Earnings call transcript: Velo3D’s Q2 2025 revenue rises 31%, aims for profitability

Velo3D Inc., a player in the advanced manufacturing sector, reported a 31% increase in revenue for the second quarter of 2025, reaching $13.6 million. Despite ongoing challenges, the company showed improvement in its gross margin and reduced its non-GAAP operating expenses. The company is targeting EBITDA profitability by 2026, driven by strong demand in the aerospace and defense sectors. The stock currently trades at $0.42, with a market capitalization of $4.24 million, showing significant momentum with a 45% return over the past six months. According to InvestingPro analysis, the company maintains an excellent financial health score of 3.8, suggesting resilience despite market volatility.

Key Takeaways

• Revenue for Q2 2025 increased by 31% year-over-year to $13.6 million.
• Gross margin improved significantly from -28% to -11.7%.
• Non-GAAP operating expenses decreased to $8.1 million from $13.4 million.
• The company launched Rapid Production Services, seeing a 79% growth in bookings.
• Velo3D targets EBITDA profitability by 2026.

Company Performance

Velo3D’s performance in the second quarter of 2025 highlights its strategic focus on the aerospace and defense sectors, which account for 87% of its Rapid Production Services demand. The company’s revenue growth of 31% year-over-year is a testament to its expanding footprint in these high-growth, mission-driven sectors. By consolidating functions and reducing fixed costs, Velo3D is positioning itself as a resilient and essential provider of mission-critical infrastructure. For deeper insights into Velo3D’s financial health and growth potential, InvestingPro subscribers can access comprehensive analysis and over 30 additional financial metrics.

Financial Highlights

• Revenue: $13.6 million, up 31% year-over-year
• Gross Margin: -11.7%, improved from -28% the previous year
• Non-GAAP Operating Expenses: $8.1 million, down from $13.4 million
• Adjusted EBITDA: -$8.9 million
• Cash and Cash Equivalents: $854,000

Outlook & Guidance

Velo3D has set ambitious targets for the remainder of 2025 and beyond. The company projects its revenue for the year to be between $50 million and $60 million, with a gross margin target of 30% by year-end. Non-GAAP operating expenses are expected to range from $40 million to $50 million, and capital expenditures are projected to be between $15 million and $20 million. The company is on a path to achieve EBITDA profitability by 2026.

Executive Commentary

CEO Arun Jelvi highlighted the company’s transformation, stating, "We are not just improving the business. We are redefining what this business is." He emphasized the importance of Rapid Production Services, saying, "RPS directly addresses a critical market need." Jelvi also underscored the company’s long-term vision: "We are building a company that is resilient, essential and built for the long haul."

Risks and Challenges

Before diving into the risks, investors should note that InvestingPro offers exclusive access to detailed risk assessments and comprehensive financial analysis through its Pro Research Report, available for over 1,400 US stocks including Velo3D. These reports provide actionable insights that help investors make informed decisions based on thorough market analysis.

• Supply Chain Issues: Potential disruptions could impact production timelines.
• Market Saturation: Increased competition in the aerospace and defense sectors.
• Macroeconomic Pressures: Economic downturns could affect customer budgets.
• Cash Reserves: Limited cash and cash equivalents may constrain operational flexibility.
• Technological Advancements: Staying ahead in innovation is crucial for maintaining competitive edge.

Q&A

The earnings call did not feature any specific questions during the Q&A session, leaving some analyst concerns unaddressed. However, the company’s strategic focus and financial targets were clearly communicated throughout the presentation.

Full transcript - Velo3D Inc (VLD) Q2 2025:

Conference Operator: a reminder, this conference is being recorded. It is now my pleasure to introduce your host, James Carvanara, Investor Relations.

Thank you, James. You may begin.

James Carvanara, Investor Relations, Velo3D: Thank you. I’d like to welcome everyone to Vello 3D’s second quarter twenty twenty five earnings call. 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 twenty twenty four ten ks and additional SEC filings. Please see those documents for additional information regarding those factors that may affect these forward looking statements. 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 GAAP to non GAAP reconciliations. The company has posted a set of PowerPoint slides providing additional details on its strategic initiatives and financial performance on the Events and Presentations page of the company’s Investor Relations website. 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 Jelvi, CEO of Velo3D. Arun, please go ahead.

Arun Jelvi, CEO, Velo3D: Thank you, James. Good afternoon, everyone, and thank you all for joining Velo3D’s second quarter twenty twenty five earnings conference call. Let me start with a simple message

James Carvanara, Investor Relations, Velo3D: of the company’s Investor Relations website. 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 Jelvi, CEO of Velo3D. Arun, please go ahead.

