Velo3D, Inc., a leading additive manufacturing technology company for mission-critical metal parts, announced financial results for its fourth quarter and fiscal year 2023 ended December 31, 2023.
“2023 was a transformational year for the company as we re-aligned our strategic and business priorities from driving revenue growth to ensuring customer success, improving system reliability and materially reducing our cost structure,” said Brad Kreger, CEO of Velo3D. “We are pleased with the significant progress we are making related to our key initiatives as we have significantly reduced our costs and materially improved our operational efficiency. Additionally, our new go to market approach is paying dividends as we have resumed our bookings growth, including signing a number of new, strategic customers in the defense industry with Kratos Defense and Bechtel Plant Machinery (BPMI). I remain very excited about our market opportunities in 2024, especially in defense given the recent $825 billion Department of Defense funding approval. We have already received one purchase order tied to this approval and expect we will close additional orders by the end of the quarter as a result. I firmly believe the benefits from our re-alignment are just beginning.”
Key highlights related to the company’s strategic initiatives:
- Ensuring customer success / system reliability – reduced field issue resolution times by more than 45% since Q3 2023 and improved system uptime by 10%
- Increased revenue 1H24 visibility through bookings growth – as of March 26, 2024, booked >$15 million in new orders since mid-December, more than 50% of orders from existing customers
- Improved Sapphire printer quality – reduced system installation time by 40% over the last 6 months
- Improving cash flow – successfully reduced sequential operating expenses by >15%, expect sequentially quarterly improvement in free cash for FY 2024
“The entire Velo3D team remains focused on these four objectives and we’re beginning to see these changes yield results, including existing customers purchasing new systems. We believe this reflects their confidence in our technology as well as the success of our initiatives in improving customer satisfaction,” said Kreger. “We’re continuing to execute on our cost realignment programs to improve margins and cash flow, while prudently managing working capital. By doing so, we believe we are well positioned to profitably capitalize on the increasing industry demand for leading-edge additive manufacturing solutions.”
|
($ in Millions, except percentages and per-share data) |
4th Quarter 2023 |
3rd Quarter 2023 |
4th Quarter 2022 |
FY2023 |
FY2022 |
|
GAAP revenue |
$1.8 |
$23.8 |
$29.8 |
$77.6 |
$80.8 |
|
GAAP gross margin |
(>100)% |
6.3% |
5.9% |
(33.7)% |
3.6% |
|
GAAP net income (loss)1 |
$(58.2) |
($17.4) |
$22.6 |
$(135.0) |
$10.0 |
|
GAAP net income (loss) per diluted share |
$(0.28) |
($0.09) |
$0.11 |
$(0.68) |
$0.05 |
|
Non-GAAP net loss2 |
$(61.1) |
($19.2) |
($16.4) |
$(117.4) |
($83.0) |
|
Non-GAAP net loss per diluted share2 |
$(0.29) |
($0.10) |
($0.08) |
$(0.59) |
($0.41) |
|
Cash and Investments |
$31 |
$72 |
$80 |
$31 |
$80 |
Information about Velo3D’s use of non-GAAP information, including a reconciliation to U.S. GAAP, is provided at the end of this release.
- 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, fair value adjustments for the Company’s warrants, contingent earnout and debt derivative liabilities, and loss on extinguishment of debt in the three months ended December 31, 2023, September 30, 2023 and December 31, 2022 and years ended December 31, 2022 and 2023.
Summary of Fourth Quarter 2023 results
Revenue for the fourth quarter was $2 million and reflected a significant reduction in system shipments due to lower than planned bookings in the second half of 2023 and the company’s re-alignment transition. For fiscal year 2023, revenue was $77.6 million compared to $80.8 million in 2022. Given the decline in bookings and challenging industry conditions, the company successfully instituted a number of strategic sales initiatives in the fourth quarter to drive bookings growth. As a result of the successful execution of these initiatives, as of March 26, 2024, the company has booked more than $15 million in new orders since mid-December 2023.
Gross margin for the fourth quarter was a negative 1,857%, primarily driven by reduced system volume, inventory valuation charges and costs associated with the company’s re-alignment initiatives. The company expects positive gross margin in the first quarter given improvements in its system balance of material costs, benefits from its new long term supply contracts and overall improvements in operating and manufacturing efficiency.
Operating expenses for the fourth quarter were $24.5 million compared to $26.7 million in the third quarter of 2023. Fourth quarter operating expenses include one-time charges totaling $4.7 million related to the company’s re-alignment initiatives including a $2.4 million inventory reserve charge and $2.3 million in severance and other costs related to its recent reduction in force. Non-GAAP operating expenses, which excludes the company’s re-alignment charges and stock-based compensation expense of $3.4 million, was $16.5 million, down approximately 17% sequentially. The company expects non-GAAP quarterly operating expenses to decline by more than 30% in the first quarter of 2024 compared to the third quarter of 2023 as a result of the company’s realignment programs.
Net loss for the quarter was $58.2 million and reflected a gain of $27.6 million on the fair value of warrants, contingent earnout and debt derivative liabilities. Additionally, net loss for the quarter included a $19.2 million loss on the extinguishment of the company’s convertible debt that was exchanged in the fourth quarter. Non-GAAP net loss, which excludes, among other items, the gain on fair value of warrants, contingent earnout and debt derivative liabilities and the loss on debt extinguishment as well as stock-based compensation expense, was $61.1 million in the three months ended December 31, 2023. Adjusted EBITDA for the quarter, excluding the same metrics, was a loss of $51.5 million. For more information regarding the company’s non-GAAP financial measures, see “Non-GAAP Financial Information” below.
The company ended the quarter with $31 million in cash and investments. Also, as a result of its re-alignment initiatives, the company recorded a $27 million non-cash charge related to the valuation of its inventory during the quarter. Fourth quarter free cash flow, excluding financing activities, was in line company’s forecasts and improved 35% on a year over year basis. The company expects sequential quarterly improvement in cash flow in 2024.
Guidance
The company expects sequential improvement in revenue, gross margin and operating expenses on a quarterly basis in 2024. The company also believes the continued execution on its realignment strategy will enable it to reach its goal of free cash flow breakeven in the second half of 2024.
For the fiscal year 2024, the company’s guidance is as follows:
- Revenue in the range of $80 million to $95 million
- Gross margin in the range of 20% to 30% with fourth quarter 2024 gross margin of approximately 30%, excluding non-recurring charges related to its cost reduction initiatives
The company will host a conference call for investors this afternoon to discuss its fourth quarter 2023 financial results 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 ir.velo3d.com.
