Q3 2021 Velo3D Earnings Conference Call

Speaker 1: Ladies and gentlemen, and welcome to the VELO 3D reports third quarter 2021 Financial Results Conference call. All lines have been placed on a listen-only mode and the floor will be open for your questions and comments following the presentation.

Good day, ladies and gentlemen, and welcome to the Bella three D reports, the third quarter 2021 financial results Conference call.

Airlines have been placed on a listen only mode and the floor will be open for your questions and comments following the presentation.

Speaker 1: At this time it is my pleasure to turn the floor over to your host, Mr. Bob Okunski. Sir, the floor is yours.

At this time it is my pleasure to turn to Florida to your host Mister Barber Penske, Sir the floor is yours.

Speaker 2: Thank you. I'd like to welcome everyone to our third quarter 2021 earnings conference call. On the call today, we will start out with comments from Benny Baller, CEO of Vela3D, who will provide a summary of the quarter, our strategic view on 2021, as well as an update on our growth initiatives for 2022 and beyond.

I'd like to welcome everyone sort of third quarter, 20th 2021 earnings Conference call.

On the call today, we will start out with comments from Benny Bullard C. E O three D, who brought a summary of the quarter, our strategic view on 2021 as well as an update on our growth initiatives for 2022 and beyond.

Speaker 2: Following Benny's comments, Bill McComb, our CFO , will then review our third quarter financial results.

Following then these comments bill Mccomb, our CFO, well, then redo our third quarter financial results.

Speaker 2: As a result, a replay of this call will be available later today on the investor relations page of our website.

As a result, a replay of this call will be available later today on the Investor Relations page of our website.

Speaker 2: During today's call, we will make four looking statements that are subject to various risks and uncertainties that are described in the safe harbor slide of today's presentation. Today's press release our most recent SEC filings related to our transaction.

During today's call, we will make forward looking statements.

Subject to various risks and uncertainties that are described in the safe Harbor slight today's presentation. Today's press release, our most recent SEC filings related to our transaction.

Speaker 2: Please see those documents for additional information regarding those factors that may affect these forward-looking statements.

Please see those documents for additional information regarding those factors that may affect these forward looking statements.

Speaker 2: Also, we will reference certain non-GAAP metrics during today's call. Please refer to the appendix of our presentation today, as well as today's press release for the appropriate GAAP to non-GAAP reconciliation.

Also we will reference certain non-GAAP metrics during today's call. Please refer to the appendix of our presentation today as well as today's press release for the appropriate gap to non-GAAP reconciliation.

Speaker 2: Finally, to enhance this call, we have posted a set of PowerPoint slides, which we will refer to in the call on the events and presentations page of our investor relations website.

Finally to enhance this call we have posted a set of Powerpoint slides, which will record the call on the events and presentations page of our Investor Relations website.

With that I'd like to turn the call over to Benny Bullard CEO a three D.

Speaker 2: With that, I'd like to turn the call over to Benny Buller, CEO of 3D. Benny?

Speaker 3: Thanks, Bob. And I'd like to welcome everyone to our first early call as a public company.

Thanks, Bob.

I'd like to welcome everyone to our first early Paul as a public company.

Speaker 3: We are very excited about the future of Velo3D, as we believe our technology will rapidly change the way mission critical parts are manufactured across multiple industries.

We are very excited about the future Scooby as we believe our technology will rapidly change your weight mission critical parts are manufactured across multiple industries.

Speaker 3: Before we review our third quarter performance, I would like to provide a brief overview of the company and why we see a tremendous opportunity for growth as we continue to push the boundaries of what is achievable with metal-additional action. Please turn to the sovereignty- Vector

Before we review our third quarter performance I would like to provide a brief overview of the company and why we see a tremendous support.

As we continued to push the boundaries of what is achievable with Nicole I didn't really catch it.

Please turn to slide for.

Speaker 3: I co-founded Vello in 2014 on the belief that the 3D printing technology at the time was ill-suited for the production of metal parts given its limited capabilities and production quality.

I could founded in 2014 on the belief that the three D printing technology at that time was inserted for the production of metal parts, given its limited capabilities and production quality.

Speaker 3: Over the next four years, we redefined 3D printing by developing a scalable solution to deliver complex, high-value, mission-critical parts and enabling engineers to design and build the parts they want.

Although the next four years, we redefined submitted printing by developing a scalable solution to deliver complex high value mission critical boats, and enabling engineers to design and build the bumps they need they want.

Speaker 3: We do this through our ability to virtually eliminate support structures during the build process, which significantly enhances design freedom and removes a key barrier to creating better products.

We do this through our ability to virtually eliminate support structures during the build process, which significantly enhances the van freedom and removes a key barrier to create investment products.

Speaker 3: Our complete end-to-end solution, which manages the build process from pre-production through quality control, offers our customers across a number of industries a wide breadth of design capabilities to meet the most demanding path structures and geology.

Or a complete end to end solution, which manages the build process from pre production. So quality control offers our customers across a number of industries a wide breadth of design capabilities to meet the most demanding pop structures in geometry.

Speaker 3: 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 commodity AM competitors.

Looking forward, we see a significant market opportunity in excess of $20 billion by 2000 therapy as our technology enables us to address that's part of the highest value mental Bob's market that is most accessible about coma commodity and competitiveness.

Speaker 3: 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 in the South.

This advantage is reflected in a strong growth since 2018, as well as our customer base, which busts nieto's.

<unk> in space Aerospace energy and contract manufacturing industries.

I firmly believe we have barely scratched the surface of the high value mental thoughts market as customers transformed the prospective industry microwaving products that were previously thought impossible.

Speaker 3: I firmly believe we have barely scratched the surface of the high-value metal parts market, as customers transform their respective industries by creating products that were previously thought impossible.

Speaker 3: I would now like to talk briefly about our end-to-end manufacturing solution. Please turn to slide 5.

I would not like to talk briefly about our end to end manufacturing solution. Please turn the slide five.

Speaker 3: Our end-to-end manufacturing solution is the foundation enabling the breakthrough in manufacturing capabilities and quality.

Our end to end manufacturing solution is the foundation, enabling them breakthrough in manufacturing capabilities and quality.

Speaker 3: This solution includes our Flow print preparation software, the Sapphire family of printers, the Assure quality control software and our unique intelligent fusion manufacturing process.

Solution includes a float plane preparation software the sapphire family of printers.

Sure a quality control software and our unique intelligence fusion, let me sexually process.

Speaker 3: At the heart of our solution is our proprietary Intelligent Flow software.

And the health of our solution is our proprietary intelligent float software.

Speaker 3: platform that optimizes the printing process for each individual feature of every part and enabling our customers to produce the most sophisticated parts in the industry.

Platform that optimizes the printing process for each individual feature of every pilot and enabling our customers to produce the most sophisticated bugs in the industry.

Speaker 3: Flow is prescribing locally the manufacturing recipes that will be executed by Ceph.

Slow is prescribing luckily the manufacture and recipes that will be executed by so far.

Speaker 3: To be able to execute the recipes described by flow, we had to invent a number of unique subsystems that are required to implement our sophisticated recipes.

To be able to execute the recipes described by float we had to invent a number of unique sub systems that are required to implement our sophisticated recipes. Those subsystems are protected by our best IP portfolio.

Speaker 3: Those subsystems are protected by our vast IP portfolio. Some of the recipes we developed are very hard to control, requiring us to invent a whole set of sensors and process metrologies that monitor the build process and maintain it within its intended parameters.

Some of the recipes redeveloped are very how to control like allowing us to invent a whole set of sensors and process metrology. That's monitored the build process and maintained with Amy intended parameters.

Speaker 3: Our assured software platform uses those sensors and metrologists to provide a quality validation report for every part produced on our SAFIRE system.

Our assure software platform users those sensors and mythologies to provide a quality validation report for every pilots produced on our staff our systems.

In summary.

Speaker 3: In summary, this approach provides customers with an unprecedented level of design freedom and quality control throughout the build process with real-time feedback and a significantly simpler overall process.

Approach provides customers with an unprecendented precedented level of design freedom and quality control throughout the build process with real time feedback and a significantly simpler overall process.

We will soon have three print those in our portfolio.

Speaker 3: First is our base SEFAR model, which has been in production since 2018. We currently have 17 SEFAR customers with an installed base of 38 systems at the end of Q3.

