Good day, and thank you for standing by. Welcome to the Xometry fourth quarter 2022 earnings call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please stand by. That today's conference is being recorded. I would now like to hand the conference over to your speaker today, Shawn Milne, Vice President of Investor Relations. Please go ahead. Good morning, and thank you for joining us on Xometry's Q4 2022 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 fourth quarter and full year 2022, and discuss our guidance for the first quarter and full year 2023. 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 before the market opened today, and in our SEC filings, including in the Form 10-K for the year ended December 31st, 2022, that will be filed with the SEC. 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 or superior to measures of financial performance prepared in accordance with U.S. GAAP. To see the reconciliation of these non-GAAP measures, please refer to our earnings press release distributed today in our investor presentation, both of which are available on the investor section of our website at investors.xometry.com. A replay of today's call will also be posted on our website. With that, I'd like to turn the call over to Randy. Thanks, Shawn. Good morning, everyone, and thank you for joining us for our Q4 2022 earnings call. While Q4 was a challenging quarter for Xometry, we continued to build global networks of buyers and suppliers and the technology tools that enable them to transact digitally. With our market leading position and a total addressable market of $2 trillion, we expect to continue to grow rapidly for many years to come. We believe the continuing shift to digital is inevitable. As the leading two-sided marketplace, our asset-light digital marketplace creates efficiencies and values for buyers and suppliers alike. Our AI-powered algorithms generate instant prices and lead times, and we efficiently connect buyers with the manufacturing technology and manufacturer, which can drastically reduce time to market and strengthen global supply chains. While there are no shortcuts, we are steadily and methodically executing on our vision of becoming the de facto digital rails for custom manufacturing. In Q4, revenue increased 46% year-over-year to $98.2 million, driven by marketplace growth and expanding supplier services with the addition of Thomas. Q4 marketplace revenue was $79.1 million, 32% year-over-year growth. Gross profit increased 72% year-over-year, driven by 30% growth in marketplace gross profit and the addition of Thomas. Active buyers increased 45% year-over-year to 40,664, driven by a record addition of 3,875 active buyers in Q4. A 17% increase over the prior record set in Q3. We also set a company record for the largest number of orders in a quarter, in part driven by record order count from existing accounts. The revenue generated by these existing accounts also continues to grow at a rapid clip, reflecting the stickiness of our marketplace. In the Q4 earnings presentation, we updated the account cohort analysis that was in our 2021 S-1 IPO filing to help quantify that growth. Active suppliers grew by 22% in 2022. Equally important, we increased our share of capacity with them as our spend per supplier grew 22% year-over-year. Xometry's international revenue grew 89% year-over-year and 15% quarter-over-quarter, driven almost entirely by the growth in our European business. Despite this growth in Q4, we fell short of expectations for the first time since becoming a public company. For only the second time in five years, Xometry's revenue decreased quarter-over-quarter. We also saw a notable sequential quarter-over-quarter decline in marketplace gross margins for the first time since Q1 of 2021. With the revenue and gross margin shortfalls, we were not able to absorb operating expense growth, resulting in a higher than expected adjusted EBITDA loss of $14.2 million in Q4. We take this step back in profitability seriously. Accordingly, I'm gonna provide a detailed explanation of what we learned in Q4 and the steps we've taken to mitigate any issues and ensure that Xometry continues to deliver strong, durable growth even in a challenging macroeconomic environment. We've already seen progress in Q1, and we are confident in our 2023 outlook. Here's what we learned in Q4 and the steps we have taken to improve our go-forward results based on this information. First, as we talked about on our Q3 call, our suppliers, influenced in part by macroeconomic factors, changed their behavior, taking jobs at lower prices, further impacting pricing. In addition, our buyers traded off longer lead times for lower prices, further impacting average order value. In Q4, average order value in the U.S. marketplace declined approximately 8% quarter-over-quarter, negatively impacting revenue by $6 million-$7 million compared to expectations. Based on our pricing optimization efforts, we're starting to see average order value rebound in the middle of Q1. Second, some of our largest customers grew less than expected late in Q4. We saw buyers delay their orders and in some cases, reduce expected order quantities. Their slowdown limited overall order growth to 41% year-over-year in the quarter, a decrease from what we had experienced earlier in Q4. The impact of this lower order growth reduced marketplace revenue by $3 million-$4 million in Q4. Our top 200 accounts represented approximately 50% of 2022 U.S. marketplace revenue. Historically, these accounts have grown significantly, yet Xometry still