Velo3D (VLDX) 1 May 232023 Q1 Earnings call transcript

Good afternoon, and welcome to the Velo3D First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session.

As a reminder, today's conference call is being recorded.

I will now turn over the call to Mr. of at President Corporation. Vice Okunski, Investor VeloXD Relations Bob Thank you, sir.

begin. may You

I'd Thank earnings everyone to conference to our welcome you. like first call. quarter XXXX

comments certain of On Benny quarter, a as call today, an will priorities the out the update for as on we summary of Buller, strategic who VeloXD, with CEO well will key provide start from XXXX.

financial comments, then review quarter XXXX will McCombe, guidance. our our CFO, results our Bill provide Following Benny's and first

be available replay Relations a of will the website. this reminder, today a Investor later call page As on our of

and are may we to are those see During make affect Harbor today's our that today's call, additional additional will for the documents XX-K as in risks forward-looking slide regarding these that SEC statements uncertainties filings. release those that today's statements. factors presentation, as press subject Please and of forward-looking information Safe various well described XXXX

during appendix as Please press non-GAAP reference we call. appropriate GAAP refer non-GAAP reconciliations. well as today's presentation, to the metrics to today's for our the Also, certain release will earnings of

our of Relations this Events Finally, set posted & a on will slides, page the which have we Presentations of also enhance call, reference the we website. during to PowerPoint call Investor

turn to With that, to CEO Benny Buller, VeloXD. call I'd like Benny? the over of

Thanks, earnings Bob, to call. and everyone I quarter would like first our to welcome

the rapidly technology We way remain world. very excited high-value manufactured about for additive changing the is across parts the as our opportunity manufacturing overall metal are

this opportunity profitability. accelerate in to on the our capitalize which to turn our to ability us growth, driver enabling Our is key behind is significant path

Slide strong first we X. QX our demand specifics pleased results continued our to as like Overall, turn systems. for with I to very would now the Please our of discuss we saw were quarter.

business year-over-year For our our demand the not to quarter, production strong but only more performance operations. customer reflects rapidly technology, also for scale doubled and ability to $XX our This than million. revenue

products XC to well direct was we new from a meet XC these our last and we result and ramped for increasing six existing success XMZ initiatives of further the Sapphire Operationally, production we over production customers demand place of as executed Sapphire This the months. systems. in put efficiency

more rose strong XX% to and and technology. goals. believe $XX confidence $XX first fiscal million, our quarter demand our With book reflect million, customer we bookings for have and XXXX quarter backlog bookings second Additionally, to achieve than of sequentially year we our increasing

expand Finally, our profitability path on our while efficiency track to adjusted expenses. reducing improved to enabled as remains operational operating us margins

XX% forecast our quarter As a significantly for than exceeding our flow in remain to the more committed we result, the cash this improved year. quarter. by sequentially, breakeven of We fourth net cash approaching

why target. briefly revenue I now discuss QX achieving our we like would and confident in to XXXX remain

to Slide X. Turning

for As have that visibility I previously mentioned, confidence fact significant the year. is we by our driven XXXX this

strong see expectations provides In revenue QX to addition, continue technology both for customers chart demand detailed as our Sapphire This our for ongoing to choose and industry-leading category. AM we needs. Sapphire systems their of by XXXX and expect breakdown a XC our

de-risked is our pipeline of our more XX% record expanding which a installed for booking annual already our and goals revenue XXXX on remain QX a than of is our in recurring gap. forecast And recurring. Given basis confident base XX% forecasted or achieving our booked year. or with from XXXX, expected the recurring our recognized backlog, booked performance, QX opportunities, healthy revenue of revenue either strong either we significantly for

$XXX revenue result, guidance to achieve a $XXX of our we well XXXX believe we are million. to million positioned As

