VELO

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, James Carbonara, Investor Relations. Thank you. You may begin.

Thank you, operator. Good afternoon, everyone, and welcome to Velo3D's second quarter 2026 earnings call. Before we begin, please note that today's call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Please refer to our press release issued earlier today, as well as our filings with the SEC, including our Form 10-K, for a discussion of these risks. We will also reference certain non-GAAP financial measures during the call. Reconciliations between GAAP and non-GAAP results can be found in today's press release, which is available on the investor relations section of our website. A replay of this call will also be available shortly after its conclusion. With that, I will turn the call over to our CEO, Arun Jeldi.

Good afternoon, everyone, and thank you for joining Velo3D's second quarter 2026 earnings call. The second quarter represented another important period of execution for Velo3D. As we continue to build on the strong momentum established at the beginning of the year, we are seeing continued expansion across our manufacturing capabilities, growing engagement from strategic customers, and increasing recognition of Velo3D as a critical partner supporting production-scale additive manufacturing across aerospace, defense, energy, and other industrial markets. Our financial performance during the quarter reflected this continuing momentum. Revenue increased 52.3% year-over-year to $20.7 million, driven by continued strength across our aerospace and defense end markets, as qualified programs increasingly transition into production deployments. We believe this performance reflects the continued execution of our strategy and the growing confidence customers are placing in Velo3D as a long-term manufacturing partner.

From a profitability standpoint, we continue to demonstrate meaningful operational progress. Gross margin expanded to 21.5%, an increase of 33.2% compared to the prior year period. This improvement reflects higher manufacturing utilization, improved production efficiencies, stronger operational discipline, and continued benefits from the strategic initiatives we have implemented over the past year. It also reflects a refinement in the allocation of certain labor and overhead costs to align with operational activities, which Jim will cover in more detail. Our balance sheet strengthened meaningfully during the quarter. We ended the quarter with $91.1 million in cash and cash equivalents, providing greater financial flexibility to execute our growth strategy and support ongoing operations, manufacturing expansion, and strategic investments. One of the most significant milestones this quarter was the launch of our new Livermore Production Campus.

This investment represents a transformational expansion of our manufacturing footprint and is expected to triple the company's manufacturing capacity once fully operational. The campus is expected to become operational later this year and will serve as Velo3D's primary production and manufacturing center. Beyond expanding production capacity, the Livermore campus represents a critical step in Velo3D's evolution into a data-driven digital manufacturing company. Every production build we execute at our own facilities generates valuable manufacturing data that helps improve our software, process intelligence, and production capabilities. By centralizing manufacturing operations within a highly automated production environment, we expect to capture and leverage significantly more real-world manufacturing data to accelerate the development of our next-generation digital design and manufacturing software platform. We believe this creates a powerful competitive edge as our install base and production volumes continue to grow, so does our proprietary manufacturing dataset.

That data enables us to further optimize print parameters, improve process predictability, accelerate customer qualification, and develop increasingly intelligent software powered by artificial intelligence and machine learning. Over time, we believe this flywheel strengthens every aspect of our platform, from design optimization and simulation to in-process monitoring and quality assurance. Ultimately, our vision extends beyond manufacturing hardware. We are building the next generation of digital manufacturing, enabling customers to design and manufacture complex mission-critical parts anywhere, anytime, on-demand, and without the design limitations of traditional manufacturing. We believe the Livermore Production Campus is a foundational step toward realizing that vision by transforming Velo3D into software and data-powered manufacturing company capable of continuously improve the performance of every system deployed across our global manufacturing network.

Our distributed manufacturing strategy also continued to gain momentum during the quarter through the expansion of our strategic partnership with Mears Machine Corporation. Mears ordered its fifth Velo3D Sapphire XC metal additive manufacturing system with options for two additional systems, further expanding manufacturing capacity, supporting aviation, defense, energy, and space applications. We believe this continued investment reflects the growing confidence our manufacturing partners have in Velo3D's technology and demonstrates how our distributor production model continues to scale alongside customer demand. Expanding our network of qualified production partners enables us to provide greater manufacturing flexibility while strengthening domestic supply chain resilience across several strategically important industries. We also announced a strategic partnership with Aurelia Technologies focused on advancing the use of metal additive manufacturing within next-generation gas turbine systems.