Arun Jelvi, CEO, Velo3D: Thank you, James. Good afternoon, everyone, and thank you all for joining Velo3D’s second quarter twenty twenty five earnings conference call. Let me start with a simple message. This quarter marks a pivotal step in Velo3D’s transformation from an innovative equipment provider to a recurrent message. This quarter marks a pivotal step in Velo3D’s transformation from an innovative equipment provider to a recurring high margin industrial technology platform.

We’re not just seeing signs of this shift. We are living it operationally, financially and strategically. Our Q2 performance demonstrates not only solid progress, but also the early impact of key changes we have made to position the company for sustainable growth, margin expansion and long term value creation. RPS building momentum through our platform for scale. A central pillar of this transformation is our rapid production services or RPS.

And I’m pleased to report momentum is building quickly. We officially launched RPS in first quarter and in just one full quarter of operation, the results are already speaking for themselves. RPS directly addresses a critical market need. The ability to deliver high complexity, high performance production parts at speed, onshore, on demand and with complete digital repeatability. RPS is resonating because it sits at the intersection of manufacturing capability, national security and supply chain modernization.

A convergence that’s reshaping the industrial economy. RPS is gaining market share fast. Let’s talk numbers because the signal here is loud and clear. RPS bookings grew 79% quarter over quarter showing rapid customer adoption in just its second full quarter of launch. 78% of this growth came from new customers, demonstrating both market expansion and new logos entering our ecosystem.

And in terms of industry mix, space and defense accounted for a combined 87% of our RPS demand. With space contributing 54% and defense 33%. This is meaningful. These sectors are high growth, well funded and high mission driven and they are increasingly looking to Velo3D as a trusted production partner. Our success in these verticals is a direct result of years of investment in precision hardware, intelligent software and material science, all of which are now whole seeking into a scalable recurring revenue platform.

At the end of second quarter, our backlog including system orders, service contract and RPS projects stood at $16,000,000 Just weeks later by July 25, it grew to $18,000,000 Now here’s what’s important. While the top line backlog figure is roughly consistent with Q1, the composition has fundamentally improved. We are seeing a significant mix shift towards RPS and services, which are higher margin, more predictable and longer term in nature. This is precisely the kind of revenue transformation we have been focused on and now it’s taking hold. Beyond performance metrics, Q2 was packed with strategic wins and partnerships that further reinforce our leadership in additive manufacturing for mission critical industries.

Let me highlight a few. A $4,000,000 master services agreement with Viaspace spanning two years. This expands our footprint in commercial space sector and deepens production ties with an emerging leader in propulsion and launch technology. The twenty two million dollars partnership with Amiro, which continued to gain traction in Q2, a major milestone was the qualification of our powder material through Auburn University’s National Center for Additive Manufacturing Excellence. A critical validation point that derisks scale up in regulated aerospace programs.

A five year $15,000,000 master service agreement with Momentus focused on delivering scalable production parts through RPS, a key signal customer confidence in a long term outsourcing of complex parts to our platform. A new agreement with Ohio Ordnance works where Velo3D will provide applications engineering and design analysis services to support their three d printed military weapons development program. This is a strong vote of confidence in our design to production capabilities in defense space. Mears Machine Corporation, a leader in precision components purchased its fourth Saphyr XC printer. A clear indicator of both the technical trust and ROI of our customers seen Velo3D platforms.

And just recently, signed a groundbreaking partnership with BlueForge Alliance to develop and qualify copper nickel for use in our large format Sapphire XC printers. This is the first time this critical maritime alloy will be adopted for laser bed fusion and it plays directly into U. S. Maritime industrial base program to accelerate shipbuilding and defense supply chain resilience. These wins are strategic, accretive and synergistic to our broader goal to position Velo3D as the backbone of digital manufacturing across national security, energy and industrial sectors.

Operational execution and financial visibility. From an operational standpoint, our team is executing with discipline and speed. Our go to market motion is becoming sharper and more verticalized and our R and D continues to be focused on unlocking high material performance, system reliability and production scalability. From a financial standpoint, we are seeing the results. A $22,900,000 in revenue through the 2025 with a clear line of sight to achieving over 30% year over year growth.

Gross margin improvement driven by better pricing, optimized production and RPS scaling. Stronger operating leverage as we consolidate functions and reduce fixed cost intensity. And most importantly, we remain firmly on track to reach EBITDA profitability by 2026. This will be enabled by a combination of high average selling prices and systems with stronger margins, a growing RPS base that delivers predictable compounding revenue, expansion of our software and service offerings and enhanced operational efficiency across the organization. We are not chasing growth blindly.

We are focused on sustainable, profitable scale that drives long term shareholder value. For investors, here’s what this all adds up to. Velo3D is becoming a mission critical infrastructure provider for precision manufacturing. Our business model is shifting from transactional to platform driven with clear visibility into customer lifetime value, expanding gross margins and a path to durable profitability. We’re building AI native production as a service model, a category defining company to the convergence of national defense, space systems, industrial AI and reshor manufacturing.

