In the course of Q4 2021, Velo3D generated $10.4 million in revenue, which is not only a significant increase on the $6.7 million it brought in during Q4 2020, but 19.5% more than the $8.7 million it reported in Q3 2021. This growth spurt was driven by a strong conversion of its order backlog, with the firm completing a record eight installations over the quarter, including one of the new Sapphire XC machine.
However, despite Velo3D’s revenue performance, its shares have dipped 8.4% in the two days since its results came out, potentially due to profitability factors such as its low adjusted EBITDA of -$14.7 million, and gross margin of 16%, the latter of which it has attributed to the high initial costs associated with the Sapphire XC’s launch.
“Our performance reflects strong execution as we exceeded our fourth quarter and fiscal year 2021 revenue forecast and surpassed our bookings target,” said Benny Buller, CEO of Velo3D, “and we achieved a key strategic milestone, as we shipped our first Sapphire XC system, which will be a significant driver of our growth in 2022.”
“Customer demand for our industry-leading Sapphire systems remains high as we help some of the world’s most innovative companies create the future using our advanced AM technology.”
Velo3D’s Q4 2021 financials
In its second published financials since it went public on the NYSE in September 2021, Velo3D hasn’t broken down its income by segment, but has made it clear that its growth in Q4 2021 was primarily driven by system sales. The 8 machines the firm fitted during the quarter took its annual figure to 23, and it went on to achieve another 13 bookings, taking its FY 2021 total to 34, 10 more than its initial goal.
Speaking on Velo3D’s earnings call, Buller explained that this rapid rise in the adoption of its systems was down to an expansion of its customer base. While the majority of these clients used to hail from the aerospace sector, more companies operating in energy, aviation, defense, contract and industrial manufacturing have begun to turn to metal 3D printing, and they now make up over 75% of its accounts.
As Velo3D has continued to expand post-IPO, its operating expenses have also increased in tandem, rising 26% sequentially to $20.8 million. According to the firm, this jump in spending was caused by the enlargement of its sales team, something necessary to meet its growth goals, as well as increased facility costs and those associated with being publicly-traded.
Addressing Velo3D’s profitability on the call, Buller revealed that its low gross profit can be accounted for by the “favorable pricing” offered to its first Sapphire XC customer, on the basis that it committed to buying ten of the systems before they’d even been fully-developed, in addition to the efficiency of their production, which will improve over time.
“We are gaining experience in the manufacture of these systems,” explained Buller on the call. “With every system we ship, we are gaining a lot of experience, and with this, we amortize the labor over many more systems. We are much more efficient, there is much less waste and we document the manufacturing process better. So, all those drive a dramatic improvement in gross margin.”
|Velo3D Financials ($)||Q3 2021||Q4 2021||Difference (%)||Q4 2020||Q4 2021||Difference (%)|
|Cash & Investments||297m||223m||-24.9||16m||223m||+1293.7|
Planning for growth in FY 2022
As Buller mentioned on Velo3D’s earnings call, its systems have traditionally found aerospace applications, and despite its recent expansion into new industries, there’s evidence to suggest that its machines are still going strong in this area.
During Q2 2021, for instance, Launcher revealed that it was working with Velo3D and Ansys to develop an upgraded liquid oxygen (LOX) turbopump for its E-2 rocket engine. Since then, in Q4 2021, the firm has extended its partnership with Velo3D, buying a second Sapphire 3D printer, with the aim of leveraging its titanium deposition capabilities to begin producing orbiter pressure vessels for the E-2.
Looking ahead, however, Velo3D says that it intends to continue to focus on attracting new customers, hence it has doubled its sales force over the last 12 months. The company is also ramping up its European operations via its recently-established EU sales and service teams, in addition the opening of a new facility in Germany, which when fully built-out, will be able to produce 400 systems per year.
On Velo3D’s call, Buller suggested that the resulting machines could find a significant amount of traction among contract manufacturers. As a result, the firm is working closely with its existing clients in this area, and it has formed a business development team dedicated solely to securing what its CEO calls the “part design wins,” that are likely to be vital to driving service provider adoption.
Velo3D projects with confidence
In his closing remarks, Buller maintained that despite ongoing global supply chain issues, he’s confident of Velo3D delivering on its expansion, and set out unchanged guidance of $89 million for FY 2022. Not mentioning the Russian invasion of Ukraine, as many of his contemporaries have done, Velo3D’s CEO instead said that its supply diversification and backlog provide it with “strong visibility.”
At the end of FY 2021, the company had a record 23-system order backlog, including 18 Sapphire XC machines, and with $223 million in cash, it remains in a healthy position when it comes to liquidity. With this in mind, Buller concluded that Velo3D is “properly resourced to meet its new customer objectives” for the coming year, and that it would now “continue to invest in its next-generation technology.”
“Looking forward, we are excited about our long-term opportunities given our industry-leading technology, continued execution on our growth plans and strong customer demand,” concluded Buller. “Specifically for 2022, our strategic priorities will focus on expanding our new and existing customer footprint in both the U.S and Europe, reflecting the increasing demand for our Sapphire XC system.”
For a deeper dive into additive manufacturing, you can now subscribe to our Youtube channel, featuring discussion, debriefs, and shots of 3D printing in-action.
Are you looking for a job in the additive manufacturing industry? Visit 3D Printing Jobs for a selection of roles in the industry.
Featured image shows a rendering of a Sapphire 3D printer production facility. Image via Velo3D.