Velo3D, Campbell, California, USA, has announced financial results for the third fiscal quarter of 2022. Revenue for the third quarter was reported at $19.1 million, in line with the second quarter of 2022, and an increase of 119% compared to the third quarter of 2021.
“Our third quarter performance reflects solid execution as we again posted strong year-over-year revenue growth, increased our sizeable backlog and expanded our new and existing customer footprint,” stated Benny Buller, CEO of Velo3D. “However, our third quarter financial results were primarily impacted by key component shortages, which affected our production schedule, resulting in certain system shipment delays. We have instituted a number of strategic initiatives to address these challenges and are confident in achieving our fourth-quarter financial forecasts. As a result of the shipment delays, and potential fourth-quarter supply chain and production disruptions, we are reducing our 2022 revenue forecast from $89 million to a range of $75 million to $80 million.”
Compared to Velo3D’s original 2022 plan, third-quarter 2022 revenue reflected the impact of system shipment delays due to supply chain component shortages and production constraints. On a sequential basis, year of sale revenue was impacted by system sales mix, as well as a higher proportion of launch customer shipments than in the second quarter. This impact was partially offset by higher recurring revenue due to a greater number of systems in the field. The year over year improvement in revenue was primarily driven by increased system sales and a more favourable mix of Sapphire XC system sales resulting in an increase in average selling price.
“Demand for our industry-leading Sapphire family of systems remains high as we expanded both our new and existing customer footprint during the quarter. For example, new customer additions included two marquee European aerospace OEMs as well as our first sale to a strategic Fortune 100 US automotive manufacture,” Buller continued. “Additionally, we had three customers purchasing multiple systems, reinforcing our credibility as a technology leader in the AM market. We also booked $27 million in new orders in the third quarter and our backlog now totals $66 million. This success provides significant revenue visibility for the fourth quarter as well as building a strong foundation for future growth as we enter 2023.”
Gross margin for the quarter was negative 1% and down sequentially due to the margin impact of an increased number of launch customer deliveries for the company’s Sapphire XC systems and higher-than-expected inventory adjustment charges associated with the production of its Sapphire XC product. Labour and overhead costs for the third quarter were in line with forecasts and the company expects further improvement in its bill of material costs through the first half of 2023.
Operating expenses for the quarter were said to be in line with the second quarter at $27.8 million. General and administrative cost increased due to re-allocations of facilities and IT costs between departments, higher professional services and taxes. Research and development expenses and selling and marketing expenses decreased slightly due to the above re-allocations. Non-GAAP operating expenses were $22.7 million in the three months ended September 30, 2022.
Net loss for the quarter was $75.2 million and reflected a loss of $47.5 million on the fair value of warrants and contingent liabilities. Non-GAAP net loss was $22.5 million in the three months ended September 30, 2022. Adjusted EBITDA for the quarter, excluding the same metrics, was a loss of $21.2 million.
The company ended the quarter with a strong balance sheet with $113 million in cash and investments. As a result, the company believes it has the liquidity for ongoing technology investments as well as providing the resources needed to fund its growth plans.
Given its bookings and backlog, the company expects fourth-quarter sequential revenue growth in the range of 25-50%. However, due to the impact of the third-quarter shipment delays as well as potential fourth-quarter supply chain and production disruptions, the company now expects 2022 revenue to be in the range of $75-$80 million compared to its previous guidance of $89 million.
“Looking forward, we remain very excited about the future as our bookings and backlog growth reflect the increasing adoption of our technology. We are confident that we have a clear path to profitability given our current capital resources. We expect to achieve this by leveraging our strong top line growth, our focus on rapidly accelerating production efficiency, prudent expense and working capital management and a return to normalised pricing. As a result, we believe we are well positioned to profitably capitalise on the rapidly expanding market for mission critical, high value metal parts,” Buller concluded.