only has a small share of their wallet. In early 2023, we redirected salespeople and customer support against these accounts. Given the higher spend we have with these accounts, we are engaging in enterprise-level discussions around strengthening supply chains and driving production order efficiencies. Third, in an environment of falling costs and slowing demand, we expanded our testing of buyer price elasticity to better understand the trade-offs between price and conversion. This resulted in a drag on marketplace gross margin in Q4. Using our learnings from Q4, we expect marketplace gross margin to largely rebound in Q1 of 2023. This will also enable Xometry to better manage future unexpected significant shifts in costs. Capitalizing on what we learned in Q4 and on the rapid growth of our active buyer base, in Q1 of 2023, we expect to resume the quarterly sequential growth in revenue and gross profit we have delivered over the years. Likewise, we expect a lower adjusted EBITDA loss quarter-over-quarter. For 2023 overall, we expect to remain in strong growth mode and deliver healthy marketplace revenue growth of approximately 30%, marketplace gross margin expansion, and improve operating leverage. Despite the headwinds of Q4, which carried into early Q1, we are committed to being adjusted EBITDA profitable in Q4 of 2023. In addition to the changes I outlined earlier, here are our primary areas of focus in 2023. One, significantly expand the number of processes, materials, and finishes we can offer our customers, so we become their one-stop destination. It is extremely difficult for any single manufacturer, even those that are vertically integrated, to have the exact capabilities to meet even a fraction of the customer needs. Thomasnet.com offers supplier capabilities across 70,000 categories. This depth and breadth is critical since our market is not defined by commodity parts or SKUs, but instead is made up of thousands of different use cases. This is one of the reasons the custom manufacturing market is so fragmented. Our marketplace is unique in its ability to meet these needs. Customers are increasingly recognizing this capability as their production order volume grew significantly in 2022 from 2021. We are expanding our capabilities and improving the production buying experience on our platform in 2023. Two, continue to grow aggressively in Europe, including the recent expansion to the U.K., which is the third largest manufacturing market in the region. Additionally, in early Q1, we made a small tuck-in acquisition in Turkey to further expand our alternative cost supplier network to serve the European market. In Q4, international revenue grew more than 100% year-over-year on an FX neutral basis. Furthermore, we remain pleased with the ramp in buyer demand in China as we're seeing orders from across many verticals, including medical equipment, biotech, optical tech, and smart equipment industries. We expect China to contribute to revenue growth in 2023. Through xometry.eu, xometry.uk, and xometry.asia, we've leveraged Xometry's core technology to provide localized marketplaces in 13 different languages with networks of suppliers across Europe and Asia, as well as North America. Three, continue to invest in our Workcenter and Industrial Buying Engine platforms, increasing our footprint with both buyers and suppliers and enabling us to scale cost effectively. For our suppliers, we've made important progress in Workcenter, the SaaS-like operating system that is the digital foundation for manufacturers. In Q4, we successfully migrated all Xometry suppliers to Workcenter to utilize the job board and suite of job management tools. In response to supplier feedback, we improved the display and management of jobs and enhanced the usability of the system on mobile devices. In 2023, we plan to expand the Workcenter job management tools and capabilities, including support for custom job workflows, job scheduling, and communication tools. For buyers, we took significant steps towards improving the Industrial Buying Engine. The Industrial Buying Engine digitizes the cumbersome and time-consuming request for quote process, taking what was once off-platform and integrating it into the heart of Thomasnet.com. In Q4, the Industrial Buying Engine continued to move on-platform buyers' requests for quotes. We saw an increased number of buyers building and submitting their Industrial Buying Engine quote requests. We also saw suppliers beginning to use our on-platform messaging tools to interact with buyers during the quote process. While the revenue from the Industrial Buying Engine transaction fees in Thomasnet.com is not yet a significant revenue stream, as we more tightly integrate it with our Instant Quoting Engine, we can increase our buyers' share of wallet. Four, m odernize the advertising products and continue to expand self-service options on the Thomasnet.com platform, making it easier for suppliers to start their advertising journey. We are moving to a pay-for-performance advertising model on Thomasnet.com. Most search and listing engines that support advertising use a pay-per-click or other performance-based advertising model, which aligns the interests in buyers and suppliers. As we improve search, we expect to see a higher level of buyer engagement, improving the opportunity for search monetization. This will also help drive growth of our higher margin supplier services, as well as boost the use of the Industrial Buying Engine. Five, aggressively look to increase efficiencies and reduce expenses across our