First is our base model, which has been in production since 2018.

We currently have 17 zafar customers with an installed base of 38 systems at the end of Q3.

Speaker 3: Earlier this year, we launched our Cephyr 1MZ that enabled the production of parts up to 1 meter high, opening up new markets for the company, including the oil and gas industry where this part is common. This system is otherwise identical to the base configuration Ceph.

Earlier this year, we launched all set for a while Lindsey that enables the production of thoughts up to one metre high opening up new markets for the company, including the oil and gas industry.

Bob site is common.

This system is otherwise identical to the base configuration so far.

Speaker 3: We expect to ship our first Cephar XC model this quarter. This product is a significant step up from our base Cephar as it allows our customers to expand their AAM capabilities to much larger parts. More on Cephar XC later on.

We expect to ship out first so far exceed model. This quarter. This format is a significant step up from our base. So far as it allows our customers to extend the add capabilities to much larger bulbs more on so far exceeded later on.

Speaker 3: On slide six, you can see that our customers base is very diverse and includes leaders in their respective industries.

On slide six.

You can see that our customers base is very diverse and includes leaders in their respective industries.

Speaker 3: While the space industry remains a significant portion of our business, and we are very excited about the opportunity there, we have continued to expand our footprint in the aerospace, energy, and contract manufacturing industries, either through system sales, pending sales, or through current part qualifications.

While the space industry remains a significant portion of our business and we are very excited about the opportunity there.

We have continued to expand our footprint in the aerospace energy and contract manufacturing industries.

Either through our system sales pending sales also current qualification.

Speaker 3: As a data point to illustrate my comments, 75% of our new customer ads year to date have been outside the space industry, and we expect this trend to continue over time.

And the data point to illustrate my comments, 75% of a new customer adds year to date has been outside the space industry and we expect this trend to continue overtime.

Speaker 3: I would like to finish my overview by highlighting what we see as the long-term growth drivers for Velo3D and why we are well positioned for success. Please turn to slide 7.

I would like to finish my overview by highlighting what we see is the long term growth drivers for relativity.

And why we are well positioned for success, please turn to slide seven.

Speaker 3: We have been strategic about our go-to-market and only focus on customers for whom we provide unique strategic value that cannot be addressed by commodity additive manufacturing.

We have been strategic about outgo, our go to market and only focus on customers for whom we provide unique strategic value that cannot be addressed by commodity additive let me fat shows.

Speaker 3: A part market we see as greater than $20 billion that only we can serve.

Pause market, we see is greater than $20 billion that only we conserve.

Speaker 3: Second, we only focus on manufacturing applications, not prototyping, meaning that new customers integrate us directly into their manufacturing environment. This is our land and expense strategy.

Second we only focus on manufacturing applications, not prototyping, meaning that new customers integrate us directly into their manufacturing environment.

Our land and expense strategy.

Speaker 3: This drives additional system purchases as the customers scale their business. Our experience has been that once we add a new customer and they realize the value we offer, they will continue to buy additional systems, end the scale production and add more applications.

This drives additional system purchases the customers scams business hour experience hasn't been that once we add a new customer and they realize the value. We offer they will continue to buy additional systems as they skin production and add more obligations.

Speaker 3: Third, we will continue to invest in new product innovation for our customers.

So we.

We will continue to invest in new product innovation for our customers.

Speaker 3: As I previously mentioned, we will be launching our Cephar XC model this quarter and continue to see very strong demand for this product ahead of our last.

As I previously mentioned, we will be launching I'll set far exceed model this quarter and continue to see very strong demand for this product ahead over lunch.

Speaker 3: Finally, to accelerate our growth going forward, we will leverage our value proposition and the sales process to continue to drive new U.S. customers and then replicate this successful approach globally.

Finally to accelerate outgrowth going forward, we will leverage our value proposition in the sales process to continue to drive new U S customers and then replicate this successful approach globally.

Speaker 3: In summary, I remain very excited about our opportunity for future success and remain committed to helping our customers design and build the parts they need without compromise.

In summary, I remain very excited about our opportunity for future success and remain committed to helping our customers design and build the pubs they need without compromise.

Speaker 3: I would now like to discuss the specifics of our third quarter results. Please turn to slide 9.

I would now like to discuss the specifics of our third quarter results.

Turn to slide knife.

Speaker 3: The third quarter represented a major milestone for our company as we successfully completed our merger with Jaws Speedfire, raising $274 million to fund our future growth plan.

The third quarter represented a major milestone for our company as we successfully completed our merger merger with just Spitfire raising $274 million to found our future growth plans.

Speaker 3: Revenue rose 22% quarter over quarter, while year over year revenue grew more than three times.

Revenue rose, 22% quarter over quarter, while year of revenue go more than three times.

Speaker 3: Our sequential performance was driven by continued strong demand from our existing customer base, making repeat purchases, while year-over-year growth reflected broad adoption of our technology from both new and existing customers.

Our sequential performance was driven by continued strong demand from our existing customer base, making repeat.

Purchases, while year of growth reflected broad adoption of our technology for both new and existing customers.

Speaker 3: We shipped five systems during the quarter, bringing our year-to-date shipments to 15 versus 14 for all of 2020.

We shipped five systems during the quarter, bringing our year to date shipments to 15 versus 14 for all of 2020.

Speaker 3: We continue to see strong demand from our existing customer base in Q3, as 80% of shipments went to current customers.

We continue to see strong demand from our existing customer base. In Q3 is 80% of shipments went to current customers.

Speaker 3: Given our strong backlog and shipment execution, we remain confident in our ability to achieve our shipment goal of 24 systems in 2021. A year over year growth rate of more than 75%.

Given a strong backlog and shipment execution, we remain confident in our ability to achieve our shipment goal of 24 assistant in 2021.

The year of the year growth rate of more than 75%.

Speaker 3: We had an outstanding quarter from Booking's perspective, and we booked 10 systems during this quarter, compared to 5 in Q2, and 20 for all of last year.

We had an outstanding quarter from bookings perspective, as we looked 10 systems during this quarter compared to five and Q2 and 24 all of last year.

Speaker 3: In fact, here today we have secured bookings of 24 systems, already accomplishing our booking goal for the full year of 2021.

In fact yesterday, we have secured the bookings of 24 systems unworthy accomplishing our bookings all for the full year of 2021.

Speaker 3: Additionally, we achieved a key milestone for the company during the quarter as we shift our first system to a European customer. We expect Europe to be a major market of approximately the same size as the US. It will be a key driver of our growth over the next few years as we expand our penetration of this very large market opportunity.

Additionally, we achieved a key milestone for the company during the quarter as we shift our first system to a European customer we expect to be a major market of approximately the same size as the U S. It will be a cute driver offered growth over the next few years as we expand our penetration of this very.

Large market opportunity.

Speaker 3: The development of our next generation Zephyr XC systems remains on track. We printed our first customer demonstration part in Q3 and expect to ship our first Zephyr XC system to a customer at the end of this quarter.

Development the development of our next generation set for our existence remains on track we had printed our first customer demonstration bug in Q3 and expected to ship I'll Trust setup exit system to a customer at the end of this quarter.

Speaker 3: It is clear that there is very strong customer demand for the Sepharaxi and that it will be a game-changing product in our industry.

It is clear that there is a very strong customer demand for the surfer agassi and that it will be a game changing product industry.

Speaker 3: Looking forward, our significant Q3 backlog and pre-order demand for our Zephyr XC system drives our confidence for 2020.

Looking forward are significant Q3 backlog and three or the demand for our set for access system drives our confidence for 2022.

Speaker 3: I would like now to spend a few minutes highlighting the key revenue drivers for the quarter as well as for the year. Please turn to slide 10.

I would like now to spend a few minutes highlighting the key revenue drivers for the quarter as well as for the.

Please turn to slide 10.

Speaker 3: First, we continue to see rapidly expanding adoption of our technology, with a significant increase in the number of parts customers relying on.

First we continue to see the rapidly expanding adoption of our technology with a significant increase in the number of thoughts customers.

Relying on develop technology.

Speaker 3: Year over year, we doubled the number of end user parts customers to more than 100 and expect this number to continue to grow rapidly.

Year after year, we've doubled the number of end user pods customers to more than 100 and expect this number continues to grow rapidly.

Speaker 3: and the unique value of our technology becomes more widely recognizable.

And their unique value of technology becomes more widely recognized.

