Manufacturing company Xometry skyrockets following public debut

Xometry surged in its opening day of trading. Xometry CEO Randy Altschuler joins Yahoo Finance Live to discuss.

Video Transcript

AKIKO FUJITA: Shares of online manufacturing marketplace, Xometry. Pulling back a bit in the session today, down about 13% after a stellar debut, the stock nearly doubled on its first day giving the seven-year-old company a big pop. And we are joined today by the CEO of Xometry, Randy Altschuler. Randy, it's great to talk to you today. Let's talk about the business model. This is a really interesting one for me because you essentially pair the manufacturers with the buyers. You add in a little AI as you've described it.

Walk me through the business model and how this allows for companies to have a little more flexibility.

RANDY ALTSCHULER: Sure. Well we've seen a lot of other industries be successfully digitized, kind of what Airbnb has done for hospitality, or Covana has done in the automotive, or PayPal for payments. Amazingly, manufacturing, which is a multi-trillion part of the world economy, hasn't really been digitized. So we thought, there's this $260 billion opportunity.

We can create a digital marketplace enabled by artificial intelligence and optimize the matching between the buyers and sellers, creating better prices, quicker delivery dates, and also helping the sellers, which are hundreds of thousands of small manufacturers, spread out across the United States and around the world, be more efficient, and grow their businesses.

ZACK GUZMAN: And you've got some big name customers using the platform as well, BMW, NASA, and GE. And impressive growth over last year, 76% year over year in terms of top line there. I wonder how much of the growth is coming from larger companies like those, or maybe if you're seeing maybe midsize and smaller ones kind of try and prototype some of this stuff out there on your platform.

RANDY ALTSCHULER: Yeah, so it's pretty amazing. Around 30% of the Fortune 500 are Xometry customers. And in any given quarter, we've seen 93% to 96% of our revenue be generated by returning accounts. So certainly big companies and returning accounts generate a lot of revenue for Xometry. But we have this very open marketplace. So we're democratizing access to manufacturing. So while we have giant companies as customers, we also have startups and a lot of emerging technologies.

So things that are important for the future economy like space travel, and EV companies, and other companies focus on sustainability, they also have access to Xometry, and effectively an instant supply chain.

AKIKO FUJITA: Randy, we've heard over and over from companies over the last year about the need to diversify their supply chains, trying to bring manufacturing a little closer to home, especially given the disruption that we saw when borders shut down. How have you seen the thinking of these companies change in terms of how they want to add a little more flexibility into their manufacturing footprint? And ultimately, what does that mean for your company?

RANDY ALTSCHULER: Yeah, no. It's absolutely a growing trend to have localized supply chains, to have resilient supply chains. And that's the great thing about the marketplace approach that we've taken with Xometry, that gives customers the access to local manufacturers. And it also gives them options cross-border as well. And companies do need that flexibility. And you've got geopolitical tensions, you've got obviously COVID, and other disruptions. And companies now know more than ever that they have to have robust supply chains, that it can count for any kind of problem.

ZACK GUZMAN: Investors certainly love the prospects of the IPO. You saw nearly a double on day one, maybe shares coming back a little bit now. But you raised about $300 million. As Akiko has been talking about, kind of the manufacturers you have on the platform, most of them a majority, a wide majority, are here in the US. I mean, how much of the raise is going to be dedicated to maybe expanding a bit more internationally here? Or are there other prospects that you have for the IPO funds now?

RANDY ALTSCHULER: Yeah, no. It's a great question. And a lot of our focus is helping the small manufacturers that make up the base of our sellers. And there's a lot of excitement, particularly here in the US, about American manufacturing, and reassuring. Well, a lot of the way we're going to do that reassuring, a lot of the way we're going to help American manufacturers is helping these small manufacturers. So we have a basket of sellers services, financial products, ways for them to lower their operating costs. And we're going to invest more and more to help those small businesses thrive.

And in return, if those small manufacturers can thrive, they can deliver more than ever for our customers throughout this country and throughout the world.

AKIKO FUJITA: And Randy, we've been talking so much about the strength of the IPO market. You got in on the very last day of what was the hottest quarter since 2000. Talk to me about the timing for you, why this time was right. And why this route at a time when we've seen so many companies come to market through blank check companies?

RANDY ALTSCHULER: Yeah. So we did our last private round was last year. It was read by T. Rowe Price, Durable Capital and ArrowMark. So we already had some great support from institutional investors. So we thought, let's leverage this amazing investor base, and grow them the traditional way. We just simply had the opportunity, the investors, and also we have the market opportunity. There's a $260 billion market. We're the leaders but it's still our early stages and early innings. And so I think we've got a lot of enthusiasm behind our mission.

ZACK GUZMAN: Lastly, real quickly, I mean, when you look at kind of the breakdown of the manufacturers on your platform, one thing that I'm kind of always shocked by was the excitement around 3D printing. I kind of cover that first wave, I want to say five years ago ish, when it was really hot and a lot of people were excited about it. But I wonder if maybe some of the steam has come out of that in terms of the use cases of it or what your take might be on maybe how the technology was exciting at first and then just took so long to get adopted in what you're seeing now in the platform.

RANDY ALTSCHULER: Yeah. Look. Manufacturing has been around for a long time. And it takes a long time for new technologies to truly penetrate and to change that paradigm. But I think 3D printing is here to stay. We're constantly adding new 3D printing technologies to our marketplace. And I think you will see over time, see more and more customers convert their prototype work to production work. And we do a lot of production work in the Xometry marketplace as well as assemblies. And more and more of those are going to depend on the various new 3D printing technologies. But it's going to take time. It's not going to happen overnight.

AKIKO FUJITA: Well, you certainly are off to a good start based on your initial day on the public markets here. Randy Altschuler, the CEO of Xometry. Good to talk to you today.