Earnings call transcript: Velo3D Q4 2025 sees revenue growth, strategic shift

Velo3D, a leader in metal additive manufacturing, reported its financial results for the fourth quarter of 2025, highlighting a significant year-over-year revenue increase to $12.6 million. The company is navigating a strategic shift from volume to value-driven operations, which aligns with its broader goal of achieving profitability by 2026. According to InvestingPro data, analysts anticipate continued sales growth in the current year, though the stock has experienced significant volatility, declining over the past three months.

Want deeper insights? InvestingPro offers exclusive analysis and 16+ additional premium insights for Velo3D, available through their comprehensive Pro Research Report. Despite a current negative gross margin of 3.5%, Velo3D aims to exceed a 30% margin by 2025. InvestingPro analysis highlights that the company currently suffers from weak gross profit margins and has not been profitable over the last twelve months. The company’s stock remained stable, closing at $1.35, with no change in the extended session.

Key Takeaways

• Velo3D reported Q4 2025 revenue of $12.6 million, showing strong growth.
• The company is targeting a gross margin above 30% by 2025.
• Velo3D’s strategic shift focuses on higher-value systems with increased average selling prices.
• The company reduced operating expenses by over 20% compared to 2023.
• Velo3D aims to achieve EBITDA profitability by the first half of 2026.

Company Performance

Velo3D’s performance in Q4 2025 marks a notable improvement, particularly in its financial metrics and strategic direction. The company has shifted its focus to producing advanced systems with higher average selling prices, moving away from a volume-driven approach. This transition is supported by operational efficiencies, including cost control and supply chain optimization, which have contributed to a 20% reduction in operating expenses from 2023 levels.

Financial Highlights

• Q4 Revenue: $12.6 million (significant year-over-year increase)
• Full Year 2025 Revenue Guidance: $50-$60 million
• Gross Margin: Negative 3.5%, with a target above 30% by 2025
• GAAP Net Loss: $21.7 million
• Non-GAAP Net Loss: $22.2 million
• Adjusted EBITDA: Improved to -$14.6 million from -$50 million in Q4 2023

Outlook & Guidance

Looking ahead, Velo3D is optimistic about its path to profitability, projecting revenue growth of over 30% in 2025. However, InvestingPro data reveals that analysts do not anticipate the company will be profitable this year, with two analysts recently revising their earnings expectations downward. The company is focusing on enhancing its gross margin and has set a capital expenditure guidance of $15-$20 million, with operating expenses expected to range between $40-$50 million. The company operates with a moderate level of debt, which could impact its financial flexibility.

Unlock comprehensive financial analysis and valuation metrics with InvestingPro’s detailed Research Report, featuring expert insights and peer comparisons. Additionally, Velo3D aims for its Rapid Production Solutions (RPS) to contribute 40% of total revenue by 2026.

Executive Commentary

CEO Arun Jaldi emphasized the company’s strategic focus, stating, "We are not chasing growth at any cost. We’re building sustainable, profitable momentum." He further highlighted Velo3D’s potential as a solid investment, asserting, "Velo3D is no longer a speculative bet. It’s a smart, long-term investment opportunity with significant upside potential."

Risks and Challenges

• The company faces challenges in achieving its targeted gross margin improvements.
• Market conditions and competition in the additive manufacturing sector may impact growth.
• Supply chain disruptions could affect production timelines and costs.
• Economic uncertainties and policy changes may influence demand in key sectors like aerospace and defense.

Velo3D’s latest earnings call underscores its commitment to strategic realignment and financial improvement, positioning itself as a formidable player in the high-end additive manufacturing market.

Full transcript - Velo3D Inc (VLD) Q4 2024:

Conference Moderator: Greetings, and welcome to the Velo3D Fiscal Year twenty twenty four Financial Results Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Bob Okunsky, Vice President, Investor Relations at Velo3D.

Please go ahead.

Bob Okunsky, Vice President, Investor Relations, Velo3D: Thank you. I’d like to welcome everyone to our fourth quarter and fiscal year twenty twenty four earnings conference call. On the call today, we will start out with comments from Arun Jaldi, CEO of Velo3D, who will provide an overview of the new Velo3D and our strategic priorities to position the company for profitable growth. Following Arun’s comments, Hall Xu, our CFO, will then review our fourth quarter financial results and provide our guidance. As a reminder, a replay of this call will be available later today on the Investor Relations page of our website.

During today’s call, we 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 our twenty twenty four ten K and additional twenty twenty four second filings. Please see those documents for additional information regarding those factors that may affect these forward looking statements. Also, we 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 GAAP to non GAAP reconciliations. We have also posted a set of PowerPoint slides providing additional details on our strategic initiatives and financial performance on the Events and Presentations page of our Investor Relations website.

