Earnings Call: Q2 2021

Aug 12, 2021

Good day, and thank you for standing by. Welcome to the Xometry second quarter 2021 earnings call. I would now like to hand the conference over to your speaker, Shawn Milne, Vice President of Investor Relations. Good afternoon, and thank you for joining us on Xometry's Q2 2021 earnings call. Joining me are Randy Altschuler, our Chief Executive Officer, and Jim Rallo, our Chief Financial Officer. During today's call, we will review our financial results for the second quarter 2021 and discuss our guidance for the third quarter and full-year fiscal 2021. During today's call, we will make forward-looking statements, including statements related to the expected performance of our business, future financial results, strategy, long-term growth, and overall future prospects. Such statements may be identified by terms such as believe, expect, intend, and may. These statements are subject to risks and uncertainties which could cause them to differ materially from actual results. Information concerning those risks is available in our earnings press release distributed after market close today and in our SEC filings included in the Form 10-Q for the quarter ended June 30, 2021, that will be filed with the SEC on or before August 16th. We caution you not to place undue reliance on forward-looking statements and undertake no duty or obligation to update any forward-looking statements as a result of new information, future events, or changes in our expectations. We'd also like to point out that on today's call, we will report GAAP and non-GAAP results. We use these non-GAAP financial measures internally for financial and operating decision-making purposes and as a means to evaluate period-to-period comparisons. Non-GAAP financial measures are presented in addition to, and not as a substitute for or superior to, measures of financial performance prepared in accordance with US GAAP. To see the reconciliation of these non-GAAP measures, please refer to our earnings press release distributed today and our investor presentation, both of which are available in the investors section of our website at investors.xometry.com. A replay of today's call will also be posted on our website. With that, I would like to turn the call over to Randy. Thanks, Shawn. Good afternoon, everyone. Thank you for joining us for our first earnings call as a public company. Since many of you are new to Xometry, I'll spend some time introducing you to our business after reviewing our second quarter financial performance and business progress. Before we begin, I'd like to take this opportunity to thank our sellers, our buyers, and our employees for making Xometry the leading marketplace for on-demand manufacturing as we further our mission to digitize one of the largest sectors of the global economy. I would also like to thank our new public market investors, as well as our existing investors, for their support. I'm going to start with a review of our second quarter performance. We had a strong Q2 with $50.6 million of revenue as we continue to see rapid adoption of our marketplace by both buyers and sellers. This represents revenue growth of 45% year-over-year and 15% quarter-over-quarter. In Q2, active buyers increased 66% year-over-year. Alongside strong new buyer growth, we continue to see robust growth within existing accounts driven by our land and expand strategy. The number of accounts with the last 12-month spend of at least $50,000 increased 54% year-over-year to 508. On top of strong revenue growth, gross profit increased 21% quarter-over-quarter, with gross margins expanding 100 basis points to 23.5%. This was driven by improvements in pricing and seller matching on our AI-powered marketplace. As our marketplace continues to scale and as the number of transactions grow, our machine learning becomes smarter, driving better matches for buyers and sellers and helping us improve our gross margins. In the first half of 2021, we added over 60 new materials, finishes, and processes to our instant quoting engine. This allows us to widen the use cases for all of our buyers across key manufacturing processes and to attract new buyers, which underscores the extensibility of our on-demand manufacturing marketplace. In the second quarter, we released digital storefronts, the latest offering in our growing basket of seller services. Adding a customized professional digital presence for Xometry sellers increases their overall engagement, visibility, and prestige as they look to attract new buyers. The storefront is integrated into our transaction engine, enabling our sellers to efficiently bring their own buyers and transactions to the Xometry marketplace. We monetize these transactions through our financial payment products. Recently, Ranjana Clark, who is currently Head of Global Transaction Banking at Mitsubishi UFJ Financial Group and is the former Chief Customer and Marketing Officer at PayPal, joined our Board