I'd now a to like initiatives. update quick on provide our operational

our nine supply production programs minimize well strategic chain months improve discussed a have instituted we over future to disruptions. as previously, we last As as of efficiency number the to

the in significant who have to progress we further leaders added of Overall, first quarter. of manufacturing, strengthened number highly X. our particular to Slide make in we team to continue operations a a relationship as turn In experience Please initiatives complex on we environment. number manufacturing

improvement by we reduced the capability on Additionally, leveraging continuous cycle production our materially floor. production times further

from production facility. our to We benefiting standardize manufacturing are flow programs also in

floor We the have also accelerate cells production material to production of tighter reducing associated and efforts successfully with waste include the These flow reorganized material our factory management to process. production labor shortages.

have we of chain, supply initiatives. the number On accomplished a

reducing as build the the shortages in as completed multiple supply the well have goal We our processes improved leadership future. of of chain or with operational out eliminating

plan additional of our supply and current shortages. managing our better chain in avoiding us we supply state Although inventory confidence chain provides improvements, much

focused our remain inventory we capital. working and managing on Finally, prudently

our better to to to chain continue benefits contracts starting delivery our supply see our build closely staggered we our initial vendors with We the more work manage new as schedule. of and that matches are existing

tighter production we Additionally, and have inventory implemented processes to improve control. material planning

that Finally, overall enable production basis. condition we are seeing chain improved on manage real-time will supply us a more to our

my out that update an to priorities by our highlighted quarter. remarks strategic XXXX I last I would to providing close like

focus for profitability remains improving this through expense will expansion growth, done EBITDA. margin by primary Our control. significantly driving revenue and year be to This

flow. As to a we result, expect materially improve cash

Please X. Slide turn to

year. on will The regarding of be bullets this goal to our EBITDA. more than revenue first in XX% confident growth page We three remain this

year. QX industry-leading increasing well booking strong our and the reflect demand the result, us technology balance of for for and increased Our position backlog healthy

mix first made the products. and driven This year. be on the BoM our gross further overall expansion XC on margin increase quarter costs of shift in sequential significant expanding also We the by lower as to ASP in the well through will improvements volume track as progress and Sapphire given end continued remain for higher

of the full cost expect second production year. initiatives of material the of programs the and efficiency half bill to in realize our benefits control we Additionally,

compared expenses. Our sequential XXXX. first quarter last we sequentially X% continue put are our cost quarter place operating the expenses as spend yielding solid results costs the control also fourth in to to over operating progress in quarter The lowering into reversing of we our trend show prudently manage adjusted increased declined results as initiatives the

expect operating in XX% a the XXXX. a similar to QX of compared reduction rate of We on XXXX as by of year. reducing committed we expenses quarterly remain to go QX basis We through adjusted

Finally, year improving we the driven cash in just as EBITDA I sequential improvement expect by improved flow as flow, go we discussed. through

in capital XX% Additionally, a benefit plan remain inventory as we to will to from year. working reduction this XX% on we reduce year-over-year by

in to these expect see We of this the benefits inventory starting efforts year. of third the quarter

to the parts. the opportunity are we printed believe on we well capitalize closing, demand about are for growing positioned high-value In metal XD future excited and

path achieving goals. to clear XXXX in we confident remain Our our profitability is and

turn provide our our and guidance. over I'd that, call like the Bill? discuss With to Bill to to financials

Thanks, Benny.

financial X. Slide quarterly our to please performance, on to turn Moving

First resulting sale the QX. and and quarter approximately due QX, line XXX% declined was $XX.X prior year-over-year. with lower year transactions of million revenue revenue slightly in to deferred of volumes to ASP deferred primarily QX, slightly, quarter absence QX revenue was higher versus of from lower from which our shipments Compared forecast in the included up payment

up for $XX.X declined a sale $X in Recurring $X.X million XXX% and from and print lower to On million. from hourly to systems to million, of was due of the basis, service sequentially revenue million up field. million was $XXX,XXX quarter XX% in leased to year-over-year reduction the year recurring the fees revenue revenue and $X.X number $XX.X a