With that, I’d like to turn the call over to Arun Jelbi, CEO of Velo3D. Arun?

Arun Jaldi, CEO, Velo3D: Good afternoon, and thank you for joining Velo3D’s fourth quarter and fiscal year twenty twenty four earnings conference call. Today marks an exciting and transformative milestone for our company. As we discuss the strategic combination with Airaid Additive, Inc, which is the parent company of Airaid Additive Nurse acquisition Corp, signaling the beginning of Velo3D two point zero. This combination is a cornerstone of our renewed focus on driving sustainable, profitable growth and positioning ourselves for long term value creation. As an investor, you recognize the importance of growth opportunities that are both impactful and strategic.

My decision to invest in Velo3D through Arrayed Additive stems from the immense potential I see in the combining our companies together. Together, we now offer unmatched metal additive manufacturing capabilities, leveraging the best technologies and expertise from both sides. This powerful synergy positions us to capitalize on significant growth opportunities in key sectors, including aerospace, defense, automotive and engineering. We’re confident that this strategic integration will not only enhance our COMPT2 edge, but also deliver substantial long term value for our shareholders. As we move forward, we remain committed to driving innovation and achieving sustainable growth, ensuring that Wella3D is well positioned for our continued success.

There are seven key investor highlights from our recent transformation include a high growth, high margin business model built for profitability. What does that mean to Velo3D? We have shifted from a volume driven model to a value driven strategy focused on maximizing profitability, for example, fewer higher value system sales. We are emphasizing the sale of advanced systems with significant higher ASPs, enabling better margins and longer term customer relationships. That is the diverse revenue streams.

In addition to system sales, our revenue mix now includes rapid production solutions, a recurring service oriented offering enabling scalable parts production. And we also are stepping into services and software licensing, a predictable margin asset to revenues and finally, operational efficiency. Cost control initiatives and supply chain optimization are lowering our breakeven point. What is the outcome of doing this? As a result, we are building a resilient business with consistent cash flow potential and clear path to profitability.

The second key highlight is strategic synergies expanding market reach and technological depth. The combination with Aered Additive is accelerating our transformation in powerful ways. We, with a minimal product and customer overlap, this partnership adds complementary capabilities without cannibalizing existing business. We are increasing the material expertise. ARAID’s leadership in magnesium and aluminum three d printing allows us to address lightweight high strength applications in aerospace, defense and motorsports and EVs.

Expanded total addressable market. Our combining offering significantly broadens the scope of industries and applications we serve, solidifying our position as a technological enabler across sectors. The third key point is strong positioning amid industry tailwinds. We are in the right place at the right time, reassuring momentum. Major U.

S. Policy initiatives and global supply chain shifts are fueling onshore manufacturing, especially for strategic sectors like defense and aerospace. Velo3D, a U. S. Based leader, as the only U.

S. Large bedside supplier of high end laser powder bed fusion systems, We offer mission critical reliability with local accountability. National security advantage. Our solutions are increasingly aligned with federal priorities around manufacturing independence and technological sovereignty. What are the strategic advantages of this?

We are not just riding the wave, we are helping to shape it by reassuring momentum as a U. S. Business leader as a U. S. Base leader and national security advantage, we are actually thriving.

The fourth key point I want to address here is trend in financial position for scalable growth. With the close of Array latitude transaction, we have taken major steps to solidify our balance sheet. We have reduced our debts. We eliminated nearly all senior debt and warrant liabilities removing financial overhang and reducing interest expense burdens. We had a bridge finance secured for 15,000,000 secures our runway to execute near term growth and integration plans.

We are focused on capital allocation with proper budgeting. Every dollar now supports initiatives that accelerates revenue, margin expansion and long term shareholder value. The fifth key point I want to address here is accelerating revenue growth and backlog momentum. We are seeing tangible commercial transaction. There is a firm $16,000,000 backlog, a growth base of commitment system orders, service contracts and RPS projects.

We have a robust pipeline, strong engagement across different defense primes, aerospace OEMs, semiconductor manufacturers and energy leaders. There is a high visibility into the future revenue. With long cycle procurement and high switching costs, our installed base leads to recurring revenue opportunities and high consumer retention. What is that to do with all of this? What that means is our near term growth is underpinned by real demand, not speculative opportunities with revenue growth of more than 30% in 2025.

We have introduced rapid production solution, the future of manufacturing. Now our RPS business is quickly becoming a cornerstone of our strategy. It solves industry pain points of with high mix, low volume production is hard to scale. RPS does it with unmatched speed and repeatability. There is a recurring revenue driver.

RPS projects are typically long term offering consistent cash flow with high margins. We have vertically integrated strategy. We are expanding our partnerships and capabilities to bring more of the value chain in house, reducing cost of goods and improving gross margins. Our target, RPS to contribute 40% of total revenue by 2026 with further upside through volume and value add services. It does not mean we are deviating our system sales.

