8-K: Velo3D Announces $27 Million in Bookings Since Mid-December, Mears Machine Acquires Two Sapphire XC Systems

Velo3D reports $27 million in new bookings since mid-December, including a significant order from Mears Machine for two Sapphire XC systems, and provides preliminary Q1 2024 financial estimates.

Summary

• Velo3D has secured $27 million in purchase orders since mid-December 2023.
• This includes an order for two Sapphire XC systems from Mears Machine, a global contract manufacturer, to be used for defense and aerospace applications.
• The company's bookings for the first quarter of 2024 totaled $17 million.
• Velo3D's backlog at the end of Q1 2024 was $23 million, with system deliveries expected to begin in the second quarter.
• Preliminary revenue for Q1 2024 is estimated to be between $6 million and $11 million.
• Gross margin for Q1 2024 is expected to be between -25% and 10%.
• The company aims to achieve a gross margin of approximately 30% by the fourth quarter of 2024.
• Operating expenses for Q1 2024, excluding one-time charges and stock-based compensation, are estimated to be between $13 million and $18 million.

Sentiment

Score: 5

Explanation: The document presents mixed signals. While the new bookings and customer wins are positive, the low revenue and negative gross margin for Q1 2024 are concerning. The company's future outlook is uncertain, making the overall sentiment neutral to slightly negative.

Positives

• The company has secured significant new bookings totaling $27 million since mid-December 2023.
• A major contract manufacturer, Mears Machine, has adopted Velo3D's technology with a purchase of two Sapphire XC systems.
• Over 50% of the new orders are from existing customers, demonstrating strong customer loyalty and satisfaction.
• The company's backlog stands at $23 million, providing a solid base for future revenue.
• The company is targeting a 30% gross margin by Q4 2024.

Negatives

• The preliminary revenue estimate for Q1 2024 is relatively low, ranging from $6 million to $11 million.
• The gross margin for Q1 2024 is expected to be between -25% and 10%, indicating potential profitability challenges.
• The company's operating expenses are estimated to be between $13 million and $18 million for Q1 2024, which is higher than the estimated revenue.

Risks

• The preliminary financial results are unaudited and subject to adjustment.
• The company's actual results may differ materially from the estimates provided.
• The company faces risks related to executing its business plan, managing growth, and maintaining customer and supplier relationships.
• The company's ability to continue as a going concern is dependent on its ability to manage cash flow and comply with debt obligations.
• The company is subject to risks related to changes in laws and regulations, economic factors, and the lingering effects of the COVID-19 pandemic.

Future Outlook

The company expects to start shipping the new orders in the early part of the second quarter of 2024 and aims to achieve a gross margin of approximately 30% by the fourth quarter of 2024. The company's future performance is subject to various risks and uncertainties.

Management Comments

• Brad Kreger, CEO of Velo3D, stated that the new orders reflect continued customer confidence in their technology and the success of their new go-to-market strategy.
• He also noted that the renewed focus on system reliability and customer success is yielding results, with over 50% of orders from existing customers.
• Kreger highlighted the value of their technology in accelerating innovation, improving lead times, and streamlining volume production.

Industry Context

This announcement highlights the growing adoption of additive manufacturing in the defense and aerospace sectors, with Velo3D positioning itself as a key player in this space. The company's focus on high-value, mission-critical parts aligns with the increasing demand for advanced manufacturing solutions in these industries.

Comparison to Industry Standards

• Compared to traditional metal 3D printing companies like Stratasys and 3D Systems, Velo3D is focusing on high-end, mission-critical applications, which is a different market segment.
• The gross margin target of 30% by Q4 2024 is ambitious, as many 3D printing companies struggle to achieve consistent profitability.
• The significant order from Mears Machine is a positive sign, as it indicates that Velo3D's technology is gaining traction with major contract manufacturers, similar to how companies like Materialise partner with large industrial clients.
• The negative gross margin in Q1 is concerning, as it is worse than many of its competitors, but the company is projecting a significant improvement by the end of the year.

Stakeholder Impact

• Shareholders may be concerned about the low revenue and negative gross margin for Q1 2024.
• Customers will benefit from the increased reliability and performance of Velo3D's systems.
• Employees may be impacted by the company's financial performance and future growth prospects.
• Suppliers may be affected by the company's ability to fulfill orders and maintain payment schedules.

Next Steps

• The company will begin shipping new orders in the early part of the second quarter of 2024.
• Velo3D will continue to focus on improving system reliability and customer success.
• The company will work towards achieving a gross margin of approximately 30% by the fourth quarter of 2024.
• The company will complete the preparation of its condensed consolidated financial statements for the three months ended March 31, 2024.

Key Dates

Keywords

additive manufacturing, metal 3D printing, Sapphire XC, bookings, backlog, revenue, gross margin, aerospace, defense, Mears Machine