Through this collaboration, we expect to support customers pursuing greater design consolidation, faster product development cycles, enhanced supply chain resilience, and meaningful cost reduction initiatives. We believe partnerships like Aurelia demonstrates the expanding applicability of additive manufacturing beyond traditional aerospace applications and reinforce our ability to deliver differentiated manufacturing solutions across a broader range of industrial markets. Beyond our operational execution, we also continue to strengthen Velo3D's presence within the public markets. During the quarter, we were added to both the Russell 3000 Index and the Russell Microcap Index, increasing our visibility among institutional investors and broadening market awareness of the company. We believe this inclusion represents another important milestone as Velo3D continues to mature as a public company and expand its shareholder base. We also strengthened our corporate governance with the appointment of Lily Mei as an independent director to our board of directors.

Lily brings extensive leadership experience across both the public and private sectors, including her tenure as mayor of Fremont, California, one of the nation's leading centers for advanced manufacturing and technology innovation. We believe her experience in economic development, manufacturing ecosystems, and public-private collaboration will provide valuable strategic perspective as we continue executing our long-term growth strategy. More broadly, customers across our pipeline continues to strengthen. We are seeing increasing interest from aerospace, defense, and industrial customers evaluating additive manufacturing for production scale applications. Existing customers continue expanding into additional programs, while new opportunities increasingly involve larger, more strategic production deployments. We believe these trends reinforce our view that the industry continues transitioning from isolated qualification programs towards broader production adoption. The macro environment also remains highly supportive of our long-term strategy.

Governments and commercial manufacturers continue prioritizing domestic production capabilities, supply chain resilience, manufacturing agility, and advanced technology capable of reducing lead times while improving performance. We believe Velo3D remains well-positioned to benefit from these long-term secular trends. As we bring the Livermore Production Campus online later this year and continue executing against our strategic initiatives, we believe Velo3D is entering an important new phase of growth. Our expanded manufacturing capacity, improved liquidity, growing strategic partnerships, and increasing customer adoption provide a solid foundation for continued execution and long-term value creation. Overall, the second quarter represented another meaningful step forward in Velo3D's evolution. We believe the investments we are making today, including our expanded manufacturing infrastructure, strategic partnerships, and continued operational execution, position the company to support the next generation of production scale additive manufacturing across critical industries.

While we recognize there remains significant work ahead, we are encouraged by the momentum we continue to see across our business. Our focus remains unchanged, execute with discipline, scale efficiently, strengthen customer partnerships, and continue investing in the capabilities that we believe will drive sustainable long-term growth, expanding profitability, and long-term shareholder value creation. With that, I'll turn the call over to our CFO, Jim Suva, to walk through our financial performance in more detail.

Thanks, Arun, and good afternoon, everyone. I am pleased to announce that second quarter results were even stronger than the first quarter results. We continue to see solid execution across the business, which drove an acceleration in our financial results both quarter-over-quarter and year-over-year. We delivered robust revenue growth, continued improvement in our gross margins, grew our backlog, further strengthened our balance sheet and secured an expansion site that is expected to triple our manufacturing capacity. This comes at a time when we are experiencing continued demand from our customers, which gives us great confidence in the direction of our business. With that, let me walk you through the financial results for the quarter. Second quarter 2026 revenue was $20.7 million, up 52.3%, compared to $13.6 million in the year-ago quarter.

The increase was driven primarily by an increase in the average selling price and an increase in RPS revenue. Second quarter 2026 revenue also grew sequentially, up 50% from $13.8 million in the first quarter 2026. Gross margin for the second quarter was 21.5%, compared to -11.7% in the year-ago quarter and 17.2% in the first quarter of 2026. The gross margin increase reflected higher average selling prices, a more favorable product mix, and refinement in the allocation of certain labor and overhead costs from cost of revenue to operating expenses to align with current operational activities. We are not only pleased with the gross margin improvement in the second quarter, but we also expect gross margin to improve as RPS scales, new Sapphire XC systems are built to order, and positive leverage from top-line revenue growth.

Operating expenses for the second quarter were $15.5 million, up from $10.0 million a year ago. On a non-GAAP basis, excluding $2.4 million of stock-based compensation, operating expenses were $13.1 million, up compared to $8.8 million in the prior year quarter. The increase reflects a return to hiring to support our strong revenue growth and backlog, as well as the refinement of certain labor and overhead costs described a moment ago. GAAP net loss for the second quarter was $11.5 million, an improvement of $1.8 million compared to the net loss of $13.3 million in the year-ago quarter. Non-GAAP net loss for the second quarter was $9.0 million, excluding stock-based compensation of $2.5 million and certain other items, an improvement compared to a non-GAAP net loss of $11.4 million in the year-ago quarter.