Speaker 3: Second, we saw a dramatic increase in parts demand in Q3, particularly from the space and energy sectors, which drove demand for our systems. In the space industry, our technology has been rapidly adopted by a range of industry leaders, including SpaceX, Aerojet, Rocketdyne, Launcher, and others. It has become a critical enabling technology in the development of next generation rocket engines in other space.

Second we saw a dramatic increase.

Demand in Q3.

Taking a leak from the space and energy sectors, which drove demand for our systems in the space industry. Our technology has been rapidly adopted by a range of industry leaders, including Spacex elegant talk about lunch and others. It has become equating enabling technology in the development of next generation market engines and.

Space systems.

Speaker 3: We are also expanding our presence in the aerospace industry and develop 3D technology, gaining recognition as a uniquely capable solution for production of both legacy parts and new devices.

We are also expanding our presence in the aerospace industry has developed will be technology gaming recognition as the universe uniquely capable solution for production of both legacy thoughts and you do that.

Speaker 3: We are excited to see strong interest by major aerospace companies in qualifying our technologies for multiple applications.

We are excited to see strong interest by major aerospace companies in qualifying our technologies for multiple applications.

We are also seeing widespread adoption of our technology and an expanding customer base in the energy sector, we expect to increase of penetration in this sector leveraging our set one MZ product.

Speaker 3: We are also seeing widespread adoption of our technology and an expanding customer base in the energy sector. We expect to increase our penetration in this sector leveraging our SAFIRE 1MZ product.

Speaker 3: Finally, system demand by our contract manufacturing partners grew strongly in Q3, driven by the increasing pulse demand that I described earlier.

Finally system demand by our contract manufacturing partners grew strongly in Q3 drill.

Driven by the increasing positive demand that I described earlier.

Speaker 3: Four of the five systems shipped in the corridor and two additional sales of lead systems were to contract manufacturing customers. This demand growth reflects the demand for parts produced by our systems from end-users and the confidence in the long-term market for velocity technology.

Four of the five system shipped in the corridor and two additional sales of belief systems were to contract let me fix certain customers.

This demand growth reflects that demand for products produced by our systems from end user and the confidence in the long term market for balance or the technology.

Speaker 3: New customer growth is very important to us. And as I mentioned, we have seen strong traction and adoption so far in 2021. Please turn to slide 11.

New customer growth is very important to us and as I mentioned, we haven't seen strong traction and adoption so far in 2021. Please.

Please turn to slide 11.

Speaker 3: So, at the end of Q3, we have added 9 new system customers with 11 systems shipped to new customers so far this year.

So what was the end of Q3, we have added nine new system customers with 11 system shipped to new customers. So far this year.

Speaker 3: As you can see, we are rapidly diversifying our customer base into those markets that we feel offer significant parts demand growth.

And you can see we are rapidly diversifying our customer base into those markets that we failed offer significant positive on the Gulf.

Speaker 3: The strong demand we are seeing reflects the increasing success of our technology and world application capabilities across multiple industries.

The strong demand we are seeing reflects the increasing success of our technology and both application capabilities across multiple industries.

Speaker 3: I would now like to briefly discuss a few of our key metrics for the quarter. Please turn to slide 12.

I would like to briefly discuss a few of our key metrics for the quota. Please turn the slide 12.

Speaker 3: In Q3, we added one new customer, bringing our year-to-date additions to mind, more than doubling our customer base since the end of 2020.

In Q3.

One new customer, bringing our year to date additions to nine more than doubling our customer base since the end of 2020.

Speaker 3: Our goal is to ship systems to an additional six new customers in Q4 to reach our plan of 15 new customers for the year. Our expected range of outcomes is shipment to three to six new customers for the quarter and 12 to 15 for the whole year.

Our goal is to ship systems to an additional six new customers in queue for to reach our plan of new customers for the year.

Are expected range of outcomes is shipment to.

326, new customers for the quarter and 12 to 15 for the whole year.

Speaker 3: As of the end of Q3 21, we had 17 total customers with 38 systems in the field.

As of the end of Q3 21, we had 17 total customer.

38 systems in the field.

Speaker 3: Moving on to slide 13, we shipped five systems this quarter, essentially split equally between new and existing customers.

Moving on to slide 13, we shaped five sisters this quarter.

Essentially split equally between new and existing customers.

Speaker 3: Year to date we have shipped 15 systems up from 14 systems in all of last year.

Year to date, we have shipped 15 systems up from.

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Speaker 3: We expect to build on our success as we go into the end of the year and plan to ship nine systems in Q4 to reach our goal of 24 systems this year.

We expect to build on our success as we go into the end of the year and plan to ship 90 systems in queue for to reach our goal of 24 systems. This year.

Speaker 3: our expected range of outcomes in 7 to 9 shipments for the quarter and 22 to 24 for the year.

Are expected range of outcomes.

729 shipments for the quarter and 22 24 for the year.

Speaker 3: We expect to hit our 2021 goal of repeat purchases from existing customers, purchasing approximately one system for each system owned at the end of the prior year.

We expect to hit our 2021 goal of a bit purchases from existing customers.

What you're saying approximately one system for each system on at the end of the player.

On slide 14.

Speaker 3: We are providing our year-to-date progress on our key revenue metrics, revenue at year of sale and recurring revenue. As a reminder, year of sale revenue includes revenue recognized at delivery of units within the period.

We are providing our year to date progress on our key revenue metrics revenue at year of sales and revenue as a reminder year of cell revenue includes revenue recognized and delivery of units within that period.

Speaker 3: Recurring revenue includes revenue attributed to systems delivered in prior periods.

Recurring revenue includes revenue attributed persistent deliberate and prior periods.

Speaker 3: ASP for the quarter was strong at $1.5 million due to two lease buyouts in the quarter. And year to date, we are $0.9 million. Very much on track with our goal for the year.

ASB for the quarter was strong at $1.5 million due to to lease.

Buyouts in the quarter and year to date, we are $9 million.

Very much on track with our goal for the year.

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Speaker 3: is tracking well ahead of plan, where we have already achieved both our plan revenue of $3 million for the year and our average ARR goal of $0.15 million. This is due to stronger than expected list and service.

A striking well ahead of plan, where we have already achieved both.

Plan revenue of $4 million for the.

Average a our our goal of 2000 $25 million. This view the stronger than expected lease and service revenues.

Speaker 3: We remain on plan to reach our $26 million revenue goal for the year, which represents more than 35% growth versus 2020.

We will remain on plan to reach our $26 million revenue growth for the year, which represents more than 35% growth.

<unk> 2020.

Speaker 3: We also expect to see continued growth in both our annual recurring and service revenue categories as units in the field are expected to double versus 2020.

We also expect to see continued growth.

Our annual recurring and service revenue categories.

In the field are expected to double versus 2020.

Speaker 3: Next, I would like to provide a quick update on the demand for our industry-leading CIFAR-XC system. Please turn to slide 16.

Next I would like to provide a quick update on the demand.

For our industry, leading so far access system, please turn to slide 15.

Speaker 3: We are excited about the launch of our Cephar X3 offering. This is a game-changing next generation system. It expands our addressable market by increasing manufacturable part volume by five times and dramatically reduces the parts production cost by 65 to 80%.

We are excited about the launch of out so far exceed offer like this is a game changing next generation system.

Is expense are addressable market by increasing manufacture boat part volume about five times and dramatically reduces the pilots production cost by 65% to 80%.

Speaker 3: We have also successfully scaled up our proven CEFR process and transferred this process to our CEFR.

We have also successfully scaled up our program setup process and transfered this process to offset Forex this system.

Speaker 3: We delivered our first customer demonstration part in the third quarter and remain on plan to ship our first system by the end of the year.

We delivered our first customer demonstration pilot in the third quarter and remain on plan to ship our first system.

End of the year.

Speaker 3: Given the strong demand for SEFR XC as well as our other SEFR systems, we made a strategic decision to expand our manufacturing capacity.

Given the strong demand for set far exceed as well as our other systems.

Systems, we made the strategic decision to expand our manufacturing capacity.

Speaker 3: Our new 80,000 square foot facility will open this quarter and provide us with annual capacity of more than 400 Zephyr and Zephyr-XC systems when fully built out.

Our new 80000 square foot facility will open this quarter and provide us with annual capacity of more than 400, so far and sexual acts assistant when fully built out.

