Velo3D (VLDX) 10 Aug 232023 Q2 Earnings call transcript

Good afternoon. Welcome to the Velo3D Second Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, today’s conference call is being recorded. I will now turn the call over to Mr. Bob Okunski, Vice President of Investor Relations at Velo3D Corporation. sir. you, Thank

begin. You may

I’d quarter like to you. welcome to earnings conference second XXXX our call. Thank everyone

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

financial McCombe, our guidance. provide Bill comments, then Benny’s and CFO, will review highlights our Following our second quarter XXXX

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

factors During will and are that forward-looking to appropriate to presentation, refer as safe as regarding affect we additional as today’s certain to are subject today’s filings. may and of release reference XX-K release will slide earnings SEC information the presentation documents that statements. call, well the we Please appendix metrics statements additional forward-looking during make XXXX GAAP those as in call. these various today’s non-GAAP uncertainties press risks press well harbor non-GAAP of our reconciliations. our today’s for described see those today’s Also the Please that for

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

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

for world. quarter Thanks, are the Bob, opportunity and as is We across manufactured manufacturing call. earnings second very high-value everyone like remain about way to our I parts rapidly overall additive would our to metal excited the the welcome changing technology

clear. our quarter. I of and strategic discuss our remains second to would profitability the are executing to committed We our to specifics priorities on now like path

fact, us in of strong revenue we leading now to the Demand Please according Western continued us the two XX% Overall, in third-party remain solutions the to share manufacturing the in X. year-over-year. we our brands. turn high. metal XX% as from company first metal number quarter fastest-growing approximately make makes progress doubling our operational in data XXX margins. printer in path our we market, supplier as enable as growth And efficiency, the last by our exited growth to in months. SmarTech, than points This as post quarter particularly to additive for our to relation XD they rose This expand sequentially market improved the XX printing system among Slide additive the to to is steady rose XX%. profitability, second to basis margins more continue In evident market to the

strong plan and see bookings quarters, forecast. demand few certain million, second trends, in in increased orders due with are closing discussions visibility to next continue deals our in second existing confident these over delays customers came in the we these We below us confidence booking primarily quarter customers. While to and with giving remain at in $XX half

saw record for we delays signed in on customer of new the XX% existing some our bookings we QX. While accounting orders amount revenue total of customer sites, a

the in defense in add customers We the sector had continue and to additional half second success to the expect defense of particular year.

this first our this XX% than half is system technology for accounted growth sector, particularly well-suited defense by more and for that fact of reflected Our revenue. the is

bookings despite forecast. revenue delays impact to half this demand the trends, positive QX on an second However, our are have expected

of with XXXX the quarterly a revenue guidance low will year to revenue second the As be million that our reducing $XXX for million. we are year. year be $XXX point for the sequential We of range improvement to result, in balance quarter the believe the our fiscal

direct today. offering successful Finally, announced our we registered also $XX million

reasons. reach we to sustained key strategic improve the our for the resources decision that While our we liquidity of to still four made goal profitability, have believe firmly we

our on provides it short-term confidence First, us to cash plan focused the rather liquidity focused than maximizing long-term remain actions. strategic and

given Second, liquidity the to our additional enable to due systems, and better complexity us of times business longer the during lead capital will quarter. needs the manufacturing manage our growing our working

a end can us significantly the of we Also, provides confidence execute cash to transaction timing, bridge the plan. capital cash have which of our this increases shipping impact customer with quarter minimize affect working to we and on financing that need and this strategic supplier Third, levels. our liquidity

X. Slide to on Moving

this over become the Continued fastest-growing customer technology industry-leading additive manufacturing our to demand increasing our the over the market. years. shown reflected to the significant enabled as we but needs. position the customers years us only AM their revenue X market annual in is leadership On family additive by choose Not the of share in in Sapphire printers this gains last for our has last our slide, highlighting are we X for made growth, also metal have company continue market

quarter share For market QX XX% of first X% we example, gone approximately have of as to end XXXX. in from the of of the XXXX approximately

as previously QX second solution In third-party in ended to industries the of I as supplier we fact, our mentioned, a according largest data.

