Xometry, Inc.: Form 10-Q for the period ended Jun 30, 2025

The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. The discussion contains forward-looking statements that are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed in Part II, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024. Our historical results are not necessarily indicative of the results that may be expected in the future and our current quarterly results are not necessarily indicative of the results expected for the full year or any other period.

Overview

Xometry, Inc. (“Xometry”, the “Company”, “we”, or “our”) was incorporated in the State of Delaware in May 2013 and our corporate headquarters is located in North Bethesda, Maryland. Xometry operates a global artificial intelligence (“AI”) powered online manufacturing marketplace, a leading North American industrial sourcing platform Thomasnet® and a suite of cloud-based services including Workcenter and Teamspace that are rapidly digitizing the manufacturing industry. Together, these platforms provide manufacturers the critical resources they need to grow their business and make it easy for buyers to create resilient supply chains. Xometry's marketplaces uses proprietary AI to help buyers efficiently source custom-manufactured parts and assemblies and attain instant pricing and lead times. The AI enables our rapidly growing network of manufacturers to select the optimal jobs to fill their capacity. Our suite of cloud-based services and our Thomasnet industrial sourcing platform helps manufacturers and industrial service providers grow their businesses using our advertising, marketing and financial services.

Xometry’s AI-enabled marketplace, which is available in multiple local platforms and 18 languages, is powered by proprietary machine learning algorithms and datasets. Our two-sided marketplace is rapidly digitizing the manufacturing industry, helping customers strengthen their supply chains. Buyers can procure the products they want utilizing our AI powered instant quoting engine, and suppliers can reach new customers throughout the world. Our rapidly growing active supplier base enables companies to accelerate their product development and go-to-market strategies, as well as reduce the cost and lead times for ongoing production work. More than 4,375 global suppliers are active on the Xometry Marketplace across four continents. Each interaction on our marketplace provides rich data insights that allow us to continuously improve our AI models and create new products and services, fueling powerful network effects as we scale.

We use proprietary technology to enable product designers, engineers, buyers, and supply chain professionals to instantly access the capacity of a global network of manufacturing facilities. The Company’s platform makes it possible for buyers to quickly receive pricing, expected lead times, manufacturability feedback and place orders on the Company’s platform. The network allows the Company to provide high volumes of unique parts, including custom components and assemblies for its buyers, as well as larger production orders of single parts. Xometry’s Teamspace offers enterprise-wide collaboration software that unites engineers, managers and purchasing executives to expedite procurement of custom-manufacturing services. We continue to improve features on Xometry and expand the offering with the launch of Teamspace in Europe in the second quarter of 2025.

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 for industries worldwide by lowering the barriers to entry to the manufacturing ecosystem.

Our business benefits from a virtuous network effect, because adding buyers to our platform generates greater demand on our marketplace which in turn attracts more suppliers to the platform, allowing us to rapidly scale and increase the number of manufacturing processes offered on our platform. In order to continue to meet the needs of buyers and remain highly competitive, we expect to continue to add suppliers to our platform that have new and innovative manufacturing processes. Thus, our platform is unbounded by the in-house manufacturing capacity and processes of our current suppliers.

We define “buyers” as individuals who have placed an order to purchase custom-manufactured, on-demand parts or assemblies on our marketplace. Our buyers include engineers, product designers, procurement and supply chain personnel, entrepreneurs, technicians and business owners from small businesses to Fortune 500 companies. We define “accounts” as an individual entity, such as a sole proprietor with a single buyer or corporate entities with multiple buyers, having purchased at least one part on our marketplace. We define “suppliers” as individuals or businesses who have been approved by us to either manufacture a product on our marketplace for a buyer or have utilized our supplier services, including our financial services or the purchase of tools and materials.

The majority of our revenue is derived from the sale of part(s) and assemblies to our customers on our marketplace, which we refer to as marketplace revenue. The suppliers on our platform offer a diversified and expanding mix of manufacturing processes. These manufacturing processes include computer numerical control (“CNC”) manufacturing, sheet metal forming, sheet cutting, 3D printing (including fused deposition modeling, direct metal laser sintering, PolyJet, stereolithography, selective laser sintering, binder jetting, carbon digital light synthesis, multi jet fusion and lubricant sublayer photo-curing), die casting, stamping, injection molding, urethane casting, tube cutting, tube bending, as well as finishing services, rapid prototyping and high-volume production. Xometry's extensible technology platform allows the Company to add new technologies and processes to gain more wallet share with our buyers. We enable buyers to source these processes to meet complex and specific design and order needs across several industries, including Aerospace, Industrial, Medical Devices, Automotive, Consumer Goods, Defense, Government, Energy, Education and Robotics.

We empower suppliers to grow their manufacturing businesses and improve machine utilization by providing access to an extensive, diverse base of buyers. We also offer suppliers supporting services to meet their unique needs. The Thomasnet product sourcing and supplier discovery digital platform provides access to in-depth profiles of 500,000 North American suppliers. Thomas’ suite of advertising services provides suppliers with tailored marketing campaigns to maximize their visibility and enhance engagement with potential buyers. Thomas’ in-house digital marketing agency, Thomas Marketing Services, offers a range of essential digital marketing services to generate leads and boost the awareness and reach of suppliers. In addition, our supplier services include financial service products to facilitate faster payments and a cloud-based manufacturing execution system (“Workcenter”) to help suppliers optimize their productivity. Workcenter digitally enables qualifying and on-boarding suppliers and allows suppliers to manage all their Xometry and non-Xometry work and provides for expedited payment terms in support of their business.

Unfavorable conditions in the economy both in the United States and abroad may negatively affect the growth of our business and our results of operations. For example, macroeconomic events, fluctuations in inflation and interest rates, volatile market conditions, impacts from tariffs, the Russia-Ukraine war, conflict in the Middle East and other geopolitical tensions, have led to economic uncertainty globally. Historically, during periods of economic uncertainty and downturns, businesses may slow spending on information technology and manufacturing, which may impact our business and our customers’ businesses.