Speaker 3: We will run capacity in phases and our plan fully supports 2022 and 2023 growth.

We will run capacity in phases and are planned fully supports a 2022 and 2023 growth forecast.

Speaker 3: Finally, as a reminder, we take an asset light approach to manufacturing our systems, with only final assembly and tests done at our facility. This successful manufacturing approach is extended also to Zephyr.

Finally, as a reminder, we take an asset light approach to sexual our systems with only final assembly and test done at our facility. This successful manufacturing approach is extended also to set pharmacy.

Speaker 3: On slide 16, we wanted to provide more detail on the demand of our CIFAR-XC product.

On slide 16, we wanted to provide more detail on the demand of our set far exceed product.

Speaker 3: Customer demand for our SephoraXC product has been very strong as we have. At the end of October 2021, 17 firms SephoraXC orders and with our backlog and pre-orders totaling 85 million dollars.

Customer demand for Seth Alexey product with very strong as we have at the end of October 2021, 17 firms are far exceed all of those and then a backlog and all that.

Totally $85 million.

Speaker 3: As you can see from the chart, we continue to successfully convert our pre-orders into bookings.

As you can.

From the chart, we continue to successfully convert all those into bookings book.

Speaker 3: Bookings for 7x3 at the end of October , 10 at the total of 40 million dollars.

Bookings for set far exceed at the end of October at the top of a $48 million.

Speaker 3: These trends give us confidence that we are well positioned for strong growth in 2020.

This trend to give us confidence that we are well positioned for strong growth in $2020.

Speaker 3: In summary, we were pleased with our performance in the third quarter as we posted strong revenue and bookings growth.

In summary, we were pleased with our performance in the third quarter as we posted stronger Avenue and bookings court.

Speaker 3: Spended into the European market and completed a number of milestones in relation to the rival.

Extended into the European market and completed a number of milestones in relation to the rash of efficacy.

Speaker 3: Given our industry-leading technology, increasing demand from our diverse customer base, strong balance sheet, and a focus on maintaining an ever-increasing commitment to quality, we are well positioned for future growth and we continue to push the boundaries of what is achievable with metal additive money.

Give an industry, leading technology, increasing demand from a diverse customer base strong balance sheet and a focus on maintaining an ever increasing commitment to quality, we are well positioned for future growth and we continue to push the boundaries of what is achievable with metal additive manufacturing.

Speaker 3: With that, I would like to turn the call over to Bill to discuss the financials and our guidance. Bill?

With that I would like to turn the call over to build to discuss the financials and our guidance Bill.

Thanks Benny.

Speaker 4: Before reviewing our quarterly performance, I want to provide a brief summary of the financial aspects of our major transaction that Joe has spent.

The full reviewing our quarterly performance I want to provide a brief summary of the financial aspects of a merger transaction with George Spitfire. Please tend to slide 18.

Speaker 4: Please turn to slide 18. As Betty mentioned, the completion of the merger was a significant milestone for the company and capped a seven-year journey from our founding in 2014.

It's Betty mentioned the completion of the merger was a significant milestone for the company in caps a seven year journey from our founding in 2014, we are very excited about our future as a public company and with the closing of this transaction. We now have the resources to fund our growth plans and capitalize on the significant opportunities we see realities mannion.

Speaker 4: We are very excited about our future as a public company. And with the closing of this transaction, we now have the resources to fund our growth plans and capitalize on the significant opportunities we see in the additive manufacturing model.

Factoring market.

Speaker 4: As shown on the slide, we received net proceeds of $274 million from the transaction after redemption in transaction expenses.

As shown on the slide you received net.

Net proceeds with $274 million from the transaction after redemptions in transaction expenses. This gives us ample liquidity to pursue growth initiatives and provides a substantial financial cushion.

Speaker 4: This gives us ample liquidity to pursue our growth initiatives and provides a substantial event when we see numbers drop to the next level because it tracks the growth performance.

Speaker 4: Moving on to our quarterly financial performance, please turn to slide 19.

Moving on to our quarterly financial performance, Please turn to slide 19.

Speaker 4: Revenue for the quarter was $8.7 million, up 22% sequentially and up more than three times year over year. The increase in revenue was driven by five 3D printer sale transactions in Q3 versus four in Q2. Q3 sales included three shipments and two customer purchases of leased equipment.

Revenue for the quarter was eight 7 million up 22% sequentially and up more than three times a year over year.

The increase in revenue was driven by five three D printer sale transactions transactions in Q3 versus four and Q2 Q3 sales included three shipments in two customer purchases of least systems will also sore at 34% sequential increase in recurring revenue.

Speaker 4: We also saw a 34% sequential increase in recurring revenue.

Speaker 4: Gross margin for the quarter was 17%, down from 31% in Q2.

Gross margin for the quarter was 17% down from 31% in Q2 Q.

Speaker 4: Q3 gross margin was impacted by a range of factors relating to positioning the company for the significant step up in the overall scale of the business that we expect in 2022 and certain other costs.

Q3 gross margin is impacted by a range of factors relating to positioning the company for the significant step up.

In the overall scale with the business that we expect in 2022 and and certain other costs. These included under absorbed factory overhead costs related to our expansion plans for 2022.

Speaker 4: These included under-absorbed factory overhead costs related to our expansion plans for 2022, under-absorbed service network costs as we built out our network in anticipation of our growth in 2022 and other costs and investments. I'll provide more detail on these factors in the following slides.

[noise] absorbed service network costs as we built out on network in anticipation of that growth in 2022, and other costs and investments I'll provide more detail on these factors in the following slides.

Speaker 4: Adjusted operating expenses rose 29% to $15 million in Q3, compared to $11.6 million in Q2, primarily driven by increased headcount and higher R&D spending.

Adjusted operating expenses rose, 29% to $15 million in Q3 compared to $11.6 million in queue to primarily driven by increased head count and higher R&D spending.

Speaker 4: R&D increased $1.6 million in the quarter due to increased spending for materials for the SAFIRE XC development program and increased head rate.

R&D increased $1.6 million in the quarter due to increased spending for materials for the Sapphire XC development program and increased head count.

Speaker 4: Sales and marketing increased $1 million due to increased headcount and increased trade shares.

Sales and marketing increased $1 million due to increased head count and increased tradeshow spending.

Speaker 4: DNA increased $0.7 million also due to increased headcount and personnel related costs.

<unk> increased $7 million also due to increased head count and personnel related costs <unk>.

Speaker 4: Gap operating expenses also included more $0.9 million in merger costs compared to $1.6 million in Q2 and $0.7 million of stock-based compensation expense, which was similar to Q2.

<unk> operating expenses also included more dollars 9 million merger costs compared to $1.6 million in Q2 and point $7 million in stock based compensation expense, which was similar to Q too.

Speaker 4: Gap net loss for the quarter is 66.6 million, which includes a 51 million non-recurring, non-cash charge related to the fair value of the modification of our convertible note in conjunction with the Jaws Spitfire merger trend.

GAAP net loss for the quarter is $66 6 million, which includes a 51 million non-recurring non-cash charge related to the fair value of the modification of a convertible notes in conjunction with the Jewish Spitfire merger transaction.

Speaker 4: On a non-GAAP basis, which excludes this charge, one-time merger costs and other adjustments, net loss was 14.6 million.

On a non-GAAP basis, which excludes discharge onetime merger costs and other adjustments net loss was $14 $6 million adjusted EBITDA for the quarter, excluding the same costs with $13 million.

Speaker 4: adjusted in the daft of the quarter, excluding the same cost, was $13 million.

On slide 20, I would like to provide more detail on the factors impacting our gross margin in Q3.

Speaker 4: On slide 20, I'd like to provide more detail on the factors impacting our gross margin in Q3.

Speaker 4: As I previously mentioned, gross margin for the quarter was 17% versus 31% in Q2 and a plan of 46.

As I previously mentioned gross margin for the quarter was 17% versus 31% in Q2 and plan a 46%.

Speaker 4: As you can see from the chart, there are two sets of factors that impacted our gross margin performance in the quarter versus plan, which primarily relate to positioning the company to support our 2022 growth plan, as well as costs associated with certain technology.

As you can see from the chart. There are two sets of factors that impacted our gross margin performance in the quarter versus plan, which primarily relate to positioning the company to support our 2022 road plan as well as costs associated with certain.

Technology and other initiatives.