organization. In January, we reduced our workforce by 6% to better streamline operations and improve efficiency and leverage. Our efficiency measures will generate operating savings of roughly $8 million on a full year basis. Jim Rallo will provide more context to these changes on our Q1 2023 guidance later in the call. The underlying metrics of the marketplace continue to be strong, with record additions of active buyers and record order accounts, including from existing accounts. Our international business had a record quarter. We made good progress with the rollout and adoption of Workcenter and building integrations to enable Thomas and Xometry users alike to access the breadth and depth of Thomasnet.com's 500,000 suppliers, the full value of which we're continuing to unlock. I spend much of my time traveling and meeting with our customers. Whether it's a hyper-growth aerospace company in California or a Fortune 500 consumer product company in the Midwest, buyers struggle with the same problem: efficiently finding solutions that meet the breadth and depth of their manufacturing needs. This highly fragmented, inefficient, opaque market provides worse outcomes for both buyers and suppliers. Our marketplace approach is the best solution to these problems. We won't stop until we've fulfilled our promise. With that, I will turn the call over to our CFO, Jim Rallo, for a closer look at fourth quarter financial results and our business outlook. Thanks, Randy, good morning, everyone. As Randy mentioned, we delivered solid marketplace growth in Q4 year-over-year, despite increasing macro headwinds and changing buyer behavior. In early 2023, we took actions to reinvigorate marketplace growth and improve operating efficiencies and leverage. We generated Q4 revenue of $98.2 million, up 46% year-over-year, driven by marketplace growth and the addition of Thomas and Supplier Services. The stronger U.S. dollar negatively impacted revenue by $1.1 million on a year-over-year basis. Q4 marketplace revenue was $79.1 million, and Supplier Services revenue was $19.1 million. Q4 marketplace growth of 32% was driven by a strong increase in the number of active buyers year-over-year, while revenue per buyer was impacted by lower pricing and softening order rates, as Randy previously mentioned. Q4 active buyers increased 45% year-over-year to 40,664. In Q4, the percentage of revenue from existing accounts was 96%, underscoring the efficiency and transparency of our business model that leads to increasing account stickiness and spend over time. 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 last 12 months spend of at least $50,000 on our platform reached 1,027 at the end of Q4, up 47% year-over-year. The strength of the U.S. dollar created a slight drag in this metric for Q4 by approximately seven accounts. Supplier Services revenue declined 2% quarter-over-quarter in Q4. The decline was primarily driven by seasonality in the Thomas business due to the timing of the publication of their trade magazine. As expected, this impacted revenue by approximately $400,000 in Q4. Q4 gross profit was $36 million, an increase of 72% year-over-year. Gross profit margin was 36.7%. Q4 gross margin for marketplace was 27.1%, down 330 basis points quarter-over-quarter. The main driver was our pricing optimization testing, which Randy previously mentioned. We expect marketplace gross margin to improve quarter-over-quarter from Q4 to Q1. Q4 gross margin for Supplier Services was 76.3%, driven by the high gross margin of Thomas marketing and advertising services. Supplier Services gross margin declined 220 basis points quarter-over-quarter due to the timing of the high margin in advertising revenue I previously mentioned, and a higher mix of supplies, which carries a much lower gross margin. Moving on to Q4 operating costs. Q4 total non-GAAP operating expenses increased 53% year-over-year to $50.3 million, driven by the addition of Thomas, continued investments in the business, and incremental public company costs associated with Sarbanes-Oxley. Within our operating expenses, sales and marketing is our largest variable component. In Q4, non-GAAP sales and marketing expenses were $22.3 million, excluding stock-based compensation, amortization, and restructuring charges, as compared to $12.4 million in Q4 2021. This increase in non-GAAP sales and marketing expenses on a year-over-year basis was driven by the addition of Thomas sales and marketing costs, continued investment to expand our network of buyers and suppliers, and hiring of additional salespeople to support strong growth in our land and expand strategy. On a quarter-over-quarter basis, sales and marketing increased $2.8 million, driven by continued investments in growing our network of active buyers. As Randy mentioned, we delivered record growth in new active buyers in Q4. Additionally, we invested $1 million-$1.5 million incrementally quarter-over-quarter to support further international expansion, including rapid growth in Europe, headcount to support the January launch in the U.K., and ramping Asian business. Our adjusted EBITDA loss for Q4 was $14.2 million or 14.5% of revenue, compared to 17.7% of revenue in Q4 2021. Our Q4 adjusted EBITDA loss excludes a $1.5 million restructuring charge related to our workforce reduction. Turning to segment reporting. In Q4, revenue from our U.S. and international operating segments was $88.1 million and $10.1 million, respectively. Segment loss from our U.S. and international operating segments for Q4 was $20.5 million and $3.9 million, respectively. We