Xometry (XMTR) Q3 2026 earnings review
Xometry reaches a record gross margin, but cash flow lags
Xometry, which runs an online marketplace for custom-made parts, kept sales expanding fast while finally turning a profit. Total revenue rose 40% from a year ago to $252 million, and chief executive Sanjeev Singh Sahni lifted the full-year outlook for a third time. Marketplace gross margin hit a record 36%, reversing a three-quarter slide and helping the company earn its first net profit.
| Revenue | $252.4M +40% from a year ago |
|---|---|
| Marketplace gross margin | 36.0% record high, up from 34.7% last quarter |
| Adjusted EBITDA | $21.4M 8.5% margin, up 5.1 points from a year ago |
| Full-year revenue outlook | Raised to >=37% up from 33–34% prior plan |
⚖️ Verdict: 🟢 Bullish
The story got better because the rebound in marketplace gross margin answered the worry that AI pricing was trading profit for order volume. At the same time, Services sales returned to growth and international losses nearly vanished. One caution: free cash flow stayed negative at $7 million by our math because unpaid bills from large corporate buyers rose 54%.
The question now is whether corporate demand can keep revenue growing near 40% or will slow toward the 32% fourth-quarter plan. Either management is repeating its habit of setting an easy target, or tougher year-ago comparisons are finally catching up. Fourth-quarter spend per buyer and free cash flow will settle both debates.
🐂 Bull Case
Marketplace Gross Margin Hit a Record 36%
Xometry runs an online marketplace that uses artificial intelligence (AI) to price custom parts and match orders with factories. A key worry was that its AI pricing would cut prices to win orders, because marketplace gross margin had slipped from 35.7% a year ago to 34.7% in the first half. Finance chief James Miln had promised that second-half margins would beat the first half.
In the third quarter, marketplace gross margin reached a record 36.0%, up 0.3 percentage points from a year ago and 1.3 points from last quarter. The company also launched a redesigned Workcenter software portal for suppliers, where "The redesigned homepage unifies job discovery, performance scores and payout visibility". Rising gross margins alongside 43% marketplace sales growth show the AI sourcing models are matching jobs at better margins rather than buying volume with discounts.
What to watch: fourth-quarter marketplace gross margin. Holding at or above 36% would confirm that Xometry sits inside its 35% to 40% long-term target range.
Larger Accounts Kept Marketplace Growth Above 40%
Chief executive Sanjeev Singh Sahni said the company is "driving record net buyer additions and increasing wallet share in larger accounts". Xometry expanded its partnership with TradeCentric, a software provider that links online marketplaces to corporate purchasing systems, to automate purchase orders and invoices across more than 220 procurement programs.
- Active buyers (customers who ordered in the past year): 93,812, up 20% from a year ago, with a record 4,255 added this quarter
- Accounts spending at least $50,000 a year: 2,172, up 26% from a year ago and up 133 from last quarter
- Marketplace sales per active buyer: up 19.2% from a year ago by our math
- Revenue from existing accounts: 98% of marketplace sales
Because the number of active buyers has grown at a steady 20% pace for five quarters, the extra sales growth comes from existing corporate customers ordering more. Adding 133 large accounts in a seasonally slower third quarter — nearly double the 71 added a year ago — shows corporate adoption is still speeding up.
What to watch: the year-end count of accounts spending at least $500,000 and $10 million annually in the fourth-quarter report. Faster growth in those tiers would show that procurement links are turning mid-sized buyers into multimillion-dollar production accounts.
Operating Leverage Drove First GAAP Profit
Xometry earned $1.9 million in net income, its first profit under standard accounting, compared with an $11.6 million loss a year ago. Adjusted EBITDA — earnings before interest, taxes, depreciation, amortization and stock-based pay — rose from $6.1 million to $21.4 million, lifting its margin by 5.1 percentage points to 8.5% of sales.
- Sales and marketing costs: 14.1% of revenue, down 4.0 percentage points from 18.1% a year ago by our math
- General and administrative overhead: 9.4% of revenue, down 1.4 points from 10.8% a year ago by our math
- International Adjusted EBITDA loss: $0.6 million, narrowed from $4.2 million a year ago and $3.3 million last quarter
- Services revenue (which includes Thomasnet advertising): $14.4 million, up 2.2% from a year ago after falling for four straight quarters
By our math, 21.3% of the new revenue since last year turned into Adjusted EBITDA, beating the 15% to 19% pace of the past four quarters. Two standing drags also eased: the international business moved within $0.6 million of breakeven, and Services returned to growth as planned.
What to watch: fourth-quarter International Adjusted EBITDA. A positive figure would remove a long-standing profit drag without waiting for an official breakeven date.
Positives this quarter didn't test
Two product and customer drivers from earlier this year had no new financial disclosures in the third-quarter release.
- Siemens software partnership: Xometry is embedding its quoting tool into Siemens design software, with revenue contribution still slated for 2027; watch for 2027 revenue targets in the fourth-quarter outlook.
- Robotics and physical AI customers: highlighted last quarter as a fast-growing buyer group, but the release gave no order or revenue numbers; watch the quarterly call or filing for customer spend data.
🐻 Bear Case
Free Cash Flow Stayed Negative as Receivables Grew
Management previously said Xometry would generate sustainable positive free cash flow once quarterly revenue reached $225 million, with capital spending near 6% of sales. Revenue reached $252.4 million this quarter and Miln praised the "operational efficiency of our marketplace", yet free cash flow remained negative.