Few companies have this combination of deep technical mode, platform leverage, recurring revenue visibility and alignment with macroeconomic and geopolitical trends that are reshaping the industrial base. So as we close out this quarter, I want to emphasize, we are not just improving the business. We are redefining what this business is. The pieces are coming together, the customers, the contracts, the tech stack, the recurring engine and it’s happening at precisely the right moment in the market. We’re building a company that is resilient, essential and built for the long haul.

Thank you for your continued support and partnership. I’ll now turn the call over to our CFO, Houg Zhu to walk you through the financial details of Q2.

Houg Zhu, CFO, Velo3D: Thank you, Arun. Second quarter revenue was $13,600,000 up 31% compared to the year ago quarter. The increase was driven primarily by a higher number of systems sold. 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. Gross margin for the second quarter was negative 11.7% compared to a negative 28% in the year ago quarter.

Let me provide some color on gross margin. The reason for the negative gross margin is primarily attributable to two systems sold in this quarter that were manufactured in early twenty twenty four where the company had significantly higher fixed costs and overhead. We do not expect such remnants of the past to meaningfully affect future financial performance. As such, we expect gross margin to improve as we go through 2025 as a result of operational efficiency initiatives that we started to implement in the back half of last year and continue to implement this year. As RPS revenue begins to ramp, we expect our overall margin to improve as more and more parts reach production status.

Non GAAP operating expenses, which excludes stock based compensation, declined year over year to $8,100,000 as compared to $13,400,000 in the 2024. This decrease reflects a reduction in all expense categories and savings related to our cost reduction initiatives. Sequentially, non GAAP operating expenses were also down compared to $8,800,000 in the 2025. GAAP net loss for the quarter was $13,800,000 compared to a net loss of $172,000 in the year ago quarter. Non GAAP net loss for the quarter was $11,300,000 compared to a non GAAP net loss of $21,700,000 in the year ago quarter and $8,900,000 in the 2025.

Non GAAP net loss excludes stock based compensation of 2,400,000.0 Adjusted EBITDA for the 2025 was negative 8,900,000 compared to a negative $15,000,000 in the 2024 and a negative $6,900,000 in the 2025. As of 06/30/2025, we had a backlog of $15,900,000 and $17,800,000 as of 07/25/2025. This compares to $16,000,000 in backlog at the 2024 and $18,000,000 of backlog in the previous quarter. Importantly, as Arun mentioned, the composition of our backlog made a significant shift toward RPS driven by strong demand from the space and defense sectors. In terms of our balance sheet, as at the end of the second quarter, we had a cash and cash equivalent of $854,000 compared to $1,200,000 at the 2024.

We are reiterating our 2025 full year guidance today. We expect revenue to be in the range of 50,000,000 to $60,000,000 gross margin to improve throughout the year exiting 2025 at or above 30%. We expect full year 2025 non GAAP operating expenses to be between 40,000,000 and $50,000,000 and capital expenditure of 15,000,000 to $20,000,000 for the year. In conclusion, we remain focused on executing our business strategy with a clear path to profitability on a basis. We expect full year 2025 non GAAP operating expenses to be between 40,000,000 and 50,000,000 and capital expenditure of 15,000,000 to $20,000,000 for the year.

In conclusion, we remain focused on executing our business strategy with a clear path to profitability on an adjusted EBITDA basis in 2026. With that, operator, I’d like to open the call to questions on adjusted EBITDA basis in 2026. With that, operator, I’d like to open the call to questions.

Conference Operator: Thank you. We will now be conducting a question and answer session. Thank you. There are no further questions at this time. I’d like to turn the floor back over to management for any closing remarks.

Arun Jelvi, CEO, Velo3D: Thank you, operator. Velo3D is in the midst of an exciting transformation, one defined by commercial momentum, operational excellence and a sharp focus on value creation. This past quarter was a turning point. We saw continued strong demand across our core verticals with especially high traction in aerospace and defense industries, where precision, reliability and innovation are non negotiable. Our differentiated technology is winning and that’s reflected in the strategic long term contracts we signed this quarter.

These agreements are not just large in value, they are multi year commitments from industry leaders that expand our backlog and validate our role as a mission critical partner. We also took a major step forward financially. This model continues to resonate deeply with customers, delivering speed, quality, and reliability at scale. Customer confidence in Velo three d is stronger than ever. We’re seeing growing adoption of our solutions, increased repeat business, and deeper partnerships.

All clear signals that we are building something enduring. We believe the opportunity ahead of us is massive. With disciplined execution and strategic focus, we are positioning Velo3D to deliver sustainable growth and long term value for our shareholders. Thank you for your continued trust, support and investment in our vision. Thank you again.

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

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