continued to invest in our international business, which grew 89% year-over-year in Q4 and 105% year-over-year on an FX neutral constant currency basis. At the end of the fourth quarter, cash and cash equivalents were $319.4 million. Moving on to guidance. We expect Q1 2023 revenue in the range of $100 million-$102 million, representing year-over-year growth of 20%-22%. We expect marketplace revenue to grow in the mid-to-high 20% range year-over-year. We expect marketplace gross margin to improve in Q1 quarter-over-quarter, driven by our pricing optimization efforts. In Q1, we expect adjusted EBITDA loss to be in the range of $9 million-$11 million or 9%-11% of revenue, compared to a loss of $12.7 million or 15.2% in Q1 2022. Q1 adjusted EBITDA loss will be lower quarter-over-quarter, driven by the growth in marketplace revenue and gross margin and the efforts to streamline operating expenses discussed earlier. In Q1, we expect stock-based compensation expense to be approximately $5 million-$6 million, which we will exclude from adjusted EBITDA. We expect 2023 revenue of $470 million-$480 million, representing 23%-26% growth year-over-year. We expect marketplace growth in the 30% range year-over-year based on current marketplace trends. We expect to be profitable on an adjusted EBITDA basis in Q4 2023, which is a change from our prior expectations for the second half of 2023. We expect improved operating leverage through 2023, driven by strong buyer and order growth and further improvement in gross margins, driving faster gross profit growth in marketplace. We expect significant leverage over fixed and semi-fixed costs, including public company costs. Additionally, our January reduction in workforce will reduce operating expenses by roughly $8 million on a full year basis. Operator, can you please open up the call for questions? As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. One moment for our first question. Our first question comes from the line of Brian Drab from William Blair. Your line is open. Good morning. Thanks for taking my questions. Randy, maybe you could start just by talking about, you know, what you've learned since we spoke last regarding why suppliers are accepting jobs at such a faster rate, and how did that job acceptance, how did the speed of the acceptance trend throughout the fourth quarter and into this year? Yeah. Brian, good morning. The, the, you know, as we indicated, we did see pricing continue to fall through the quarter and, you know, buyers or suppliers were just more willing than ever to take prices at those lower rates. That, you know, that continued to drive down the AOV as the quarter progressed. Then you couple that with, you know, as we talk about, you know, slowing order growth from our largest accounts, and that just ended up being a double whammy for us. Right. Right. Have you seen those acceptance speeds change at all? I mean, it was kind of a sudden drop of 30 something percent that you saw at the end of the third quarter. Yeah. Are they accepting faster now than they were before or has that leveled off? Yeah. We're seeing, you know, we're seeing now prices. I mean, there are a couple of dynamics at work. One is, you know, as we indicated, we were also doing some price optimization testing in Q4. You know, and that dragged into the beginning of this, of Q1, so in January of Q1, because we wanna make sure we got it right. Now, as we're taking those learnings, you know, we've been optimizing prices. Even on... Let me just look at that just from the price perspective, that's you're seeing that we're, you know, very selectively raising prices, and optimizing it, you know, also trying to make sure that we're maintaining that very strong order growth that we've been seeing. At the same time, you are seeing stabilization from the suppliers at the prices that they're willing to take things. Even though in January, you know, we saw a relatively low AOV, in February that's been trending back up. Overall that trend is going, you know, going higher. Okay. Just one last question on this. I mean, you've been experimenting with the price, experimenting at lower levels, I guess. Now price coming back up a little bit, are you still in the experimentation phase, or do you feel like you've something figured out that you, that you hadn't before? Where should we expect price to go, you know, in March and beyond? I guess it's gonna continue to creep up. Yeah. I think, you know, we've consolidated the learnings that we've had. Look, we were aggressive in Q4, sort of in response to the trends we were seeing. We took that as an opportunity to really invest in the testing. We've taken those and now you're gonna see the AOVs grow as a result of us ending that testing and taking those learnings and optimizing pricing. As we said, raising prices where we think we have the room to do that without impacting this healthy growth in orders that we've been experiencing. Okay, thanks very much. I'll get back in line. No problem. Thank you. One moment for our next question. Our next question will come from the line of Matt Hedberg from RBC Capital Markets. Your line is open. Great, guys. Thanks. Randy, I'm wondering if there's any more clarity on maybe why suppliers are accepting orders at a lower rate. Just to be clear, are you sure there's not a competitive reason maybe causing some of these buyers and sellers' decisions? Well, look, I think there's, you know, clearly and there's you know, an unusual macro environment. If buyers, if our suppliers are willing to take prices at lower