Adjusted EBITDA for the second quarter of 2026 improved to $-8.1 million, compared to $-8.9 million in the second quarter of 2025. As of June 30th, 2026, we had a backlog of $31 million, up from the $16 million backlog at the end of the second quarter of 2025. Our backlog reflects strong demand across our customer end markets. Importantly, the composition of our backlog continues to show year-over-year growth in RPS, fueled by strong demand from our customer base. Moving on to the balance sheet. We had $91.1 million of cash and cash equivalents as of June 30th, 2026, up from $39 million at the end of 2025. We made significant progress on strengthening our balance sheet during the first half of 2026. In April, we completed an underwritten registered direct offering, raising approximately $50 million in gross proceeds.

During the second quarter, we raised $59.4 million in gross proceeds under our at-the-market offering program. We also completed debt-to-equity conversions of $18.5 million, and as a result, we reduced our outstanding debt by more than 70% to $8.2 million as of quarter end. These actions collectively strengthen our liquidity and provide additional flexibility to support ongoing investments in our people, operations, and growth initiatives. Overall, the second quarter was marked by continued execution across the business and an acceleration from the first quarter, driven by strong revenue growth, expanded margins, and a stronger balance sheet, all positioning the company to continue executing on our strategic priorities. The opening of our Livermore, California, expansion site, which is expected to triple our manufacturing capacity, is well-timed to enable us to capture the accelerated demand we are experiencing and move us to the next chapter in the history at Velo3D.

The customer support for this expansion has been overwhelmingly positive, and we are working to get permitting and production ramped up as fast as possible. With that, I'll turn the call back over to Arun.

Thank you, Jim. Looking ahead, we are increasing our 2026 revenue guidance to $65 million-$75 million from $60 million-$70 million, reflecting continued adoption of our Rapid Production Services and expansion of our large format additive manufacturing capabilities across both existing and new programs. We continue to expect sequential improvement in gross margins, with margins projected to exceed 30% in the second half of 2026 as production volumes increase and we realize further operational efficiencies. Non-GAAP adjusted operating expenses are expected to remain disciplined in the range of $45 million-$55 million as we continue investing selectively to support strategic growth initiatives. Capital expenditures are expected to remain in the range of $40 million-$50 million, primarily for RPS expansion, subject to availability of sufficient financing. We continue to expect to achieve positive EBITDA in second half of 2026.

Operator, we can open the call to questions.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment please while we poll for questions. Our first question comes from the line of Jaeson Schmidt with Lake Street. Please proceed with your question.

Hey, guys. Thanks for taking my questions. Just curious if you could disclose how much RPS revenue was in Q2. Relatedly, just given the strength you saw in Q2, how are you thinking about RPS as a percentage of revenue exiting this year?

The revenues in RPS has grown double digits from the last year. As I mentioned in the past, the RPS full growth takes about three years. Exiting this year, we're doubling that percentage from last year, which will be about 25%-30%.

Got you. Just as a follow-up, I think previously the goal was to have 40 printers by year-end. Just curious, with this new facility, how you're thinking about the overall fleet exiting this year.

We're building about 20 machines to 25 machines. I mean, 20 are brand new machines and five or six we're buying back from the field. So about 25 machine capacity. We already have 15 machine capacity built in Fremont. With the new improvements, there is a nine to 10 bay which we're going to keep it here, and the next 10 we'll be deploying to Livermore. So that will give you a 40 machine capacity by end of the year. But the actual capacity ramp-up starts in 2027.

Okay, perfect. Thanks a lot, guys.

Thank you.

Thank you. Our next question comes from the line of Greg Palm with Craig-Hallum. Please proceed with your question.

Yeah, thanks. Just starting with the kind of more of a broad, high-level discussion on kind of demand, I mean, as it relates to your bookings. What are you seeing from your customer base as it relates to current customers versus potential new customers? And from a high-level standpoint, I'd just love to kind of get more color on what you're seeing across various end markets, because it clearly seems like demand for metal additive technology is really accelerating right now.

Yeah. I mean, there are several bottlenecks, Greg, in general in aerospace and the fields we are serving. Space, defense, and energy markets are booming. You can see there are a lot of new visions and new companies are popping up every day. The defense market with the stockpile and the recent International conflicts has raised a lot of concerns on the manufacturing and the stockpile bring back in manufacturing. That is creating quite a bit of demand and energy markets in general with the data centers and other AI boom, we need a lot of electricity. That is creating a market for specific turbines and both fusion and other ways of clean energy. In the space, obviously there's a lot of space race and multiple space companies now. It's really pushing the limits to speed up their production rates.

