Q1 2025 Velo3D Inc Earnings Call
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Hull Xu, Unknown Executive, Arun Jeldi, Velo3D
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Speaker Change: Thank you for joining us. This is a production of the National Institute of Technology, Canada. Copyright © 2016, National Institute of Technology. All rights reserved. No part of this recording may be reproduced without Master Judy Shulman's express consent. This recording may not be reproduced without Master Judy Shulman's express consent. © 2020, National Institute of Technology.
Speaker Change: Greetings, and welcome to the Velo3D First Quarter 2025 Conference Call. At this time, all participants are in a listen-only mode. The question and answer session will follow in the formal presentation.
Speaker Change: If anyone should require operated assistance, please press star zero or your telephone keypad. As a reminder, this conference is being recorded. It's not my pleasure to introduce James Carbonara. Thank you, James. You may begin.
Speaker Change: Thank you, I'd like to welcome everyone to Velo3D's first quarter 2025 earnings call.
Speaker Change: During today's call, management will make forward-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, as well as the company's 2024-10K and additional SEC filings.
Speaker Change: We see those documents for additional information regarding those factors that may affect these forward looking statements.
Speaker Change: Also, management will reference certain non-GAAP metrics during today's call. Please refer to the appendix of our presentation as well as today's earnings press release for the appropriate gap to non-GAAP reconciliation.
Speaker Change: As a reminder, a replay of this call will be available later today on the Investor Relations page of the company's website. With that, I'd like to turn the call over to Arun Jeldi, CEO of Velo3D, Arun.
Thank you, James.
Speaker Change: Good afternoon, and thank you for joining Velo3D's first quarter 2025 earnings conference call.
Speaker Change: We are pleased to share that momentum is building across our business as we implement a series of focused, strategic initiatives aimed at driving sustainable long-term growth and positioning Velo3D for a return to profitability.
Speaker Change: Today, we'll walk you through the progress we have made towards transitioning to a high growth, high margin, industrial technology platform.
Speaker Change: The first quarter is highlighted by a successful launch of rapid production services, RPS, offering, the signing of several key customer agreements and the achievement of a positive
Speaker Change: The launch of RPS represents a major milestone in our strategy to drive referring to revenue and deliver scalable high-makes low-volume production capabilities to industries where quality and repeatability are critical.
Speaker Change: Early customer response has been strong, particularly in defense and aerospace, where RPS addresses urgent needs for domestic flexible manufacturing.
Speaker Change: In addition to this launch, we secured several new long-term customer agreements, including multi-year contracts that strengthen our backlog and underscore confidence in our technology and service model.
Speaker Change: These wins for the diversifier customer base and enhanced revenue visibility moving forward.
Speaker Change: Importantly, we also delivered a positive gross margin in Q1, a key indicator that our cost of stock optimization efforts and pricing strategies are gaining traction.
Speaker Change: This Mindstone reflects our focus on financial discipline and sets the solid foundation as we work towards EBITDA profitability by 2026.
Speaker Change: There are multiple key investor highlights that make Velo a compelling investment.
Speaker Change: First, we are transforming into a highly attractive business model, with multiple diversified revenue streams driven by our rapid production solutions, or RPS.
Speaker Change: This is built for improving profitability, we are shifting from a volume driven model to a value driven strategy, emphasizing the sale of advanced systems to significantly higher ASPS, enabling better margins and long-term customer relationships.
Through this strategy, we are focused on maximizing profitability.
We have diversity of revenue streams.
Speaker Change: In addition to system sales, our revenue mix now includes rapid production solutions.
Speaker Change: a recurring service-oriented offering enabling scalable parts production and we also are stepping into services and software licensing, a predictable margin, assertive revenues and finally operational efficiency.
Speaker Change: The combination with arrayed additive is accelerating our transformation by expanding our market reach and deepening our technological capabilities.
with minimal more mapping products and customers.