prices, you know, then that means, you know, a couple of things. One is that they probably have less work themselves, they have more open capacity. Also second, that, you know, we are, we talked about this last quarter, you know, we are working hard to make it easier and easier for them to work with us. I think it's sort of a combination of those. Got it. Maybe just to double click on Thomasnet. Are there what are the specific things that you're focused on in 2023 to drive faster conversion of buyers and sellers? Yeah. You know, a couple of different things. You know, IBE is operational, and we're working very hard. You know, we've been growing very nicely the top of funnel there. We're trying to make it easier and easier for buyers to find what they're looking for, you know, optimize their searching and then make it easier for them to transact. On the flip side, we're also just trying to streamline the communication that the supplier has with that buyer. You know, take a step back before we bought Thomas, all this was happening off platform. We're moving it on platform both to the buyer side and the supplier side. As we get more top of funnel, more activity there, and as we make it easier for buyers to find what they're looking for, that will improve, you know, our ability to transact. Likewise, as we get the suppliers more engaged, that will also improve. We're working both sides of the equation. Got it. Thanks a lot, guys. Matt, I would just say, we would talk to, its Shawn. We talked a little bit about this on the call, you know, you should expect to see from us this year, you know, more advertising solutions, new self-serve advertising solutions on Thomas for our suppliers. As you know that, you know, historically, that's all had to go through salespeople. The more we can offer self-serve, that's gonna be helpful to the business. As Randy called out, you know, we're gonna lay the groundwork for pay-for-performance search, which will be really a step function change for Thomas as well long term. Thank you. One moment for our next question. Our next question comes line of Eric Sheridan from Goldman Sachs. Your line is open. Thanks so much. Maybe just one quick follow-up to what we've been talking about so far, and then I'll get into a deeper question. In terms of where we are in the macro cycle, you know, what sort of visibility do you think you have in terms of whether you've absorbed the most, you know, the biggest wave of what would be excess capacity on the partner side of the equation, where they've been willing to accept jobs at lower prices, and therefore more of that's behind you than ahead of you, as opposed to the sense you have a visibility of whether the macro environment could get worse over the next three to six months? That would be number one, and maybe I'll come back with a second one after that. I mean, Eric, I think we've seen the prices, you know, the cost bottom out. I think as we indicated, as you move from January to February, we are seeing, you know, we're increasing prices partly because we're really seeing that floor from the suppliers, we've sort of reached that floor from the suppliers. Likewise, you know, we made an investment in Q4 to really test the price elasticity of our customer base, and we're also taking some of the learnings and, you know, we've been raising prices selectively. I think between the combination of the prices, of the cost bottoming out from the suppliers plus the learnings that we've gotten from our elasticity tests, you know, AOBs are improving. Okay. I think that said, Eric, for the year, we you know, when you look at our guidance for the year, we've tried to be conservative when we look at the AOBs, you know, just not to get ahead of ourselves. Totally understood. Maybe the second one, more for Jim. You know, in terms of the way you're framing the efficiencies you're pulling into the business now versus the potential exit velocity of 2023, how should we be thinking about incremental margins and mix of sort of fixed versus variable costs or what's implied in maybe the way you're thinking about Q4 of 2023, so we better understand how the business is set up from an incremental margin standpoint beyond 2023? Thanks so much. Yeah. Yeah, good question, Eric. I think a couple things. You know, one, you know, we had some significant costs this quarter around finalizing Sarbanes-Oxley, that, you know, that obviously is a one-time hit for us. We need to continue to maintain that, but, you know, the initial integration of that was obviously a lot of work for our team, and we obviously used some consultants to get there as well. In addition, I think, you know, look, we, you know, we took a very quick move to institute a RIF, which is gonna save us $8 million over next year. Again, you know, we are seeing good changes in the gross profit margin already. We would expect to continue to grow that gross profit margin throughout the year. I think when you look at those factors put together, you know, we feel pretty confident about getting, like I said, to that profitability on adjusted EBITDA basis in Q4. Yeah. Maybe, Eric, just add a little, you know, commentary there. You know, when you look at things like our G&A, in particular our product development line items, you know, we expect to gain real leverage. We had been going in, you know, Q4 obviously was sort of an anomaly for us, where we went in the wrong direction. We expected to gain real leverage on those line items in particular. You know, it's marketing that will continue to grow, but we're moderating that as well. I