Speaker 4: The first category on the chart includes production scale up or excess overhead costs required to meet the higher production plan for 2022, which are under-absorbed at current volumes compared to the plan.

But first category on the chart includes production scale off or excess overhead costs required to meet the higher production plan for 2022, which are under absorbed at current volumes compared to the plan.

Speaker 4: Similarly, we're building out our service network at a significantly larger scale to support the higher levels of sales in 2022 and incurring under-abseiled cost here as well this is the plan.

Similarly, with building out our service network at a significantly larger scale to support the high levels of sales in 2022 and in court incurring undue absorbed overhead cost under absorbed cost here as well versus the plan.

Speaker 4: We would expect both these categories of costs to grow in absolute dollars going forward, but the variances should decline as a percent of revenues as production volumes and revenues increase substantially next year.

We would expect both these categories of costs grow in absolute dollars going forward, but the variances should decline as a percent of revenues as production volumes and revenues increased substantially next year.

The second category.

On the chart includes three types of costs, firstly higher costs versus plan for the development of the system for a new metal powder. We believe this investment will expand our addressable market for new part applications.

Speaker 4: Firstly, higher cost versus plan for the development of a system for a new metal powder. We believe this investment will expand our addressable market through new part applications. Secondly, we also made investments in the quarter for customer upgrades to improve system reliability related to specific technical issues.

Secondly, we also made investments in the quarter for customer upgrades to improve system reliability related to specific technical issues.

Speaker 4: These investments are not unexpected for a brand new technology such as the Sapphire and should become less frequent as the technology in the tour.

These investments and not unexpected for brand new technology, such as a sapphire and should become less frequent as the technology matures.

Speaker 4: Finally, we were impacted by shipping material costs, mostly associated with expanding our stocks and materials in anticipation of ramping up production volumes in 2020.

Finally, we were impacted by shipping and material costs, mostly associated with expanding on stocks and materials in anticipation of ramping up production volumes in 2022.

All three of the costs in this category are driven by specific specific initiatives there episodic in nature and will recur from time to time, but should not recurring every quarter.

Speaker 4: All three of the costs in this category are driven by specific initiatives.

Speaker 4: They're episodic in nature and will recur from time to time, but should not recur in every court.

Speaker 4: The final category on the chart is other overhead and inventory adjustments which recur but fluctuate over time.

Final category on the chart as other overhead and inventory adjustments, which recur about fluctuate over time.

Speaker 4: To summarize, we had a confluence of factors affecting gross margin in Q3 as a result of investment decisions which should either diminish over time as the business scales or occur less often or less of scale as our technology may choose.

To summarize we had a confluence of factors affecting gross margin in Q3 as a result of the investment decisions, which should either diminish over time as the business scales or occur less often or less of scale is how technology materials.

Speaker 4: However, when we introduce new technology in the future, we should expect to see these talk of technology learning curves talk of factors we incur.

When we however, when we introduced new technology in future.

Should expect to see these talk with technology learning curve caught the factors reoccur.

Turning to the balance sheet on slide 21.

We exited the transaction was a very strong balance sheet and ended the quarter with $297 million in cash in very limited that.

Speaker 4: We exited the transaction with a very strong balance sheet and ended the quarter with $297 million in cash and very limited debt.

Speaker 4: Please note that this cash number reflects $20 million of merger expenses paid in the third quarter and will be reduced by the payment of the remaining $24 million of merger expenses in the fourth quarter.

Please note that this cash number reflects $20 million of merger expenses paid in the third quarter and will be reduced by the the pain by the payment of the remaining $24 million of merger expenses in the fourth quarter.

Speaker 4: We remain committed to maintaining a healthy cash position for several reasons. It gives our customers confidence that we have the financial security to be their long-term partner. It allows us to continue to invest in our technology pursue our product roadmap and extend our technology lead over our competitors. And thirdly, it provides the resources to fund aggressive growth in our sales and marketing efforts, including expanding our global sales and marketing.

We remain committed to maintaining a healthy cash position for several reasons. It gives our customers confidence that we have the financial security to be the long term partner it.

It allows us to continue to invest in our technology pursue product roadmap and extend our technology lead over a competitive.

Thirdly, it provides the resources to fund aggressive growth in our sales and marketing efforts, including expanding our global sales and marketing footprint.

Speaker 4: Looking forward, our strategy is to continue with our asset-like business model. Excluding the current build-out of the new manufacturing facility, we expect CapEx to average approximately 3% of sales over the long term and expect our working capital needs to grow with the business.

Looking forward our strategy is to continue with how asset light business model.

Excluding the current bill the out of the new manufacturing facility, we expect Capex to average approximately 3% of sales over the long term I expect out working capital needs to grow with the business.

I would now like to provide.

Speaker 4: Our guidance for Q4 and fiscal and full year 2021. Please turn to slide 22.

Our guidance for four Q4 in fiscal and full year 2021, Please turn slide 22.

Speaker 4: This summarizes our guidance for the four key metrics from our analyst day presentation in June .

This summarizes out guidance for the full key metrics from Ah Analyst day presentation in June in June.

Speaker 4: As of the end of October , we have already achieved our goal of 24 bookings for the year and we expect to add to that number in the fourth quarter.

As of the end of October we have already achieved our goal of 24 bookings for the year and we expect to add to that number in the fourth quarter.

Speaker 4: Our goal is to ship systems to six new customers for Q4 and 15 for the year. Our expectation is that this metric could be in the range of 3 to 6 for Q4 and 12 to CO4 and RQ4 can detect at this cost for Q4 and everything else if they are in the range of USD $4.

Our goal is to ship sick system's two six new customers for Q4 and 15 for the year. Our expectation is that this metric could be in the range of three to six four Q4 and 12 to 15 for the year.

Speaker 4: A plan for 2021 is for total shipments of 24 systems.

A plan for 2021 is for total shipments of 24 systems. We believe we can achieve this goal however.

Speaker 4: We believe we can achieve this goal, however, our expectations are that this metric could be in the range of 79 shipments to Q4 and 22 to 24.

Our expectations out at this metric could be in the range of seven to nine shipments for Q4 and 2224.

Speaker 4: As of October , we have a backlog of 17 XC bookings, so we expect to achieve a year-end target of bookings for 2016.

As of October we have a backlog of 17 XC bookings. So we expect to achieve our year end target of bookings for 2000 systems.

Speaker 4: With $17 million of year-to-date revenue and strong momentum in our sales pipeline, we continue to expect to hit our 2021 revenue goal of 20.

With $17 million a year to date revenue and strong momentum in our sales pipeline. We continue to expect to hit at 2021 revenue goal of $26 million.

Speaker 4: Finally, given our significant backlog and increasing demand for our SAPPHIRE XC systems, we remain very confident in achieving our 2022 revenue.

Finally, given out significant backlog, an increasing demand for our Sapphire <unk> systems, we remain very confident in achieving of 2022 revenue forecast.

Speaker 4: Please turn to slide 23, where we provide an update on our 2022 revenue build-out slide from the analyst day presentation.

Please turn to slide 23, where we provide an update on our 2022 revenue Buildout slide from the analyst day presentation.

Speaker 4: The total revenue outlook remains unchanged at $89 million. However, as Benny mentioned, we've made significant progress in converting our Sapphire XC pre-orders into bookings, and that's reflected in this chart.

The total revenue outlook remains unchanged at $89 million. However, it's Benny mentioned, we've made significant progress in converting a sapphire exceed preorders into bookings and that's reflected in this chart.

Speaker 4: Compared to June , we added a net $14 million to our Sapphire XC bookings, including $9 million in the month of October 1.

Compared to June we added a net 14 million to Ah sapphire exceed bookings, including $9 million in the month of October alone.

Speaker 4: This means we currently have visibility into our target revenue comprised of the following elements. A continuation of our 2021 base of revenue of 26 million. Six million of incremental recurring

This means we currently have visibility into our target revenue comprised of the following elements a continuation of 2021 base of revenue $26 million.

6 million of incremental recurring in service revenue.

Speaker 4: 35 million from booked Sapphire XC orders, and an additional 43 million in the potential conversion of Sapphire XC pre-order.

$35 million from book Sapphire, XC orders and an additional $43 million in the potential conversion of Sapphire exceed preorders. These some to $110 million, creating a buffer of $22 million above or target revenue of $89 million.

Speaker 4: These sum to $110 million, creating a buffer of $22 million above our target revenue of $89 million.