The integration brings complementary strands without disrupting our existing business.
Speaker Change: Alright, Editing's leadership in magnesium and aluminum 3D printing enhances our material expertise.
Speaker Change: Enabling us to address lightweight, high-strand applications across aerospace, defense, modern sports, and electric vehicles.
Speaker Change: This expands our total addressable market significantly. Together, our combine of offering broadened range of industries and applications we can serve, reinforcing our role as technology enabler across multiple sectors.
Speaker Change: Near the end of the first quarter, in March, we officially launched our RTS.
Speaker Change: which we believe is future of manufacturing. RPS addresses a critical industry demand to scale high-mix low-walling production. It is defined designed to meet the growing demand for scalable, high-quality production costs.
RPS has unmatched speed, repeatability and scalability.
Speaker Change: Our customers can leverage our production sales for surge capacity to scale rapidly and build US-based resilience supply chain for production parts with our significant capital
Marketing acceptance of RPS have been overwhelmingly positive.
Institutional Launch of RPS
Speaker Change: Backflip for this offering has tripled compared to the prior quarter.
Speaker Change: More than 75% of the first quarter bookings were from new customers, importantly, approximately nearly 50% of our views, the demand is from the different sector.
Reinforcing our strategic position in high value, long cycle markets.
Speaker Change: Since the official launch of RTS, we have made significant commercial progress signing multiple to build new agreements with customers for this new offering.
We have also made significant commercial progress with key agreements.
Speaker Change: which I'd like to point out today. We find a five-year, 15 million master service agreement with momentous to deliver production parts through our RPS offering.
Speaker Change: We entered into a 5-year exclusive supply agreement with Amiro, advancing reshoring efforts and accelerating adoption of additive manufacturing in critical sectors.
Speaker Change: And most recently, we signed an agreement with Ohio Ardenance Works to provide RPS in support of its 3D-printed military weapons development initiative.
Speaker Change: These will reflect growing momentum for RPS as a strategy growth engine and position as well for long-term recurring revenue expansion with high margin potential.
Speaker Change: It is important for the investment coming. Not only is RPS a high demand commercial offering. It is also a powerful recurring revenue engine.
Speaker Change: Projects are typically long-throw, generating consistent cash flow and retroactive margins.
Speaker Change: As a part of Vertical Integrator Strategy, we are expanding partnerships and bringing more of the value chain in-house.
Speaker Change: It's not only reduces our cost of goods, but also improves gross margins.
Speaker Change: Ross Margin for the first quarter was 7.5% compared to...
Speaker Change: 28.8% in the first corner of 2024. The company expects Grosswasjun to improve throughout 2025 as a result of operational efficiencies.
and an anticipated ramp up of its rapid collection solutions business.
Speaker Change: Our goal is for RPS to contribute 40% of total revenue by 2026.
with additional upside from volume growth and value added services.
Speaker Change: System Sales. Instead, we are enhancing Velo's value proposition by becoming a full service
Speaker Change: We are laser focused on achieving a bit of profitability in first half of that year.
The drivers include improved average selling prices, ASP's.
Cailable Revenue, Decorate Revenue from RPS and Services
An operational leverage as revenue grows with limited cost expansion.
Our more agile integrated organization structure will support this transition.
Speaker Change: We are not chasing growth at any cost. We are building sustainable, profitable momentum.
Speaker Change: In addition to the pursuit of growth, we are strengthening our business fundamentals by improving operational efficiency through more diligent management of costs and supply chain optimization, positioning us for consistent cash flow generation and sets a clear path to long-term profitability.
Speaker Change: Glass margin for the first quarter was 75 percent compared to the previous year 28.8 percent for the first quarter of 2024. Taking a look at the commercial market, there are several favorable industry tailwinds that make Velo3D a compelling investment opportunity.
Speaker Change: We are uniquely positioned at the intersection of major industry and geopolitical shifts.