think we, you know, we're gonna gain substantial efficiencies as the quarter, as the year goes on. As Jim also indicated and we've said, you know, you're gonna see gross profit margins largely in marketplace largely rebound here in Q1. With that positive trend, you know, kind of resuming what you saw from us in prior quarters going on, that also adds incremental dollars for every dollar of revenue. Incremental profit for every dollar of revenue as we leverage those expense, those OpEx line items. Great. Thanks for the color. One moment for our next question. Our next question comes from the line of Karl Keirstead from UBS. Your line is open. Okay, great. Thank you. Maybe two for Randy. Randy, these macro issues as you're describing them around suppliers willing to take lower prices and slowing order growth from buyers. I'm just curious whether this is a little bit more unique to an online marketplace model like yours or company specific versus macro in the sense that as we see results across the manufacturing sector, we would expect to, everybody in the line, you know, hear evidence of the same trends that you're describing. The crux of the question is how marketplace or Xometry specific these pressure points are. Look, I think one thing to be clear about, we mentioned the call, I just want to double down on that is, you know, we are gaining market share. Not only we had a record number of active buyers in Q4, we continue to see very strong growth trends in adding active buyers, we see really strong growth in adding order accounts. We're gaining market share here. I think, you know, it has been an odd macro environment, I don't think that's specific in terms from a cost perspective, I don't think that's specific to us. I think that's more an overall environment that you're seeing. I wouldn't ascribe it to anything particular to us. Shawn, I don't know if you wanna... Yeah, no, I mean, Karl, I mean, you know, we've seen others in the space actually see their revenues decline year-over-year. You know, I'm sure you watch the macro environment as much as we do, and there certainly was some lower manufacturing output in the fourth quarter too. Got it. Okay. Just wanted to test that. Thank you. Secondly, Randy, if you could just describe in perhaps a little bit more detail these price optimization efforts that you're making because it does seem like the recovery that you're anticipating in 2023 is not really from the macro improving. I think you made a comment that these headwinds are likely to carry into Q1, but rather it's the tuning or optimization of the marketplace algorithm that should enable things to recover. I know that you started doing that after 3Q, and it obviously didn't lead to a significant improvement in the fourth quarter. What I really want to press on is what's different this time around your tuning efforts that we can feel comfortable with that marketplace gross margin going up in Q1? Thank you. Yeah, look, and I just, you know, I just wanna you know, make it clear, and I think for Karl, you said it, you're right. For 2023, we've taken a conservative view on our, on our AOV, you know, to make sure that, you know, that we take into account. You know, we're not buying into a macro improvement by sort of taking into account kinda where, you know, being conservative on that element. I think also just on that point, you know, we continue to grow market share, and we're seeing robust order growth. I think in terms of our ability to control it, you know, we wanted to make sure the test ran through. We do have the ability, you know, to raise as the cost from the suppliers sort of bottom, you know, have bottomed out. That sort of, you know, has been going down lower as we raise our prices through our selective, you know, through our price optimization, that just enables us to get a healthier margin. Without sacrificing that increase in order count or order growth from our customers. That's what we were testing. We got pretty aggressive in that testing to see what is that price elasticity. I think we have a very good sense about how we can continue to gain that share of customer wallet without it costing us dollars or our ability to add more cost or more price or charging them more. I think we feel very good about the results of that optimization, and you will see the results of that here in Q1. Okay. Good context. Thank you, Randy. Okay. One moment for our next question. Our next question will come from the line of Ron Josey from Citi. Your line is open. Great. Thanks for taking the question. I have two. Maybe Randy, can you talk a little bit just about annual active buyers and cohorts? I mean, we saw some pretty strong growth here in annual active buyers and additions in the quarter. I'm wondering if you expect the ramp in new buyer activity to slow at some point relative to prior quarters, or do you think this cohort, what we've seen on that slide in the presentation can continue in terms of overall growth? I have a quick follow-up. Thank you. I think we are continuing to see very healthy additions of active buyers. You know, that's been growing steadily throughout 2022. We obviously hit a record in Q4 of this past year in terms of the quarter-over-quarter adds of active buyers, and we expect, you know, a healthy trend to continue in 2023. We also added, you know, for folks who haven't seen it, if you look at the earnings deck that now we've attached, that you can find on our site, you can see we actually added a slide that showed the revenue contributions from our cohorts. I think you can see from