In its first quarterly statement since officially going public, Velo3D reports strong Q3 results, with a 22% sequential revenue increase from Q2 and shipments up 50% YTD (15 in 2021 vs 10 in 2020) among the top highlights. Sapphire XC system soon to be released.
“Our strong third-quarter results reflect increasing demand for our industry-changing end-to-end Sapphire solution, which is redefining the production of high-value metal parts for mission-critical applications,” said Benny Buller, CEO of Velo3D. “We remain committed to helping our customers design and build the parts they need—without compromise. With the upcoming release of our Sapphire XC solution, we intend to accelerate the deployment of the next-generation technologies our customers are creating.”
“One of the key highlights for the quarter was the closing of our merger with JAWS Spitfire—Mr. Buller added. This merger was a huge milestone for the Company, enabling us to become a publicly-traded company and generating approximately $274 million of net cash proceeds from the transaction. We believe we now have the liquidity to continue to invest in driving technology innovation while providing the resources needed to fund our future growth plans.”
Revenue for the third quarter was $8.7 million, an increase of 22% compared to the second quarter of 2021. The improvement in revenue was driven primarily by higher Sapphire system sales. Additionally, recurring revenue for the third quarter rose 34% compared to the second quarter as the company continued to benefit from its expanding installed base of systems.
Velo3D shipped 5 systems in the third quarter and 15 year to date. YTD shipments rose 50% compared to the same time period in 2020. This increase reflects the Company’s repeat purchases by existing customers and its expanding customer base, with the addition of nine new customers so far in 2021, more than doubling the Company’s customer base since year-end 2020. Finally, the Company increased its revenue visibility for the fourth quarter and fiscal year 2022 as it had booked 10 systems, compared to five in the second quarter and 20 for all of 2020.
“Operationally, we were also pleased with our strong growth momentum as we exceeded our revenue target and posted very strong bookings for the quarter,” Mr. Buller continued. “Demand for our new Sapphire XC system continues to grow strongly with bookings of $40 million and pre-orders of $45 million at the end of October. We are also on plan for our first customer shipment of our Sapphire XC system by the end of the year. The third quarter also marked another strategic milestone for the Company as we shipped our first system to a European customer, expanding our footprint to a market that we believe offers significant long-term opportunity. Finally, we continue to invest for future growth as we build out our new manufacturing facility which we expect to open by the end of the year. We expect this expansion will be a key driver of our 2022 growth and will provide us with the capacity to meet our demand forecasts through 2024.”
Gross margin for the quarter was 17% and reflected the impact of increased overhead expenses, primarily related to under absorbed production and service network costs as the Company scaled up its operations in anticipation of strong growth in 2022, new metal development costs and higher than anticipated material and shipping expenses. The Company also increased its spending for customer system upgrades to improve performance and quality. The Company believes that these continued investments will increase its addressable market, improve customer utilization rates and position the Company for growth in 2022.
Operating expenses for the quarter rose 18% sequentially to $16.5 million, primarily driven by headcount costs associated with the Company’s expansion plans and increased spend related to the Company’s technology development initiatives. Non-GAAP operating expenses, which exclude merger-related costs of $0.9 million as well as stock compensation expense of $0.7 million, were $15 million.
Net loss for the quarter was $66.6 million. This included a $51 million extraordinary charge related to the loss on fair value on the convertible note modification in conjunction with the JAWS Spitfire merger transaction. Non-GAAP net loss, which excludes the loss on fair value on the convertible note modification, merger costs and other items such as stock-based compensation, was $14.6 million. Adjusted EBITDA for the quarter, excluding the loss on fair value on the convertible note modification, was a loss of $13.0 million. For more information regarding the Company’s non-GAAP financial measures, see “Non-GAAP Financial Information” below.
Velo3D ended the quarter with a strong balance sheet with $297 million in cash including $274 million in net proceeds from its merger transaction. As a result, the Company believes it has the liquidity to continue to invest in driving technology innovation while providing the resources needed to fund its future growth plans.
“Given our industry-leading technology, increasing demand from our diverse customer base, strong balance sheet and a focus on maintaining our commitment to quality, we believe we are well positioned for future growth as we continue to push the boundaries of what is achievable with metal additive manufacturing,” concluded Buller.
In its guidance for fiscal year 2021, Velo3D expects revenue of $26 million, with total Sapphire shipments numbering 22-24 units, more than 24 total Sapphire bookings, a total Sapphire XC backlog of 20 units and between 12 and 15 customer additions. For fiscal year 2022, given its significant backlog and increasing demand for its Sapphire XC solution, the Company remains confident in its ability to achieve its 2022 revenue forecast of $89 million.