Speaker 4: As a result of the backlog we've created so far and with a strong pipeline of additional prospects going forward, we have even stronger confidence in achieving our 2022 revenue.

As a result of of the backlog was created so far with a strong pipeline of additional prospects going forward, we have even stronger confidence in achieving out 2022 revenue target.

Speaker 4: In summary, given our continued sales momentum, increasing backlog, strong demand for our Sapphire XC system, and solid balance sheet, we're well positioned to capitalise on what we see as significant growth opportunities in the additive manufacturing model.

In summary, given out continued sales momentum increasing backlog strong demand for out Sapphire XC system and solid balance sheet, we're well positioned to capitalize on what we see is as significant growth opportunities in the additive manufacturing market.

Speaker 4: With that, I'd like to turn the call over for questions. Operator?

With that I'd like to turn the call over the.

For questions operator.

Speaker 1: Thank you ladies and gentlemen, if you would like to ask a question, it is star 1 on your telephone keypad at this time. If you're using a speaker phone, we ask that while posing our question, you pick up your handset to provide the best sound quality. Again, that is star 1 for any questions or comments at this time. We'll go 1st to Brian drab at William Blair. Your line is open, sir. Please go ahead. Thank you. Hi, Benny. Hi, Bill.

Thank you, ladies and gentlemen, if you would like to ask a question is star one on your telephone keypad at this time, if you're using a speaker phone, we ask that while posing a question you pick up your handset to provide the best sound quality.

Isn't that a star one for any questions or comments at this time.

First to Brian trap at William Blair. Your line is open Sir Please go ahead.

Hi, Bonnie Hi, Bill Thanks for taking my questions.

Speaker 5: So, I just wanted to clarify slide 22. First, you know, you...

So I just wanted to clarify on 522.

First you have the.

Speaker 5: shipment expectation in the in the table of 24 for the year and then the footnote of you know with the range of 22 to 24. What so the 24 obviously I guess corresponds to the 26 million revenue but if you ship

Shipment expectation and the and the table of 24 for the year and then the footnote of.

With the range of 22 to 24.

So the 24, obviously I guess corresponds to the $26 million in revenue, but if you ship.

22 would we expect that to be violent.

Speaker 5: 22, would we expect that to be like, you know, 20, 23 million? Or can you just clarify why we're using those ranges and not using ranges for revenue?

<unk> 2000, 23 million or can you just clarify why why are we using those radars and not using ranges for revenue.

Speaker 4: Yes, so Brian , so the difference is that in the third quarter we had two sales That were not associated with shipments. So these were the two purchases by our customers of systems that were already leased.

Yeah sure Brian.

The difference is that in the third quarter, we had two sales.

That we're not associated with shipments. So these were the two purchases by our customers of systems that will already leased.

Speaker 4: So in effect, where our revenues are two units ahead of our shipments because of that.

So in effect where.

Al revenues are two units ahead of our shipments because.

Of that circumstance.

Speaker 5: I see so the so that the 9 million though for the 4th quarter. I mean, should I think of that as you're implying a range though or.

I see so that so.

So that.

The 9 million low for the fourth quarter and should I think that is you're implying arrange though or.

Speaker 5: or is the 9 million reaffirmed estimate? We're comfortable with the 9 million, and if we happen to be at 22 shipments as opposed to 24, then the fact that we've had these two sale transactions that were not associated with shipments would make up the delta.

Or is that $90 million confirm an estimate said way, we're comfortable with the 9 million and.

If we happen to be a 22 shipments as opposed to 24.

Then.

The fact that we had to say.

Sales transactions that were not associated with the shipment with shipments.

Make up the Delta.

I see okay.

And then.

Speaker 5: For gross margin, can can you talk at all about for 2022? You gave us a good update on the revenue growth, but.

For for gross margin.

Can you talk at all about for 20.

22, you gave us a good update on the on the revenue growth but.

Speaker 5: you know, are you still expecting the 2022 gross margin that you talked about earlier this year, which was, you know, in one, in the slide deck you had at the analyst is 34%. Is that still kind of the range that we're targeting or have things developed differently? Well, we're not, it's too early for us to give guidance on the 2022 margin. You know, what I'll say is that we expect.

Are you still expecting.

The 2022 gross margin that you talked about earlier this year, which is.

And one in the slide deck you had at the analyst is 34% is that still kind of the range that we're targeting our heads things developed differently.

We're not.

It's too early for us to give guidance on the 2022 margin.

What what I'll say is that we expect.

Speaker 4: For the fourth quarter, we expect a slight improvement, and there are two factors that are going to come into play.

For the fourth quarter, we expect.

A slight improvement and there are two factors were going to come into play.

Speaker 4: Firstly, the specific technology initiatives costs on the chart. Those should not recur or shouldn't recur at anywhere near the same magnitude. But on the other hand, we're going to deliver the first of our XC units. And as with any new technology program, the early units in the program are at a much lower margin. So that would be an offset.

Firstly, the specific technology initiatives costs on the chart.

<unk>.

Should not recur or shouldn't recur in anywhere near the same magnitude.

But on the other hand.

We're going to deliver the first of al.

C.

Units and as within technology, New Technology program.

Units in the program or at a much lower margin.

That.

That will be an offset.

Speaker 4: to the first factor that I mentioned. Then as we go into 2022, we'll be delivering a lot more units in the first part, in the first quarter of 2022. So, the negative impact of that.

To the first factor that I mentioned, then as we go into 2022.

Will be will be delivering a lot more units in the first part in the first quarter of 2022.

So.

The negative impact of that.

Speaker 4: Those early negative impact on gross margin is a little unit from the program will be there and then that will

Of those early negative impact on gross margin is the.

Early units and the program will be there and then that will.

Speaker 4: you know, lesson over time as we improve our unit costs through the year.

Lessen over time, as we improve our unit costs to the year.

Speaker 4: You know, I can't at this time we haven't we haven't sat down to determine what our guidance would be. So look, I'll just give you those as factors and, you know, we'll provide more guidance on our first call for 2020.

I can't at this time, we haven't.

We haven't sat down to determine what our guidance would be.

So what I'll just give you those factors and.

Will provide more guidance on our.

First call for 2022.

Okay.

This one.

Alright.

Speaker 6: Bill, I'd like to add a little bit on this. So one of the things that is happening is that we have a very strong demand for Sephardic systems.

Well I'd like to add a little bit.

So one of the things that were happening.

We have a very strong demand for so far access systems.

Speaker 6: which means that we are going to ship a lot of SephoraXE systems in the first half of 2022.

Which means that we are going to ship a lot of Sahara access systems in the first half of 2020 occur.

Speaker 6: This has a good and bad element in this when it comes to gross margin. The bad part is that there is a lot of focus on shipping quickly, a lot of systems, so there is less time to reduce the overhead and the initial...

This has a good embeds element in this and when it comes to gross margin the beds Park is that we.

There is a lot of focus on shipping quickly a lot of system. So there is less time to.

The overheads and the inefficiencies.

Speaker 6: of early systems. On the other hand, there is a very fast learning because we are making a lot of systems. So the result is that if you kind of look at that in terms of number of units, we are going to go through

Of early systems.

On the other hand, there was a very fast alarming because we are making a lot of systems. So.

Okay is that.

If you kind of look at that in terms of number of units, where I'm going to go through this learning curve of.

Speaker 6: this learning curve of the first number of units quicker, but they will all basically condense at the beginning part of the year. So I would expect in the first half of the year, the gross margin to be lower, and then starts to approach the numbers that we predicted on the same...

The first number of units quicker, but they will all basically combatants at the beginning part of the year. So I would expect in the first half of the year of the gross margin to be lower and then starts to approach the numbers that we.

Perfect and on the second half of the year.

Speaker 5: Can I just ask one more or maybe two per question, but the system's expectation for next year, are you saying that the effect system sales would be weighted more in the front half of 2022, you just have better visibility to the first half and maybe the second half ends up being more shipment than the first half. And then also what are you seeing in people leaning toward the ARR type of purchase or the outright purchase?

Can I just ask one more or maybe two part question, but.

The systems expectation for next year are you are you, saying that.

You expect system sales would be weighted more in the front half of 2020, teary just have better visibility to.

The first half and maybe the second half ends up being more shipments than the first half and then also what what are you, saying people leaning towards wreck.

<unk>.

