Velo3D, Inc. Q4 FY2025 earnings call

2025 was a defining year for Velo3D with double-digit revenue growth. In defense, reached major milestones like being first additive manufacturing vendor qualified under U.S. Army's initiative, secured contracts, and won multi-year full-rate production contract. Commercial side adoption accelerating with rapid production solutions used by Intergalactic. Evolution of business model beyond hardware to digital manufacturing data and analytics. Developed long-term capacity plan envisioning up to approximately 400 production systems over the next decade. Moving decisively to expand production capacity, leveraging asset-backed financing and exploring M&A in areas like feedstock and metal powder.

Fourth quarter revenue was 9.4 million, down 25% compared to 12.6 million in the year ago quarter. Full-year 2025 revenue was $46 million, up 12% compared to $41 million a year ago. Gross margin for the fourth quarter was negative 73.6% compared to negative 3.5% in a year ago quarter and 3.2% in the prior quarter. Full-year gross margin was negative 16.1% compared to negative 5.1% in the prior year. As of December 31st, 2025, backlog was approximately 31 million.

Anticipate revenue in 2026 in the range of $60 million to $70 million. Expect sequential improvements in gross margins with margins projected to exceed 30% in the second half of 2026. Non-GAAP adjusted operating expenses expected to be in the range of $45 million to $55 million. Capital expenditures predicted to be in the range of $40 million to $50 million. Expect to achieve EBITDA positive in the second half of 2026. Long-term capacity plan targets approximately 400 production systems over the next decade.

Decrease in revenue driven by product mix and timing related to government shutdown. Non-recurring inventory obsolescence write-off. Margins affected by various factors including inventory levels and operational costs. Market demand changes and supply chain risks.

Q: Just curious if you could share how much RPS revenue comprised in 2025. And then as we look at 2026, how should we think about that composition increasing either exiting this year or for the full year?

A: The RPS is... 10% to 15% for the first year, and the rest is systems. But it will rapidly grow year after year, doubling that number, as we projected in the previous presentations of ours. It will take about two to three years to fully overtake RPS as our main revenue because of the infrastructure build and also project maturity timelines.

Q: can you remind us how many printers you currently have? And then how should we think about that number growing to exiting this year? And relatedly, can you provide any update on the Midwest facility plans?

A: We have currently about 15 printers on our floor and 140 printers in the field. Our own hosting of the printers for this year will be at the range of 40 plus. And on the expansion plan, the phase one expansion plan for next 100 machines will be done in California to reduce the operational cost at the early stages. And then the later stages, we'll expand it to the later part of the country, depending on the customer demand on those parts.

Q: I'm just curious if you could provide some additional color on the U.S. Army ground vehicle announcement, how we should be thinking about that potential size and revenue opportunity?

A: As we mentioned in the contract itself, it's a milestone-based contract, and the potential will be – I mean, total potential will be much more, but the first 12 months is qualification, and whatever the number we mentioned in that will be considered as a revenue part pretty quickly.

Q: Hey, guys. Thanks very much for taking my question, and congratulations on everything you accomplished in 2025. I wanted to ask about gross margin. It looks like gross margin was low single-digit positive the last two quarters, if you exclude the inventory write-down. You know, quite a number of drivers, it sounds like, that get you to 30-plus percent in the back half of the year. Can you talk about sort of what are the biggest drivers and kind of help us understand the relative importance?

A: Last year, this is what we dealt with is like a, a, uh, extensive, uh, downgrade revenue. I mean, um, of, uh, inventory we have in storage. I mean if you go back and look at the balance sheets and P&Ls from 24 to 25, how we cleaned up, that is adding up for the loss of the gross margin losses that we have mentioned in our previous calls is like the overhead in 2024 were 400 employees and then the total COGS on it was very expensive. So these actually sitting in the inventory for too long is causing this overhead to drive down those gross margins. So the new bills from 2024, later quarter, we started building the new machines have very least amount of overheads. So as we push those out in the first quarter, second and third, fourth quarters, that's the driver for your highest, I mean, big gross margin increases.

Q: And then I think you mentioned that most of the growth you're expecting to see in the RPS business is coming from aerospace and defense. Did I hear that correctly? Are there any other sectors where you're focused there? And, you know, is that just a matter of where the demand is or where, you know, you put more marketing efforts?

A: We are still focusing on our key areas of defense space and semiconductor and energy markets. So the main force to drive RPS will be the qualification speed. So defense is moving, as you see, the unmanned vehicles and munitions programs and everything going on. It will be still a big driver, but space is also expanding the same way. So we consider those two as our main bread and butter in addition to semiconductors. Semiconductor qualifications take longer time, and these are expensive feats. So that will come as a third layer, and then energy comes as a fourth layer. So by 2027, we should have a full good mix of all of them, at least 50% on defense and 20% on space, and the rest is semiconductor and energy markets.