The effect of macroeconomic conditions may not be fully reflected in our results of operations until future periods. If, however, economic uncertainty increases or the global economy worsens, our business, financial condition and results of operations may be harmed. For further discussion of the potential impacts of macroeconomic events on our business, financial condition, and operating results, see the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024.

Convertible Notes Transactions

In June 2025, we issued $250.0 million aggregate principal amount of 0.75% Convertible Senior Notes due 2030. The net proceeds from the issuance of the 2030 Notes were approximately $242.2 million, net of debt issuance costs. We used a portion of the net proceeds to (i) repurchase a portion of our outstanding 1.00% convertible senior notes due 2027, (ii) enter into capped call transactions and (iii) repurchase shares of our Class A common stock. Refer to Note 9, Debt Commitments and Contingencies for our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Restructuring

During 2025, we initiated restructuring actions to help improve efficiency and align resources by reducing our workforce by approximately 5%. The workforce reduction focused on realigning our staffing levels to help us meet the current and future objectives of our business. For the three and six months ended June 30, 2025, we incurred $0.1 million and $1.6 million, respectively, for employee termination costs related to our restructuring. Refer to Note 9, Debt Commitments and Contingencies—Restructuring for our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

U.S. Tax Legislation

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law in the United States. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions that were originally enacted in the 2017 Tax Cuts and Jobs Act and were set to expire on December 31, 2025, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company is currently assessing the OBBBA’s impact on its consolidated financial statements. Based on our preliminary assessment, we do not believe the legislation will have a material impact on our condensed financial statements.

Key Marketplace Operational and Business Metrics

In addition to the measures presented in our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, we use the following key operational and business metrics to help us evaluate our marketplace business, measure our performance, identify trends affecting our business, formulate business plans and develop forecasts, and make strategic decisions:

Active Buyers

We define Active Buyers as the number of buyers who have made at least one purchase on our marketplace during the last twelve months. An increase or decrease in the number of Active Buyers is a key indicator of our ability to attract, retain and engage buyers on our platform.

Active Buyers has consistently grown over time. The number of Active Buyers on our platform reached 74,777 as of June 30, 2025, up 22% from 61,530 as of June 30, 2024. The key drivers of Active Buyer growth are continued account and buyer engagement and the success of our strategy to attract new buyers.

Percentage of Revenue from Existing Accounts

We define an existing account as an account where at least one buyer has made a purchase on our marketplace. We believe the efficiency and transparency of our business model leads to increasing account stickiness and spend over time. Buyers can utilize our marketplace for both one-off and recurring manufacturing opportunities. For example, a buyer may choose to utilize our marketplace’s CNC manufacturing processes to manufacture a discrete component for a prototype, and then may choose to later use our marketplace to mass produce that same component. A buyer may also recommend our marketplace to other engineers within their organizations who are designing other products and who may use an entirely different set of manufacturing processes, deepening our reach and stickiness with an account.

For the quarter ended June 30, 2025, 98% of our revenue was generated from existing accounts. 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.

Accounts with Last Twelve-Month Spend of At Least $50,000

Accounts with Last Twelve-Month, or LTM, Spend of At Least $50,000 means an account that has spent at least $50,000 on our marketplace in the most recent twelve-month period. We view the acquisition of an account as a foundation for the addition of long-term buyers to our marketplace. 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 LTM Spend of at least $50,000 on our platform reached 1,653 as of June 30, 2025, up 15% from 1,436 as of June 30, 2024.

Adjusted EBITDA

We define Adjusted EBITDA as net loss, adjusted for interest expense, interest and dividend income, other expenses, and certain other non-cash or non-recurring items impacting net loss from time to time, principally comprised of depreciation and amortization, amortization of lease intangible, benefit for income taxes, stock-based compensation, payroll tax expense related to stock-based compensation, charitable contributions of common stock, income from unconsolidated joint venture, restructuring charges, and acquisition and other adjustments not reflective of our ongoing business, such as adjustments related to purchase accounting, the revaluation of contingent consideration, transaction costs and executive severance. Adjusted EBITDA is a performance measure that we use to assess our operating performance and the operating leverage in our business. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA for a period by revenue for the same period.

(1) Includes loss on debt extinguishment.

For the three months ended June 30, 2025, Adjusted EBITDA was $3.9 million, as compared to Adjusted EBITDA loss of $(2.6) million for the same quarter in 2024. For the three months ended June 30, 2025, Adjusted EBITDA Margin was 2.4% of revenue, as compared to (2.0)% of revenue for the same quarter in 2024. For the six months ended June 30, 2025, Adjusted EBITDA was $4.0 million, as compared to Adjusted EBITDA loss of $(10.1) million for the same period in 2024. For the six months ended June 30, 2025, Adjusted EBITDA Margin was 1.3% of revenue, as compared to (4.0)% of revenue for the same period in 2024. The increase in Adjusted EBITDA was driven primarily by increased operating efficiencies as we continue to grow our revenue and margins faster than our expenses.

Non-GAAP Net Income (Loss)

We define Non-GAAP net income (loss), as net loss adjusted for depreciation and amortization, stock-based compensation, payroll tax expense related to stock-based compensation, amortization of lease intangible, amortization of deferred costs on convertible notes, gain on sale of property and equipment, charitable contributions of common stock, lease termination, restructuring charges, loss on debt extinguishment and acquisition and other adjustments not reflective of our ongoing business, such as adjustments related to purchase accounting, the revaluation of contingent consideration, transaction costs and executive severance.

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For the three months ended June 30, 2025, Non-GAAP net income was $4.7 million, as compared to Non-GAAP net loss of $(0.6) million for the same quarter in 2024. For the quarter ended June 30, 2025, Non-GAAP net income (loss) was 2.9% of revenue, as compared to (0.5)% of revenue for the same quarter in 2024.

For the six months ended June 30, 2025, Non-GAAP net income was $5.5 million, as compared to Non-GAAP net loss of $(6.3) million for the same period in 2024. For the six months ended June 30, 2025, Non-GAAP net income (loss) was 1.8% of revenue, as compared to (2.5)% of revenue for the same period in 2024.