of Directors to help guide our payment strategy. As I mentioned earlier, since many of you are new to the story, I would like to take a few minutes to provide a brief overview of our marketplace and to discuss key opportunities for growth and areas of investment. Xometry is the leading on-demand manufacturing marketplace. Since our founding in 2013, growth has been tremendous, including 92% compounded annual growth from 2018 to 2020, with $141 million of revenue in 2020. Today, roughly 30% of Fortune 500 companies are Xometry buyers. Our mission is to accelerate innovation by providing real-time, equitable access to global manufacturing capacity and demand. Our vision is to drive efficiency, sustainability, and innovation by lowering the barriers to entry to the manufacturing ecosystem and to digitize one of the largest industries in the world. The Xometry platform is a two-sided marketplace, connecting buyers and sellers of custom manufactured parts through a transparent online experience. The market is ripe for disruption and digitization, with a highly fragmented, regionalized base of sellers and a highly inefficient, opaque process for buyers. Not only is procurement traditionally slow and expensive, there's an increased focus from buyers on ESG issues, as corporations' supply chains produce five and a half times more emissions than their direct operations. For buyers, we provide immediate pricing, delivery estimates, and quality assurance. For sellers, we provide global access to buyers and jobs and a growing basket of seller services to help small local machine shops more efficiently run their businesses, including supplies, shipping, and a suite of financial products. Underpinning our marketplace is our proprietary artificial intelligence. Our AI-powered marketplace enables instant competitive pricing and lead times across a constantly increasing number of choices and combinations of processes, materials, and finishes. It starts with our software, which enables 3D geometry and feature recognition. Our machine learning algorithms train on a huge number of features, enabling the platform to become smarter with each transaction, driving higher revenue, efficiency, and margins. As pricing and lead times improve, we drive more buyers and higher engagement, resulting in more demand for sellers, creating a powerful network effect for Xometry. The power and value of our marketplace is evidenced by over 23,000 active buyers, including leading brands in aerospace, defense, robotics, medical devices, consumer products, automotive, and space. At the same time, we continue to ramp up our network of active sellers, which grew 82% from 2019 to 2020 to over 1,410 active sellers. With so many disruptions to our global supply chains, the expanded breadth and resilience of our seller network has proved crucial to our buyer base. Our market opportunity is massive, with a global TAM of $260 billion in custom on-demand manufacturing, a subset of the multi-trillion dollar manufacturing industry. Given the massive market opportunity and our scalable marketplace platform, we will be bold and aggressive in our sales, marketing, and technology investments. We're just getting started. Within our large and rapidly growing active buyer base, we have a significant opportunity to become an enterprise solution embedded in product design and procurement workflows. We have partnerships with leading CAD platforms, including SOLIDWORKS, Inventor, and our recent March 2021 launch of a new integration with Autodesk Fusion 360, which enables users to get instant pricing and lead time estimates from Xometry without leaving Fusion 360. Another key area of focus is expanding our basket of seller services. In 2019, we launched seller services, beginning with Xometry Supplies, which enables our sellers to buy competitively priced goods from leading brands. In mid-2020, we introduced financial products, including the Xometry Advance Card, which gives sellers immediate access to 30% of the value of the Xometry jobs they accept. Recently, in March of this year, we launched Xometry Pay, a new suite of payment products that allows sellers to quickly accept credit cards and offer payment terms for their customers, backed by Xometry. These financial products offer sellers the opportunity to improve their cash flow, giving them capital to buy materials, tooling, and other expenses needed for business operations. Our seller services have been well-received, with 40% of our active sellers purchasing supplies or utilizing at least one of our financial products in 2020. In late 2019, we acquired a small team in Munich, Germany, to launch our European operations. Since that time, we've seen a strong ramp in revenue in Europe as that platform leverages the AI learnings from our U.S. marketplace. We have a massive opportunity for international growth. International revenue was just over $3 million for the year 2020 and has generated roughly $6 million in the