Press release·05/16/2024 14:22:08

Company Overview

Velo3D is a metal 3D printing technology company that makes printers and software for companies to print high-value metal parts. The company’s proprietary technology enables the production of complex parts that other 3D printing methods cannot make.

Financial Performance

In the first quarter of 2024, Velo3D’s revenue was $9.8 million, down 63% from $26.7 million in the first quarter of 2023. The company had a net loss of $28.3 million in the first quarter of 2024 compared to a $36.3 million net loss in the first quarter of 2023.

The decrease in revenue and narrower net loss was primarily due to lower printer sales. Velo3D sold fewer printers at lower average prices in the most recent quarter compared to the first quarter of 2023.

Revenue Breakdown

Velo3D generates revenue from three sources:

• Printer sales - $7.7 million (78% of revenue)
• Leasing printers - $0.5 million (5% of revenue)
• Support services - $1.7 million (17% of revenue)

Printer sales make up the majority of Velo3D’s revenue.

Profitability

Velo3D operated at a loss in the first quarter of 2024. The company had a negative gross margin of 29%. This means it cost Velo3D $1.29 to generate each dollar of revenue.

High production costs on new printer models launched in 2023 contributed to the negative gross margin. Velo3D also spent heavily on supporting printers in the field. These support costs are expected to decline over time.

Q1 2024 Key Stats

• Revenue: $9.8 million
• Gross Margin: -29%
• Net Loss: $28.3 million

Cash Position

Velo3D burned through $20.5 million in cash on operations during the first quarter of 2024. It ended the quarter with $10.9 million in cash remaining.

The company does not believe it has sufficient capital to continue operating for another 12 months. It will need to raise additional money through equity offerings or debt financing.

Outlook

Velo3D expects full-year 2024 revenue to improve from the first quarter but remain below 2021 and 2022 levels. It has a backlog of $22 million in printer orders as of March 31, 2024.

The company is focused on boosting sales in the defense and aerospace sectors. It is also working to improve the production process and lower costs.

Velo3D believes its new printers targeting larger metal parts production will drive revenue growth in the future. It expects recurring revenue from its leased printers and support services to increase over time as well.

Financial Analysis

Declining Revenue

Velo3D’s 63% year-over-year revenue decline in the first quarter of 2024 shows the business is struggling. Lower printer sales volumes and prices led to the weaker performance.

The company blamed delayed customer shipments and order push-outs. These shipment issues could indicate problems with product quality or meeting production demands.

Production Challenges

Velo3D continues having trouble building its new Sapphire XC printer model efficiently. Producing these more advanced printers resulted in negative gross margins in the first quarter.

The production difficulties may signal broader issues with Velo3D’s ability to manufacture complex printers at scale. It also suggests the printers remain unreliable requiring extensive support expenditures.

High Cash Burn

Velo3D burned through $20 million in cash last quarter. At that rate, the business can only operate for another six months without new funding.

The company reduced some operating expenses but needs to further slash costs. Additional financing in the near-term is critical to Velo3D’s survival.

Uncertain Demand Environment

The 3D printing sector saw booming growth during the pandemic. Now activity is normalizing, and economic uncertainty is rising.

It remains unclear if industrial companies will continue investing in expensive 3D metal printing equipment at past rates. Macro uncertainty may constrain Velo3D’s growth prospects this year.

Final Thoughts

Velo3D showed impressive early technology but is now facing business challenges typical of many young hardware companies. Bringing a complex manufactured product to market with high reliability has proven difficult.

The company’s growth prospects look questionable without a turnaround in printer production issues and substantial new financing. Velo3D continues burning through cash at an unsustainable rate.

It may find demand for its printers limited until quality and reliability metrics meet customer standards. Macro uncertainty around interest rates, corporate profits and supply chain conditions further cloud the outlook.