Velo3D, Inc. Third Quarter 2026 Financial Results - VELO3D INC

Financial Performance:

• Revenue for Q3 2026 increased 50% year-over-year (YoY) to $20.5 million, driven by higher system sales and increased Rapid Production Solutions (RPS) revenue.
• Gross margin improved significantly to 26.5% from 3.2% in the prior year period, attributed to higher average selling prices, favorable product mix, manufacturing efficiency gains, and inventory reserve adjustments.
• New bookings reached $28.9 million, exceeding quarterly revenue, signaling strong demand and a healthy backlog of $40.1 million.
• Operating expenses rose to $22.7 million (non-GAAP adjusted to $17.0 million) due to investments in the Livermore production campus and operational capabilities; excluding stock-based compensation, this represents a key cost structure metric.
• Net loss narrowed to $16.7 million (GAAP) and $10.8 million (non-GAAP) compared to prior year losses, though non-GAAP adjusted EBITDA widened to -$9.8 million due to strategic investments.
• Liquidity position strengthened with cash and cash equivalents ending at $75.7 million (up from $39 million), while outstanding debt was reduced by approximately 76% to $7.4 million.

Guidance and Future Outlook:

• Reaffirmed full-year 2026 revenue guidance of $65 million to $75 million and non-GAAP adjusted operating expenses of $45 million to $55 million.
• Revised gross margin outlook to expect sequential improvement in Q4 2026, though full-year expectations were adjusted from the previous >30% second-half target.
• Updated capital expenditure (CapEx) guidance to $10 million–$20 million for 2026, a reduction from the previous $40 million–$50 million range, to reflect the timing shift of infrastructure investments into 2027.
• Long-term profitability target revised: management now aims for positive EBITDA and positive net cash from operating activities in 2028, delayed from the previous H2 2026 expectation to align with the ramp-up of the Livermore campus.
• Expressed confidence in achieving 2026 revenue guidance, citing strong demand and production timeline accelerations.

Business Segments and Product Lines:

• Revenue from 3D printers and parts grew 57% to $18.8 million, driven by increased unit sales and higher average selling prices; RPS revenue grew as production lines expanded.
• Launched "Forge 1" in Livermore in July 2026, which is currently operating in phases with the goal of becoming the primary production hub to support larger, complex programs in aerospace, defense, space, and energy.
• Announced two productivity-enhancing products for 2027: a removable bill module to reduce downtime and a software platform to automate production and improve build success rates.
• Expanded strategic partnership with Mears Machine Corporation, which ordered its sixth Sapphire XC system dedicated to copper-nickel additive manufacturing for shipbuilding and offshore applications.

Market and Competitive Landscape:

• Observed a market shift from specialized prototyping to broader production deployments of metal additive manufacturing, particularly in defense and aerospace sectors emphasizing supply chain resilience and domestic production.
• Strengthened position in the defense ecosystem via participation in the Government Industry Data Exchange Program (GIDP), aiding risk management and supply chain security.
• Supply chain has been robustly diversified over the past nine months from single-point failures to a three-layer model with increased U.S. sourcing, mitigating potential bottlenecks.
• Management notes that midterm election outcomes have not negatively impacted the defense business; some contracts are ramping up to production levels faster than anticipated.

Risks and Challenges:

• Primary risk involves the timing of converting bookings into revenue, which depends on customer production schedules and system delivery timings.
• Continued need to balance heavy capital and R&D investments with financial discipline to maintain liquidity while scaling operations.
• Achievement of the revised 2028 profitability targets requires consistent execution, sustained revenue growth, and significant margin improvement.
• Management highlighted that the previous going concern uncertainty has been resolved; substantial doubt regarding the ability to continue as a going concern no longer exists.

Management Commentary and Tone:

• Tone was confident and strategic, emphasizing the transition from a "specialized" player to a scalable digital manufacturing company.
• Management expressed strong conviction in the "inflection point" being reached, crediting the Livermore campus and operational leadership hires (EVP of Technology and Senior Director of Operations) for enabling the next growth phase.
• CFO search is in the final phases with a candidate expected to be announced before year-end.
• Emphasized the strategic shift of CapEx payments to 2027 does not imply a slowdown in the install base target, which remains at 40 printers for 2027.

Analyst Questions and Answers:

• Greg Palm (Craig Hallam): Asked about the wide Q4 revenue range and potential seasonality; management confirmed confidence in hitting guidance and attributed potential sequential variance to production schedule adjustments and margin improvements. Also queried the CFO search timeline (confirmed for year-end) and CapEx timing vs. install base (confirmed 40 printers in 2027, payments spread out).
• Troy Jensen (Canter Fitzgerald): Challenged the $70M+ CapEx requirement for 40 printers against the current burn rate; management explained funding will come from raised capital, equipment loans, and proceeds from machine sales while aiming to reduce cost of goods sold. Clarified adjusted EBITDA break-even revenue estimates, stating the required quarterly revenue is likely lower than the analyst's $45–$50M estimate due to margin improvements.
• Austin Bulick (Needham & Company): Inquired about the impact of U.S. midterms on defense revenue (no negative impact; contracts ramping faster) and supply chain bottlenecks (robust, diversified, U.S.-centric supply chain); requested 2027 OpEx guidance, which management deferred until Q4 closure.

Other Key Points:

• The company is no longer subject to "substantial doubt" regarding its going concern status, a major milestone in stabilizing the financial foundation.
• The "Forge 1" campus is viewed as a foundational investment for becoming a digital manufacturing company, integrating design software, machine performance, and production intelligence.
• A specific $2.5–$2.7 million in revenue from spare parts and consumables exists outside the primary $18.8 million printer and parts revenue line.
• The strategic focus remains on moving complex mission-critical components from design to production to improve supply chain flexibility and reduce traditional manufacturing constraints.