first half of 2021 alone. Currently, over 90% of our revenue is generated in the United States. We see an enormous global opportunity and are rapidly scaling up our operations in Europe and intend to build out similar capabilities in Asia-Pacific. As with other leading global online marketplaces, international revenue could be 40% or more of total sales over the next several years. Post our public offering, our pro forma cash balance is roughly $346.8 million. Providing strong liquidity to grow our business organically and the opportunity for strategic tuck-in acquisitions to add to our platform, including new geographies or new services. In Q3 and Q4, we're going to capitalize on our leadership position and the fragmented nature of our $260 billion market by accelerating investments in new marketing channels, creating a small, dedicated sales team focused on our basket of seller services, and stepping up our efforts to expand in new international geographies, including Asia Pacific. We're also increasing our investments in our machine learning algorithms and the application of them throughout the marketplace. Xometry is committed to promoting environmental sustainability across our services and to reducing the carbon footprint of manufacturing. With the Xometry Go Green Initiative, we purchase carbon credits to offset 100% of the estimated impact of the shipment of parts, and we offer buyers the ability to instantly calculate the price to purchase carbon credits to offset the CO2 emitted through the manufacturing of their parts. Our stakeholders expect us to be good stewards, not only of our business, but of the world in which we all live. With our recent IPO, we founded Xometry.org, which supports the Pledge 1% movement and is committing our equity over time to support charitable organizations. With that, I'll turn the call over to our CFO, Jim Rallo, for a closer look at second quarter financial results and our business outlook. Thanks, Randy. Good afternoon, everyone. I'd like to echo Randy's comments that we're excited to discuss our first results as a public company and to share our outlook for the business. As Randy mentioned, we generated Q2 revenue of $50.6 million, a 45% year-over-year increase and up 15% quarter-over-quarter. This increase was driven by strong growth in the number of active buyers, resulting from our continued investment in sales and marketing as we leverage our attractive unit economics. As a reminder, we disclosed in our S1 that one customer associated with PPE products accounted for 11% of revenue in 2020. Revenue growth in Q2 2021 was approximately 53%, excluding revenue from that one customer. As Randy mentioned, Q2 active buyers increased 66% year-over-year to 23,942 in Q2. The percentage of revenue from existing accounts was 95%, underscoring the efficiency and transparency of our business model that leads to increasing account stickiness and spend over time. We believe the repeat purchase activity from existing accounts reflects the underlying strength of our business and provides us with substantial revenue visibility and predictability. Once an account joins our platform, we aim to expand the relationship and increase engagement and spending activities from that account over time. The number of accounts with the last 12 months spend of at least $50,000 on our platform reached 508 at the end of Q2 2021, up 54% year-over-year and 23.3% quarter-over-quarter. Q2 gross margin was 23.5%, down 30 basis points compared to 23.8% in Q2 2020. Q2 gross margin increased 100 basis points from Q1 2021. In early Q1 2021, we dampened our pricing algorithms to smooth out the impact of rapid commodity price increases to our buyers, lowering gross margin at the start of the year. Towards the end of Q1, we reversed the dampening adjustment, driving improved gross margins quarter-over-quarter. We expect this trend of gross margin improvement to continue quarter-over-quarter in Q3 and Q4. As our marketplace continues to scale and as the number of transactions grow, our machine learning becomes smarter, driving better matches for our buyers and sellers, and increasing our gross margin over time. Moving on to Q2 operating costs. Q2 2021 total operating expenses increased 69% year-over-year to $23.7 million, representing 46.8% of revenue. Q2 2021 operating expenses included stock-based compensation expense of $2 million that is allocated across SG&A line items. Additionally, Q2 operating expenses include approximately $0.5 million in public company costs. Within our operating expenses, sales and marketing is our largest variable component. Given our large $260 billion TAM, we intend to aggressively grow our marketplace, including buyer and seller networks. Sales and marketing costs were $8.9 million in Q2, an increase of 73% year-over-year, driven by continued investment to expand our network of buyers and sellers, our hiring of additional salespeople, and increased stock-based compensation