- 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 ended March 31, 2023, December 31, 2022 and March 31, 2022.
Summary of First Quarter 2023 results
Revenue for the first quarter was $26.8 million, an increase of 120% year over year. Compared to the first quarter of 2022, Year of Sale revenue1 improvement was driven by an increase in system volume and a higher average selling price due to a more favorable transaction mix. On a sequential basis, Year of Sale revenue declined primarily due to slightly lower system volume as the fourth quarter included shipments deferred from the third quarter, and a lower average selling price reflecting the absence of deferred payment transactions compared to the fourth quarter. Support service and recurring payment revenue rose 10% to $2.2 million compared to the first quarter of 2022, primarily due to an increase in the company’s installed base.
Gross margin for the first quarter was 10.9%, up approximately 500 basis points sequentially, as the company benefited from a sequential reduction in material costs and improved manufacturing efficiency. Labor and overhead costs for the first quarter were in line with forecasts and the company expects further improvement in its material costs through the end of 2023.
Operating expenses for the first quarter increased 14% to $27.0 million compared to $23.7 million in the fourth quarter of 2022. Fourth quarter operating expenses included $3.4 million of non-recurring expense reductions, primarily in research and development. On a comparable basis, excluding these non-recurring expenses, operating expenses were in line sequentially. Non-GAAP operating expenses, which exclude stock-based compensation expense of $6.2 million, were $20.8 million. Excluding the aforementioned $3.4 million non-recurring benefit from the fourth quarter, first quarter operating expenses declined approximately 5% sequentially.
Net loss for the quarter was $36.2 million and reflected a loss of $12.2 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 $17.8 million in the three months ended March 31, 2023. Adjusted EBITDA for the quarter, excluding the same metrics, was a loss of $16.0 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 $64 million in cash and investments and minimal debt. Net cash flow for the quarter improved more than 50% sequentially and was ahead of guidance. The company expects sequential improvement in cash flow through the balance of the year while approaching break even in the fourth quarter of 2023.
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1 Year of sale revenue refers to revenue from all units shipped within the calendar year.
Guidance
Given strong demand trends, current backlog and first quarter bookings, the company is confident in achieving its 2023 financial forecasts.
For the second quarter of 2023, the company expects the following:
- Revenue in the range of $25 million to $29 million
- Gross margin in the range of 12% to 16%, assuming no impact from potential non-recurring charges
- Bookings in the range of $23 million to $29 million
For the fiscal year 2023, the company’s guidance remains unchanged:
- 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
- Bookings in the range of $100 million to $130 million
The company will host a conference call for investors this afternoon to discuss its first quarter 2023 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.
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 second quarter, fourth quarter and full year 2023 (including the company’s estimates for revenue, revenue growth, gross margin and bookings), the company’s expectations regarding its ability to achieve profitability, 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, operational and manufacturing efficiency improvements, material costs reduction and cash flow 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, 2022 (the “FY 2022 10-K”), which was filed by the company with the SEC on March 20, 2023 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 2022 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.
