Velo3D Announces Sequential Revenue Growth of 60% / Year over Year Growth of More Than 160% for Second Quarter 2022

Company Reiterates FY2022 Revenue Guidance of $89 Million 

• >15x revenue growth over last 6 quarters – on track to become the largest metal additive manufacturing company, possibly as early as the end of 2022¹
• Strong demand - booked $18 million in new orders, backlog of $55 million
• 2022 confidence – 1H22 revenue / backlog account for >95% of 2022 revenue guidance
• Launched new Sapphire XC 1MZ system – largest build volume of any laser PBF printer in its class - initial shipments in Q322
• Maintained strong balance sheet – exited Q222 with $142 million in cash

Velo3D, Inc. (NYSE: VLD), a leading additive manufacturing technology company for mission-critical metal parts, today announced financial results for its second fiscal quarter of 2022.

“Our tremendous success in providing our customers with the industry leading additive manufacturing solutions they need is reflected in our revenue growth, increasing more than 15 fold since the first quarter of 2021,” said Benny Buller, CEO of Velo3D. “We have accomplished this while the revenue of our peers has been relatively flat over the same period. As a result, given our expected strength of our business in the second half of the year, it is possible that we will be the industry leader in metal additive manufacturing as we exit 2022, quicker than even we anticipated.”

“Demand for our industry-leading Sapphire family of systems remains high as we booked $18 million in new orders during the quarter and exited the quarter with $55 million in total backlog. As a result of this strong demand, we now have significant visibility in achieving our revenue guidance this year as more than 95% of our 2022 revenue forecast is now either recognized, booked or recurring revenue. We also expanded our product leadership during the quarter with the recent launch of our Sapphire XC 1MZ. With part sizes up to 10 cubic feet, we believe this is the world’s largest commercially available metal powder bed fusion production system with initial customer shipments commencing this quarter,” continued Buller.

“Looking forward, given our first half execution, strong second quarter bookings, revenue visibility through our backlog and the further scaling of Sapphire XC production, we are very confident in our ability to meet our 2022 revenue guidance of $89 million,” concluded Buller.

____________________

¹ Company comments and forecasts concerning market share, peer revenue performance and AM industry growth based on data published in the CONTEXT World - Shipment and Forecast Report for Global AM / 3DP Industry as of June 30, 2022 for metal printer sales for the leading Western AM brands. Additional details related to this report can be found in the company’s second quarter supplemental earnings slides available on the company’s investor relations website at https://ir.velo3d.com/.

Information about Velo3d’s use of non-GAAP information, including a reconciliation to U.S. GAAP, is provided at the end of this release.

Summary of Second Quarter 2022 results

Revenue for the second quarter was $19.6 million, an increase of 60% compared to the first quarter of 2022 and more than 160% year over year. The improvement in revenue was primarily driven by a more favorable mix of Sapphire XC system sales resulting in an increase in average selling price. Recurring revenue was in line with forecasts and is expected to increase in the second half of 2022 due to the higher number of systems in the field.

Gross margin for the quarter was 6% and continues to reflect the impact of launch customer pricing for the company’s Sapphire XC systems shipped during the quarter as well as elevated overhead absorption and bill of materials costs as the company scales its manufacturing operations. While the company’s gross margin for the second quarter was in line with expectations, ongoing supply chain challenges have changed the timing of certain forecasted cost reduction benefits that will impact gross margin in the second half of the year. Bill of material cost savings which were anticipated for the second half of 2022, are now expected to be delayed until the first half of 2023 as the company reduces pre-purchased, higher cost inventory acquired in the first half of 2022 to offset ongoing component shortages and delivery delays. Additionally, these challenges will impact the delivery schedule of its remaining launch customer systems with certain shipments shifting to the third and fourth quarter resulting in more gross margin impact in those quarters than initially forecasted. The company continues to expect its per unit labor and overhead costs to be in line with its plan due to its manufacturing scale up. As a result, the company now expects its third quarter gross margin to be in line with its second quarter gross margin and fourth quarter 2022 gross margin to be in the range of 11% to 14%.

Operating expenses for the quarter declined slightly to $27.5 million, primarily as a result of lower general and administrative costs partially offset by higher sales and marketing expenses to fund the company’s global expansion plans. Non-GAAP operating expenses, which excluded stock-based compensation expense of $5.0 million, was $22.5 million.

Net income for the quarter was $128 million and reflected a gain of $154 million on the fair value of warrants and contingent liabilities. Non-GAAP net loss, which excludes the gain on fair value of warrants and contingent earnout liabilities as well as stock-based compensation, was $21.0 million. Adjusted EBITDA for the quarter, excluding the same metrics, was a loss of $19.8 million. For more information regarding the company’s non-GAAP financial measures, see “Non-GAAP Financial Information” below.

The company ended the quarter with a strong balance sheet with $142 million in cash and investments. As a result, the company believes it has the liquidity for ongoing technology investments as well as providing the resources needed to fund its growth plans.

Guidance

For fiscal year 2022, given its strong year to date results and significant backlog, the company is reiterating is previous revenue guidance of $89 million.

Additional information for fiscal year 2022:

• The company’s business continues to evolve due to new product introductions and changing customer demand trends
• The company booked $18 million in new orders in the second quarter and has a total backlog of $55 million
• More than 95% of the company’s 2022 sales forecast is either recognized, booked or expected recurring revenue
• Product mix - the company is observing significantly higher average selling prices due to increased Sapphire XC product demand which is expected to offset a lower than forecasted unit count
• End customer mix – the company expects to continue to see a material shift in mix towards higher recurring purchasing rates from existing customer for 2022 than in the initial model

The company will host a conference call for investors this afternoon to discuss its second quarter 2022 performance at 2:00 p.m. Pacific Time. The call will be webcast and can be accessed from the Events page of the Investor Relations section of Velo3D’s website at https://ir.velo3d.com/.