expense. Sales and marketing as a percentage of revenue was 17.5% compared to 14.7% in the same period a year ago. We expect to invest more aggressively in sales and marketing in the second half of 2021, including new marketing channels, increased digital marketing, and further hiring in our sales team. Our adjusted EBITDA loss for Q2 was $9.1 million, or 17.9% of revenue. In Q2, revenue from our U.S. and Europe operating segments was $47.2 million and $3.4 million, respectively. Segment loss from our U.S. and Europe operating segments for Q2 was $9.4 million and $2.8 million, respectively. We continue to invest in our European business, which is growing rapidly and improving gross margins as transaction volume increases. At the end of the second quarter, cash and cash equivalents were $37.4 million, with $15.9 million in debt. In early July, we raised approximately $325 million in net proceeds from our IPO and subsequently have paid down our debt, leaving a June 30, 2021 pro forma cash balance of $346.7 million. Moving on to guidance, we expect Q3 revenue in the range of $53 million-$55 million, representing year-over-year growth of 26%-31%. As I mentioned previously, one customer accounted for 11% of revenue in 2020, with the majority of those revenues in Q3 2020. Excluding revenue from that customer, revenue growth guidance is 66%-72% for Q3 2021 as compared to Q3 2020. Our Q3 2021 revenue guidance assumes minimum revenue from that one customer. We expect Q3 adjusted EBITDA loss to be in the range of $12 million-$13 million, reflecting the previously mentioned higher spending around sales and marketing, accelerated international investments, and higher public company costs that we estimate to be approximately $3 million per quarter moving forward. In Q3, we expect stock-based compensation expense in the range of $2 million-$2.5 million, which we will exclude from adjusted EBITDA. Additionally, as Randy previously discussed, as part of the IPO, we pledged 1% of the company's capitalization, or approximately 403,000 shares, to Xometry.org for charitable contributions to nonprofit organizations. As a result, each quarter we will record a non-operating charge through general and administrative expenses, which will be excluded from adjusted EBITDA. We estimate that this charge in Q3 2021 will be approximately $1.3 million-$1.6 million. For the full year, we expect fiscal year 2021 revenue in the range of $207.5 million-$211.5 million, representing year-over-year growth of 47%-50%. We expect fiscal year 2021 adjusted EBITDA loss to be in the range of $41 million-$43 million, reflecting the previously mentioned higher public company costs and further investments in sales and marketing. With that, operator, can you please open up the call for questions? Certainly. As a reminder, to ask a question, simply press star one on your telephone. To withdraw the question, press the hash key or the pound key. One moment while we compile the Q&A roster. Our first question comes with Sterling Auty with JPMorgan. Yeah, thanks. Hi, guys. First of all, welcome to the public markets. In terms of questions, you talked about the 30% of the Fortune 500 that are customers. I'm curious if you could talk to us about the trends of how you're increasing penetration, especially within those larger companies. What did you experience here in the quarter? Hey, Sterling, it's Randy. Thank you for the question. Excited to be a public company now. I think, as we mentioned earlier on, we saw a great uptick, an increase of 54% to 508 accounts with more than $50,000 in LTM basis. As you can imagine, most of those accounts are larger corporations where we've been focusing our land and expand strategy. I think that's been very successful. Plus, we've also begun rolling out technology tools, including integrations or what people call punch-outs with ERP systems, which is also making those relationships stickier. As we grow the amount of materials and tools, in Q2, we added over 60 new processes, materials, and finishes. That also allows us more and more to be that one-stop shop for those corporations. Great. As a follow-up, you talked about the international investment that you're making. Where do you feel you are in terms of the needed presence in the region to be able to scale that business? We're very excited that if you look at the first six months, we've been focused in Europe, and the revenue in the first six months of 2021 versus the first six months of 2020, we've seen growth of over 5X. That's great, and we think we can take advantage of that success and move even quicker, particularly in Asia-Pacific, where we've got a small number of sellers there, but where we do not have a domestic presence. We think we have some terrific opportunities there. We've seen that great success in Europe. We're going to work faster to duplicate that kind of success in Asia-Pacific in particular. Got it. Thank you. Thank you. Our next question comes from Mike