For the quarter ending September 30, 2021, metal 3D printing leader VELO3D reported the first financial results following its public listing on the New York Stock Exchange (NYSE: VLD) following the completion of a merger deal with a blank-check company. The third-quarter financial results for 2021 included $274 million in cash from the transaction, which the company will use to continue investing in technology innovations and future growth plans.
Company stock stumbled a bit on November 9, 2021, prior to the earnings announcement at the closing bell, but steadied in after-hours trading. The day after, company shares started out 8.8% down, at $10.43. Overall, however, company stock increased 24.6% since VELO3D’s NYSE debut on September 30, 2021, when shares were at $8.37.
Currently valued at $2.2 billion, VELO3D had mixed results as revenues topped estimates, but earnings dropped. The company said its third-quarter diluted net loss was $14.6 million, or 74 cents per share, compared to a $6.6 million, or 42 cents per share, net loss in the prior-year period. Net loss was also down sequentially by 47%. However, the fast-growing company also reported strong revenue of $8.7 million, up 283% year-over-year.
The improvement in revenue was driven primarily by higher sales of its recently launched large-format 3D metal printer, the Sapphire XC, described as a game-changing next-gen system that will increase the manufacturable part volume five times and reduce production costs by up to 80%. According to company executives, the platform’s development program is on track, with the first customer parts printed during the third quarter. The platform is in high demand as VELO3D announced a significant backlog for 2022, with 17 XC orders worth $85 million in total bookings and pre-orders.
Additionally, recurring revenue for the period rose 34% compared to the second quarter as the company continued to benefit from its expanding installed base of systems. During the third quarter, it shipped five systems, essentially split equally between new and existing customers. Given the strong backlog and shipment execution, VELO3D CEO Benny Buller remains confident they will ship a total of 24 systems in 2021, a year-over-year growth rate of more than 75%.
Commenting on the company’s third-quarter performance during an earnings call with investors, Buller said he was “pleased with our strong growth momentum as we exceeded our revenue target and posted very strong bookings for the quarter. Demand for our new Sapphire XC system continues to grow strongly with bookings of $40 million and pre-orders of $45 million at the end of October. We are also on plan for our first customer shipment of our Sapphire XC system by the end of the year.”
As part of its expansion strategy, VELO3D shipped its first system to a European contract manufacturer of high-value metal parts for the oil and gas industry, the German Schoeller-Bleckmann Oilfield (SBO) Technology group, making this another milestone for the business. SBO’s new Sapphire system will be located in the company’s Austrian headquarters and will unlock the ability to print complex metal parts in Inconel 718. The international build-up also includes opening a 1,200 square foot technical center at the Augsburg Innovations Park in Germany, where VELO3D’s Sapphire systems will be assembled and demonstrated.
Buller added that the expansion to a market that offers “significant long-term opportunity,” along with investments in its new manufacturing facility in California, will be key drivers for 2022 growth. Given the strong demand for the company’s 3D printing platforms, the manufacturing facility will provide an annual capacity of more than 400 Sapphire and Sapphire XC systems. Expected to open by the end of the year, the new 80,000 square foot site could help meet the firm’s demand forecasts through 2024.
During the period, VELO3D saw a dramatic increase in parts demand, particularly from the space and energy sectors, which drove demand for the printers. As a result, the group’s metal AM technology has been rapidly adopted by a range of industry leaders in the space segment, including SpaceX, Aerojet Rocketdyne, Launcher, Relativity Space, Lockheed Martin, and many more. SpaceX alone ordered the first 10 Sapphire XC systems in June 2020, showing that this is becoming a critical enabling technology in developing next-generation rocket engines and other space systems. In fact, the space industry remains a significant portion of the business, even though VELO3D is expanding its footprint in other fields, like aerospace and contract manufacturing industries, either through system sales, pending sales, or current part qualification.
The company says it anticipates revenue for the entire year will be $26 million, representing more than 35% growth versus 2020. Buller also expects to see continued growth in both the annual recurring and service revenue categories, as units in the field are expected to double compared to last year. Moreover, given its significant backlog and increasing demand for its Sapphire XC solution, the company remains confident in its ability to achieve its 2022 revenue forecast of $89 million.
“Looking forward, we see a significant market opportunity in excess of $20 billion by 2030, as our technology enables us to address that part of the high-value metal parts market that is not accessible by our commodity AM competitors. This advantage is reflected in our strong growth since 2018 as well as our customer base, which boasts the leaders in space, aerospace, energy, and contract manufacturing industries. I firmly believe we have barely scratched the surface of the high-value metal parts market, as customers transform the respective industry by creating products that were previously thought impossible,” reflected Buller.
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