About Velo3D:

Velo3D is a metal 3D printing technology company. 3D printing—also known as additive manufacturing (AM)—has a unique ability to improve the way high-value metal parts are built. However, legacy metal AM has been greatly limited in its capabilities since its invention almost 30 years ago. This has prevented the technology from being used to create the most valuable and impactful parts, restricting its use to specific niches where the limitations were acceptable.

Velo3D has overcome these limitations so engineers can design and print the parts they want. The company’s solution unlocks a wide breadth of design freedom and enables customers in space exploration, aviation, power generation, energy and semiconductor to innovate the future in their respective industries. Using Velo3D, these customers can now build mission-critical metal parts that were previously impossible to manufacture. The end-to-end solution includes the Flow™ print preparation software, the Sapphire® family of printers and the Assure™ quality control system—all of which are powered by Velo3D’s Intelligent Fusion® manufacturing process. The company delivered its first Sapphire® system in 2018 and has been a strategic partner to innovators such as SpaceX, Honeywell, Honda, Chromalloy and Lam Research. Velo3D has been named to Fast Company’s prestigious annual list of the World’s Most Innovative Companies for 2021. For more information, please visit velo3d.com, or follow the company on LinkedIn or Twitter.

VELO, VELO3D, SAPPHIRE and INTELLIGENT FUSION, are registered trademarks of Velo3D, Inc.; and WITHOUT COMPROMISE, FLOW and ASSURE are trademarks of Velo3D, Inc. All Rights Reserved © Velo3D, Inc.

Amounts herein pertaining to June 30, 2022 represent a preliminary estimate as of the date of this earnings release and may be revised upon filing our Quarterly Report on Form 10-Q with the Securities and Exchange Commission (the “SEC”). More information on our results of operations for the three months ended June 30, 2022 will be provided upon filing our Quarterly Report on Form 10-Q with the SEC.

Forward-Looking Statements:

This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1996. The company’s actual results may differ from its expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect”, “estimate”, “project”, “budget”, “forecast”, “anticipate”, “intend”, “plan”, “may”, “will”, “could”, “should”, “believes”, “predicts”, “potential”, “continue”, and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, the company’s guidance for full year 2022 (including the company’s estimates for revenue), the company’s expectations regarding its potential to become the largest company in metal additive manufacturing, its recurring revenue and its pricing, improved production efficiencies and gross margin during 2022, the company’s strategic priorities for 2022 (including the company’s market and customer expansion plans), the company’s expectations regarding its liquidity and capital requirements, and the company’s other expectations, hopes, beliefs, intentions or strategies for the future. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. You should carefully consider the risks and uncertainties described in the “Risk Factors” section of the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the “FY 2021 10-K”), which was filed by the company with the SEC on March 28, 2022 and the other documents filed by the company from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Most of these factors are outside the company’s control and are difficult to predict. Factors that may cause such differences include, but are not limited to: (1) the inability to recognize the anticipated benefits of the merger transaction, which may be affected by, among other things, competition, the ability of the company to grow and manage growth profitably, maintain relationships with customers and suppliers and retain its key employees; (2) costs related to the merger transaction; (3) changes in the applicable laws or regulations; (4) the possibility that the company may be adversely affected by other economic, business, and/or competitive factors; (5) the impact of the global COVID-19 pandemic; and (6) other risks and uncertainties indicated from time to time described in the FY 2021 10-K, including those under “Risk Factors” therein, and in the company’s other filings with the SEC. The company cautions that the foregoing list of factors is not exclusive and not to place undue reliance upon any forward-looking statements, including projections, which speak only as of the date made. The company does not undertake or accept any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based.

Non-GAAP Financial Information

The company uses non-GAAP financial measures to help it make strategic decisions, establish budgets and operational goals for managing its business, analyze its financial results and evaluate its performance. The company also believes that the presentation of these non-GAAP financial measures in this release provides an additional tool for investors to use in comparing the company’s core business and results of operations over multiple periods. However, the non-GAAP financial measures presented in this release may not be comparable to similarly titled measures reported by other companies due to differences in the way that these measures are calculated. The non-GAAP financial measures presented in this release should not be considered as the sole measure of the company’s performance and should not be considered in isolation from, or as a substitute for, comparable financial measures calculated in accordance with generally accepted accounting principles accepted in the United States (“GAAP”).

The information in the table below sets forth the non-GAAP financial measures that the company uses in this release. Because of the limitations associated with these non-GAAP financial measures, “Non-GAAP Net Loss”, “EBITDA”, “Adjusted EBITDA”, and “Adjusted Operating Expenses”, should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. The company compensates for these limitations by relying primarily on its GAAP results and using Non-GAAP Net Loss, EBITDA, Adjusted EBITDA, and Adjusted Operating Expenses on a supplemental basis. You should review the reconciliation of the non-GAAP financial measures below and not rely on any single financial measure to evaluate the company's business.

The following tables reconcile Net income (loss) to Non-GAAP Net Loss, EBITDA, and Adjusted EBITDA and Total Operating Expenses to Adjusted Operating Expenses during the three months ended June 30, 2022 and 2021, the six months ended June 30, 2022 and 2021 and the three months ended March 31, 2022 and 2021:

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets to the total of such amounts shown on the condensed consolidated statements of cash flows:

View source version on businesswire.com: https://www.businesswire.com/news/home/20220809005797/en/