<unk> type of purchase or the outright purchase.

[noise] so.

Speaker 6: So on the first part it's easier to answer.

On the first spot.

You will go on so so.

Sure.

Speaker 3: What I see is a very strong demand for Cephra XC that we have better visibility for the first part of the year. So we see a strong ramp up at the beginning of the year, but at the same time, we will be busy with Cephra XC shipments through the end of the year, as well as naturally Cephra systems. But those, we don't have, you know, nine months visibility to them. So I do not expect 2022 to be weighted.

What I see is a very strong demand for so far exceed.

That we have better visibility for the first part of Bill So we see a strong grandpa.

Beginning of the year, but at the same time, we will be busy with that alright, so shipments through the end of the year as well as make.

Make sure Lisa Harker for those we don't have nine months of the ability to them.

And make sure of it so so I do not expect 2022 to be wasted.

Speaker 3: on the front part, but kind of equally distributed, which maybe a little bit even ramped over to the second part of the year. Regarding the kind of...

On the front part but.

Equally distributed was maybe a little bit.

Even the ramp scholar to the second part of the year.

Regarding their.

Hello.

Yeah.

Speaker 5: I mean, sorry, the recurring revenue they are. Yeah. Yeah. Right. Purchase is outright.

Accounts receivable, sorry, [laughter] the recurring revenue.

Yeah.

Yeah, right right purchase versus outright yes.

Speaker 6: So I would expect similar mix as we had in 2021 between the two. What was that, mix?

So so I I would I would expect similar mix as we had in 2021.

Between Burger.

What was that mix.

I do not believe with this club that.

Alright, so okay alright, okay.

Speaker 7: So, yeah. Okay. All right. Yeah. Okay. Okay.

Okay. Okay. Thank you.

Thanks.

Speaker 1: Once again, ladies and gentlemen, it was Star One for any questions or comments. We will connect to Jim Rashidi and need him in come.

Once again, ladies and gentlemen that with star one for any questions or comments flavor connect to German shitty anytime in company.

Hi, Good afternoon, I wanted to go into.

Speaker 4: Hi, good afternoon. I wanted to go into a little bit more detail if we may, just on what you're seeing in terms of demand for the SAP IRXC.

A little bit more detail if we if we may just on on what you are seeing in terms of demand for the Sapphire XC.

Speaker 4: Is this, can you give us a sense, are these, I presumably these are existing customers that are moving up to the XC and what is the profile in broad terms? Are you seeing more of the customer moving to the XC who are contract manufacturers? Are they OEM?

Is this can you give us a sense are these I, presumably these are existing customers that are moving to the X C and.

What is the.

The profile in broad terms are you seeing more of the customer moving to the customers moving to the <unk> who are contract manufacturers are they Oems and maybe you could just speak to.

Speaker 4: And maybe you could just speak to what application.

What.

Locations.

Speaker 4: they seem to be most interested in with the X-ray.

They seem to be both interested in with the <unk>.

Speaker 4: Thank you. A lot of questions. Yeah, I'm thinking about it. Thanks, Jim.

Thank you a lot of questions, Yeah, I'll take I'll take advantage of them.

Thanks, Jim So.

Speaker 6: So we see a mix, so both new customers as well as.

So we see a mix so we're both new customers as well as.

Customers.

When it comes to new customers. The driver is that customers make larger pouch, but they can make an existing.

Speaker 3: When it comes to new customers, the driver is that customers need larger parts that they can make on the existing SEFA and the SEFA XE opens.

<unk>.

Speaker 3: this opportunity for them. This drives mostly new customers that are OEM.

This opportunity for them.

This drives mostly new customers that are.

Oh, yes.

Speaker 3: When you talk about the split between OEMs versus contract manufacturers, we see strong demand from both types of customers. Both existing customers that are OEMs as well as contract manufacturers that are OEMs. Most of them show similar demand.

When you talk about the split between.

Mmm versus contract manufacturers.

His strong demand for most most types of customer that.

Both both Sir.

Existing customers with the Oems as well as.

Consequently, ketchup with the Orioles most most of them are so similar.

And then he is if you think of the the applications.

Speaker 4: And Benny, if you think of the applications, obviously these are customers interested in larger parts. But is the demand or the interest that you're seeing for the X to be skewed to any one or two of the market verticals that you currently address?

Obviously these are customers interested in larger parts are there.

Is it is the demand or the interest that you're seeing where the X C skewed to any one or two of the market verticals that you currently address.

Speaker 6: So, you know, we didn't make it a secret that the first 10 orders that were in June of 2020 were from SpaceX. If you look at beyond this initial demand, we see demand in aviation, we see demand in oil and gas and energy, we see demand in semiconductors.

So so.

Didn't make it a cigarette the first kind of all of those that were doing extra thousand currently we're from spaces. If you look beyond this initial demand.

With.

Demand.

Affiliation received amount.

And gas and energy.

The demand in semiconductor.

Speaker 3: I would say that the demand is, and of course in space, I would say the demand is relatively uniform this part. It's not concentrated on any spectrum.

I would say that the demand and of course in space I I would say that the mendes.

Quickly uniformly spreads.

700 club concentrate the other aspect.

With some specific industry.

Speaker 4: Got it. And one other question if I may. If we think of that the investments you're making in Europe you've kind of characterized this as a longer term opportunity. But I'm wondering is there the potential that as we think about 2022.

Got it and just one other question if I may if we think of that.

The investment you're making an European you've kind of characterize this as a longer term opportunity, but I'm wondering is there the potential that is we think about 2022.

Speaker 4: with the new product, with the XC starting to scale, that you could see potentially a faster contribution in Europe . And I wonder if you can give us some flavor as to where you think you could be.

With the new products with EXE starting to scale.

You could see potentially a faster concert.

In Europe and and.

I'm wondering if you could give it some flavor as to where you think you could be.

Speaker 4: getting the most traction in your since it's really in under penetrated completely under penetrated market for you.

Getting the most traction in Europe since it's really an underpenetrated completely underpenetrated market for Ya.

Speaker 6: Correct. So based on what we have seen so far, we believe there is a strong opportunity in the aviation market.

Okay. So so based on what we have seen so far.

We believe there is a strong.

Okay I'll put directly in there.

We Asian market.

Speaker 6: as well as in the defense market in Europe .

As well as in.

Defense.

Market.

In Europe.

[laughter].

Speaker 3: When we look at the spread between XE and SEFAR, based on the signals that we have seen so far, I believe that in 2022 we'll have more business in Europe than in SEFAR XE.

When we look at.

Between the accents Uh huh.

The signals that we have seen so far.

I believe that in 2020 curve will have more business in Europe and stuff.

That is correct.

Speaker 3: from the simple reason that for the vast majority of customers, the right way for them to start working with us is developing their product on Cephyr. And when they get to enough maturity with their product and the manufacturing process, and they're ready to scale up to transition to Cephyr AXI. If you can make your parts on Cephyr, it will be faster to develop the product on Cephyr and cheaper than on Cephyr.

From the simple Louise.

For the vast majority of customers the right way for them to start working with us.

Developing about product, so far and when they get to enough maturity reserve product Monosexual process and there are there to scale up to transitional go set correctly.

If you if you can make your thoughts on.

It will be faster to develop the product so I'm, so far and cheaper than one so far.

Speaker 3: So I believe based on what I've seen so far in the market, that in Europe initially, there will be soldiers that are tracking. You have the infrastructure, the sales infrastructure built? Are you, do you anticipate seeing that ready to really begin to scale in the early part of 2022?

So so I believe.

Based on what I've seen so far in the market that in Europe. Initially there will be a stronger Uh huh.

Trucker in your head you have the infrastructure the sales.

Infrastructure built are you do you anticipate seeing that ready to to really begin to scale in the early part of 22.

Speaker 3: We are building it right now. It's not fully developed. It's far from being fully developed. We are in a very strong momentum of building it. And our expectations in terms of shipments into Europe in 2022 are relatively modest.

We are building gets right now we cannot fully develop.

Far from being fully developed.

We are in a very strong momentum building.

And our expectations in terms of fur.

Shipments into Europe in 2022, a relatively modest.

Speaker 6: as we are developing this market. So we do not expect this market to kill us. But this is not.

As we are.

Developing this market. So we do not expect this market took care of that.

Got it thanks very much.

Thank you thanks, Jim.