margin adding which prior million. top of reduction QX. quarter, which On sequentially in Gross improved approximately to $XX.X included up million these primarily $X.X gross back and in operating $XX.X excludes end X% stock-based our basis the non-GAAP from million compares The expenses to for million. non-recurring guidance after margin expenses X% increase range, quarter, for reductions. from Non-GAAP expense comparable $XX driven reductions, This material the manufacturing compensation $XX costs million the was of which in by were quarter declined a sequential and efficiency. in the was was XX%, a operating

marketing declined expenses Specifically, sales compared on quarter. was to and G&A fourth QX, the this in basis, with $XXX,XXX R&D $XXX,XXX line and declined

stock-based the net of for a GAAP and expense, net $XX.X was $XX.X of for warrants million. and loss adjusted related compensation and the was a loss the excluding same fair the items million, million excludes $XX.X On loss value of including liabilities. our $XX quarter non-cash earnout this a was loss loss which changes EBITDA basis, in non-GAAP approximately to million quarter

backlog up The quarter Finally, order, which now financing customer we securing has backlog to as but been at where to remove made complete stands for an to in million. the to therefore from has Benny believe the our $XX canceled, We decline backlog progress at and adequate to $XX not time. XX% this million, it were not remove in purchase. mentioned, it's prudent is the adjustment bookings primarily related demonstrated

to provide X. XXXX. for gross our like more outlook detail Please Slide to turn on margin I'd

guidance in to and approximately primarily lower our confident QX, QX the be range. in efficiency. QX expansion margin mentioned I in the gross As margin We margin XX% our high-end costs our manufacturing increased was driven by will gross XX% at earlier, ability year. of following by gross remain was driven to of This improve this material factors. improvement and our by to our In

deliveries the are materials process effect supply occurring, either at under low in of and product bill costs more decline cost new with currently the signed negotiated. material First, receive are as in stage of expected to or validation long-term contracts. we contracts being These

lowering and new work higher year a costs. the these proportion under expect to of As we off receive inventory materials existing therefore, progresses, our contracts, our

costs. scrap effort making a are we inefficiency and material to addition, In concerted reduce

benefit of percentage fixed as costs Volume costs overhead and decline we in efficiency. our will We as in will increased greater and fixed production leadership to units. will labor from therefore volumes revenue. also made cost growth number absorption Second, other expect which we've investments labor spread we a of the and a drive factory over training, improve

due bird we year. balance the the with price discounts completion expect ASPs for implemented reservation to of improvement of recently shipments the early in year and increases from continued Finally, last

than for million the XX% to major cash a XX. QX increased sheet exited than million, balance primarily finished debt. our limited by million, usage turn with We to $XX were as and temporary was quarter cash the balance strong goods. Inventory sequentially follows: sheet down $X loss $XX Slide of a increase $XX very on was components the The of forecast. due million. usage Please in quarter more Cash and in significantly the better with EBITDA

we work to growth lower for the stocking quarter flatten of inventory and through inventory our contract then XXXX and half out as expect We allowed decline deliveries to in existing levels. and staggered second next flow

quarter in receivable payments. contract due increase the from of reflects other working in primarily deposit million the The a accounts due of was down timing shipments CapEx capital to $X million increases in in QX. in $X timing and reduction a to liabilities

cash and under our under financing of sales million equity approximately bank from raised facilities. facility million We activities borrowing also ATM of million $XX in $XX of comprised $X our

be in million proceeds to of range the to payments QX expect inclusive timing This collections. under We in a of bank booking and total depending our on receivables financing usage deposits, cash for range $XX of our ATM million program $XX and shipments from facility. is

expect the We to decline quarter end each usage through cash to of XXXX. continue

through Finally, plan that liquidity to we confident to the we business profitability. fund remain our have

to I'd provide turn now to XX. Slide for like XXXX. our outlook Please

second to quarter be $XX expect backlog to range is million, which the in and in million to revenue $XX items. XXXX of We XX%, excluding be existing of XX% a to non-recurring gross by range margin supported

expect $XX million. also $XX the to in range bookings We million to of be

Our full-year unchanged. XXXX guidance is

XX% growth million $XXX to a of greater million. than and expect $XXX be revenue range of revenue to in We

XX% gross in gross range margin QX the of to with XX%. XX% We be for expect to a margin year approximately in

margins bookings to on $XXX improvements to we be million. profitability we $XXX through range in In for focused to year clear flow. are of and million conclusion, executing expect the our efficiency, path on in cash operating Finally, the

like now questions. I'd to Operator? call for that, With over the turn

Thank you.