that, you know, that we're seeing really strong growing contribution from those cohorts. We, you know, we expect that trend to continue. Ron, hey, it's Shawn. I just wanna add, too, on that cohort slide, just to be clear, you know, you were asking about the active buyer growth, which was a record this quarter. You know, as Randy said, we expect that to be healthy going forward. The cohort slide is based on an account basis. Just keep in mind the whole land and expand strategy here. We try to bring in an account, we add buyers in an account, and that's how it really drives that growth. Got it. That, that's actually a good segue into the second question I had here. Randy and Shawn, and Jim, you know, you talked about slowing order growth from Xometry's largest accounts, but also realigning the sales force to focus on those top 200 accounts. If you could help us understand just the plan to call it expand in those top 200 accounts, that would be helpful. Where are you in that process of realignment? Thanks, guys. Yeah. You know, our top 200 accounts represent almost 50% of our U.S. marketplace revenue. As we sort of began the call, one of the things unfortunately that we experienced unexpectedly in Q4 with that was a slowdown from that group. You know, really as we saw that trend, we made sure that we realigned our sales force and our support to focus on going deeper into those customers. We've, you know, we've provided a bunch of case studies to land and expand. We're trying to go deeper and deeper into them for a number of reasons. First of all, these are large companies that have tremendous spend on custom manufacturing. Even though we've grown rapidly with them, since they joined us, we're still a very small portion of their overall spend in custom manufacturing. This is very fertile ground for us to grow into. As we've gotten bigger with them, we're also getting the opportunity to do more and more with them, to get bigger orders, larger orders. It's an investment that makes a lot of sense. You know, particularly if we do more production work, more end-use parts, this is very fertile ground for us. Focusing, our technical resources on that as well to go deeper, makes a lot of sense. Likewise, as we expand the menu of the things that we can offer, as we more tightly integrate all the capabilities that the suppliers of Thomas offer, that enables us more and more to be that one-stop shop or one-stop place for those accounts to go. Again, those accounts have such big spend. As we broaden what we can offer them, more and more they can default more of that spend to us. It's sort of a multi-pronged strategy. I think, you know, we have a lot of active buyers, so making sure we're focused on those that provide the greatest opportunity for profitable growth. You know, Q4 was a reminder of that, and we're doubling down that here in Q1, throughout this year, that's where, in terms of just where we put our head count, that's where we wanna put it. Got it. Thank you, guys. One moment for our next question. Our next question will come from the line of Cory Carpenter from JP Morgan. Your line is open. Hey, guys. This is Danny Pfeiffer on for Cory Carpenter. I just have two quick ones on international. For international expansion, is the key driver of growth there really more geared towards expanding the amount of countries you're operating in? Or is it really kind of geared toward expanding the depth in each market with new offerings? Another one on international. Can you talk about what was attractive about the marketplace in Turkey you acquired, and maybe if we should expect to see more of these bolt-on acquisitions in the future? Thanks. Yeah. I think, when you look at, when you look at Europe, it's actually both. It's both the things you mentioned. We are adding sales folks in different countries. We're also expanding our capabilities in Europe. When you look at the recent tuck-in acquisition we did with Tridi, what that did was give us really a low cost network in Europe. Think about, you know, similar cost model to what you would have in like a China or Asia network. The, you know, the beauty of that is we can ship in 24 hours from Turkey to really anywhere in Europe. You're lowering your lead times and still giving our European customers an economy opt-option, if you would. You know, both again, growth in, both growth in the sales force, and continued growth into different countries in Europe is what's driving that. If we're going deeper into markets, you know, there are huge markets that we're in Europe already. When you look at the German-speaking countries, when you look at France and Italy and Spain, we're also adding new markets, as we talked about, you know, we now have a physical presence in the U.K. We're transacting in pounds. That's the third-largest market in Europe. It's still early days there, but lots of room to grow. Just double down on what Jim said about Turkey. You know, a lot of European manufacturing is done there. It's very familiar ground with Europe, it just offers us a great opportunity. There's growth opportunity in Turkey itself. We get two different things for that. Got it. Thanks. One moment for our next question. Our next question comes line of Greg Palm from Craig-Hallum. Your line is open. Yeah. Morning. Thanks for taking the questions. You know, I know you'd been testing this price elasticity in Q4. I know we focused a lot on the behavior on behalf of your suppliers. I'm curious if what you were doing changed the behavior at all in terms of your buyers, whether, you know, maybe they