We're running out of space and we're trying to catch up with the demand we have. As I mentioned last year, we have already seen this, right? I mentioned it, we absolutely need 100 machines as of today to actually run all the programs on the demand we have. But they're lagging behind on the production of more machines, and we're trying to keep up and pushing the limits to get as soon as possible. By next year, we'll have half of that capacity, and the following year we'll have half of the capacity beyond 2027. By mid-2028, we're focusing to get all the 100 machines up. Those will be sold before we can actually build. That's how much demand we are ramping up.

And I guess as it relates to that, your confidence level in being able to build that rate, significantly higher than what you have been doing this year or last. Maybe you can just give us some sense on whether it relates to supply chain or labor or anything else that's on your mind.

Every company goes through supply chain problems. It's not that is more worry for me. My thing is, it's now the demand is higher than what anybody can create today. My biggest problem is getting the people at the skill level growth and then getting alignment with single point failures and creating the double layers of things. That work we have been doing from last 1.5 year, as I mentioned. The last 1.5 year for Velo3D is just purely the stability of the company. Okay? Now we are beyond that point. Now it's a growth phase. The growth phase represents the higher margins, operational efficiencies that you can do with the funds available to the company. The financial struggles in the last year didn't help us to really do what we want.

This year, we have that stability to create that ecosystem we always envisioned for, and it's ramping up faster. As my vision is coming to fruition, you can always see like what we told we are doing it in sequential form, and it's inevitable that if our adversaries have a 10 million square feet already existent and you don't even have a 250,000 square feet of additive in the country, it's quite evident that we absolutely need that capacity to bring back all the programs. All the production and the prototype models right now is moving on to the productions at a bigger scale. We need actually 300 or 400 machines as of in next one or two years. We can only build 100. Metal additive is so hard, especially when you have specific requirements in space and defense and the precision.

Velo3D is beating everybody on the tech side to prove that point, and we have been doing this for almost seven years on the printing side. Still, I still feel like there's a lot more to go. So there's an absolute need on that.

Yep. Okay. Then two quick housekeepings, if I can. I think you said Livermore operational this year.

Will it start to produce revenue generating parts later this year? Or early next?

We're pushing to get that done by fourth quarter because it's absolutely necessary. Fremont is fully occupied. We thought of first quarter, but it's inevitable that we have to get by fourth quarter. We're pushing those boundaries to get that operational and put those machines running to produce parts and also build machines there.

Yep. Okay. Then one for Jim. I think you said there was a reclassification of costs from COGS to OpEx. Can you quantify what that was in the quarter? Is there expected to be an additional amount here going forward?

Sure, Greg, thank you for the question. First of all, it's actually not like an error or not a restatement. As we look forward and with Livermore opening and aligned with what Arun talked about, the opening of Livermore, it's an alignment in job duties. It's really kind of apples and oranges and not really applicable or anything that actually requires us to quantify. It's kind of really a not relevant item to quantify. There's really no numbers behind it because, again, it's an alignment in job duties as we look forward with Livermore opening.

Okay, fair enough. All right. Thanks for all the color.

Thank you, Greg.

Thank you. Our next question comes from the line of Austin Bohlig with Needham & Company. Please proceed with your question.

Hey, guys. Thanks for taking my question, and congrats on the great results. Wanted to just maybe dive a little bit into the end market and maybe specifically what you guys are seeing in traditional defense. Understanding you guys have some pretty good exposure to the munitions market, missiles, unmanned systems. Those are areas that are inflecting as we speak. Just kind of curious on what you guys saw in the quarter in those verticals and how we should be thinking about demand throughout the year.

The demand is driven by, as I mentioned before, there is an absolute need for a push on unmanned vehicles and also munitions programs and other engine programs that are ramping up, because every drone you create, every unmanned vehicle you create requires engines, and you can imagine the scale of how fast it has to go to produce thousands and thousands of them. That is a different story. But in the space itself, the ramp-up is heavy on both on the data centers and others, the AI models and also space rocket engines. Multiple existing customers who have proven their prototype level is now going to production level at a high scale and energy markets. To run all this energy market, electricity is the key. Producing some clean energy on various turbines and design changes have led to a greater demand on production.

