US financial markets appear to be in a state of limbo. For one thing, there are few clear opinions circulating concerning the question as to whether the American economy is, or is not, in a recession. On top of that, even if the answer to this question is “yes,” there seems to be still less agreement about whether that should be interpreted positively or negatively by investors.
Much of the uncertainty, of course, has to do with the trajectory of the Federal Reserve’s interest rate hikes. Thus, the general financial ambiguity will likely continue, until investors get a better sense of the effects the US central bank’s efforts have already had on tampering inflation, how much farther the Fed seems to want to go, etc. With that in mind, as I pointed out recently (also regarding Velo3D), it is currently quite difficult to know what to make of any positive near-term financial results.
Nevertheless, a strong quarter is still a strong quarter and, earlier this week, Velo3D reported that in Q2 2022, the company’s year-over-year growth (compared to Q2 2021) was 160%. Perhaps even more impressively, Velo3D’s revenue in the second quarter increased 60% compared to the first quarter of 2022 — at the same time as the US GDP at-large was undergoing a slight contraction.
As Buller points out, Velo3D’s success so far this year has been largely attributable to the latest addition to its Sapphire series of printers, the Sapphire XC. Assuming, then, that the company is able to fill its backlogged orders — currently representing $55 million of 2022 revenue — Velo3D already looks like it’s going to meet revenue expectations for the year. If the rollout of the XC 1MZ in Q3 is similarly successful, the company could be in a favorable position to exceed its 2022 expectations.
The issue of backlogged orders will be critical to the success of the AM sector’s scale-up over the next few years. It will also probably play a role in determining which original equipment manufacturers (OEMs) have longevity, and which ones get acquired or simply fail. A large number of backlogged orders can certainly be viewed as a plus, at least temporarily. However, in a sector where it seems like every OEM is touting it as a plus, too many companies with a large number of backlogged orders could quickly shift into customer skepticism about an emerging technology’s ability to deliver.
In this sense, the outcome of the competition for supremacy over the metal AM machine markets could end up coming down, quite simply, to which companies are able to deliver orders in a timely fashion. Velo3D already has a track record of responding to customer demand quickly, and setting deadlines and meeting them. Moreover, the company’s budding relationship with the federal government should also help it maintain control over its supply chains. Again, it seems virtually impossible for the time being to take momentary signs of success, no matter how solid, as anything but momentary. But Velo3D is at least worth keeping an eye on.
Images courtesy of Velo3D
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