Velo3D reaffirms 2025 revenue target of $50M–$60M while advancing defense and industrial partnerships

Earnings Call Insights: Velo3D (VLDXD) Q3 2025

MANAGEMENT VIEW

* CEO Arun Jeldi highlighted Velo3D’s transformation into a high-value recurring industrial technology platform, emphasizing "steady growth, operational improvement and expanding margins, all while maintaining a clear line of sight toward profitability in the first half of 2026." He cited $13.6 million in Q3 revenue, consistent with last quarter and up more than 65% year-over-year, attributing this to "increasing market validation of our platform," the ramp of rapid production services (RPS), and strong relationships with aerospace, defense, and industrial customers.
* Jeldi reported a backlog increase to $21 million as of September 30, up from $16 million at the end of Q2, driven by "strong repeat orders and long-term production contracts." He detailed major milestones: $6 million in sales and service agreements under the U.S. Navy’s Maritime Industrial Base Program, participation in the U.S. Army DEVCOM AvMC initiative, expanded strategic materials sourcing with Linde's AMT, attainment of AS9100D certification for RPS, integration of Dyndrite’s LPBF Pro software for AI-enabled optimization, and an expanded partnership with Innovative Rocket Technologies for U.S.-based propulsion system production.
* The CEO announced the successful uplisting of Velo3D’s common stock to the NASDAQ Capital Market and a $17.5 million public offering, stating that these moves "significantly strengthen our balance sheet, enhancing liquidity, improving working capital flexibility and providing the fuel to accelerate our RPS scaling."
* Jeldi reaffirmed full year 2025 revenue guidance of $50 million to $60 million, sequential gross margin improvement targeting "30% or higher by quarter 4 of 2025," non-GAAP operating expenses between $40 million and $50 million, capital expenditure of $15 million to $20 million, and EBITDA profitability in the first half of 2026.
* CFO Hull Xu stated, "Third quarter revenue was $13.6 million, up 65% compared to $8.2 million in the year ago quarter. This increase was driven primarily by higher systems and printed parts sales as RPS operations continue to ramp up." Xu added, "Gross margin for the third quarter was 3.2% compared to 49.4% in the year ago quarter and a negative 11.7% in the prior quarter."

OUTLOOK

* Management reaffirmed full year 2025 guidance: "Our revenue will be $50 million to $60 million and sequential gross margin improvement reaching 30% or higher by quarter 4 of 2025. The non-GAAP operating expenses will be anywhere between $40 million to $50 million. Capital expenditure will be $15 million to $20 million. EBITDA positive in the first half of 2026." CEO Jeldi described these targets as reflecting "continued confidence and strength of our execution, the resilience of our business model and the depth of demand across our end markets."

FINANCIAL RESULTS

* Revenue for Q3 was $13.6 million, matching the prior quarter and rising from $8.2 million a year ago. Gross margin improved to 3.2% from negative 11.7% in Q2. Operating expenses were $11.1 million, with non-GAAP operating expenses at $9 million after excluding stock-based compensation. GAAP net loss for the quarter was $11.8 million, non-GAAP net loss was $9.2 million, and adjusted EBITDA was negative $7.3 million.
* Backlog grew to $21 million, with the composition shifting further toward RPS. Cash and cash equivalents stood at $11.8 million as of September 30, compared to $1.2 million at the end of 2024, supported by the recent public offering.

Q&A

* Jaeson Schmidt, Lake Street Capital Markets, LLC: Asked whether the government funding backdrop is causing friction and for bookings in Q3. CFO Hull Xu responded that the timing of government reopenings is critical "so we are pretty close in signing a couple of things with the primes. I think the timing would be probably the only thing." CEO Jeldi added, "the government shutdown might have a little impact of it, but good thing is that they're moving in the right direction."
* Schmidt inquired about RPS revenue as a percentage of total revenue by year end. Xu estimated, "we expect RPS to land somewhere between 20% to 30% for the year."
* Schmidt further questioned vertical momentum outside defense and space. Jeldi cited traction in space, semiconductor, and energy sectors, emphasizing "energy is another sector...especially oil and gas."
* An unknown analyst asked if Q4 gross margin uptick is driven by RPS mix or efficiency. Jeldi replied, "RPS gross margins is pretty high...we are very careful on our gross margins on the new machines that we sell."
* The same analyst asked about legacy backlog. Jeldi stated, "That has almost gone. So we're building the new machines, the overhead and everything will be reduced."
* The analyst also asked about Department of Defense segment demand. Jeldi pointed to "the munitions program. That's upticking quite a bit...defense companies now leaving the traditional legacy way of doing things and saw more value."

SENTIMENT ANALYSIS

* Analyst tone was generally positive, commending progress but probing for clarity on government disruptions, RPS momentum, sectoral diversification, and gross margin drivers.
* Management maintained a confident tone throughout, reaffirming guidance and expressing optimism: "We are confident that the steps we are taking today...will yield a strong profitable growth platform for years to come." During Q&A, management acknowledged uncertainties, especially related to government funding, but stressed positive trends and backlog visibility.
* Compared to the previous quarter, both analysts and management displayed slightly greater confidence, with less focus on cost reduction and more emphasis on scaling RPS and strategic partnerships.

QUARTER-OVER-QUARTER COMPARISON

* Guidance was reaffirmed: revenue target of $50 million to $60 million, gross margin improvement to 30% or higher by Q4, and EBITDA positive in the first half of 2026, consistent with Q2. The composition of backlog continued to shift toward RPS, with backlog rising to $21 million from $15.9 million at Q2 end.
* Management’s tone shifted from emphasizing operational discipline and cost reductions in Q2 to highlighting technological milestones, strategic sector expansion, and financial stability in Q3. Analysts in Q3 focused less on foundational business health and more on growth levers and verticals.
* Key metric changes include higher cash reserves at quarter end, improved gross margin, and increased RPS contribution.

RISKS AND CONCERNS

* Management flagged potential short-term impacts from government shutdowns on booking timing, with Xu stating, "it depends on when it opens backup, right?" Jeldi indicated, "the government shutdown might have a little impact of it, but...they're moving in the right direction."
* Analyst questions highlighted risk exposure to government funding cycles and reliance on defense contracts.
* Management outlined strategies to mitigate these risks by diversifying into semiconductor and energy sectors and scaling recurring revenue streams.

FINAL TAKEAWAY

Velo3D’s third quarter demonstrated continued execution of its transformation strategy, marked by expanding recurring revenue, sectoral diversification, and robust backlog growth. The company’s reaffirmed revenue and profitability targets, strengthened balance sheet, and expanding government and industrial partnerships underscore management’s confidence in achieving sustainable growth and margin improvement while navigating sector-specific risks such as government funding volatility.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/vldxd/earnings/transcripts]

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* Velo3D, Inc. (VLDXD) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4841601-velo3d-inc-vldxd-q3-2025-earnings-call-transcript]
* Velo3D, Inc. 2025 Q2 - Results - Earnings Call Presentation [https://seekingalpha.com/article/4814966-velo3d-inc-2025-q2-results-earnings-call-presentation]
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