Velo3D, Inc. Q1 FY2026 earnings call

• Overall Q1 2026 Performance

• 2026 opened with accelerating momentum across Velo3D's business, driven by strong execution, expanding customer demand, and growing adoption of additive manufacturing as a production technology in defense and aerospace. Revenue grew 48% YoY as qualified programs converted to full-scale production, and the company achieved a key milestone of positive 17.2% gross margin, up from 7.5% YoY and -73.6% sequentially from Q4 2025.
• GAAP net loss improved to $7 million, from $25 million YoY and $21.9 million in Q4 2025; non-GAAP net loss improved to $5.1 million, from $9 million YoY and $11.6 million in Q4 2025. Operating expenses fell YoY to $9.3 million, demonstrating sustained cost discipline.
• Ending backlog was $30 million, a modest decline from the Q4 2025 record high of $31 million, with Q1 bookings of $12 million. The underlying opportunity pipeline continues to strengthen in both size and quality.
• Balance sheet improvements included completed debt-to-equity conversions of $15 million, reducing total outstanding debt by ~70% to $9 million, and a post-quarter end $50 million gross equity financing that strengthened liquidity.

• Key Strategic and Operational Milestones

• Secured an $11.5 million full-rate production contract from a major U.S. defense prime contractor, marking a transition from qualification and pilot activity to scaled production.
• Earned qualification as the first additive manufacturing vendor for U.S. Army ground vehicle applications, opening new long-term opportunities in military sustainment and modernization.
• Awarded a $9.8 million five-year IDIQ contract with the Defense Logistics Agency for the JAMA pilot program, positioning Velo3D at the forefront of DoD adoption of additive manufacturing for improved supply chain resilience.
• The RPS business model, which delivers long-term recurring production relationships versus one-time system sales, is a transformational shift expected to drive more durable revenue streams and scalable profitable growth over time.

• Market and Pipeline Trends

• The macro defense backdrop is highly favorable, with governments prioritizing modernization, domestic manufacturing, and supply chain resilience, all of which align with Velo3D's core capabilities. The additive manufacturing market is shifting from experimentation to full-scale production adoption.
• The opportunity pipeline is evolving to include larger, more sophisticated production opportunities earlier in the sales cycle, with customers increasingly evaluating multi-system deployments rather than starting with single-unit purchases.

• Capacity and Technology Investment

• Velo3D is advancing phase one of a long-term capacity expansion plan, which targets a network capable of supporting ~400 production systems over a decade. The 2026 expansion will increase output, improve efficiency via automation, and scale the company's manufacturing footprint.
• The company continues strategic investment in its technology roadmap, including AI-driven process optimization, advanced software integration, next-generation manufacturing intelligence tools, and robotics integration, working toward a long-term vision of a fully connected intelligent digital manufacturing ecosystem.

Velo3D operates two core revenue segments: system sales and Rapid Production Solutions (RPS). Total Q1 2026 revenue was $13.8 million, representing 48% year-over-year (YoY) growth and 46% sequential growth from Q4 2025. RPS accounted for 25% of total Q1 2026 revenue ($3.45 million). Of the company's total ending backlog of $30 million, 50% ($15 million) is attributed to the RPS segment, with the remaining 50% ($15 million) attributed to system sales. The RPS segment has grown meaningfully YoY in both absolute revenue and its share of total backlog, driven by rising demand from defense and aerospace customers.

• Management maintains its prior projection of sequential gross margin expansion throughout 2026, with gross margins expected to exceed 30% in the second half of the year as production volumes rise and operational efficiencies are realized. • Non-GAAP adjusted operating expenses are projected to remain in the range of $45 million to $55 million for full-year 2026, with selective investment to support strategic growth initiatives. • Full-year 2026 capital expenditures are expected to range from $40 million to $50 million, primarily allocated to expanding production capacity, enhancing automation, and scaling the company's manufacturing footprint. • Management reaffirmed its guidance to achieve GAAP profitability in the second half of 2026, contingent on access to sufficient funding. • Phase one of the long-term production network expansion, which will add a new California facility capable of hosting up to 100 production systems, is expected to be completed within two and a half years of facility launch.

• Bookings can fluctuate quarter to quarter due to the timing of government procurement cycles and the variable size of individual production awards, which can create near-term variability in revenue and backlog. • Scaling manufacturing capacity requires coordinated supply chain activity and incremental investment, and cannot be completed overnight, creating near-term constraints on how much revenue the company can capture from existing demand. • Achieving the 2026 second half profitability target is dependent on the availability of sufficient funding to support capacity expansion and growth initiatives. • Forward-looking results are subject to general risks and uncertainties that could cause actual performance to differ materially from projections, as detailed in the company's SEC filings including its 2025 Form 10-K.

Q: An analyst asks for an update on Velo3D's 2026 printer ramp plan and California facility expansion, and the impact of recently announced large programs on financial results in 2026, 2027, and beyond, plus RPS' Q1 revenue share. / A: Management states Velo3D currently has 15 production machines, will build 20 additional units this year to reach 40+ total production machines by next year, with ramping concentrated in H2 2026. A new California site that will host up to 100 machines (phase one of long-term expansion) has been selected, with formal announcement pending completion of administrative formalities. Management expects to capture all recently awarded contract backlog within 12 months, with printer build speed directly tied to how much RPS revenue can be recognized in 2026. RPS accounted for 25% of Q1 2026 revenue.

Q: An analyst asks what share of the $30 million Q1 end backlog comes from RPS, if the H2 2026 profitability target relies on ramping RPS, if there is sufficient existing bookings to fully utilize 40+ machines to hit 30+% gross margins, and reconfirms the EBITDA profitability guidance. / A: Management confirms half of the $30 million backlog, or $15 million, is RPS. All 40 machines will be fully utilized by the end of 2026 with the already secured pipeline of work, and capacity is built sequentially in line with incoming demand. CFO Jim Sua reaffirms the company stands by its guidance to achieve EBITDA profitability in H2 2026, noting strong customer demand and emerging operational efficiencies support the target.

Q: An analyst asks what non-defense end markets Velo3D is targeting to grow its top of funnel, and what efforts are underway to simplify third-party use of Velo3D machines for scaled production. / A: Management confirms that outside of defense, the company's top priority non-defense verticals are semiconductor manufacturing equipment and energy, both of which are seeing stronger momentum than in 2025. Semiconductor demand is correlated with growth in AI chips and data center infrastructure, creating long-term demand for Velo3D's components. Energy is another multi-decade tailwind aligned with broader infrastructure buildout. Velo3D is focused on supporting existing customer demand with current capacity via field service and flexible financial models that work for both Velo3D and its customers.