Adjusted EBITDA and Non-GAAP net income (loss) are non-GAAP financial measures that we use, in addition to our GAAP financial measures, to evaluate our business. We have included Adjusted EBITDA and Non-GAAP net income (loss) in this filing because they are key measures used by our management to evaluate our operating performance. Accordingly, we believe that Adjusted EBITDA and Non-GAAP net income (loss) provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management team and board of directors. Our calculation of Adjusted EBITDA and Non-GAAP net income (loss) may differ from similarly titled non-GAAP measures, if any, reported by our peer companies and therefore may not serve as an accurate basis of comparison among companies. Adjusted EBITDA and Non-GAAP net income (loss) should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

Components of Results of Operations

Revenue

Our marketplace revenue is primarily comprised of sales of parts and assemblies to customers through our platform. Buyers purchase specialized CNC manufacturing, sheet metal manufacturing, 3D printing, injection molding, urethane casting, tube cutting, tube bending and finishing services. Customer purchases range from rapid prototyping of single parts to high-volume production on our marketplace. These products are primarily manufactured by our network of suppliers.

Supplier services revenue includes the sale of marketing and advertising services, and to a lesser extent financial service products and SaaS-based solutions.

Cost of Revenue

Marketplace cost of revenue primarily consists of the cost to us of the products that are manufactured or produced by us or our suppliers for delivery to buyers on our platform, internal and external production costs, shipping costs and certain internal depreciation. We expect cost of revenue to increase in absolute dollars to the extent our revenue increases and transaction volume increases. As we grow and add suppliers to our platform, we are able to improve our pricing efficiency, we expect cost of revenue to decline as a percentage of revenue over time.

Cost of revenue for supplier services primarily consists of internal and external production costs and website hosting.

Gross Profit

Gross profit, or revenue less cost of revenue, is primarily affected by the growth of our revenue. Our gross profit margin is primarily affected by liquidity of our suppliers’ network and the efficiency of our pricing and will be benefited by increasing the use of existing supplier services and the variety of supplier services offerings over time.

Operating Expenses

Our operating expenses consist of sales and marketing, operations and support, product development, general and administrative functions and impairment of assets.

Sales and Marketing

Sales and marketing expenses are expensed as incurred and include the costs of our digital marketing strategies, branding costs and other advertising costs, certain depreciation and amortization expense, contract acquisition costs and compensation expenses, including stock-based compensation, to our sales and marketing employees. We intend to continue to invest in our sales and marketing capabilities in the future to continue to increase our brand awareness, add new accounts and further penetrate existing accounts. We expect sales and marketing expense to increase in absolute dollars in the future as we grow our business, though in the near-term sales and marketing expenses may fluctuate from period-to-period based on the timing of our investments in our sales and marketing functions as these investments may vary in scope and scale over future periods.

Operations and Support

Operations and support expenses are the costs we incur in support of the buyers and suppliers on our platform which are provided by phone, email and chat for purposes of resolving buyer and suppliers related matters. These costs primarily consist of compensation expenses of the support staff, including stock-based compensation, restructuring charges, certain depreciation and amortization expense and software costs used in delivering buyer and suppliers services. We expect operations and support expense to increase in absolute dollars in the future, though in the near-term operations and support expenses may fluctuate from period-to-period based on total revenue levels and the timing of our investments in our operations and support functions as these investments may vary in scope and scale over future periods.

Product Development

Product development costs that are not eligible for capitalization are expensed as incurred. This account also includes compensation expenses, including stock-based compensation expenses to our employees performing these functions, restructuring charges and certain depreciation and amortization expense. We expect product development expense to increase in absolute dollars in the future, though in the near-term product development expenses may fluctuate from period-to-period based on total revenue levels and the timing of our investments in our product development functions as these investments may vary in scope and scale over future periods.

General and Administrative

General and administrative expenses primarily consist of compensation expenses, including stock-based compensation expenses, for executive, finance, legal and other administrative personnel, professional service fees, restructuring charges and certain depreciation and amortization expense. We expect general and administrative expenses to fluctuate as a result of operating as a public company.

Other (Expenses) Income

Interest Expense

Interest expense consists of interest incurred on our outstanding borrowings under our outstanding convertible notes or other borrowings.

Interest and Dividend Income

Interest and dividend income consists of interest and dividends on our cash, cash equivalents and marketable securities.

Other Expenses

Other expenses consist primarily of loss on debt extinguishment, realized foreign exchange gains and/or losses and other expenses.

Income from Unconsolidated Joint Venture

Income from unconsolidated joint venture consists of our share of the joint venture's income.

Results of Operations

Comparison of the Three Months Ended June 30, 2025 and 2024

The following table sets forth our unaudited statements of operations data for the periods indicated:

(in thousands)

The following table sets forth our unaudited statements of operations data expressed as a percentage of total revenue for the periods indicated:

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The following tables present our disaggregated revenue and cost of revenue. Revenue from our marketplace primarily reflects the sales of parts and assemblies on our platform. Revenue from supplier services primarily includes the sale of advertising and to a lesser extent financial service products and SaaS products.

Revenue and cost of revenue is presented in the following tables for the three months ended June 30, 2025 and 2024 (in thousands):

Revenue

Total revenue increased $30.0 million, or 23%, from $132.6 million for the three months ended June 30, 2024 to $162.5 million for the three months ended June 30, 2025. This growth was a result of an increase in marketplace revenue, partially offset by a decrease in supplier services revenue. Marketplace revenue increased $30.9 million, or 26%, from $117.3 million for the three months ended June 30, 2024 to $148.2 million for the three months ended June 30, 2025. The increase in marketplace revenue was primarily due to increased buyer activity on the platform, particularly with respect to enterprise customers, for the three months ended June 30, 2025 as compared to the prior year period.

Supplier services revenue decreased $1.0 million, or 6% from $15.3 million for the three months ended June 30, 2024 to $14.3 million for the three months ended June 30, 2025. The decrease in revenue was due to reductions in Thomas advertising and marketing services and to a lesser extent a decrease in Thomas non-core services partly offset by growth in financial services.

