Velo3d, Inc. ((VLDX)) has held its Q4 earnings call. Read on for the main highlights of the call.
Velo3D’s Latest Earnings Call: Strategic Advancements Amid Financial Challenges
The recent earnings call for Velo3D, Inc. painted a picture of strategic progress and a fortified financial stance, with a promising outlook for future growth. Despite these positive developments, the company faces challenges with current financial metrics, including a negative gross margin and a significant net loss. However, Velo3D has outlined a clear path to profitability by 2026, expecting improved financial outcomes as strategic initiatives are executed.
Strategic Combination with Arrayed Additive Inc.
Velo3D announced a transformative milestone with its strategic combination with Arrayed Additive Inc. This move significantly enhances Velo3D’s market position by providing unmatched metal additive manufacturing capabilities, particularly in the aerospace, defense, automotive, and engineering sectors. This strategic alignment is expected to bolster Velo3D’s competitive edge in these industries.
Shift to High Margin Business Model
The company has transitioned from a volume-driven to a value-driven strategy, focusing on higher-value system sales with significant average selling prices (ASPs). This shift is anticipated to result in better margins and foster long-term customer relationships, aligning with Velo3D’s strategic goals for sustainable growth.
Strengthened Financial Position
Velo3D has made significant strides in strengthening its financial position by eliminating nearly all senior debt and warrant liabilities. The company secured $15 million in bridge finance and reduced operating expenses by more than 20% compared to 2023, positioning itself for future financial stability and growth.
Backlog Growth and Revenue Visibility
Exiting 2024, Velo3D reported a $16 million backlog and anticipates revenue growth of more than 30% in 2025. This growth is driven by a robust pipeline and high visibility into future revenue, suggesting a positive outlook for the company’s financial performance in the coming years.
Negative Gross Margin
The gross margin for the fourth quarter was negative 3.5%, primarily due to lower fixed cost absorption. However, Velo3D expects improvements as operational efficiency initiatives progress, which should enhance the company’s financial metrics moving forward.
Net Loss and Negative EBITDA
Velo3D reported a GAAP net loss of $21.7 million for the quarter, with an adjusted EBITDA of negative $14.6 million. Despite these figures, the company anticipates improvements as its business strategy is implemented, aiming for a turnaround in financial performance.
Forward-Looking Guidance
Looking ahead, Velo3D provided guidance for 2025, expecting revenue to range between $50 million and $60 million, with gross margin improvements exceeding 30% by the end of the year. Operational efficiency initiatives are expected to enhance margins as RTS revenue ramps up. Non-GAAP operating expenses are projected to be between $40 million and $50 million, with capital expenditures estimated at $15 million to $20 million. These strategic initiatives are designed to drive revenue growth, margin expansion, and cost reductions, setting a path to profitability by 2026.
In conclusion, Velo3D’s earnings call highlighted a strategic focus on growth and financial strengthening, despite current challenges. The company’s initiatives, including its strategic combination with Arrayed Additive Inc. and a shift to a high-margin business model, are expected to drive future success. With a clear path to profitability by 2026, Velo3D is poised for a promising future in the metal additive manufacturing industry.