Strategic Initiatives to Drive Significant Improvement in Profitability in 2023
- Record Q422 revenue – 56% sequential increase
- Continued demand – expected revenue growth of >50% for FY 2023
- Technology leadership – record Sapphire XC shipments in Q422
- Strong year on year sales growth – 200% for 2022
- New customers – increased customer base by >50% in 2022
CAMPBELL, Calif., Mar 2, 2022 – Velo3D, Inc. (NYSE: VLD), a leading additive manufacturing technology company for mission-critical metal parts, today announced financial results for its fourth quarter and fiscal year ended December 31, 2022.
“We exited the year with a strong fourth quarter performance as we exceeded our revenue forecast, added to our diversified customer base and maintained our technology leadership with the continued, successful ramp up of our Sapphire XC system,” said Benny Buller, CEO of Velo3D. “Overall, 2022 was another important and successful year for Velo3D. Despite a number of challenges, we were able to triple our annual revenue and demonstrate our commitment to innovation by further expanding our range of industry leading products. This success reflects strong execution as well as our ability to capitalize on customer’s increasing deployment of additive manufacturing solutions to produce the high value metal parts they need.”
“Specifically, we continue to see strong demand for our Sapphire family of printers as we shipped a record number of Sapphire XC systems during the quarter and commenced initial volume shipments of our next generation Sapphire XC 1MZ product. We also expanded our installed base with annual new customer growth in excess of 50% for the year. Finally, we booked $15 million in new orders in the fourth quarter and our backlog now totals $43 million. This provides significant revenue visibility for the first half of this year and positions us well to achieve 2023 revenue growth of more than 50%.”
“Looking forward, we remain very excited about the future given the significant market opportunity and the increasing adoption of our industry leading technology. We are confident that we have a clear path to profitability and our key initiatives for 2023 reflect this focus. These initiatives include programs for continued gross margin improvement, a 20% reduction in quarterly non-GAAP operating expenses by the end of 2023 as well as the benefits from the further execution of our previously announced supply chain and manufacturing efficiency improvements. Given our positive momentum coming into this year and the further ramp up of our new products, we believe we are well positioned to capitalize on the rapidly expanding market for mission critical, high value metal parts,” concluded Buller.
| ($ Millions, except percentages and per-share data) | 4th Quarter 2022 | 3rd Quarter 2022 | 4th Quarter 2021 | FY2022 | FY2021 | |
| GAAP revenue | $29.8 | $19.1 | $10.4 | $80.8 | $27.4 | |
| GAAP gross margin | 5.9% | (0.6%) | 16.2% | 3.6% | 18.1% | |
| GAAP Net Income (Loss)1 | $22.6 | ($75.2) | ($14.4) | $10.0 | ($107.1) | |
| GAAP Net Income (Loss) per diluted share | $0.11 | ($0.41) | ($0.08) | $0.05 | ($1.82) | |
| Non-GAAP Net Loss2 | ($16.4) | ($22.5) | ($17.5) | ($83.0) | ($51.9) | |
| Non-GAAP Net Loss per diluted share2 | ($0.08) | ($0.12) | ($0.10) | ($0.41) | ($0.88) | |
| Cash and investments | $80 | $113 | $223 | $80 | $223 |
Information about Velo3D’s use of non-GAAP information, including a reconciliation to U.S. GAAP, is provided at the end of this release.
- Reconciliations to U.S. generally accepted accounting principles (GAAP) financial measures are presented below under “Non-GAAP Financial Information”.
- Non-GAAP net loss and non-GAAP net loss per diluted share exclude stock-based compensation expense, and fair value adjustments for the Company’s warrants and earnout liabilities in the three months and years ended December 31, 2022 and 2021, and transaction costs related to the JAWS Spitfire merger transaction and charge related to the loss on fair value on the convertible note modification in conjunction with the merger transaction for the three months and year ended December 31, 2021.