Total revenue for the three months ended June 30, 2025 and 2024 was $135.7 million and $112.2 million, respectively, for the U.S. operating segment and $26.8 million and $20.4 million, respectively, for the International operating segment.

Cost of Revenue

Total cost of revenue increased $17.7 million, or 22%, from $79.7 million for the three months ended June 30, 2024 to $97.4 million for the three months ended June 30, 2025. This increase was primarily the result of an increase in marketplace cost of revenue. Total cost of revenue from marketplace and supplier services for the three months ended June 30, 2025 was $95.8 million and $1.6 million, respectively, as compared to $78.0 million and $1.7 million, respectively, for the three months ended June 30, 2024.

Marketplace cost of revenue was driven by order growth and increased activity on our marketplace.

Gross Profit and Margin

Gross profit increased $12.3 million, or 23%, from $52.9 million for the three months ended June 30, 2024 to $65.2 million for the three months ended June 30, 2025. The increase in gross profit was primarily due to increases in revenue from marketplace and improved marketplace gross margins as compared to the prior year period.

Total gross margin was 40.1% for three months ended June 30, 2025 as compared to 39.9% for the three months ended June 30, 2024. The increase was primarily driven by higher marketplace gross margin as compared to the prior period.

Gross margin for marketplace was 35.4% for the three months ended June 30, 2025, as compared to 33.5% for the three months ended June 30, 2024. The improvement was due largely to our AI-driven platform and expanding network of active suppliers which optimizes pricing to buyers and suppliers.

Gross margin for our supplier services remained flat at 89% for the three months ended June 30, 2025 and 2024.

Operating Expenses

Sales and Marketing

Sales and marketing expense increased $2.3 million, or 8%, from $27.5 million for the three months ended June 30, 2024 to $29.8 million for the three months ended June 30, 2025, primarily due to additional sales and marketing employees and their compensation and benefit costs and increased advertising costs. As a percent of total revenue, sales and marketing expenses decreased to 18.3% for the three months ended June 30, 2025 from 20.7% for the three months ended June 30, 2024.

Advertising expense increased 5%, from $8.8 million for the three months ended June 30, 2024 to $9.2 million for the three months ended June 30, 2025 primarily due to increased marketplace advertising.

Operations and Support

Operations and support expense increased $3.6 million, or 25%, from $14.2 million for the three months ended June 30, 2024 to $17.7 million for the three months ended June 30, 2025, primarily due to additional employees and their compensation cost including stock based compensation, consulting expense and increases in severance costs. As a percent of total revenue, operations and support expenses increased to 10.9% for the three months ended June 30, 2025 from 10.7% for the three months ended June 30, 2024.

Product Development

Product development expense increased $1.0 million, or 10%, from $10.0 million for the three months ended June 30, 2024 to $11.0 million for the three months ended June 30, 2025, primarily as a result of increases in amortization expense related to capitalized internal-use software development costs, increases in software costs and increases in severance costs. As a percent of total revenue, product development expenses decreased to 6.8% for the three months ended June 30, 2025 as compared to 7.6% for the three months ended June 30, 2024.

General and Administrative

General and administrative expense increased $0.5 million, or 3%, from $16.5 million for the three months ended June 30, 2024 to $16.9 million for the three months ended June 30, 2025. The increase was due to increases in the cost of charitable contributions of Class A common stock, reserves for bad debt, consulting costs and software and maintenance costs. As a percent of total revenue, general and administrative expenses decreased to 10.4% for the three months ended June 30, 2025 from 12.4% for the three months ended June 30, 2024.

Other Income (Expenses)

Interest Expense

Interest expense remained flat at $1.2 million for the three months ended June 30, 2025 and 2024. Interest expense is primarily due to the interest on the 2027 convertible notes issued in February 2022.

Interest and Dividend Income

Interest and dividend income decreased $0.6 million, or 21%, from $2.8 million for the three months ended June 30, 2024 to $2.2 million for the three months ended June 30, 2025. The decrease was primarily due to lower investment in the money market account as the Company funds ongoing operations.

Other Expenses

Other expenses increased by $17.1 million, from $0.2 million for the three months ended June 30, 2024 to $17.4 million for the three months ended June 30, 2025. The increase was primarily attributable to a $16.4 million loss on debt extinguishment recognized in connection with the partial repurchase of 2027 Notes, and to a lesser extent to the increase in foreign exchange losses.

Income from Unconsolidated Joint Venture

Income from unconsolidated joint venture remained flat at $0.2 million for the three months ended June 30, 2025 and 2024.

Additional Segment Considerations

Total segment Adjusted EBITDA from our U.S. reportable segment for the three months ended June 30, 2025 and 2024 was $6.9 million and $0.2 million, respectively. Total segment Adjusted EBITDA from our International reportable segment was $(2.9) million for both three-month periods ended June 30, 2025 and 2024.

Refer to Note 5, Segments as we changed our measure of segment profit or loss in 2024 to segment Adjusted EBITDA and recast prior year data.

Comparison of the Six Months Ended June 30, 2025 and 2024

The following table sets forth our unaudited statements of operations data for the periods indicated:

(in thousands)

The following table sets forth our unaudited statements of operations data expressed as a percentage of total revenue for the periods indicated:

The following tables present our disaggregated revenue and cost of revenue. Revenue from our marketplace primarily reflects the sales of parts and assemblies on our platform. Revenue from supplier services primarily includes the sale of advertising and to a lesser extent financial service products and SaaS products.

Revenue and cost of revenue is presented in the following tables for the six months ended June 30, 2025 and 2024 (in thousands):

Revenue

Total revenue increased $58.2 million, or 23%, from $255.3 million for the six months ended June 30, 2024 to $313.5 million for the six months ended June 30, 2025. This growth was a result of an increase in marketplace revenue, partially offset by a decrease in supplier services revenue. Marketplace revenue increased $60.1 million, or 27%, from $224.5 million for the six months ended June 30, 2024 to $284.6 million for the six months ended June 30, 2025. The increase in marketplace revenue was primarily due to increased buyer activity on the platform, particularly with respect to enterprise customers, for the six months ended June 30, 2025 as compared to the prior year period.