the we key Additionally, gainer gain ending leading continue market is XX will according for were the in to period growth factors. industry rate. This share due the significantly in to QX the expect SmarTech, as to XXXX. months we exceed share future we several to We believe

technology. our is First

to space, most they solution only provide for the with the today, industry today. in mission-critical world the customers of the including industries. complex end-to-end for the commercial We demanding and aviation, need integrated freedom design applications the AM high-quality the some offer parts print defense, fully We energy metal in parts

quality simplify This scalability customer process solution manufacturing their them We shortening providing from growth. our chain, to are allows existing improve we to times. and expend why our is lead with while benefit future critical what is feel them as scalable an part significantly a the drives also seeing strategy to and land supply onshore customers they shifting

turn X. Slide to Please

existing into our last growth power in as a the basis. years. continue the the systems of primarily and more driven translates in base end manufacturing The machines This top quarter, in than their we capacity have the than dynamic This customers as XXX% been XX by they As applications. the second chart on approximately annual adding left to X base increase additional an this and new the highlights more has increase customers customers. add of field add on of XXX our installed

In fact, now more than XX% of with X systems. more XX% has owning our base than system one or more

strategy XX basis, revenue. partners contract we On our existing more be a as our a to last over manufacturing parts with approximately than of customers long-term months. expect is customer purchases our This successful the also have XX% doubled

traction, the defense our we in and as diversify to base new industries. are aerospace continue we Finally, customer customer seeing increasingly particularly

broaden Slide quick verticals footprint of industries. on our wanted as a provide Turning we I a X, to Overall, as to few multiple continue to well update successes. across our our QX important

as while we Avio customers costs. As verticals them to to the improved the design rapidly from such include on parts, can and of implement to markets in contract reliance new QX. ability the adding Europe performance offer other largest space have the energy, you one manufacturer NASA we significantly chart, giving our as expanded see initial remains space, leader in and development applications. We as vertical customers changes in remain our aviation, customer our from defense, footprint Space lower

X% To of traction see base in defense and is beginning also put to was defense into only our close vertical now starting at and of perspective, industry, are end the this our the constitutes XX%. this to customer We market. XXXX significant fastest-growing

Our to new primarily in ability weapon success reduce due times for to is part systems in development. addition defense providing our lead replacement to

in QX, defense nine. new customers we customer bringing three Specifically, added to base total defense our

global for our of As and revenue, systems pursuing reduce than I growth segment market in solutions which this supply efficiency half continue potential previously number important of remains costs. mentioned, defense improve this to important We look accounted opportunities. XX% an see our the traction first market. for end chain a and strong for shows more Aerospace that we in as us, for XXXX customers are future

to their Finally, AM remains existing core contract as for vertical manufacturing continue expand customers footprint. a us

we parts mentioned, the update customers year. of by chain have XXXX to to previously now half XXX strategic in supply expect through second customers priorities. to I’d our more add remarks I my out than and providing additional our As close CM like parts the an

Please turn X. to Slide

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

half As a the the result, year. we second expect of in to materially cash improve flow

First, EBITDA. XXXX more QX expect growth improving of results. revenue on now our We given year-over-year than solid XX%

more year. This down While in well second double existing visibility quarter driven as forecast, industry half by customer rate success the confidence from is year. our this this the for the is demand customer of our still it growth new as into previous significantly increasing than

in as the such key share in space, result, a to to As defense, gain expand footprint the we industrial half continue we our as and second markets. expect verticals

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

full our the the year. second of expect we Additionally, efficiency half benefits to realize of the production in initiatives

focus execute on prudently to cost on control our expenses we as managing initiatives. We continue our

XX% When we milestone. achieve decline expenses. to in We in place the year-over-year are QX a operating still have targeting this programs XXXX believe

year. the We each quarter balance expect for OpEx to decline the of

improving Finally, cash flow.

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

reduction Additionally, we the a from benefit in year working will needs progresses. as capital

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

confident Our path we goals remain for clear, is our year. to in achieving profitability and this

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

Benny. Thanks,

financial Slide X. Moving Please on to our to quarterly turn performance.

our revenue lower $X.X guidance lower and and to Recurring for of million. other year transaction $XXX,XXX declined to QX, pricing service revenue slightly and quarter $XX.X maintenance million QX the Compared declined up and First was quarter year-over-year. revenue sales. sale part was sequentially XX% within due approximately range to

our a system On sale million service million. declined up the primarily and due at year-over-year basis, recurring to recurring million, was first terms. in added line $XX.X $X.X rose was and year While of onetime $XX.X base, lease customer service concession related a revenue we XX% from to compared revenue as to on installed to XXXX quarter XX% charge a revenue to revenue

sequentially. sales service points sequential up basis within margin charge Non-GAAP and onetime and Gross our higher revenue margin the reflected This just material quarter. gross primarily development and to related for marketing XX%, stock-based $XX.X the and material $X.X operating recurring offset The $XX.X in and for to mentioned increase excludes was in million product new by were slightly. lower by increase operating R&D for driven efficiency, quarter, million. down costs. costs expense in improved million The expense, manufacturing G&A range I support compares was guidance a compensation, the XXX was the costs in quarter which expenses prior declined increase program. $XXX,XXX a

reduce on Our goal XX% to basis. QX year-over-year a by remains OpEx

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

quarter $XX provide as performance million. margin like detail more our mentioned, to the gross for stands XXXX. backlog were Benny Finally, our at and $XX now on for bookings million I’d