Speaker Change: As the momentum for reshoring grows, driven by US policy initiatives and global supply chain realignments, unsure manufacturing is rapidly accelerating, particularly in strategic sectors like aerospace and defense.
Speaker Change: as the only US-based prologue of large-format, high-end laser-powered or bed fusion systems.
Our capability is directly support federal priorities and I will be showing it.
National Security and Technological Solidarity [inaudible]
Speaker Change: As reshoring accelerates, we have a strong, personal, or advantage with an established presence and proven technology, which we believe gives us a headstock in winning long-term contracts.
Importantly, we are not just benefiting from reshoring momentum.
Speaker Change: You're helping define what secure, sovereign, next-generation manufacturing looks like. In shock, Velo3D isn't just riding the wave.
Speaker Change: We are shaping the future of resilient, secure U.S. industrial leadership.
Speaker Change: The capture and meaningful share of the growing market opportunities, fueled by favorable industry tailwinds.
We are executing a highly targeted go-to-market strategy.
Speaker Change: This approach is designed to align our capabilities with sectors experiencing significant demand for innovation, performance, and advanced materials.
The Department of Defense and Prime Contractors.
Speaker Change: We're lightweight, high-strand components are critical for mission success and domestic manufacturing capabilities are increasingly prioritized.
The space and era space industries.
Speaker Change: which are undergoing rapid transformation with the need of scalable production of complex parts, then meet stringent performance and regulatory requirements.
Speaker Change: The semiconductor sector, where precision, reliability, and material innovation are essential to meet the demands of next-generation chip manufacturing and equipment.
By concentrating our efforts on these high-potential verticals
Speaker Change: We are positioning ourselves not only when near-term business, but to become a long-term strategic partner in sectors that are undergoing significant technological evolution.
We are on a robust road strategy.
Speaker Change: supported by a strong pipeline and deep engagement across different sprims.
Aerospace OEMs, Simiconductor Manufacturers and Energy Leaders
Speaker Change: There is a high visibility into future revenue with long cycle procurement and high switching costs.
Speaker Change: Our install base leads to recurring revenue opportunities and high consumer retention.
Speaker Change: Our near-term growth is underpinned by real demand, the revenue growth of more than 30% in 2025.
Speaker Change: We have a firm backlog of $18 million as of the end of the first quarter. That is committed to our service contracts and our P.S. projects that we expect to deliver over the next few months.
Speaker Change: I also want to highlight our improved financial position which now supports scalable long-term growth.
Speaker Change: We have taken significant steps to solidify our balance sheet including reducing our debt and eliminating nearly all senior debt and bond liabilities, effectively removing financial overhang, substantially lowering interest expense.
Speaker Change: Furthermore, we secured 15 million in bridge financing, providing the runway needed to execute our near-term growth and immigration plans with confidence.
Finally, we believe there is a clear path to profitability.
Speaker Change: We are laser-focused on achieving EBITDA profitability in first half of 2026.
This will be driven by higher average selling prices.
Speaker Change: and improved grass bargees from system sales, scalable, recurrent revenue from RPSN services.
Speaker Change: Operating leverage as we grow revenue with limited cost expansion and a more agile integrated
Speaker Change: I will now turn the call over to Hull Xu to discuss our first quarter financial performance in more detail.
Thank you, Arun.
Speaker Change: The decrease was driven by a modest decrease in the system sale as we focus on high value customers and maintaining ASP.
Speaker Change: RPS Revenue has started to meaningfully contribute to total revenue and we expect RPS revenue to continue to increase as a percentage of total revenue.
Speaker Change: The improvement is primarily due to a higher absorption of fixed costs.
Speaker Change: We expect gross margin to improve as we go through 2025 as a result of operational efficiency initiatives that we started to implement last year and continue to implement this year.
Speaker Change: As RPS revenue begins to run, we expect overall margin to improve as we work through the initial set of costs associated with new parts.
Nungap Operating Expenses, which excludes stock-based compensation.