Ng with Goldman Sachs. Hey, good afternoon, and congratulations on the first quarter as a public company. I was just wondering if you'd talk a little bit more about gross margins and the gross margin trajectory for the rest of the year? Jim, you mentioned the dampening adjustment and the sequential improvement. I was just wondering if you could expand on that a little bit more? Thank you. Sure. Thanks, Mike. No problem. Again, I think when you look at what happened in the first quarter, we talked about the inflation that we saw in commodity pricing. That commodity pricing was pretty quick in the beginning of the quarter. We decided to dampen the model in the beginning of the quarter and then realized that this isn't a one-time thing. This is a trend that's going to continue, which we've seen continue. We therefore removed that dampening off the model. At that point, gross margins started to climb again. What you see is we had significant improvement about 110 basis points actually, quarter-over-quarter as we move through the second quarter of this year. The model is doing what it's supposed to do. It's adjusting for those prices of the increase in commodities, that is. We expect to see continued performance around that over the rest of the year. I would tell you that Q3, Q4, we expect to continue to get improvement in gross profit margin. Again, we feel very confident in our long-term growth model and being able to achieve the margins that we put out there. Great. Thank you. I was just wondering if you could talk a little bit more about some of the mega trends that you're seeing that'll help the on-demand platform, whether that's nearshoring and de-globalization or the proliferation of SKUs. Are you still seeing that momentum and are there any changes to either of those things as reopening continues to happen? Thank you. Yeah, I think we're beginning to see a secular shift into digital manufacturing. One of the benefits of our marketplace is it's very technology extensible. We've seen a lot of success in different verticals. In particular, a couple to call out in Q2 are consumer, and we're also seeing an emerging industry such as space and green technology as well. I think you're seeing more and more industries adopting this. Again, there's sort of greater acceptance or sort of this secular shift to a digital manufacturing model. Yeah. Mike, I said we're still right now trying to understand exactly how the infrastructure bill that was passed will affect us. I think, on the surface, obviously, we feel like it's going to be positive for the business, certainly not negative. We'll try to have a better update on that on our next call. Clearly, there's going to be an infusion of dollars coming through the U.S. economy that's going to be focused on manufacturing. A lot of that's going to be focused on small businesses. Obviously, we're empowering small businesses, we do expect to see some positive impact for that. Again, we need to really study that bill, and we'll give you more feedback on the next call. Excellent. Thank you so much for the thoughts. Really appreciate it, Jim and Randy. Thank you. Our next question comes from Brian Drab with William Blair. Hi. Thanks for taking my questions. I'm on 2 conference calls at the same time, so let me just ask 2 questions here in case I need to jump to the other one for a second. Are you still expecting gross margin to step up on the second half of the year? In the presentations that you showed us ahead of the IPO, it looked like you were expecting about 25% in the third quarter and 26% in the fourth quarter. Is that still the case? My second question is, can you remind me how you're handling the digital storefront service in terms of, is that a revenue-generating service, or is that kind of more just to create more attachment with the sellers? Thanks. Thanks, Brian. I think we're estimating that we'll continue to see sequential gross margin improvement from Q2 to Q3 and from Q3 to Q4, and then, as Jim said, from beyond that as well. We're seeing a nice trend there, and we expect that to continue. The digital storefronts are very exciting, and as I sort of mentioned in my remarks, they are being powered by our suite of financial products. While there's no charge to our sellers to have a digital storefront, the transactions that go through that storefront are with our financial products, and we are able to monetize those. Brian, that answer your question? He may be on to his other call, Operator. Thank you. Thank you very much. All right. Thanks, Brian. Next question comes from Karl Keirstead with UBS. Thank you, both, and congrats on this first quarter. Maybe one for both of you. Randy, you talked a couple of times about the desire to invest overseas to drive the business. I'm wondering if you could just describe what the expected lag is between the timeframe for those investments and when you would expect them to translate into sort of a needle-moving impact on