Q: The backlog that you quoted, can you just comment on the duration of that backlog? Is that more than one year or is that within one year?

A: It's within 12 months. That's the backlog we have. So we'll capture all that this year.

Q: is all of your machines and your RPS service internally developed by Velo – And I guess I'm asking the question because I've always thought that your machines were so much more sophisticated, much more harder to operate. I'm curious if you guys would consider deploying other metal machines that may be more efficient. And can you also just talk about the automation that you've added to these machines, if I'm wrong, on the cost of kind of running them?

A: Velo is not going to just set off laser bed fusion. As we expand, The offerings, what we give to the customer, have to come from customer demand on various sides of it. At the same time, we're not going to compromise our technology itself. I mean, there are two reasons. So if you think RPS as somebody can just buy different kinds of machines and just run it, it's the most impossible and hassle that you can take upon and not successful because then you have to have different people understanding different machines, and you cannot control your own technology. The powerful thing Velo has is an OEM, which can control its technologies according to what we want to do. That's a powerful tool which others will miss. If you think of any of these machine shops or the guys who are contract manufacturers can do this, right? But what is that we are adding as a value is not understood. I mean, the market is missing that point. When you are an OEM and the technology and the software and the hardware side, you have much more success to fastly iterate and collect the data to the point that no one has the abilities to do so. And when you can do that, you are the powerful machine on the data that all these companies are missing. So you cannot go and wait on a service. You cannot go and wait on somebody to fix your software or upgrade software or fix your machine. And at the same time, when we take upon any technologies, that's going to be under Velo wing. And when I mentioned M&A, the mergers and acquisitions, we have a strong focus on the business for the next five years where Velo will be the AWS of data and analytics company and a product based company at a defense level, which what you see is a base of start. And what you see in the next 70 years is the vision of Velo, where Velo will make sure that we are ready for the next generation manufacturing and digital platforms, which is very siloed at this point and does not have access to all the things I'm talking.

Q: Have you talked at all about what your margins are on the RPS side of the business? looking maybe at scale.

A: Margins on RPS is between 40% and 60% depending on the project. But that's the highest gross margins you can see compared to any of the machine sales or anything. Our machine sale gross margins range about, if you make a brand-new machine and sell immediately, it's about 35%. So this is why it's so powerful for us to expand our fleet and have that adoption very quickly, rather than just depending on the sale of the machine. And we are selling capacity now. We're not just selling machines and put it on somebody's floor to struggle with it, just like other machines. We're customer-focused mostly, and we want to be customer-focused to give them the easy access to the parts they want. By the end of the day, these tools are made to make parts, complex parts, whether it's a secure location for the customer or a non-secure location for us. We want to fulfill both ends, and we will cover all of this with different technologies in future.

Q: Could you provide some color on your plans to strengthen supply chain, feedstock materials you mentioned?

A: So, I mean, if you imagine the scale of – I mean, there is no one in the whole country has what we are building as a fleet – So Velo is taking the first initiative. And I always believe that if you can control your feedstock supply chain, you have a tremendous value as a company. Just like if you take some of the companies which are linearly integrated, you see the bottom line of their main source of metals or anything, they build themselves. This is why our supply chain has to be robust if we have to scale to that 400 or 500 machines in scale. We're building a total ecosystem of how the additive manufacturing at scale happens. So I'm focused on that metal powders and the feedstock to be very well secured for years to come for us when we promise to the customer we want to deliver it on time. And then I don't want any vendor waiting. I mean, we don't want to wait on vendors to give us what we want. At the same time, at the post-processing site, we want to make sure that we have full collaborations of contract manufacturers and a supply chain robustness to give the end product to the customer. It's a big feat, which no one has done, and we are taking up on that as a first digital manufacturing, million-dollar-square-foot facilities. Velo has a big project to do. both on the data of the industrial manufacturing as digital and also in future how the manufacturing is done, which is used by any OEMs, anybody who wants to do a product.

Q: Would that be sort of into the data software sort of to create the AWS sort of idea along those lines?

A: So on the acquisition side, we do have our internal IP protected software, which no one has the ability. I mean, no one has that kind of complex software that can actually do algorithms that produces a complex part, which some companies outside is trying, but they're not actually in use of what they make. But Velo has already adopted that, and most of our products are at a production scale and also prototyping scale. So not only that, but the traditional manufacturing is super important for us to make it digital and collect all that data. So the whole line from the material side to, I think, every layer of what we print, every layer of what the material is used, all the way to – giving that finished product to the customer is the target for us to acquire and then basically give an ecosystem that is fully digitally manufactured. So now the siloed data is not working, and that's why you have these supply chain problems. And then when you transform some of the traditional parts into digitalized data collection from the early stages of design, It will really help everybody, not just 1OM or Prime, to adopt those in scale. And then that's where you see the product being designed differently, manufactured differently, and analyzed differently, which gives us a full scope of what Velo is trying to do.