Anything we talk on space, defense or energy markets in general, if you do a prototype like two years and then they go to production and then they ramp up, it is a three- to five-year program run. That is how we started these programs like last year, going to the prototype and the scale and now in the production of the scale. As I mentioned, that is how the demand is ramping up and ramping up. You cannot create machines overnight. The demand is superseding the existing capacity, and we need to catch up. There is absolute need for our capacity increase.

Okay. As we think about the Livermore facility, could you maybe give some color on how many systems you guys are planning to have operational maybe at the end of this year and as we think about Q1 of next year?

Specifically to Livermore, like 25 capacity in Fremont and 10 to 15 by end of the year and another 40 machines by end of 2027 is what we are looking. That will bring our total capacity up to 75 to 80 machines. That is the total manufactured and built machines. By mid 2028, we should see about half of that capacity standing in Livermore.

Okay. Then lastly, might be one more for Jim. Just thinking about the revenue cadence sequentially as we make our way in the back half of the year, should we be expecting kind of down sequentially in Q3 and then end of the year ramping up?

No, it is a sequential ramp-up. So quarter after quarter, what we projected is, because it is a capacity game, so increasing the capacity should increase all the numbers. The spend to basically, if the revenue ramps up, your gross profitability increases and that reduces the operational cost, eventually. But the initial CapEx, what we talked and also some operational to increase the production requires some additional hires. So that will increase some operational costs, but we are trying to very strategically balance the revenues and operational costs not to exceed. We are guided to be a bit positive this year, so that should tell you a story.

Okay. Well, thank you, guys, and keep up the good results.

Thank you.

Thank you. As a reminder, if anyone has any questions, you may press star one on your telephone keypad in order to join the queue. Our next question comes from the line of Kieran McCabe with Cantor Fitzgerald. Please proceed with your question.

Yes, thank you for taking my question. It's Kieran McCabe on for Troy Jensen. I think most of my question's been answered, but I did have one on labor. You mentioned labor and the new facility being located in California to help with labor there. Can you kind of maybe give us some color on the labor markets and the ability to fill positions and things like that for your company?

We are actually feeling pretty good. We hired about 16 new hires this year, in a matter of seven months.

The labor market is pretty aggressive, and the amount of training and skill, what we are in-housely giving them, actually pushing us to get those people. And one of the things we have changed is not only that, it's like we're getting really experienced people to scale these operations, and that's helping us to actually grow faster. We do not foresee that. And the amount of, and the kind of labor we are hiring is not the top level. We are actually hiring more on the technician level because three machines run is done by one technician. We're not planning to hire hundreds and hundreds of them in future, but we're also, by 2027, 2028, the idea is to automate so the existing pool can actually run a whole Livermore facility.

We are preparing the ground today on the workforce, and eventually to automate to balance that workforce not to have too much operation cost.

Right. My second question kind of leads off of that. You brought up automation, but also in your prepared marks, you talked about the data and using large language models and AI. Is really that-kind of derive a lot, is that more to really drive a lot of efficiencies and quality assurance and things in-house? Is there any way that it can also help with, not really that you have a demand issue right now, but really would help with adoption of advanced manufacturing as well?

Yes. It's not the data just to drive the operational efficiency in-house. For the data, what we are talking is to create a product on a next level software. The software will right now, you take the CAD or CAM or something, you design and simulate, and then you move to the production and all that. And you have to do several prototype iterations to actually fix it. But if you have the real-time data, which we are lacking in manufacturing in general today, because most of these manufacturing capabilities are siloed, and there is no data to pull in all of the efficiencies. So if someone is manufacturing something, they have the data to internally increase the efficiencies and solve it.

But externally, there is no universal data to actually support the various changes during the process of material build or the parts build-up, and also material studies as they actually melt and do the manufacturing. And also the incident to monitoring and other digital factors will create a software that actually can help you to actually literally change while you build. And also you don't have to do too many prototyping, that reduces the time, and you can go to production faster. So these laws need to applicable to most of the manufacturing in future. So we're building that in-house by creating these datasets and having a hardware pull that data while you are on the floor is most essential part, just like anybody done in the previous times. And that increases another product level of revenue for Velo3D, and that's what we're creating, not just manufacturing of parts.

Great. Thank you. That takes my questions.

Yep. Thank you.

Thank you. We have reached the end of the question and answer session. I would like to turn the floor back over to CEO, Arun Jeldi, for closing remarks.