Supplier services revenue decreased $1.9 million, or 6%, from $30.8 million for the six months ended June 30, 20244 to $28.9 million for the six months ended June 30, 2025. The decrease in revenue was due to reductions in Thomas advertising and marketing services and to a lesser extent a decrease in Thomas non-core services partly offset by growth in financial services.

Total revenue for the six months ended June 30, 2025 and 2024, was $263.6 million and $215.5 million, respectively, for the U.S. operating segment, and $50.0 million and $39.8 million, respectively, for the International operating segment.

Cost of Revenue

Total cost of revenue increased $37.5 million, or 24%, from $154.5 million for the six months ended June 30, 2024 to $192.0 million for the six months ended June 30, 2025. This increase was primarily the result of an increase in marketplace cost of revenue. Total cost of revenue from marketplace and supplier services for the six months ended June 30, 2025 was $188.8 million and $3.2 million, respectively, as compared to $150.9 million and $3.6 million, respectively, for the six months ended June 30, 2024.

Marketplace cost of revenue was driven by increased payments to suppliers on our platform due to order growth and increased activity on our marketplace.

Gross Profit and Margin

Gross profit increased $20.7 million, or 21%, from $100.8 million for the six months ended June 30, 2024 to $121.5 million for the six months ended June 30, 2025. The increase in gross profit was primarily due to increases in revenue from marketplace and improved marketplace gross margins as compared to the prior year period.

Total gross margin was 38.8% for six months ended June 30, 2025 as compared to 39.5% for the six months ended June 30, 2024. The decrease is primarily driven by faster growth and associated mix shift to marketplace revenue which has lower gross margin than supplier services.

Gross margin for marketplace was 33.7% for the six months ended June 30, 2025, as compared to 32.8% for the six months ended June 30, 2024. The improvement was due largely to our AI-driven platform and expanding network of active suppliers which optimizes pricing to buyers and suppliers.

Gross margin for our supplier services improved slightly to 88.9% for the six months ended June 30, 2025, as compared to 88.4% for the prior year period.

Operating Expenses

Sales and Marketing

Sales and marketing expense increased $1.5 million, or 3%, from $54.7 million for the six months ended June 30, 2024 to $56.2 million for the six months ended June 30, 2025, primarily due to additional sales and marketing employees and their compensation costs, including stock-based compensation, along with consulting and travel costs. These increases were offset by a reduction in marketing and advertising expense. As a percent of total revenue, sales and marketing expenses decreased to 17.9% for the six months ended June 30, 2025 from 21.4% for the six months ended June 30, 2024.

Advertising expense decreased 6%, from $17.1 million for the six months ended June 30, 2024 to $16.0 million for the six months ended June 30, 2025 primarily due to decreased marketplace advertising.

Operations and Support

Operations and support expense increased $6.6 million, or 23%, from $28.2 million for the six months ended June 30, 2024 to $34.8 million for the six months ended June 30, 2025, primarily due to hiring of additional operations and support employees and their compensation costs including stock-based compensation, increase in consulting costs, and severance costs related to the restructuring. As a percent of total revenue, operations and support expenses remained flat at 11.1% for the six months ended June 30, 2025 and 2024.

Product Development

Product development expense increased $2.6 million, or 13%, from $19.6 million for the six months ended June 30, 2024 to $22.2 million for the six months ended June 30, 2025, primarily as a result of increases in amortization expense related to capitalized internal-use software development costs, increases in software costs, severance costs related to restructuring and consulting costs. As a percent of total revenue, product development expenses decreased to 7.1% for the six months ended June 30, 2025 from 7.7% for the six months ended June 30, 2024.

General and Administrative

General and administrative expense increased $2.6 million, or 8%, from $31.4 million for the six months ended June 30, 2024 to $34.0 million for the six months ended June 30, 2025. The increase was primarily driven by an increase in reserves for bad debt, general and administrative employees and their compensation costs, software costs, consulting costs and severance costs related to restructuring. These increases were offset by reductions in professional fees. As a percent of total revenue, general and administrative expenses decreased to 10.8% for the six months ended June 30, 2025 from 12.3% for the six months ended June 30, 2024.

Other (Expenses) Income

Interest Expense

Interest expense remained flat at $2.4 million for the six months ended June 30, 2025 and 2024. Interest expense is primarily due to the interest on the 2027 convertible notes issued in February 2022.

Interest and Dividend Income

Interest and dividend income decreased by $1.0 million, or 19%, from $5.5 million for the six months ended June 30, 2024 to $4.5 million for the six months ended June 30, 2025. The decrease was primarily due to lower investment in the money market account as the Company funds ongoing operations.

Other Expenses

Other expenses increased by $17.6 million, from $0.6 million for the six months ended June 30, 2024 to $18.2 million for the six months ended June 30, 2025. The increase was primarily attributable to a $16.4 million loss on debt extinguishment recognized in connection with the partial repurchase of 2027 notes, and to a lesser extent to the increases in foreign exchange losses and non-income based taxes.

Income from Unconsolidated Joint Venture

Income from unconsolidated joint venture remained flat at $0.3 million for the six months ended June 30, 2025 and 2024.

Additional Segment Considerations

Total segment Adjusted EBITDA from our U.S. reportable segment for the six months ended June 30, 2025 and 2024 was $9.9 million and $(5.2) million, respectively. Total segment Adjusted EBITDA from our International reportable segment for the six months ended June 30, 2025 and 2024 was $(5.9) million and $(4.9) million, respectively.

Refer to Note 5, Segments as we changed our measure of segment profit or loss in 2024 to segment Adjusted EBITDA and recast prior year data.