It means we are adding more value to Velo as revenue with RPS solution provider. There is a clear path to profitability by 2026. That is a major key point I want to address here. We are laser focused on achieving EBITDA profitability by first half of twenty twenty six, driven by improved ASPs and gross margins from system sales, scalable recurring revenue from RPS and services, operating leverage as we grow revenue with limited cost expansion, a more agile and integrated organization structure. We’re not chasing growth at any cost.

We’re building sustainable, profitable momentum. What does that mean for investors? A transformed high margin business model, access to rapidly growing markets with limited competition, technological leadership in defense critical manufacturing, strengthened balance sheet and operational discipline, a credible and visible path to profitability and value creation. Join us at the inflection point. We are done we have done the heavy lifting.

The strategic pieces are in place. The momentum is building. We believe Velo3D is no longer a speculative bet. It’s a smart, long term investment opportunity with significant upside potential. We are committed to transparency, disciplined execution and building enduring value for our shareholders.

We hope you will join us as we execute on our strategic vision. Thank you. I now invite Paul Xu, our CFO, to discuss our detailed financial performance and guidance.

Hall Xu, CFO, Velo3D: Thank you, Arun. Moving on to our financial performance. Fourth quarter revenue was $12,600,000 up significantly from a year ago and sequentially. The improvement was driven by increased system sales as well as our new go to market strategy starting to gain traction. Gross margin for the fourth quarter was negative 3.5% and primarily due to lower fixed cost absorption.

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. As RTS revenue begins to ramp, we expect our overall margin to improve as we work through the initial set of costs associated with new parts. We also made significant progress on reducing our operating cost structure in the fourth quarter as non GAAP OpEx declined year over year to $18,700,000 excluding share based compensation. On an annual basis, 2024 operating expenses declined more than 20% as compared to 2023. The decrease in operating expenses reflects a reduction in all expense categories and savings related to our realignment initiatives, which included two rounds of reductions in force.

As we begin 2025 with a new outlook, we are making investments in certain areas to ensure the delivery of our financial plan and the high quality services that our customers have come to expect from Velo3D. However, even with the planned investments, we expect a reduction in OpEx as a percentage of revenue on a year over year basis. GAAP net loss for the quarter was $21,700,000 dollars On a non GAAP basis, which excludes stock based compensation and a non cash gain as a result of the debt for equity exchange, net loss was $22,200,000 Adjusted EBITDA for the quarter excluding stock based comps gained from the debt for equity exchange and one time restructuring charges was negative $14,600,000 compared to a negative $50,000,000 in Q4 of twenty twenty three. We exited 2024 with $16,000,000 in backlog and added to our growing sales pipeline in the first quarter of this year. In relation to our balance sheet, we have significantly strengthened our financial position due to three factors.

One, the elimination of a substantial amount of our senior secured debt, which had a very aggressive repayment schedule. Two, our recently completed warrant exchange transaction, which addressed imminent cash liabilities and preserved cash for our business operations. And finally, we secured $15,000,000 in bridge financing, which gives us the resources to execute on our strategic initiatives. Turning to 2025 full year guidance. We expect revenue to be in the range of $50,000,000 to $60,000,000 Gross margin to improve in sequential quarters exceeding 2025 at above 30%.

As we invest in our future of profitable growth and expansion plans, we expect non GAAP operating expenses to be in a range of $40,000,000 to $50,000,000 and capital expenditure to be between $15,000,000 and $20,000,000 In conclusion, we are focused on executing our new business strategy with a clear path to profitability in 2026 through a combination of revenue growth, margin expansion and identified expense reductions. With that, I’d like to open the call to questions.

Conference Moderator: Thank you. We’ll now be conducting a question and answer session. Thank you. There are no questions at this time. I would like to hand the floor back over to Arun Geldi for any closing comments.

Arun Jaldi, CEO, Velo3D: Thank you, everyone. Thank you for supporting Velo3D all these years as we change our pathway and get to a new position as a new Velo2.0. We need your support and give us the momentum needed for the company. Velo is not just a metal additive manufacturing company in U. S, it’s a part of U.

S. Strategy for manufacturing. That’s the reason why Arrayed Additive has believed in Velo and want to be making Velo proud. We really want everyone to support us in this journey. We’ll make proud in getting back manufacturing to U.

S. As President Trump’s vision is. We want to make sure Velo actually executes in that manner. A hybrid model in Velo is a proven thesis and it will grow its strategy as we evolve. And 2025 is a new beginning to Velo.

And I appreciate all my team and investors, our customers and vendors in supporting us. Thank you very much for your support. Have a good weekend and great year ahead. Thank you.

Conference Moderator: This concludes today’s conference call. You may disconnect your lines at this time. Thank you for your participation.

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