Thank you very much for all the support from my investors, employees, and well-wishers of Velo3D. It's been an 18-month of really hard journey, and turning around a company is not easy. We have faced a lot of ups and downs, and I think we're in a position to thrive now, and this is a year of scaling. From here onwards, what we have mentioned from last 18 months have been proven. Now we're showing the real value where Velo3D is the next generation of digital manufacturings. As we grow, there will be a lot of people throwing stones on us, but we are not worried about those. We are focused purely on the signal and want to achieve what we promised for the future of digital manufacturing.

This is a pure intention to bring back that manufacturing to our shores and give a lead from our adversaries how we actually make things in the future. This effort will be fulfilled with the dedicated team at Velo3D. I want to thank you again for taking this call and answering and asking these questions. I appreciate each one's effort, and thank you, and have a good evening.

Thank you. This concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation.

Please note this conference is being recorded. I will now turn the conference over to James Carbonara, Investor Relations. Thank you. You may begin.

Thank you, operator. Good day, everyone, and welcome to Velo3D's first quarter 2026 earnings call. Before we begin, please note that today's call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Please refer to our press release issued earlier today as well as our filings with the SEC, including our 2025 Form 10-K for a discussion of these risks. We will also reference certain non-GAAP financial measures during the call. Reconciliations between GAAP and non-GAAP results can be found in today's press release, which is available on the investor relations section of our website. A replay of this call will also be available shortly after its conclusion.

With that, I will turn the call over to our CEO, Arun Jeldi. Arun, please go ahead.

Good afternoon, everyone, and thank you for joining Velo3D's first quarter 2026 earnings call. 2026 is off to a strong start for Velo3D. We are seeing accelerating momentum across the business, driven by strong execution, expanding customer demand, and increasing adoption of additive manufacturing as a true production technology across defense and aerospace markets. In the first quarter, revenue increased 48% year-over-year, reflecting continuous strength across both our defense and commercial aerospace end markets as qualified programs increasingly convert into full-scale production activity. We believe this performance underscores the growing strategic importance of our technology and the confidence customers are placing in Velo3D as a long-term manufacturing partner. A major highlight this quarter was continued expansion of our Rapid Production Solution or RPS business, which now represents an increasingly meaningful portion of total revenue. We believe this evolution is transformational for Velo3D.

Unlike traditional one-time system sales, RPS creates long-duration production relationships with repeat utilization across multiple programs, driving greater visibility, stronger customer integration, and what we believe will be improved long-term economics for the business. As adoption accelerates, we believe this mix shift positions us to pursue more durable, high-quality revenue streams and scalable profitable growth over time. From a profitability standpoint, we delivered positive gross margin of 17% during the quarter. A significant milestone and another strong indicator that the structural improvements we have implemented are taking hold. Gross margin expansion was driven by higher utilization rates, improved manufacturing efficiency, better absorption of fixed costs, and continued operational discipline throughout our production footprint. Importantly, we believe we are still in early innings of this margin expansion story. We expect meaningful continued progress throughout 2026. As production volumes increases, RPS continues to scale and operating leverage improves.

Our backlog was approximately $30 million compared to approximately $31 million at year-end, reflecting a modest decline, while bookings totaled approximately $12 million during the first quarter. Demand trends remain highly encouraging, particularly across defense and aerospace customers pursuing larger scale production deployments. It's important to recognize that bookings can fluctuate from quarter to quarter due to the timing of government procurement cycles and the size of individual production awards. The underlying pipeline continues to strengthen significantly, and we are seeing growing momentum in both quality of opportunities entering the funnel. This quarter also included several landmark commercial and defense achievements that we believe further validate Velo3D's growing strategic importance within advanced manufacturing. An announcement in our latest earnings call in March 2026. We continue to execute on our program with defense contractors supporting the U.S. Navy, U.S. Army, and other defense programs.

We had announced in February an $11.5 million full rate production contract from a major U.S. defense prime contractor. This award represents a meaningful step beyond qualification and pilot activity into scale production deployment and reflects increasing confidence in our ability to deliver complex mission-critical components reliable and at scale. Also in February, we had announced that Velo3D became the first additive manufacturing vendor qualified for U.S. Army ground vehicle applications. We believe the milestone is particularly significant because it establishes a new benchmark for additive manufacturing adoption within defense platforms and further expands our long-term opportunities across military sustainment and modernization programs. In March, we also announced that Velo3D was awarded a $9.8 million five-year IDIQ contract with the Defense Logistics Agency, supporting the Joint Additive Manufacturing Acceptability, or JAMA Pilot Program, Pilot Parts Program.