Speaker 1: We'll take our next question from Troy Jensen at Lake Street Partners. Your line is open. Please go ahead.

Take our next question crime Troy Johnson at Lake Street partner. Your line is open. Please go ahead.

The gentleman congrats sermonize results.

Thanks, Thanks, Thank you.

Speaker 8: Thanks. Thank you. Hey, I guess we're either one of you guys. You 38 deployed units. Do you know how many of those are on ARR Davis at data point?

Yes for either one of you guys are 38 deployed units.

Do you know how many of those on air.

That data plan.

Speaker 3: I'm not sure if we actually disclose this information. I don't think that we did. Bill? Yes. I don't think that we disclosed it.

I'm not sure if we actually disclosed this information.

Things that were there.

Okay.

I don't think that will be disclosed.

Disclosed.

But.

Or round about.

30%.

30% Okay.

Alright and produced.

About a quarter.

Because we had we.

We had a couple of buyouts.

With the Bachelor quarter.

Those numbers.

Speaker 5: Very perfect. Then we think about contract manufacturer for this quarter of the five ship to be used to them all of those are also AR, or just in general, where contract manufacturer is gonna go, annual revenues are, and I think about that one.

Perfect and then when you think about contract manufacturers for this quarter of the five shipped to you assume all of those are also.

Or just in general or a contract manufacturer is gonna go annual.

Annual revenues or.

I think about that one.

Yeah.

Speaker 6: You're asking the right question here, and I think that what we see is a mixed trend that we are still studying. In general, contract manufacturers have a tendency to pressure the current revenue model.

You're asking the right questions and I think that.

What we say it.

Is.

MC strength that we are still studying in general a contract manufacturers.

Have a tendency to pressure liquor.

Recurring revenue model.

Speaker 3: At the same time, what we see in some cases, where contract manufacturers have very good visibility to long-term production contracts, they prefer to buy the systems upright. So we see both those trends.

At the same time.

What we say in some cases.

We have a contract manufacturers have very good visibility.

Two long term production contract they preferred to buy the system's upright. So we say both those trends.

Speaker 3: kind of competing with each other. But one thing is very clear, and that is that there are many more recurring revenue deals signed with contract manufacturers than with OEMs.

Kind of competing with each other but it's one thing is very clear and that is that.

There are many more recurring revenue deals signed with contract manufacturers then with Oems.

Speaker 5: Okay, one more for you, I do have a couple follow-ups for Bill, but just can you talk briefly on competition? I mean, I'm not overly worried about it, but ever since you guys went public every other metal company is now talking about support lists So how far ahead are you guys? Is anybody close to having a solution? Just your thoughts on other people kind of...

Okay, Sir when Murphy Bang I do have a couple of follow ups for bill, but just contact person on competition I mean, I'm not overly worried about it but ever since you guys went public every other metal companies now talking about support lists.

So just how far ahead are you guys as anybody in a close to having a solution to see your thoughts on on other people kind of.

Her to your specific.

Yeah. So.

Speaker 3: You know, the best part about our competitors offering support-free solutions is that they support those solutions.

The best part about our competitors offering to parks right solutions.

They.

Those solutions are they.

Speaker 6: They claim that those solutions are achievable on systems that they have been selling for 2, 3, 4, 10 years and they are in the market. All our customers, many of our customers already have those systems and they've already tried everything under the sun to try to make very complex structures and they are buying our systems to be able to produce these parts after they failed to make them on the market.

A claim that those solutions are achievable on systems that there hasn't been selling for two or three for 10 years and they are in the market.

All our customers and many of our customers already have those systems and they're already tried everything under the Sun.

Try to make it very complex structures and they're buying our systems to be able to produce big spots. After they failed to make them on.

Speaker 3: our competitive systems. So what we offer is a real pathway to make high quality parts.

Our competitors dispersed so.

What we offer is a real pathway to make high quality parts and geometry.

Speaker 6: in geometry that previously and even today on commodity additive and effect systems are not manufacturable. This is not a game in marketing where people bring a part to a show and say, yeah, we have done that too. This is real production that people are doing on our systems. And they have convicted our systems in their shops.

Flea and even today on commodity editing when it just becomes a monthly sexual.

This is not.

Gaming marketing where people bring Barack Rochelle.

So yeah, we have done that too which is a real production lopiccolo doing little sisters, and they have you compared with our systems in the shops.

Speaker 6: that none of those systems are producing those bugs.

And none of those systems are producing those folks so.

Speaker 3: It's the difference between the real thing and the marketing game.

It's the difference between going okay.

Marketing game.

Speaker 5: That's what I thought I just want to hear it from you. Um, and then for you, Bill, just quickly on on the Sapphire, I see bookings are 40 million preorders or 45. I'm more curious on the preorder side. Is there any I mean, to convert from preorders to me, those kind of reservations to booking.

That's what I thought just wanted <unk>.

And then for your Bill.

Clicking on on the Sapphire bookings or $49 creators of 45 I'm more curious on preorder side is there any.

To convert from preorders cameos kind of reservations to bookings.

Speaker 5: I mean, any risk to that visibility at all, or that contractually obligated.

I mean any risks to that the disability at all or that contractually obligated.

Speaker 4: Now there's very many contractual obligations to convert it there's a small deposit

Earning a contractual obligation to convert it.

There's a.

As a small deposit.

Alright.

Nowadays the customer does have the option to.

Speaker 4: Not to proceed, but we've had very good success. One of the reasons, one of the implications of placing a reservation is that customers use that to create budget in their

Not to proceed but.

Had very good success.

The.

One of the reasons and one of those.

Locations in pricing reservation is that is that customers use that to create objects.

And they're planning process or approaches.

So.

Speaker 4: You know, it's a signal of intention and we've had good success of converting those but

It's a signal of intention and we've had good success in converting those but but we can't say that it's it's without risk.

Alright.

There was risk but.

Speaker 4: If you look at slide 22 in the deck, you'll see that, you know, of the...

If you look at slide 22 in the deck can see that.

The.

Speaker 4: In order to hit our 89 million target next year, we only have to convert 22 million.

In order to hit Al.

89 million target next year, we only have to convert.

$2 million.

Speaker 4: 21 million of the 43 so, you know round numbers good

$21 million 43, so round numbers.

And fulfill will will make all.

Speaker 5: Great. Okay, sure. Understand you guys have great visibility to register. So, and the last one for you, Bill, can you just help us out on a share count we should use for Q4 and for 2022 fully deleted.

Great Okay, Sir understanding as a group disability Register so and the last one for your Bill can you just help us out on a shared count we should use for Q4.

And for 22 was fully diluted look like.

Speaker 4: It's actually in the financial savings, but 183.2 million, that's the share count as of September 30. So, you know, it will be some modest growth from option conversion, but.

It's it's actually in between the financial statements that $183 2 million, that's the share count as of.

September 13th.

So.

Some modest growth from.

Hmm.

Option conversion, but.

Okay.

It would be relatively modest.

Weighted average account that you see.

Speaker 4: you know, 18 million. The reason that's such a low number is that there were only two days of the quarter when 183 million shares were outstanding and that calculation is...

18 million the reasons that such a low numbers.

There were only two days South Dakota, when 183 million shares were outstanding in that calculation is Donna.

<unk> basis.

Speaker 8: Yep, totally understood this way. Yeah, 183.2 is the number you should be looking at. Okay, guys.

Totally understand this way and I have 181.

1832 is that we.

Should be looking at.

Okay, guys keep a particular color.

Great. Thank you. Thank you. Thank you so much.

Speaker 1: And one final reminder to star one if you had a question or comment at this time.

And one final reminder to star one if you had a question or comment at this time.

Speaker 1: With no other questions, I'll now turn the conference back to Benny for any additional or closing comments.

With no other questions.

Now turn the conference back to Benny for any additional are closing comments.

Speaker 3: Thank you so much. Thank you everyone for participating in our first Erwin call. We will be glad to answer any more questions that you will have. Thank you everyone and have a good evening.

Thank you so much.

Thank you everyone for participating in our first call.

We will be glad to answer any more questions that you will happen.

Thank you everyone and have a good evening.

Speaker 1: Ladies and gentlemen, that will conclude today's call. We thank you for your participation. You may disconnect at this time and have a great day.

Ladies and gentlemen that will conclude today's call. We thank you for your participation you may disconnect at this time and have a great day.

Speaker 9: .....

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