Slide to XX. turn Please

QX, within an gross our our in to mentioned driven was improvement margin and efficiency. earlier, expansion in material gross I was costs lower our As In and QX margin guidance primarily manufacturing range. increased by XX%

see margins and printer to operational benefit can our expand. continue the chart, from to continue you from As initiatives we

sequentially payment lower XX.X% Specifically, printer margins increased quarter. offset and This partially margins. by points second support improvement the basis recurring to in was approximately XXX service

improvement balance from further margin and We We support costs year gross remain in of as return normal margins more to revenues. a this through our confident in half benefit continue lower to from the recurring of to The the year. unchanged. drivers payment of second expect remain the improvement the year-over-year ability service expand we and material main margin our

costs new, therefore, lower supply receive materials longer-term, costs. expected we progresses, more as expect First, of Also contracts, inventory under proportion work contracts. and are receive year higher to these materials a bill new our to off of under lowering material we decline as cost existing the

continuing concerted we’re a and effort reduce inefficiency costs. scrap to In material to addition, make

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

reservation the as Sapphire expect back improvement be our product products early in bird to of shifts shipments will year mix we balance with ASPs and XC higher-priced Finally, for us. the our behind discounts

for our expected these revised year benefits, the despite QX for However, revenue margin gross outlook and the lower expectations. QX impacts

QX result, in percentage a now the gross mid-XXs to we low As basis. margin expect be a on to

cash balance the the major strong chain to marginally of the our million, the guidance quarter exited lower-than-expected follows. primarily QX of deliveries POs quarter as turn increased under Inventory million, by sheet supply $XX loss for on usage XX. components shipments Please year in final above Slide range. during with $XX was a balance with We usage and sheet Cash placed $XX The EBITDA $X slightly excess due last were to crisis. million. cash. million was a

inventory behind the approximately to We be XXXX. to the half expect these second remain of expect us, and in we flat effects largely

reduce contract deliveries, and will for better We levels. to work continue allow staggered to stocking planning inventory which lower through

reflects to and was $X receivable other in million customers, completions. delays in in sequentially. working increase The the shipments, impact down CapEx capital deferred and terms the in site increases for late test of acceptance payment primarily quarter accounts due certain

remain quarterly expect balance range year. the of We to the in this for CapEx

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

of inclusive million repayment, and to for the deposits, usage receivable on from our Excluding of depending is of under proceeds cash range convertible net expect shipments, proceeds to This financing associated QX $XX the in booking debt of collections. timing total payments the equity the range financing million and debt $XX be ATM in we program.

cash to quarterly of expect the XXXX. usage We decline through end

financing with financing transactions the $XX the debt we Silicon us flow of proceeds Combined EBITDA be net balance, cash expect strong believe and our in point $XX the after million. business approximately to breakeven. existing put of and cash debt through position will We this Valley of convertible repayment finance of a million to Bank

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

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

full is updated as follows. Our XXXX year guidance

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

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

the As point sequential Benny the believe revenue we our QX for mentioned, be improvement balance will quarterly low with of for the the year. year

In conclusion, on flow. on margins, efficiency, cash and clear our through executing path to profitability operating we’re in focused improvements

a this With sheet debt execute which financing, the convertible have plan. strong to balance from we

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

go Drab Instructions] with question [Operator from first And Brian Please our Blair. William ahead. comes

slides – the backlog, release. backlog? in What Hi, good say the my question. mentioned afternoon. did it And or or anywhere Thanks I for Yes, think don’t you you Bill, of about Benny, taking but missed I the number. one I see maybe, in

quarter, of $XX it end the was at the million. at It’s

XX?

