- Reconciliations to U.S. generally accepted accounting principles (GAAP) financial measures are presented below under “Non-GAAP Financial Information”.
- Non-GAAP net loss and non-GAAP net loss per diluted share exclude stock-based compensation expense, fair value adjustments for the Company’s warrants, contingent earnout and debt derivative liabilities, and loss on extinguishment of debt in the three months ended December 31, 2023, September 30, 2023 and December 31, 2022 and years ended December 31, 2022 and 2023.
Summary of Fourth Quarter 2023 results
Revenue for the fourth quarter was $2 million and reflected a significant reduction in system shipments due to lower than planned bookings in the second half of 2023 and the company’s re-alignment transition. For fiscal year 2023, revenue was $77.6 million compared to $80.8 million in 2022. Given the decline in bookings and challenging industry conditions, the company successfully instituted a number of strategic sales initiatives in the fourth quarter to drive bookings growth. As a result of the successful execution of these initiatives, as of March 26, 2024, the company has booked more than $15 million in new orders since mid-December 2023.
Gross margin for the fourth quarter was a negative 1,857%, primarily driven by reduced system volume, inventory valuation charges and costs associated with the company’s re-alignment initiatives. The company expects positive gross margin in the first quarter given improvements in its system balance of material costs, benefits from its new long term supply contracts and overall improvements in operating and manufacturing efficiency.
Operating expenses for the fourth quarter were $24.5 million compared to $26.7 million in the third quarter of 2023. Fourth quarter operating expenses include one-time charges totaling $4.7 million related to the company's re-alignment initiatives including a $2.4 million inventory reserve charge and $2.3 million in severance and other costs related to its recent reduction in force. Non-GAAP operating expenses, which excludes the company’s re-alignment charges and stock-based compensation expense of $3.4 million, was $16.5 million, down approximately 17% sequentially. The company expects non-GAAP quarterly operating expenses to decline by more than 30% in the first quarter of 2024 compared to the third quarter of 2023 as a result of the company’s realignment programs.
Net loss for the quarter was $58.2 million and reflected a gain of $27.6 million on the fair value of warrants, contingent earnout and debt derivative liabilities. Additionally, net loss for the quarter included a $19.2 million loss on the extinguishment of the company’s convertible debt that was exchanged in the fourth quarter. Non-GAAP net loss, which excludes, among other items, the gain on fair value of warrants, contingent earnout and debt derivative liabilities and the loss on debt extinguishment as well as stock-based compensation expense, was $61.1 million in the three months ended December 31, 2023. Adjusted EBITDA for the quarter, excluding the same metrics, was a loss of $51.5 million. For more information regarding the company’s non-GAAP financial measures, see “Non-GAAP Financial Information” below.
The company ended the quarter with $31 million in cash and investments. Also, as a result of its re-alignment initiatives, the company recorded a $27 million non-cash charge related to the valuation of its inventory during the quarter. Fourth quarter free cash flow, excluding financing activities, was in line company's forecasts and improved 35% on a year over year basis. The company expects sequential quarterly improvement in cash flow in 2024.
Guidance
The company expects sequential improvement in revenue, gross margin and operating expenses on a quarterly basis in 2024. The company also believes the continued execution on its realignment strategy will enable it to reach its goal of free cash flow breakeven in the second half of 2024.
For the fiscal year 2024, the company’s guidance is as follows:
- Revenue in the range of $80 million to $95 million
- Gross margin in the range of 20% to 30% with fourth quarter 2024 gross margin of approximately 30%, excluding non-recurring charges related to its cost reduction initiatives
The company will host a conference call for investors this afternoon to discuss its fourth quarter 2023 financial results at 2:00 p.m. Pacific Time. The call will be webcast and can be accessed from the Events page of the Investor Relations section of Velo3D’s website at ir.velo3d.com.
About Velo3D:
Velo3D is a metal 3D printing technology company. 3D printing—also known as additive manufacturing (AM)—has a unique ability to improve the way high-value metal parts are built. However, legacy metal AM has been greatly limited in its capabilities since its invention almost 30 years ago. This has prevented the technology from being used to create the most valuable and impactful parts, restricting its use to specific niches where the limitations were acceptable.
Velo3D has overcome these limitations so engineers can design and print the parts they want. The company’s solution unlocks a wide breadth of design freedom and enables customers in space exploration, aviation, power generation, energy, and semiconductor to innovate the future in their respective industries. Using Velo3D, these customers can now build mission-critical metal parts that were previously impossible to manufacture. The fully integrated solution includes the Flow print preparation software, the Sapphire family of printers, and the Assure quality control system—all of which are powered by Velo3D’s Intelligent Fusion manufacturing process. The company delivered its first Sapphire system in 2018 and has been a strategic partner to innovators such as SpaceX, Honeywell, Honda, Chromalloy, and Lam Research. Velo3D has been named as one of Fast Company’s Most Innovative Companies for 2023. For more information, please visit Velo3D.com, or follow the company on LinkedIn or X, formerly Twitter.
VELO, VELO3D, SAPPHIRE and INTELLIGENT FUSION, are registered trademarks of Velo3D, Inc.; and WITHOUT COMPROMISE, FLOW and ASSURE are trademarks of Velo3D, Inc. All Rights Reserved © Velo3D, Inc.
Amounts herein pertaining to December 31, 2023 represent a preliminary estimate as of the date of this earnings release and may be revised upon filing our Quarterly Report on Form 10-Q with the Securities and Exchange Commission (the “SEC”). More information on our results of operations for the three months ended December 31, 2023 will be provided upon filing our Quarterly Report on Form 10-Q with the SEC.
Forward-Looking Statements:
This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1996. The company’s actual results may differ from its expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect”, “estimate”, “project”, “budget”, “forecast”, “anticipate”, “intend”, “plan”, “may”, “will”, “could”, “should”, “believes”, “predicts”, “potential”, “continue”, and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, the company’s guidance for the fourth quarter and full year 2023 (including the company’s estimates for revenue, and gross margin), the company's expectations regarding its ability to reach free cash flow break even by the second quarter of 2024, the company’s expectations regarding its ability to achieve profitability by 2024, the company's strategic realignment and initiatives (including the company's plans and targets for non-GAAP operating expense reduction and bookings growth), the company’s expectations regarding its liquidity and capital requirements, and the company’s other expectations, hopes, beliefs, intentions or strategies for the future. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. You should carefully consider the risks and uncertainties described in the “Risk Factors” section of the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the “FY 2022 10-K”), which was filed by the company with the SEC on March 20, 2023 and the other documents filed by the company from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Most of these factors are outside the company’s control and are difficult to predict. Factors that may cause such differences include, but are not limited to: (1) the inability of the company to execute its business plan, which may be affected by, among other things, competition, the ability of the company to grow and manage growth profitably, maintain relationships with customers and suppliers and retain its key employees; (2) changes in the applicable laws or regulations; (3) the possibility that the company may be adversely affected by other economic, business, and/or competitive factors; (4) the impact of the global COVID-19 pandemic; and (5) other risks and uncertainties indicated from time to time described in the FY 2023 10-K, including those under “Risk Factors” therein, and in the company’s other filings with the SEC. The company cautions that the foregoing list of factors is not exclusive and not to place undue reliance upon any forward-looking statements, including projections, which speak only as of the date made. The company does not undertake or accept any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based.