Liquidity and Capital Resources

General

We have financed our operations primarily through sales of our equity securities and borrowings under our convertible notes. As of June 30, 2025, our cash and cash equivalents and marketable securities totaled $225.8 million. We believe our existing cash and cash equivalents and marketable securities will be sufficient to support our working capital and capital expenditure requirements for at least the next twelve months. We believe we will meet our longer-term expected future cash requirements primarily from a combination of cash flow from operating activities and available cash and cash equivalents and marketable securities. We may also engage in equity or debt financings to secure additional funds. Our future capital requirements will depend on many factors, including our revenue growth rate, receivable and payable cycles, the timing and extent of investments in product development, sales and marketing, operations and support and general and administrative expenses.

Our capital expenditures consist primarily of internal-use software costs, manufacturing equipment, computers and peripheral equipment, furniture and fixtures and leasehold improvements and patents.

Convertible Notes due 2030

In June 2025, we issued $250.0 million aggregate principal amount of 2030 Notes pursuant to an indenture dated June 12, 2025, including the exercise in full of the initial purchasers’ option to purchase up to an addition $25.0 million principal amount of the 2030 Notes. The 2030 Notes were sold in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The net proceeds from the issuance of the 2030 Notes were $242.2 million, net of debt issuance costs. The debt issuance costs are amortized to interest expense using the effective interest rate method.

The 2030 Notes are general unsecured obligations and bear regular interest at 0.75% per annum, payable semiannually in arrears on June 15 and December 15 of each year, beginning on December 15, 2025. The 2030 Notes will mature on June 15, 2030 unless earlier repurchased, redeemed, or converted in accordance with their terms prior to such date.

The 2030 Notes are convertible into cash, shares of our Class A common stock, or a combination of cash and shares of our Class A common stock, at our election, at an initial conversion rate of 21.2495 shares of Class A common stock per $1,000 principal amount of 2030 Notes, which is equivalent to an initial conversion price of approximately $47.06 per share of our Class A common stock. The conversion rate is subject to customary adjustments for certain events as described in the indenture governing the 2030 Notes. In addition, following certain corporate events that occur prior to the maturity date of the 2030 Notes or if we deliver a notice of redemption in respect of the 2030 Notes, we will, under certain circumstances, increase the conversion rate of the 2030 Notes for a holder who elects to convert its 2030 Notes in connection with such a corporate event or convert its 2030 Notes called (or deemed called) for redemption in connection with such notice of redemption, as the case may be.

We may redeem for cash all or any portion of the 2030 Notes, at our option, on or after June 20, 2028 if the last reported sale price of our Class A common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption, at a redemption price equal to 100% of the principal amount of the 2030 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

Holders of the 2030 Notes may convert all or a portion of their 2030 Notes at their option prior to the close of business on the business day immediately preceding March 15, 2030, in multiples of $1,000 principal amounts, only under the following circumstances:

• during any calendar quarter commencing after the calendar quarter ending on September 30, 2025 (and only during such calendar quarter), if the last reported sale price of our Class A common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the preceding calendar quarter is greater than or equal to 130% of the applicable conversion price of the 2030 Notes on each such trading day;
• during the five business day period after any ten consecutive trading day period in which the trading price per $1,000 principal amount of the 2030 Notes for each day of such ten consecutive trading day period was less than 98% of the product of the last reported sale price of our Class A common stock and the applicable conversion rate of the 2030 Notes;
• on a notice of redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date, in which case we may be required to increase the conversion rate for the 2030 Notes so surrendered for conversion in connection with such redemption notice; or
• on the occurrence of specified corporate events.

On or after March 15, 2030, the 2030 Notes are convertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.

In the event of a fundamental change (as defined in the indenture governing the 2030 Notes), subject to certain conditions and limited exceptions, holders of the 2030 Notes may require us to repurchase for cash all or a portion of the 2030 Notes at a price equal to 100% of the principal amount of the 2030 Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date.

We accounted for the issuance of the 2030 Notes as a single liability measured at its amortized cost, as no other embedded features require bifurcation and recognition as derivatives.

As of June 30, 2025, the 2030 Notes have a carrying value of approximately $241.5 million with an effective annual interest rate of 1.5%.

Convertible Notes due 2027

In February 2022, we issued $287.5 million aggregate principal amount of 2027 Notes pursuant to an indenture dated February 4, 2022. The 2027 Notes were issued in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The net proceeds from the issuance of the 2027 Notes were $278.2 million, net of debt issuance costs. The debt issuance costs are amortized to interest expense using the effective interest rate method.

The 2027 Notes are unsecured obligations and bear regular interest at 1% per annum, payable on February 1 and August 1 of each year. The 2027 Notes will mature on February 1, 2027 unless repurchased, redeemed, or converted in accordance with their terms prior to such date.

The 2027 Notes are convertible into cash, shares of our Class A common stock, or a combination of cash and shares of our Class A common stock, at our election, at an initial conversion rate of 17.8213 shares of Class A common stock per $1,000 principal amount of 2027 Notes, which is equivalent to an initial conversion price of approximately $56.11 per share of our Class A common stock. The conversion rate is subject to customary adjustments for certain events as described in the indenture governing the 2027 Notes. In addition, following certain corporate events that occur prior to the maturity date of the 2027 Notes or if we deliver a notice of redemption in respect of the 2027 Notes, we will, under certain circumstances, increase the conversion rate of the 2027 Notes for a holder who elects to convert its 2027 Notes in connection with such a corporate event or convert its 2027 Notes called (or deemed called) for redemption in connection with such notice of redemption, as the case may be.

We may redeem for cash all or any portion of the 2027 Notes, at our option, on or after February 5, 2025 if the last reported sale price of our Class A common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption, at a redemption price equal to 100% of the principal amount of the 2027 Notes to be redeemed, plus accrued and unpaid interest or additional interest, if any.

