Velo3D Inc (VLD) Q1 2024 Earnings Call Transcript Highlights: Navigating Challenges Towards Growth

Despite a tough quarter, Velo3D Inc (VLD) outlines strategic adjustments and optimistic revenue forecasts for 2024.

  • Q1 Revenue: $10 million, up significantly from Q4 2023.
  • Gross Margin: Negative 29% in Q1; expected positive in Q2.
  • Operating Expenses (OpEx): Non-GAAP OpEx declined 15% sequentially to $14 billion.
  • Net Loss: GAAP net loss of $28.3 million; non-GAAP net loss of $20.2 million.
  • Adjusted EBITDA: Negative $11.7 million in Q1.
  • Bookings: $17 million in Q1, with significant contributions from core markets.
  • Systems Backlog: Ended Q1 with $22 million.
  • Q2 Revenue Growth Forecast: Expected to grow more than 30% sequentially.
  • Full Year 2024 Revenue Guidance: Expected to be between $80 to $95 billion.
  • Full Year 2024 Gross Margin: Forecasted to reach approximately 30% by Q4.
  • Full Year 2024 Non-GAAP Operating Expenses: Projected to be between $40 to $50 million.
Article's Main Image

Release Date: May 15, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Velo3D Inc (VLD, Financial) met its revenue guidance for Q1 and is seeing benefits from a new go-to-market strategy, with bookings improving and providing visibility into Q2.
  • The company has successfully implemented aggressive cost reduction programs, reducing OpEx by 15% from Q4 and 30% year over year, with further reductions expected.
  • Velo3D Inc (VLD) expanded its customer base in the defense sector, adding three new customers, and exited Q1 with a $22 million systems backlog.
  • Significant improvements in system reliability and customer service have been achieved, enhancing customer satisfaction and operational efficiency.
  • The company is on track to achieve cash flow breakeven by the end of the year, bolstered by strategic realignment and operational improvements.

Negative Points

  • Despite improvements, the company reported a GAAP net loss of $28.3 million for Q1, including non-cash charges, highlighting ongoing financial challenges.
  • Gross margin for Q1 was negative 29%, impacted by lower fixed cost absorption, although improvements are expected in Q2.
  • The dependency on further increasing system shipments to improve gross margins indicates potential vulnerability to market fluctuations or operational hiccups.
  • While customer reliability has improved, the company is still in the process of fully resolving these issues to ensure long-term customer commitment to new system purchases.
  • The strategic review process initiated in the previous quarter is ongoing, with no new updates provided, creating uncertainty about potential strategic shifts or outcomes.

Q & A Highlights

Q: Hi, good afternoon. So you're suggesting significant improvement in gross margin. I guess getting to a positive gross margin in Q2, and that's at around 10 million or so of revenue. So what I'm trying to understand is what are some of the levers that are going to generate that kind of improvement? Is it will you get enough manufacturing absorption to get to a breakeven gross margin off of those revenues?
A: Yes, hi, Jim. This is Hull. Yes, that is the plan as we fill out the factory floor and some of the fixed costs will be absorbed by a more system IT system shipments doubling that will help on the gross margin side. So yes, you're exactly right and you get that kind of improvement just even with no, still, I would say sequentially, that's a healthy level improvement in gross margin, but you still at a relatively low level. So it's just coming from manufacturing absorption or there's some other component to that. It's just puzzling to me when I look at where you ended up coming in at gross margin for Q1, yes. And as we as we build more systems, we are able to utilize some of them less expensive inventory that we have on hand that also help on the margin side. So in a more system, shipments is overall much better for us.

Q: Okay. Okay. And I'm wondering how we should think about cash burn in the current quarter? Any color you could provide?
A: So OpEx for the last quarter was in our non-GAAP OpEx was 14 million and change, we expect about 10% reduction sequentially.

Q: Yes, hi, this is Matthew on for Brian. Thanks for taking our questions today. And or can you quantify a little bit more widely the improvement in printing machine downtime at your installed base over the last six months? And are the majority of your customers now evaluating purchasing new systems? And then one more like in that same vein, can you comment specifically on whether you're seeing a return in demand from your largest customer from 2022, which shall drop down in 2023?
A: Sure. So in terms of customer reliability, if we don't provide details on specifics of numbers. What I can say is we've made material improvements for our customers, right? And so when we're talking to our customers and they're looking at placing orders for additional systems, they're typically looking at being able to achieve right with their existing systems, need throughput and uptime and utilization values that meet their economic models right for originally purchasing the system. And so I think what we're seeing is we're helping customers get to that point where their models are valid and they feel comfortable that making additional investments will continue to deliver that kind of a result. Data is right. And maybe one on one hand. Yes, thank you. And I'll add one thing is that on the customer service side, we've been able to address more issues than they come up. So I mean, that's a definitely a good trend.

Q: Right. All right. Thanks very much on. And then one more just a similar question as it relates to government purchasing. On this end, we thought the concern was reliability and that they contract their address reevaluate when that's fixed on. Can you provide any updates related to government product evaluation or any ongoing in that vein or any communication?
A: So I mean, in terms of government spending and the way that comes to us is typically indirectly, right? So you have a number of government programs, hypersonics or various programs coming through defense and others are ultimately being serviced by the defense primes and the defense primes are leveraging our contract manufacturers, in most cases that are the customers utilizing our technology. So if you look at customers like me mirrors that we added at the end of last quarter. That's directly tied to defense and supporting defense primes and ultimately government spending. But again, it's coming to us kind of indirectly through that supply chain. So I'm not sure if I have that kind of addresses your question may be answered. The evaluations being done are ultimately being done by contract manufacturers who are guided to us or direct to us by again the primes and the government programs.

Q: Okay, got it.
A: I think our Omnicam in addition to our efforts in paying off price, you saw that we announced three new customers just in the defense sector. And this is an area where we are pretty we are seeing a lot of traction right from. It's a unique market. Defense is clearly ramping up, and it's something we see as a tailwind for us throughout 2024 and going forward.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.