Our comes now Blair. be We will question. Instructions] Drab [Operator question-answer first with Please with session. proceed conducting Brian from your a William question

taking for Thanks Hi. my questions.

or can one, removed figure. may able customer's order order signed? was back table? the just And also or have something you the a how get come that that orders that financing that backlog, just will you the off is on But potentially backlog? – was if I'm is to The from were wondering missed that elaborate the Bill, if I then said significant first that it

been getting order so thought it's customer backlog $XX order The a – obviously But in while in and financing, we in demonstrated there it of come gets the has canceled. conservatism. that progress that the of were just for is And should under interest customer certainly the – the about Yes. not the million. been we just could back. remove it XX% financing, if a approximately It's the smidge hasn't enough out decline

Okay.

able you're overall issue. is and Because for except backlog that like fair size your really seems if Is than better that remove And maintain something your so I to a guess expected demand from that, conclusion? of guidance. that that still one

Yes.

and a As is you and for strong QX. there for pipeline improving, saw, bookings and are still very QX solid

a from right? the going So have coverage have very to plan quarter, do to how for the didn't to rest bookings quarter for how detailed we meet wouldn't a this clear that the booking on So that. very guided year, we we're numbers we we accomplish target and we're going if of this

the sorry, that, out XXXX? but to the I forecasted guidance just clear know is $XX out And million it's of for – of be of really approximate that's that backlog, then out

are But if about we of let to Yes, you it date but come and exactly. this that. comes for than customer forward, we come better And for unless it's of we want come not as know. to back early the their we going back can think in we paid terms it, So time will on ship And will know. If about talked right, back, schedule, a When report it'll at we that. report kind the for ship, payments don't going useful we at least we back, bookings which – every we'll way likelihood delinquent, date, – it, we'll it ship that is but report we right? customer not the we it'll booking. because not let since if have a the booking is per all you have not to booking ideally quarter us – have, where it, the a to have where it'll this

didn't we I uncertain to date, remove one, whether place. It's to uncertain deposit in get have was we adequate one, paid. – they're it's going as from financing, should didn't see a this just progress, said, we win. trying elected that – so and – but arrange a we our small uncertain reporting, add to been we The On of and shipping still Yes. it's it but had financing, the it's customer

a And customer? it's new

Yes.

a Would new be customer?

doesn't right a of It's Yes. that [customer it]. look

Yes.

Okay.

I you pass I later. think Thank since four just along to asked I I'll might much. it you like very follow-up talk questions.

Thanks, Brian.

you. Thank

Our next Ellis from your Credit Please question. with question Suisse. comes Ashley proceed with

clarify you that of last the for were took customers question. Bill, taking financing we're just my the you you just Hi. Thank to quarter to that two Is addition out having order in backlog, discussing. issues?

one was It them. No. of

Yes.

referenced. was It one of the ones that we

Yes.

when main discussed. customers issues, the talked that about So financing we we that that's one have

last how Okay. trend concerned of any you're Is contract And then, think manufacturer's because that you customer segment I certain or conversations going? quarter? said are this a

Yes.

situations purchases is in no we have – customers other all for deposits no We the backlog. concerns financing the with The are in place and the so this other one. have like

you quick how Thanks. improve? a then you I'm and as to the think to Specifically, about then go-to-market Great. – you're where opportunity are can follow-up. expenses, what had that With OpEx, areas I continue cutting there wondering prioritize, thinking is investments? you're And Okay. operating you'll

We R&D were sales and reduction bit expect a our more we our little careful marketing. And efforts engineering around continuing expenditure the are just prioritize headcount across and to board and attrition. through modest we and being

and the in marketing. are planned investments sales So R&D in engineering, continuing and make we that we all had to

Okay. Thank you.