Summary of Fourth Quarter 2022 results
Revenue for the fourth quarter was $30 million, an increase of 56% compared to the third quarter of 2022. For fiscal year 2022, revenue rose 194% to $81 million compared to fiscal year 2021. Sequential Year of Sale revenue[1] improvement was driven by an increase in system volume, a higher average selling price due to a more favorable transaction mix resulting from record Sapphire XC shipments and an increase in deferred payment transactions compared to the third quarter of 2022. On a year over year basis, revenue growth reflected higher annual system sales, specifically a significant increase in the sales of the company’s Sapphire XC system compared to fiscal year 2021, as well as the growth in support service and recurring payment revenue resulting from an increase in the company’s installed base.
Gross margin for the fourth quarter was 5.9%, up sequentially, as the company benefited from higher average selling prices, a reduced number of shipments of Sapphire XC systems at launch customer pricing compared to the third quarter of 2022 and lower service and recurring revenue costs. The company completed its final shipment under its launch customer pricing contract during the fourth quarter. Labor and overhead costs for the fourth quarter were in line with forecasts and the company expects further improvement in its material costs through the first half of 2023.
Operating expenses for the fourth quarter declined 15% to $23.7 million. The decline was driven by $3.4 million of non-recurring expense reductions, primarily in research and development. Research and development costs also declined due to the completion of major development projects and improved expense control. General and administrative costs were in line with the third quarter while sales and marketing expenses rose slightly. Non-GAAP operating expenses, which excludes, among other items, stock-based compensation expense of $5.1 million, was $18.6 million in the three months ended December 31, 2022.
Net income for the quarter was $22.6 million and reflected a gain of $44.1 million on the fair value of warrants and contingent earnout liabilities. Non-GAAP net loss, which excludes, among other items, the gain on fair value of warrants and contingent earnout liabilities as well as stock-based compensation expense, was $16.4 million in the three months ended December 31, 2022. Adjusted EBITDA for the quarter, excluding the same metrics, was a loss of $14.4 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 $80 million in cash and investments. As a result, the company believes given its current liquidity and its recently established “at-the-market” equity offering program, it has the liquidity to fund its operations including its technology investments and growth plans.
Guidance
Given strong demand trends, current backlog and fourth quarter bookings, the company is confident in achieving its 2023 financial forecasts.
For the first quarter of 2023, the company expects the following:
- Revenue in the range of $25 million to $28 million
- Gross margin in the range of 9% to 11%, assuming no impact from potential non-recurring charges
For the fiscal year 2023, the company expects the following:
- Revenue in the range of $120 million to $130 million
- Gross margin in the range of 19% to 21%, assuming no impact from potential non-recurring charges – with gross margin of approximately 30% in the fourth quarter of 2023
The company has not provided a reconciliation of non-GAAP operating expenses guidance measure to GAAP operating expenses, the most directly comparable GAAP measure, because certain items excluded from GAAP cannot be reasonably calculated or predicted at this time. Accordingly, a reconciliation is not available without unreasonable effort.
The company will host a conference call for investors this afternoon to discuss its fourth quarter and fiscal year 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 fully integrated 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 as one of Fast Company’s Most Innovative Companies for 2023. 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. Without Compromise, Flow and Assure are trademarks of Velo3D, Inc.
All Rights Reserved © Velo3D, Inc.
###
Investor Relations:
Bob Okunski, VP Investor Relations
Media Contact:
Dan Sorensen, Senior Director of PR
[1] Year of sale revenue refers to revenue from all units shipped within the calendar year.
For the full release including financial tables, please visit https://ir.velo3d.com/.
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 the first quarter, fourth quarter and full year 2023 (including the company’s estimates for revenue and revenue growth and gross margin), the company’s expectations regarding its ability to achieve profitability, its improved bill of materials costs during the first half of 2023, the company’s strategic priorities for 2023 (including the company’s plans and targets for revenue growth, gross margin improvement, non-GAAP operating expense reduction and supply chain and manufacturing efficiency improvements), 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 of the company to execute its business plan, 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) changes in the applicable laws or regulations; (3) the possibility that the company may be adversely affected by other economic, business, and/or competitive factors; (4) the impact of the global COVID-19 pandemic; and (5) 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”).