Holders of the 2027 Notes may convert all or a portion of their 2027 Notes at their option prior to November 1, 2026, in multiples of $1,000 principal amounts, only under the following circumstances:

• during any calendar quarter commencing after the calendar quarter ending on June 30, 2022 (and only during such quarter), if the last reported sale price of our Class A common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the preceding calendar quarter is greater than or equal to 130% of the applicable conversion price of the 2027 Notes on each such trading day;
• during the five-business day period after any ten consecutive trading day period in which the trading price per $1,000 principal amount of the 2027 Notes for each day of that ten consecutive trading day period was less than 98% of the product of the last reported sale price of our Class A common stock and the applicable conversion rate of the 2027 Notes;
• on a notice of redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, in which case we may be required to increase the conversion rate for the 2027 Notes so surrendered for conversion in connection with such redemption notice; or
• on the occurrence of specified corporate events.

On or after November 1, 2026, the 2027 Notes are convertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.

In the event of a fundamental change (as defined in the indenture governing the 2027 Notes), subject to certain conditions and limited exceptions, holders of the 2027 Notes may require us to repurchase all or a portion of the 2027 Notes at a price equal to 100% of the principal amount of 2027 Notes, plus accrued and unpaid interest.

We accounted for the issuance of the 2027 Notes as a single liability measured at its amortized cost, as no other embedded features require bifurcation and recognition as derivatives.

We may, from time to time, repurchase our convertible senior notes using cash on hand, either on the open market or in privately negotiated transactions.

Partial Repurchase of 2027 Notes

We used a portion of the net proceeds from the issuance of the 2030 Notes to repurchase approximately $201.7 million in aggregate principal amount of outstanding 2027 Notes. The total cash paid in connection with this repurchase was approximately $216.7 million, which included approximately $0.7 million to pay the accrued interest through the settlement date and an approximate $14.3 million premium. The repurchase resulted in a $16.4 million loss on debt extinguishment, which included the write-off of $2.1 million of deferred costs related to the 2027 Notes. The loss on debt extinguishment was recorded within Other expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

Following this partial repurchase, approximately $85.8 million aggregate principal amount of the 2027 Notes remain outstanding on our Condensed Consolidated Balance Sheet. The original terms and conditions continue to apply to the remaining notes, and the unamortized debt discount and issuance costs related to these notes will continue to be deferred and accreted.

As of June 30, 2025, the 2027 Notes have a carrying value of approximately $84.9 million with an effective annual interest rate of 1.6%.

Capped Call Transactions

In connection with the issuance of 2030 Notes, we entered into capped call transactions (the “Capped Calls”) with respect to its Class A common shares with certain financial institutions. The Capped Calls are expected to reduce the potential dilution to our Class A common stock upon any conversion of the 2030 Notes and/or offset any cash payments we are required to make in excess of the principal amount of the converted 2030 Notes, as the case may be, with such reduction and/or offset subject to a cap based on a cap price initially equal to $63.35 per share and which is subject to certain adjustments under the terms of the Capped Calls.

We used approximately $17.5 million of the net proceeds from the 2030 Notes to pay the cost of the Capped Calls. These instruments are classified as equity and recorded as a reduction of additional paid-in capital in the Condensed Consolidated Statements of Changes in Stockholders’ Equity. The Capped Call are not accounted for as derivatives and will not be remeasured; they will remain in stockholder's equity until expiration or settlement.

Purchase of Treasury Stock

In conjunction with the 2030 Notes issuance, we purchased 220,994 shares of our Class A common stock in privately negotiated transactions at an average price of $36.20 per share on June 9, 2025. The $8.1 million of treasury stock repurchase costs was funded using a portion of the proceeds of the 2030 Notes and was recorded as a reduction to stockholder's equity in the Condensed Consolidated Statements of Changes in Stockholders’ Equity.

Cash Flows

The following table presents a summary of our cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024.

(in thousands)

Operating Activities

For the six months ended June 30, 2025, net cash used in operating activities was $4.1 million, primarily due to a net loss of $(41.5) million adjusted for non-cash charges of $44.5 million and a net decrease in our operating assets and liabilities of $(7.1) million. The non-cash adjustments primarily relate to a loss on debt extinguishment of $16.4 million, stock-based compensation of $15.2 million, depreciation and amortization of $8.7 million and a $2.2 million of reduction to our right of use lease assets. The net decrease in operating assets and liabilities is primarily driven by the changes in accounts receivable of $13.5 million due to increased sales and a reduction in lease liabilities of $3.2 million, offset by changes in accounts payable and accrued cost of revenue of $6.4 million due to timing of payments and growth, changes in contract liabilities of $2.1 million and changes in other accrued expenses of $2.0 million.

For the six months ended June 30, 2024, net cash used in operating activities was $20.8 million, primarily due to a net loss of $(30.3) million adjusted for non-cash charges of $24.4 million and a net decrease in our operating assets and liabilities of $(14.9) million. The non-cash adjustments primarily relate to stock-based compensation of $14.2 million, depreciation and amortization of $6.4 million, and a $2.2 million of reduction to our right of use lease assets. The net decrease in operating assets and liabilities is primarily driven by changes in accounts payable of $14.4 million due to the timing of payments and reductions in lease liabilities of $3.4 million, offset by changes in other assets of $2.6 million.

Investing Activities

For the six months ended June 30, 2025, net cash used in investing activities was $3.8 million, primarily due to the purchase of property and equipment (which includes the internal-use software development costs) of $12.5 million and the purchase of marketable securities of $4.4 million offset by the sale of marketable securities of $13.0 million.

For the six months ended June 30, 2024, net cash used in investing activities was $12.1 million, primarily due to the purchase of marketable securities of $13.5 million and purchase of property and equipment (which includes the internal-use software development costs) of $8.8 million offset from the sale of marketable securities of $10.0 million.

Financing Activities

For the six months ended June 30, 2025, net cash provided by financing activities was $2.0 million, primarily resulting from $242.2 million in net proceeds from the issuance of the 2030 Notes (net of issuance costs) and approximately $1.4 million from the exercise of stock options largely offset by outflows of $216.0 million to repurchase a portion of the 2027 Notes, approximately $17.5 million to purchase capped calls, and approximately $8.1 million to purchase treasury stock.

For the six months ended June 30, 2024, net cash provided by financing activities was $1.8 million, relating to proceeds from the exercise of stock options.