It's and more just efficient an productively. effort spend more to money be

Great. Thanks.

Thanks, Ashley.

you. Thank

Jim with Please your proceed from Ricchiuti comes question question. next with Our & Company. Needham

decline payment Chris This Could the on color Good revenue? the provide bit Grenga you Hi. on on for afternoon. is Jim. recurring a more actually potential

question. I I'm catch the it. could sorry, didn't you restate

sequential provide the color decline payment in recurring on Sorry. revenue? the Could you

Yes. Sure.

of in a systems small of uses field decline allotment allotment the were hourly factors the number are the buyout a the there. two there their item to – hours. due in revenue print And then We fees a line initial customer when that paid returns. of lease above and that – component had of So another their

that that that it saw we the was that than So the may was or been – purchased associated of system with have by likely down system. more renter come and

systems a number to going lease And we've of are got that this go scheduled out then quarter. forward,

field of So in expect the we increase. a modestly to would number systems

would by that leased driven really So this I systems. is the that is call shipments what timing isolated of trend of an

a color answer I will my Jim, that ensure you this on is and can give correct. little Bill more maybe XXX%

So this has with do to three systems.

revenue One that, of was that from one-time. customer them decided was system and a basically that to unleased moved the buy So right? to recurring

And the and customer customer the hope one upgrade was full then a of a system. end a system customer purchased and they system that another is we decided third system, do the return that bigger the the bigger to this was the there price the system a and not system keep to is to first decided system. basically Another then one to two, that at

systems So these are three under… the

Got it. Very helpful. Thanks.

Yes.

shipments As more out I lease you a that This trend so blip. of quarter, got was systems turn mentioned, one-time we've going will know around. this

workshops respect that in dates] bookings discussions into has that planned. [tour recently bookings? you've Asia but your in targeting the then With noticed effort are it. Got more I printing been few of met holding around a expectations that terms translating the to it still early or market. there effort, are how that is that And It's and

the geography just you. demand you Just in curious more and you currently seeing – if that Thank how recently? you're the would characterize reception that

Yes.

As never into know, sold we China. you

that. have inflection So we didn't from any kind of

this in that rest that our the We regions, But that developing slowest. few Asia the all of Pacific. we a three region working is say opportunities are from on the have is would I

in slower those is all we So already, recurring developing have and us. even traction for Europe more or repeat much Asia

Europe. effort very resources have We to for small much A compared very, in less also Asia us.

workshops. Print

in or Asia general? In

[Indiscernible].

in States. pretty United in contract a have manufacturers footprint of kind good the we So

expanding of customers is with as number focus kind main more in a building of manufacturers. adding Europe, out are In we of their kind build to this to fleet those of working Our contract network. manufacturers opposed terms contract contract

We now. are have few one have actively we and and more building, we

much. so Thanks

Thank you.

Markets. question Street Capital comes with proceed Our next Troy your Please from Lake Jensen with question.

here. Congrats gentlemen. Hey, quarter on the great

Thanks, Troy.

Troy. Thanks,

Hey.

So a I question. got

Refurbish machines are release with do these you them coming what guys off or? lease, and them? do of So that them

you development the of machines another So use it We those a basically of depends try again type as Most before customer. to arrangement. generally almost business customers. are those leases on as leased kind buy

So another. from that machines we to went one few a like customer that have

most them the rarely discounted they that's re-leased. we So would Very More general. often the would a sell at just price. be

In Troy, of they leased the cases, they're some the count out lessee. purchased come system by because

it's Right. I yes, but revenue that, onsite, stream. get they're the still

The are generally are most ones returned that re-leased.