By our math, third-quarter operating cash flow was $7.9 million and capital spending on software and equipment was $14.9 million (5.9% of sales), leaving negative $7.1 million in free cash flow. For the first nine months, free cash flow was negative $13.5 million. The cash went into unpaid customer bills: accounts receivable climbed 54% from a year ago to $152.2 million, outpacing the 40% rise in sales because larger corporate buyers take longer to pay.
What to watch: fourth-quarter accounts receivable and free cash flow. If revenue growth slows toward the 32% to 33% outlook and free cash flow stays negative, corporate payment terms are consuming more cash than the business model planned for.
Stock Offerings and Notes Raised Diluted Shares 25%
Xometry measures its per-share profit excluding one-offs using a diluted share count that includes employee stock awards and convertible debt. That share count rose 24.6% from a year ago to 67.3 million shares, up from 54.0 million.
The increase stems from three sources: selling new shares to the public and to Siemens in the second quarter for $298 million, granting $31.0 million in employee stock compensation over the first nine months, and adding 10.0 million potentially dilutive shares from convertible notes. On the balance sheet, $84.8 million of convertible debt due in 2027 moved into current liabilities because it matures within a year. Because the share count grew by nearly a quarter, a 783% jump in profit excluding one-offs (to $18.6 million) translated into a smaller 600% rise in per-share profit (to $0.28).
What to watch: how Xometry settles the $84.8 million of current convertible notes in the quarterly filing. Paying in cash from its $505 million reserve would cap share dilution, while settling in stock would make the share count permanent.
The Fourth-Quarter Plan Points to a Slowdown
After two quarters of 40% revenue growth, Xometry forecast fourth-quarter revenue of $254 million to $256 million. That plan calls for 32% to 33% growth from a year ago and just 1.0% growth from the third quarter at the middle of the range, down from a 10.1% quarterly jump in the third quarter.
Part of the slowdown is a tougher comparison, because fourth-quarter revenue last year grew 29.5%. Even so, Xometry has beaten its quarterly revenue plan eight times in a row, by an average of 7.1% over the past four quarters. Because the outlook sits well below the current pace, we cannot yet tell whether corporate demand is actually cooling or management is repeating its cautious pattern.
What to watch: fourth-quarter marketplace revenue growth against the 35% to 36% plan. A result near 35% would mean growth in spend per buyer dropped by nearly half.
👓 Other Themes
Defense Cybersecurity Grants and Texas Demand
Xometry reported that 2026 job growth among its Texas manufacturing partners is running at nearly twice the pace of its national network, driven by demand for certified production. To expand that supply base, the Xometry Foundation partnered with MxD, a national digital manufacturing institute, to offer grants that help small and mid-sized US shops pay for defense cybersecurity certifications (CMMC Level 2).
💲 Other KPIs
US sales grew 41.2% from a year ago to $213.4 million, while International sales rose 31.8% to $39.0 million. Because the US grew faster for a third straight quarter, International accounted for 15.5% of total revenue, down from 16.4% a year ago and well below Xometry's long-term target of 30% to 40% of marketplace sales.
Cash and short-term investments dipped by $11.7 million from $516.7 million last quarter, as negative $7.1 million in free cash flow and $4.6 million spent on a business acquisition reduced the balance. Total cash remains more than double the $219.1 million held at the end of 2025 following June's stock offerings.
Contract liabilities — cash customers have paid upfront for orders or services not yet delivered — rose 56.0% from $11.3 million a year ago and 30.6% from $13.5 million last quarter. That growth outpaced the 39.7% rise in reported revenue.
🔮 Guidance
Raised against the $245 million to $250 million range that the prior full-year plan implied by our math. The new outlook calls for 32.5% growth at the middle of the range, driven by 35% to 36% marketplace growth. Xometry has beaten its quarterly revenue midpoint for eight straight quarters by an average of 7.1% over the last four; if that pattern holds, fourth-quarter revenue would reach about $273 million by our math.
Raised above the $19.4 million to $20.4 million range implied by last quarter's full-year plan by our math. At the middle of the range, the outlook puts the fourth-quarter Adjusted EBITDA margin at 8.7%, up from 8.5% in the third quarter and 4.4% a year ago.
Raised. Management lifted the full-year growth floor by 3.5 percentage points from the middle of the prior range, and raised the marketplace growth target from 37% to 41%. It is the third raise this year, and the smallest: +6.5 points in the first quarter, +6.0 points in the second, and +3.5 points now. Combining nine-month sales with the fourth-quarter midpoint yields 37.2% full-year growth by our math.
Raised by $7.25 million at the middle of the range, up from $18.5 million in 2025. By our math, the new range implies a 19.5% full-year incremental Adjusted EBITDA margin — up from 18.5% under the prior plan and almost back to the 20% full-year target Xometry set at the start of the year.
❓ Key Questions
Why is free cash flow still negative above $250M revenue?
Management previously linked sustainable positive free cash flow to a $225 million quarterly revenue run rate with capital spending near 6% of sales. Revenue reached $252 million with capital spending at 5.9%, yet free cash flow was negative $7.1 million by our math.
How much did the July acquisition add to Services revenue?
The cash flow statement shows $4.6 million in cash and $2.1 million in non-cash value paid for a business combination over the first nine months. Investors need to know how much of Services' $0.3 million year-over-year revenue gain came from that deal.
How will Xometry settle the $84.8M of current convertible notes?
With $84.8 million of 2027 convertible notes now in current liabilities and $505 million of cash on hand, management has not stated whether it will pay conversions in cash or issue more shares.
When will the International segment reach Adjusted EBITDA breakeven?
International Adjusted EBITDA losses narrowed to $0.6 million from $3.3 million last quarter. With the segment so close to profit, will it stay positive in 2027, or will European expansion costs push losses back up?