Speaker Change: Declined in year over year to 8.8 million as compared to 14.1 million in the first quarter of 2024.
Speaker Change: This decrease reflects a reduction in all expense categories and savings related to our cost reduction initiatives.
Speaker Change: Equationally, non-GAAP operating expenses were also down compared to 18.7 million in the fourth quarter of 2024.
Speaker Change: In 2025, we are making investment in certain areas to ensure the delivery of our financial plan and high quality of services that our customers have come to expect from Velo3D.
Speaker Change: Even with these planning investments, we expect non-GAAP operating expenses as a percentage of revenue for the full year to be lower in 2025 than they were in 2024.
Speaker Change: Get that loss for the quarter was 25.4 million compared to a net loss of 28.3 million in a year ago quarter.
Speaker Change: Non-GadNet loss excludes stock based compensation of 4.1 million, loss unfair value of warrants of 1 million, and loss on war and cancellation of 11.4 million.
Speaker Change: Not just at EBITDA, but the first quarter of 2025 was negative 6.9 million compared to negative 11.7 million in the first quarter of 2024 and negative 14.6 million in the fourth quarter of 2024.
Speaker Change: As of March 31st, 2025, we had a backlog of 18 million this compares to 16 million at the end of the year.
Speaker Change: This backlog represents committed orders that we expect to deliver over the next 12 months.
Speaker Change: In terms of a balance sheet, as at the end of the first quarter, we had a cash and cash equivalent of 3.9 million up from 1.2 million at the end of 2024.
Speaker Change: With the warrant exchange transaction completed, we significantly reduce the future liabilities and preserved cash for operations.
Speaker Change: We are reiterating our 2025 four-year guidance today. We expect a revenue to be in a range of 50 to 60 million dollars. Of course, margins are improved sequentially throughout the year, exhibiting 2025 at or above 30%.
Speaker Change: We expect 4-year 2025 non-GAAP operating expenses to be between $40 million and $50 million and capital expenditure of $15 to $20 million for a year.
Speaker Change: In conclusion, we remain focused on executing our business strategy with a clear path to profitability on an adjusted EBIGAP bases in 2026.
With that, upper there we can open a column to questions.
Thank you.
Speaker Change: We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad and confirmation tone will indicate your line is in the question queue.
Speaker Change: You may press star 2 to remove yourself from the queue, for participants using speaker equipment and may be necessary to pick up the answer before pressing the star keys.
One moment while we pull for questions.
Speaker Change: As a reminder, if you'd like to ask a question, please press star 1.
Speaker Change: Alright, then look like there are any questions at this time. I'd like to turn the call back to over on Jeldi for closing remarks.
Thank you.
Arun Jeldi: Velo3D is entering a transformative growth phase driven by strong commercial traction enhanced
and Solid Operation Execution
Our Q1 Results Demonstrate this Momentum.
The Successful Launch of our Recurring Payments, Recurring.
Arun Jeldi: RPS system, he's accelerating the shift to Scalable Recreate Gravenium Oil.
Arun Jeldi: Demand remains strong in our core markets, particularly aerospace and defence.
Arun Jeldi: where we have secured multiple long-term high-value contracts, reinforcing both our backlog and our technological leadership.
Arun Jeldi: There also, please to report a positive gross margin in Q1.
Arun Jeldi: An important milestone that positions us well on the path to sustain profitability.
Arun Jeldi: In addition, we have removed ward liabilities from our balance sheet for the strengthening our financial position and simplifying our capital structure.
Arun Jeldi: With a validated business model and increasing market adoption, Velo3D is well positioned to deliver long-term shareholder value.
and thank you for trusting in us and
Arun Jeldi: We want to serve you and make sure that we value your time and your investments in our Velo3D have a great day.
Arun Jeldi: Thank you. What that does conclude today's teleconference. We thank you for your participation. You made disconnect your lines at this time.
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The End