This award is strategically important for several reasons. First, it reinforces Velo3D's growing role within critical defense sustainment initiatives. Second, it validates the strength and reliability of our technology for mission-critical applications. Third, it positions us at the forefront of the Department of Defense's adoption of additive manufacturing solutions designed to improve readiness, resilience, and supply chain flexibility. Collectively, these wins represents more than just contract value. They demonstrate increasing institutional adoption of Velo3D technology across some of the most demanding and strategically important manufacturing environments in the world. More broadly, we continue to deepen engagement across our customer base. Existing customers are expanding utilization into additional programs, while new customers are progressing through evaluation and qualification cycles at an increasing pace. We are seeing a growing number of defense primes and tier-1 aerospace suppliers transition from pilot projects into multi-system production deployments.

This marks an important inflection point for additive manufacturing industry and further validates our belief that the market is increasingly moving from experimentation to scale production adoption. The macro backdrop in defense remains highly favorable. Governments and defense organizations continue prioritizing modernization, domestic manufacturing capabilities, supply chain resilience, and faster production timelines. We believe these trends align directly with Velo3D's core strengths and significantly expand our long-term opportunity set. In aerospace, demand for complex high-performance metal components remain robust. Customers increasingly require advanced manufacturing technologies capable of delivering precision, repeatability, and scalability for mission-critical applications, and we believe Velo3D is well-positioned to meet these needs. Importantly, the pipeline itself is evolving. Not only are we seeing more opportunities overall, but we are also seeing larger, more sophisticated production opportunities emerge earlier in the sales cycle. Increasingly, customers are evaluating multi-system deployments from outset rather than beginning with single system installations.

We view this as a strong indicator of where the industry is headed and of Velo3D's growing role in that transition. To support this growing demand environment, we are actively advancing plans for our next manufacturing capacity expansion. This expansion is expected to meaningfully increase output while also improving operational efficiency through automation, optimized workflows, and enhanced throughput capabilities. At the same time, we continue investing strategically in our technology roadmap. Our teams are making meaningful progress across AI-driven process optimization, advanced software integration, and next-generation manufacturing intelligence tools designed to improve consistency, accelerate cycle times, and enhance overall system performance. We're also advancing robotics integration initiatives that we believe will further increase scalability and reduce manual intervention across production environments. Together, we expect these capabilities move us closer to our long-term vision of fully connected intelligence manufacturing ecosystem.

Ultimately, we see a significant opportunity to evolve beyond discrete part production toward a closed-loop digital manufacturing platform where customer can design, validate, optimize, and manufacture mission-critical parts using real-time production intelligence. Overall, the first quarter represents another important step forward in Velo3D's evolution. We believe we're executing against a large and expanding market opportunity driven by defense modernization, industrial reshoring, and the accelerating adoption of additive manufacturing at production scale. While we are encouraged by our progress, we recognize that execution at scale brings new challenges, and we remain focused on managing costs and capital carefully as we grow. We believe Velo3D is playing an increasingly important role in this transformation. Our focus remains clear: execute with discipline, scale efficiently, deepen customer relationships, and continue investing in technologies and capabilities that will drive long-term growth, profitability, and shareholder value creation.

With that, I'll turn the call over to our CFO, Jim Suva, to walk through our financial performance in more detail.

Thank you, Arun. We are pleased to start off 2026 with a strong first quarter as revenue growth accelerated and gross margin expanded, both on a year-over-year basis and on a sequential quarter-over-quarter basis. First quarter 2026 revenue was $13.8 million, up 48% compared to $9.3 million in the year-ago quarter. This increase was driven primarily by an increase in the average selling price, an increase in the number of systems sold, and an increase in RPS revenue. First quarter 2026 revenue also grew 46% sequentially from $9.4 million in the fourth quarter 2025. Gross margin for the first quarter was 17.2% compared to gross margin of 7.5% in the year-ago quarter and -73.6% in the fourth quarter 2025.

We are not only pleased with the gross margin improvement in the first quarter, but we also expect gross margin to improve as RPS scales and new Sapphire XC systems are built to order. Operating expenses for the first quarter were $9.3 million, down from $12.2 million a year ago. On a non-GAAP basis, excluding $1.2 million of stock-based compensation, operating expenses were $8.1 million, again down compared to $8.8 million in the prior year quarter, demonstrating continued cost discipline without sacrificing revenue growth. GAAP net loss for the quarter was $7 million and improved compared to a net loss of $25 million in the year-ago quarter, and also improved from a net loss of $21.9 million in the December 2025 quarter.