Xometry's revenues. Perhaps I'll just ask the second question to Jim. Jim, just so I understand the fourth quarter sequential growth dynamics, the guidance you gave implies 4Q revenue growth sequentially of about 13%. In 4Q 2020, it was a -9%, so quite a big difference. I think the answer to why it's so different is just that 3Q 2020, for the reasons you described, was so big given that one client, perhaps that pulled revenues from 4Q, that makes for a much tougher sequential compare. I just wanted to make sure that that's, in fact, the right way to think about it. Thank you both. Yeah. Let me answer the first question, Karl, thank you for that, and then I'll hand it off to Jim for the second. We expect within the next 6 months to formally launch our platform locally in the Asia Pacific market, and that's when I think we'll begin to generate revenue locally within Asia Pacific. Now I'll hand it off to Jim on the second question. Yeah, Karl. I think, as we talked about, we had one significant customer last year that accounted for about 11% of our revenue. Backing that out, obviously the growth rates would be stronger, as I highlighted before. Back to the revenue growth, we don't see really at this point a slowing of revenue growth. We feel confident that we continue to grow strongly, will grow strongly, that is, in Q3 and Q4 and beyond. Got it, Jim. It sounds maybe like the fourth quarter implied guidance is a more normalized revenue growth for the company. Agreed. Yeah. Okay, terrific. Thank you both. Thank you. Our next question comes from Nick Jones with Citi. Great, thanks. Kind of a bigger picture question on the marketplace. Can you talk about the challenges it is to get more supply on the platform? What are the pressures in getting them to come on and stay on? Why would they churn off? I guess trying to understand kind of the supply versus demand constraint dynamics of the platform today and how you're working to solve that. Thanks. Yeah. Thanks, Nick. I think, a couple of things. We've got a very robust network of sellers already in the marketplace, but one of our focuses is to continue to grow our share of their capacity. We're also introducing new services, such as our basket of financial services and others, that are attracting new sellers to the marketplace. I think we're seeing growth in both ends. Both we're growing within the existing sellers, their capacity and their spend, and we're also attracting new sellers. That's been very successful. In fact, one of the reasons last year we saw 40% of our sellers use multiple products, we're kind of working on that success to invest even more this year and grow a small direct sales force, and sort of pour gasoline on that fire. Great. Can you maybe just touch on the sellers who are using some of the ancillary services that you have as well, and what kind of attach rate and uptake you're seeing on those? Thanks. Yeah, sure. I'll take that, Nick. As we disclosed in our S1, we had 40% last year of our sellers adopted our seller marketplace services, which includes obviously buying supplies, all of our financial products and so forth. We've seen an uptick in that number recently. We'll give a stronger update on that when we get towards the end of the year, but we continue to see improvement in the number of sellers adopting our seller services. Great. Thank you. Thank you. Our next question comes from Nat Schindler with Bank of America. Yes. Hi, guys. Thank you. I was just hoping if you could give a little bit more detail on how COVID has impacted the business, other than the PPE seller, which is an obvious direct impact. Any other broader impacts or changes? Were there any move by design engineers to look online for products early on because of COVID or lockdown? Yeah. I think just to go back what I was mentioning before, this sort of secular adoption now of digital manufacturing, because of concerns about supply chain fragility, and the potential impact of COVID or climate change, as we're seeing a lot of that this summer. I think people are certainly more and more concerned about that, particularly larger corporations. I think you will continue to see a shift towards the digital and towards supply chains or marketplaces like Xometry, that give you robustness and backup resiliency in case there's a failure in one particular state or region of the world. Yeah. Nat, what I would say is, the one thing we learned from COVID is that the focused supply chains or concentrated supply chains that typical customers had with their manufacturers, that proved to be problematic during COVID. What happened was, we were open for business the entire time during COVID, obviously parts of the world shut down. I mean, China shut down first, then Europe, and then the U.S., and then parts of the U.S. Because certain states were open, certain states were not. We were able to use our global network, and we flexed that network to be open for business all the time for our