3D Printing Financials: Velo3D’s Tough Quarter and What Lies Ahead

Velo3D (NYSE: VLD) has been navigating rough financial waters this past year, with a series of tough quarters that have left it struggling to regain its footing. The second quarter of 2024 was no exception, with revenue dropping to $10.3 million from $25.1 million in the same period last year.

Alongside this, the company reported an adjusted net loss of $21.7 million, following a series of similar quarterly results over the past year. The gross margin also turned sharply negative, pointing to deeper issues within the company’s operations.

This downturn is part of a broader trend, as the company has faced difficulties since late 2023, unable to meet its revenue guidance due to delayed bookings and increased operating costs.

To address these challenges, Velo3D has implemented cost-cutting measures. It has reduced its operating expenses by 37% year-over-year, which included a significant headcount reduction of close to 30%. These moves are part of a broader effort to realign its resources and streamline operations in response to challenging market conditions.

Despite these efforts, the company continues to face an uphill battle. These challenges have forced Velo3D to withdraw its financial guidance for the remainder of 2024, especially with uncertainty around delayed orders and unpredictable market conditions.

Still, CEO Brad Kreger reassured shareholders, “Looking forward, we believe the continued focus on our key priorities will position us well to capitalize on the increasing industry demand for leading-edge additive manufacturing solutions.”

For Kreger, the second quarter results reflected the continued execution of Velo3D’s strategic priorities, maintaining a healthy backlog and reduced operating expenses.

“Specifically, we continued to expand our defense and space sector footprint during the quarter and expect to add to our backlog in these important industries in the second half of the year,” explained the executive. “While we have made significant financial and operational progress year to date, we have made the difficult decision to right-size the business as we expect industry conditions to remain challenging into the second half of 2024. Our second-quarter results also reflected the impact of delays in the funding of certain governmental projects, with those system orders now expected in the second half of the year. While we still expect to close these transactions, these delays have negatively impacted our revenue forecast for the balance of the year.”

As a result, Velo3D has instituted several material cost reduction programs to reduce expenses and manage liquidity. Kreger says he expects these programs to drive significant annual operating savings while the company examines various options to support the balance sheet during its ongoing strategic review process.

Adding to the pressure, the market’s response has been tough as Velo3D’s stock has sharply declined, dropping by over 90% in the past year. As of August 15, 2024, the stock was trading at roughly $1.39 per share, down from $14 per share just a year ago.

In July 2024, the company received a noncompliance notice from the New York Stock Exchange (NYSE) because its market capitalization fell below the required $50 million threshold. As of July 5, 2024, Velo3D’s 30 trading-day average market capitalization was approximately $36.6 million, well below the NYSE’s required threshold. While Velo3D avoided delisting by keeping a minimum stock price above $1, the situation remains challenging. Velo3D now has a 45-day window to submit a compliance plan to the NYSE, which, if accepted, would allow the company’s stock to continue trading while it attempts to regain compliance over 18 months.

The leadership transition within Velo3D adds another layer of complexity to the company’s current status. Last December, Benny Buller, the company’s founder and former CEO, stepped down at the request of the Board of Directors. Buller has since shifted his focus to a new venture in stealth mode based in Los Angeles. This new software company, which is still largely under wraps, is described as “uptooling our industrial manufacturing base” and has already posted job openings, ranging from sales representatives to engineers.

Buller’s departure and new focus have raised questions about the future direction of Velo3D under its new leadership, especially when the company faces significant financial and operational challenges. With the ongoing strategic review and the NYSE compliance issues, the next few months will be crucial in determining whether Velo3D can stabilize its operations and return to a growth trajectory.