Critical Accounting Estimates

Our condensed consolidated financial statements and accompanying notes have been prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected. For additional information about our critical accounting policies and estimates, see the disclosure included in our Annual Report on Form 10-K for the year ended December 31, 2024 as well as Note 2, Basis of Presentation and Summary of Significant Accounting Policies in the notes to the condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q. There have been no material changes to our critical accounting policies and accounting estimates as compared to those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.

Recent Accounting Pronouncements

For a description of our recently adopted accounting pronouncements and recently issued accounting standards not yet adopted, see Note 2, Basis of Presentation and Summary of Significant Accounting Policies in the notes to the condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q.

We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of exposure to potential changes in interest rates. We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure.

Foreign Currency Exchange Risk

Our U.S. revenue and costs are principally denominated in U.S. dollars and are not subject to foreign currency exchange risk. Our International operating segment generates revenue outside of the United States that is denominated in currencies other than the U.S. dollar. Our results of operations are impacted by changes in exchange rates. Outside the U.S., our International operations generate approximately 16% of our revenues for the six months ended June 30, 2025, of which a majority is generated in Euros. If the average exchange rate of Euros changed unfavorably by 10%, our revenues for the six months ended June 30, 2025 would have decreased by 1.3%. During the six months ended June 30, 2025, our revenues were slightly impacted as the average exchange rate experienced modest fluctuations during the six month periods ending June 30, 2025 and June 30, 2024.

Inflation Risk

We do not believe that inflation has had a material effect on our business, results of operations, or financial condition. If our costs were to become subject to significant inflationary pressures such as those caused by geopolitical tensions, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, results of operations and financial condition.

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Pursuant to Rules 13a-15(e) and 15d-15(e) under the Exchange Act, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of our disclosure controls and procedures as of June 30, 2025. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025.

Changes in Internal Control over Financial Reporting

There were no changes to our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Investing in our Class A common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described in our Annual Report on Form 10‑K for the year ended December 31, 2024 under Part I, Item 1A, "Risk Factors,” together with all of the other information in this Quarterly Report on Form 10-Q, including the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our condensed consolidated financial statements and related notes, before making a decision to invest in our Class A common stock. Our business, financial condition, results of operations, or prospects could also be harmed by risks and uncertainties not currently known to us or that we currently do not believe are material. If any of the risks actually occur, our business, financial condition, results of operations, and prospects could be adversely affected. In that event, the market price of our Class A common stock could decline, and you could lose part or all of your investment.

Other than as set forth below, there have been no material changes to our risk factors as previously disclosed in Item 1A. contained in Part I of our Annual Report on Form 10‑K for the year ended December 31, 2024.

Changes in U.S. and international trade policies could adversely impact our business, results of operations and financial condition.

The recent announcements of substantial new tariffs and other restrictive trade policies have created a dynamic and unpredictable trade landscape, which may adversely impact our business. Current or future tariffs or other restrictive trade measures may raise the cost of raw materials, components or finished goods. We derive the majority of our revenue from the sale of parts and assemblies to our customers on our marketplace. Our business is therefore dependent upon the availability and price of raw materials, tools and components for assembly in various countries around the world. To the extent that significant tariffs, sanctions or similar restrictions are placed on certain goods imported into the United States or tariffs and similar measures, including retaliatory measures, are imposed by foreign governments, we could also face significant challenges in maintaining our cost-effectiveness, and we and our network of suppliers may be required to raise prices, thereby making our marketplace less attractive to buyers. To the extent suppliers increase their costs and we are unable to sufficiently pass such price increases on to our customers, or if the level of demand for the products and services we offer decreases as a result of any price increases, we may not be able to achieve or maintain profitability or otherwise maintain our historical margins. Our suppliers, and we as a result, may experience supply chain disruptions as a result of increased costs and uncertainty, including risks to the long-term viability of such suppliers, which may impact our ability to meet customer demand or cause reputational harm if we are unable to deliver products on expected timelines or if any price increases are poorly received by customers. In addition, many of our customers operate businesses that may be impacted by trade policies, which may result in decreased demand on our marketplace or extended sales cycles as customers assess the impact of evolving trade policies on their operations and face increased costs or decreased revenue due to tariffs and trade restrictions. As a result of the foregoing factors, our business, financial condition and results of operations could be materially and adversely affected.

Trade disputes, trade restrictions, tariffs and other political tensions between the U.S. and other countries may also exacerbate unfavorable macroeconomic conditions including inflationary pressures, foreign exchange volatility, financial market instability, and economic recessions or downturns, which may also negatively impact customer demand for products on our marketplace, delay purchases or renewals, limit expansion opportunities with customers, limit our access to capital, or otherwise negatively impact our business and operations. Ongoing tariff, trade restrictions and macroeconomic uncertainty has and may continue to contribute to volatility in the price of our Class A common stock.

The complexity of announced or future tariffs may also increase the risk that we or our customers or suppliers may be subject to civil or criminal enforcement actions in the U.S. or foreign jurisdictions related to compliance with trade regulations. In addition, retaliatory trade policies or anti-U.S. sentiment in certain regions whether driven by trade tensions, political disagreements, or regulatory concerns may make customers, governments and investors more hesitant to engage with, purchase from or invest in U.S. firms. This may lead to increased preference for local competitors, changes to government procurement policies, heightened regulatory scrutiny, decreased intellectual property protections, delays in regulatory approvals or other retaliatory regulatory non-tariff policies, which may result in heightened international legal and operational risks and difficulties in attracting and retaining non-U.S. customers, suppliers, employees, partners and investors. Further, international suppliers may elect not to continue engaging us, limiting our sourcing options and increasing our dependency on domestic suppliers.

While we continue to monitor trade developments, the ultimate impact of these risks remains uncertain and any prolonged economic downturn, escalation in trade tensions, or deterioration in international perception of U.S.-based companies could materially and adversely affect our business, results of operations, financial condition and prospects. In addition, tariffs and other trade developments have and may continue to heighten the risks related to the other risk factors described in our Annual Report for the fiscal year ended December 31, 2024.