customers. What happened was, people realized that the marketplace that we operate provides them the resilience that they need. That's why you've seen an uptick in a lot of the KPIs, like active buyers LTM and the number of accounts that are spending over $50,000. It's the stickiness of that marketplace and the resilience of the marketplace that we proved during COVID, which is helping drive those increases. Great. Related to that marketplace buildup and the global seller base that you have, when you move this business more internationally, let's say to Europe, how much time do you need to build up local manufacturing, or is that just not necessary? Can you just move by pushing on the sales side of just one side of the equation, the buyer side? We want to offer customers, buyers, both a local and an international option. I think there's definitely for various reasons, for time, there may be data issues, et cetera, where it needs to be purchased locally within country or within region. When we think about providing our buyers with the optimal experience and with the maximum number of options, I think it's important to have a local network as well. Great. Thank you. I think that's what's great about our technology platform, that we're able to build that for them. Great, thanks. Thank you. Our next question comes from Matt Hedberg with RBC Capital Markets. Oh, hey, guys. Thanks for taking my questions, and congrats on the IPO. Jim, I wanted to circle back to a prior question in your comment. 40% of active suppliers have purchased one of our financial service. When you look at some of those sellers that have leveraged even more, in other words, have really taken advantage of that, was there an aha moment that they had where they started to use it, and then they realized, "I'm going to use this a lot more"? Just sort of curious what that tipping point was on maybe expanded usage. Yeah. I think, look, we've rolled out our products sequentially, Matt. I think what we've seen is we've seen an uptake in the adoption as we've continued to roll out products. As Randy described earlier in his comments, we've continued to roll out products, and that's driving continued adoption. We would expect that to continue. We've just rolled out additional financial products. We've expanded our network of suppliers, of MRO providers. We feel confident that that adoption rate will continue. As we talked about earlier, the financial services piece of the business for us is very high margin, so 90%-95% gross profit margins. Again, we're getting good traction in that area from the business and the sellers. I think just to answer your question a little bit, to dig a little bit deeper into that, when a seller starts using our FastPay product, for example, where they pay a fee to get paid even quicker, you'll see that seller, once he or she starts using it, they use it for most of the future transactions. When we talk about where we're making our investments, one of the reasons we're investing in a small sales force to sell this basket of seller services is to get more of those sellers into it, because it becomes quite addictive. The stickiness has been really strong, and the repeat rate of them using it has been very high. We've just got to get more people to taste it, and then they'll hopefully continue to use it. That awareness is going to be very important. Once they sample it, they want more. That's great, Randy. Randy, you guys support several key manufacturing processes, CNC, die cast, injection molding, et cetera. I am curious, I think you've had a lot of success in CNC. Maybe just confirm that. When you look forward to the future, where do you see some of the most interesting aspects of additional adoption of manufacturing process? I am just really curious just sort of what people are leveraging the platform maybe today and maybe looking forward to, how might that change? We've seen really strong growth in all of our different technologies and processes. It's been a sort of an overall growth across the board. I think when you look at this $260 billion market, it's filled with many different use cases and lots of different flavors. I think as we continue to add more processes, more technologies, more finishes, we added over 60 last quarter, I think that's what we're seeing, that customers, particularly as we're trying to be that one-stop shop, as we're trying to grow that number of 50,000 of our accounts, part of the key to that will be to have a big basket of options available for them. Also as you move to end-use products and production products, that becomes increasingly important as well. Again, that's why our marketplace approach and with our technology infrastructure, it's ideally suited for it. Got it. Thanks a lot. Congrats on the results, too. Thank you. Thank you. Thank you. Ladies and gentlemen, this concludes our Q&A and program for today. We thank you for your participation, and you may now disconnect. Have a wonderful day.