Was here. it. a launch other questions there any – there Was in Got systems couple QX? of pricing

no was some customer contract, there bird There reservation launch were shipments. early but

So those a were at discount.

All right. income now? the launch the gone Are machines through all pricing statement

Yes.

there's think one left. I only

No.

customer… launch The

all they're customers, gone, launch yes. The

one The early think I bird. bird, more there is early

Got it.

update Okay. okay. All questions, just that's Can Europe? Two give if more right. you on us an

Europe?

Yes.

have we machine. purchased in the a So that few Europe OEMs

followed of the already with up order. them One repeat

that machine. getting is contract and a one second have We already machine has a manufacturer

pipeline moving sales takes a a forward. both generally a say long It's for going a and Europe, and the it's have and have cycle, number would it's we so And also But on it a We very contract new of good in it's team market I manufacturers. time. ground more – OEMs well.

It's moving it's this will I'm quickly all move. move, how it'll So forward optimistic that time. forecast difficult the very pleased that very to I'm but

much second said done goal. quarter, XX% Good. QX going percentage Hey, quarter it the on backlog a it's All ratio, definitely meaningfully is but of that's revenue percentage little of half. for the here, than the thoughts coverage down half. like, a This to But last right. higher you go the your the maybe question. entering second It's the Benny, just the seems as long-winded.

if all I'm it's in curious. So opportunity, got of is me I obviously pipeline book more so significantly be not this mean it's a to backlog? to ship I kind business, just mean, and just

terms be booking place QX, have right? a So to And if into the booking gave our of QX. going same that I the roughly at in same place be we'll we say QX. roughly would backlog getting We hit in If guidance, like we meet QX. roughly this, booking into guidance this for guidance we we'll

we is kind a information. thing backlog you next how that can We quarter did of providing most So the booking this provided the how this execute have can and this quarter, information basically of information the given bracket nice of kind we about right? on well you

book Troy, quarter. and it also the ship depends on how much we in business

into that that's the So well. a equation as factor goes

Bill, quickly finished guys ship you have though? inventory do that to

inventory. is not have do amount of we We machines are building a – shipment these significant This now. not but

So it way. maybe put I should a different in

parts get in of to inventory need to numbers. we quarter the have machines that build these the We to

the Yes. hit We're confident we can targets. shipment

a confidence lot of revenues guys to You Benny. good guys. have expressed Congrats go hear. in here. definitely ahead, Oh, It's

Yes.

quarters, revenue the is to the few the the that the in have information that Just past say – core for in of and the fact of the reason why we them already we bookings thing bookings. and provide XX% backlog the say the given was And the this that risk that same lies all that were range XX%. or that, up but that say revenue from and we way average I'll XX%. between booked to and was bookings about was the booked systems shipped our The quarter from the in were now – didn't

this quarters. some was you to few is in our risk bracket the can accomplished given number, we hit average in and there XX% XX% So but this list last that able being have

Yes.

a And or that that about and so. on services – over – revenue XX%. And Troy. elaborate minus X% last is recurring support year and that to of XX%, the ship to I'm X%. payment. is the back Just sort bit, XX% of to The And that in plus referring percentage the book the looking or averages total quarter, revenue total little of the we around

quarter. like there's in we that in revenue, total and sell XX% about addition And what consumables to… that – includes revenue into printer of goes some that, the So things shipped generally is that there's and booked

gentlemen. And I'll Understood. Benny, you… see again, Congrats

Troy. Thanks,

back are closing further floor to no you. turn would Buller, like Instructions] questions. to There Benny the I Thank over comments. CEO [Operator for

you. Thank

year earlier, are we by driven the As point the profitability. XXXX towards improving making see, a as that. revenue as can steady in of get improving is topline you And I very well which total to we progress mentioned are This is as determined to are steps reducing and thanks very and we by to and get edge good we very we'll for profitability the And this are Thank earnings margin confident call OpEx. year. making very on of being the end that gross our the you much, of to today.

This concludes teleconference. today's

disconnect participation. your at this Thank time. may You lines for you your