decided to order, you know, less parts per order, any change in kinda lead times. I think you alluded to something like that to reduce cost and maybe a little bit more color on buyer behavior. Yeah, great question. We did see buyers trade off lead time for price. We did see some reduction in quantity. Those things that you're talking about are absolutely spot on. You know, that also obviously impacted the average order values that we saw as we, you know, as we exited Q4 and in the beginning of Q1. Again, we've seen that trend change in February. We've also, you know, we're reaping the benefits of our price optimization. We expect that AOV to start rebounding, and it has rebounded in February, and we expect it to have a good trend. That said, we're trying to be conservative for this year, and to not get ahead of our skis on it, but it certainly has improved from where it went in late Q4 and the beginning of Q1. In terms of pinpointing that improvement, I'll sort of tie that back to my initial question. How much of that is driven by, you know, the suppliers versus the buyers? Maybe they're adding more parts to the order. Maybe they're, you know, maybe doing expedited or standards in lieu of economy. Can you just dig into a little bit in terms of the specifics around the improvements? Yeah. I mean, we are seeing buyers. We're seeing less buyers. There is more urgency from the buyers as we're sort of getting further into this quarter. They are trading off less on the lead time than they had been doing, you know, we saw at the end of Q4 and the beginning of this year. There is some change in the buyer behavior. Part of it is also, you know, some of our price optimization. Okay, makes sense. yep. Okay, got it. just in terms of margins, I just wanted to dig into the commentary a little bit on Q1 specifically. I think you said that, you know, they're gonna rebound or normalize, I forget the exact words, but would you expect them to rebound to levels that, you know, you saw in Q2 or Q3 last year? Just, you know, last quarter, you talked about accelerating that timeline to achieve your long-term targets. Are you still comfortable with that in 2024, or do these recent results change your thinking there? Absolutely. We're still comfortable with that, and I think the rebound in Q1, I think we're seeing that to be very we use the term largely rebound, and when we talk about largely rebound, we're going back to Q3. We're seeing we're back to what we think is a very healthy gross profit margin on the, on the marketplace side. Okay, makes sense. All right, thanks. Best of luck. Thanks. Thank you. One moment for our next question. Our next question comes from the line of Scott Graham from Loop Capital. Your line is open. Yeah. Hi, good morning. Thank you for taking my question. On the price optimization, you know, what you did there, was that just sort of a sweeping price change across all or most categories, or was it maybe more surgical in categories and with groups of users? I'd say we did wide testing. I think you've hit it spot on. I mean, we're running different tests and different technologies, and for customers at different points in their, you know, in their journey with Xometry. Whether or not they're just a brand new customer moving to the second order versus a customer who's been here longer, and again, versus if you're looking at folks in additive manufacturing versus machining or molding, et cetera. We ran a bunch of different tests. And we thought, look, it was a very interesting period, and we thought it was the time where we're grabbing market share, and we wanted to really test this. We thought this was a smart move to fund it, and, you know, reap the benefits of it as we move forward. Just to make sure I understand your question, your answer, Randy, is does that suggest that there's potentially some more wood to chop here that, you know, maybe there's more price optimization by category or otherwise to come that you haven't addressed? I think we're always gonna be testing price elasticity all the time. We're always gonna be running tests on that, but we don't expect that to have the material impact on gross margins that you saw in Q4 of last year. Okay. Thank you. You know, that was. We really funded a big number for that. We do not expect that to happen in Q1 and beyond of this year. Got it. My follow-up question is simply, you know, the existing account sales of, you know, 96%, you know, been hovering around 95%-96% for some time. I'm wondering, and I know that that speaks to the stickiness of the model, but I'm wondering with the active buyers growth just continuing to be, you know, quite strong, the assumption there is that some of those active buyers are new accounts, right? When does that number start to go down, and perhaps maybe should it have gone down by now? Yes, Scott it's Shawn. I mean, just remember that, you know, a new buyer would spend less, right, than someone who's been, you know, an account that's been spending over time, right? It's that kind of dynamic. If you actually look at, you know, sort of revenue per buyer in Q4, I mean that's part of, you know, we saw very strong active buyer growth in Q4. Again, we saw, you know, some of our existing customers order less. That, that was, you know, the bigger impact in terms of revenue per buyer. Okay. Thank you. Thank you. As a reminder, that's star one one for questions, star one one. Please stand by while we compile the Q&A roster. Now I'm not showing any further questions in the queue. This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.