XX, yes.

mentioned through visibility you have those do some just wondering orders. orders the timing? to you much in And delays Alright. I’m Okay. coming in how

If our of you of from listed new Historically, coming of XX% mix terms kind to customers only in revenue between revenue historically. customers. XX% is XX% systems of the and look the XX%. was coming And from

percentage to a customers. higher received much few do had much, And we coming recently. that quarter, a of systems lot customers that This relatively has a from quite new with

is a demand delay repeat there So in of of somewhat orders.

the existing customers this see we that up should over next quarters. demand picking think I from

in specific will from X us demand always to very and materializing QX. in those this some because quickly then existing a some appearing difficult it’s are usually And X, foresee months. So of be of exactly it few customers be within for quarter, will that months,

rate to we to at purchase see those. don’t before. used that purchase the continue a that the customers we continue have So it lot and visibility will existing they to long-range of absolutely to systems, But pattern buy we’ll

fundamental very if for from a I’m is $XX mistaken see – from of customers And we number very bookings million healthy a new is that don’t in perspective, terms customers. of us shift. million, bookings $XX So new not

Yes.

and In fact, our ever we’ve dollar that It’s customers the bookings had. highest new record. was it amount of

Great.

the overall, anything else half you’re Okay. I of like the How second for a now. gives just trying I’m order quarter? But And in patterns the in you in question just as good the know was confidence you’ve quarter from level get then to stands orders what it and the more one first sense orders for versus guidance seeing back got customers. that new now? some

Yes.

were bookings $XX was of in million, $XX million, million was quarter $XX to we as customers. the the QX described of million which our first So $XX new

were our – just existing see the those and we lost orders haven’t we’re that through bookings not got feel wasn’t business. rebound away can because you come that delayed It that significantly, traded going was to just customer confident They schedule pretty that down that, see They existing what So from we didn’t a that’s customers’ were those delayed. the orders on competitors. were to anticipated. orders this in

Okay. little up later. Alright, Thank will I follow you. a

Co. Ricchiuti question Needham next go ahead. James Our from & comes with Please

afternoon. Hi, good

think we you’ve the of are repeat newer from QX? customers the half anticipating business added as that about some outlook, you in second Just

It those if on less this they is Hi, you definitely just James. in look likely, does of their this less receive occasionally, we happen and it’s is We HX booked think many book systems of in this year. plan will customers that at that because likely systems that will but – less the QX, this cannot quarter.

before but happen the system they on this. year-end. quite occasionally, unlikely will don’t plan it’s another we It book So that does

I to I But interrupt. also, didn’t sorry, And mean that to what trying guess Benny. understand I’m – makes sense,

to have that customers point But did add on orders start I’ll going are And systems from to new months. customers in new of ship we coming a few those we this. quite that just many getting those last we the customers. new are XX some seeing the

decline or you down working is you? R&D second to that in With that and are anticipating sounds half it. also does into come should begin sequential Or behind that on elevated QX, plays as Got a bulk the then of presumably, project? spend you’re to respect OpEx? the you’re that remain new on that in the the And working, it maybe like

absolutely. decline QX. We see this. in And lot to outlier a R&D. material lower a for and level had QX spending was a But in on lot That things this an we hardware are going now procurement and is behind of new project. QX QX. spend Yes, will of was of on us a on this

it’s get converting being a in that out in confidence get bookings one pushed environment the around And next to two this difficult quarters. actually to of high-level

outlook So confidence revenues. it the a of in past the my for that about of around I’m part content. get that also year, where it’s the activity. have bookings going business. think of customers the more big again, to second trying existing newer in you half adding within year customer like revert Presumably, base be sounds are that you kind something pickup been And full that arms the seen you’re see also like, as But the going a to to we’ve existing to

absolutely. Yes,

and that seeing based specific demand up and from trends seen pick past this suggest specific to talking we these some going emerging confidence customers. quarter. in customers what have in and is of that in next is are that pattern on on the partially partially statistical this quarter of Both we Our things those with

just profile the that the to current get last margin the backlog us in to say to backlog range you’re the and is step-up the the that can is respect margin And out have, target that you that out about there that gives looking you confidence the of gross QX. with guidance, could you talking that looking there, question respect something to with QX

And and perspective, first think I prior in from current pricing quarters we backlog them bird had quarter. quarter. than we a that favorable these the early the of is the Jim, had Yes, in more one the reservations

have more go. We of to one those

that ‘XX those ‘XX, the reservations and to we And XC in then end ended Sapphire the reservations these of ‘XX. the offer So, prices late reservations in of being were those in committed early when early was introduced.

will so And behind those be by QX. us

reservations the the improvement sort continues margin material bill So And is of pricing backlog cost average behind get part at reduction. us. the to other those of then up a of

give we and contracts material. So it starting and cost delivery volume And in increase of the is then QX. will have place between us just in to expected lower an that part now third occur

think based the yes, to question answer I equation. on those the So parts of is the three margin

Instructions] [Operator

you and everyone, in you, call. earnings to looking see Thank our forward next

call. concludes today’s conference This

a may You good time. and for disconnect your day. this at your lines you Thank participation, have