266

)

Net cash used in operating activities

 

 

(24,259

)

 

 

(9,942

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchase of marketable securities

 

 

(280,091

)

 

 

 

Proceeds from sale of marketable securities

 

 

4

 

 

 

 

Purchases of property and equipment

 

 

(2,543

)

 

 

(1,244

)

Proceeds from sale of property and equipment

 

 

165

 

 

 

 

Net cash used in investing activities

 

 

(282,465

)

 

 

(1,244

)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from stock options exercised

 

 

1,263

 

 

 

846

 

Proceeds from issuance of convertible notes

 

 

287,500

 

 

 

 

Costs incurred in connection with issuance of convertible notes

 

 

(9,301

)

 

 

 

Payments on finance lease obligations

 

 

(2

)

 

 

(3

)

Net cash provided by financing activities

 

 

279,460

 

 

 

843

 

Effect of foreign currency translation on cash and cash equivalents

 

 

(29

)

 

 

(19

)

Net decrease in cash and cash equivalents

 

 

(27,293

)

 

 

(10,362

)

Cash and cash equivalents at beginning of the period

 

 

86,262

 

 

 

59,874

 

Cash and cash equivalents at end of the period