3D Printing Financials: Velo3D Sees Better Q1 2024 After Difficult Last Quarter

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Velo3D‘s (NYSE: VLD) first quarter of 2024 shows signs of recovery after a challenging end to 2023. The company is reaping the benefits of its strategic realignment and cost-reduction efforts. By focusing on the defense and space markets—particularly defense—the company has strengthened its market position, increased customer purchases, and improved performance.

In the first quarter of 2024, Velo3D’s revenue surged to $10 million, up from $2 million in the final quarter of 2023. Growth was fueled by higher shipments and strong bookings, reaching $17 million for the first quarter alone and $27 million since mid-December 2023. Entering the second quarter of the year with a $22 million backlog suggests the company has fulfilled $5 million in orders, offering a much more clear outlook for future revenue.

Net loss for the period was $28.3 million, which, although substantial, was a marked improvement from the $56.1 million net loss in the fourth quarter of 2023 and a year-over-year headway compared to a net loss of $36.3 million from the same period in 2023. The company also improved its operating cash flow by 35% year-over-year and ended the quarter with $11 million in cash.

The company’s efforts to reduce costs are also evident. Operating expenses decreased by 30% compared to the same quarter in 2023 and 15% sequentially, excluding one-time charges related to restructuring efforts such as severance packages and facility consolidations. This reduction is part of Velo3D’s broader realignment strategy to reach cash flow breakeven in the second half of 2024.

During an earnings call with investors, CEO Brad Kreger explained, “We further expanded our pipeline during the quarter with a particular emphasis on our core verticals of defense, space, and aerospace. Given this success, we believe we have significant visibility to Q2 revenue, achievement, and shipment goals. Specifically, we continue to see recovery in existing customer orders given our reliability initiatives, with approximately 50% of Q1 bookings coming from our current customers.”

Brad Kreger speaking at the AMS 2024 CEO panel. Image courtesy of 3DPrint.com/Sarah Saunders.

Hull Xu, the new CFO, highlighted the impact of cost reduction initiatives on the company’s financial performance: “We have identified and started to implement approximately 25 separate programs to lower our Sapphire XC cost by more than 30% by the end of the year. This includes improving the monetization of our maintenance and parts recurring revenue streams and expanding our consumable business such as powder sales.”

Velo3D’s focus on a customer-driven approach in sales and support has been crucial to its recovery. Better system reliability has kept existing customers coming back, leading to many of the bookings this quarter. The defense sector, in particular, has grown, adding three new customers. With the $825 billion Defense Spending Bill approved in late March, Velo3D expects continued growth and new opportunities in the defense sector.

Kreger points out in the earnings call that Velo3D is positioning itself as a long-term trusted partner to its defense customers by “working directly with the supply chain of key defense primes” and increasing its footprint in defense areas that offer huge opportunities, like hypersonics and legacy Park production, which involves supplying critical components for older defense systems still in active use.

Hull Xu, CFO at Velo3D. Image courtesy of Velo3D.

“Looking forward, we believe the focus on our key priorities, as well as further executing on our margin and cash flow initiatives, will position us to profitably capitalize on the increasing industry demand for leading-edge additive manufacturing solutions,” Kreger stated. “Our realignment efforts are showing progress as we further reduced our quarterly costs and improved our operational efficiency.”

Despite the challenges of 2023, Velo3D says it’s optimistic about the future. It expects a continued sequential improvement in revenue, gross margin, and operating expenses. The company maintains its guidance for its second-quarter revenue growth of more than 30%, with full-year revenue expected to range between $80 million and $95 million. The company also anticipates reaching a positive gross margin by the second half of 2024, driven by increased system shipments, long-term supply contracts, and higher operational efficiency.

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