Non-GAAP net loss for the quarter was $5.1 million, excluding stock based compensation of $1.9 million, an improvement compared to a non-GAAP net loss of $9 million in the year-ago quarter. Also an improvement from a non-GAAP net loss of $11.6 million in the December 2025 quarter. Adjusted EBITDA for the first quarter of 2026 improved to -$3.6 million compared to -$6.9 million in the first quarter of 2025, also improved compared to -$10 million in the December 2025 quarter.

As of March 31st, 2026, we had a backlog of $30 million, slightly down compared to the $31 million at the end of December 2025 quarter, which was the largest quarterly bookings in company history and up from the $18 million backlog in the first quarter of 2025. Our backlog reflects strong demand across both defense and aerospace programs. Importantly, the composition of our backlog continues to show year-over-year growth in RPS, fueled by strong demand from both the aerospace and defense sectors. Moving on to the balance sheet. We had $16.6 million of cash and cash equivalents as of March 31st, 2026, down from $39 million at the end of 2025.

We made significant progress on strengthening our balance sheet during the first quarter of 2026 with the completion of debt-to-equity conversions totaling $15 million, including $5 million converted at a premium to the company's share price on the date of conversion and full repayment of the secured note. As a result, we reduced our outstanding debt by approximately 70% to approximately $9 million. Subsequent to quarter end and not reported on the March 31st, 2026 balance sheet, on April 27th, 2026, we further enhanced our financial position through a successful equity financing, raising approximately $50 million in gross proceeds through a firm commitment underwritten registered direct offering. These actions collectively strengthen our liquidity and provide additional flexibility to support ongoing investments in our people, operations, and growth initiatives. In summary, our strategy is gaining traction.

Employee efforts are translating to positive operating and financial progress. We delivered a strong first quarter, posting both revenue growth acceleration and gross margin expansion. With that, I will turn the call back to Arun for a few remarks regarding our outlook for 2026. Thank you.

Looking ahead, we continue to expect strong momentum through 2026. As we scale our operations and execute against growing demand across defense and commercial aerospace markets. For the full year 2026, we are reiterating our guidance. We expect revenue in the range of $60 million-$70 million, reflecting continued adoption of our Rapid Production Solutions, an expansion of our large format additive manufacturing capabilities across both existing and new programs. We continue to expect sequential improvement in gross margins, with margins projected to exceed 30% in the second half of 2026 as production volumes increase and we realize further operation efficiencies. Non-GAAP adjusted operating expenses are expected to remain disciplined in the range of $45 million-$55 million as we continue investing selectively to support strategic growth initiatives.

Capital expenditures are expected to remain in the range of $40 million-$50 million, primarily focused on expanding production capacity, enhancing automation, and supporting the scale up of our manufacturing footprint. Subject to the availability of sufficient funding, we continue to expect to achieve EBITDA profitability in the second half of 2026. More broadly, we remain focused on executing the first phase of our long-term capacity expansion strategy, which envisions a potential scaled production network over the next decade to support approximately 400 production systems. The investments we're making in 2026 across manufacturing infrastructure, supply chain optimization, and workforce development are foundational to that plan. We expect to provide periodic updates as we progress against key capacity milestones.

Thank you. With that, we will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two to remove yourself from the queue. For any participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment while we poll for questions. Our first question comes from the line of Jaeson Schmidt with Lake Street Capital Markets. Please proceed with your question.

Hey, guys. Thanks for taking my questions. Arun, just curious if you could update us on how you're thinking about the ramp of the fleet of printers this year to get to that goal of 40. Any update on the expansion plans in California would be helpful. Thank you.

Yeah. Jaeson, thank you for your question. You're talking about the fleet expansion of 400 in 10 years or?

Just the expansion this year and how we should think about the ramp of printers.

Okay. Currently the facility has about 15, we're building another 20 machines, we're buying back some of the machines. That will be 40+ machines at a full production level. Sequentially, we are adding more printers every quarter. According to our model, like, we're ramping that more on the third quarter and fourth quarter, we will finish the builds of 20+ machines this year. That will put us at 40+ production machines generating revenue by end of the year. The expansion plan, we're expanding in California. We finalized one of the sites, and we will announce that pretty soon once the paper, I mean, the formalities are done from lease aspect. This expansion within California will host up to 100 machines in that facility.

That is phase 1 of our production, which will be completed within two and a half years of start of that new facility. The reason why we selected California is to reduce a lot of burden on our present teams and also reduce the OpEx overall as we grow. We'll find out and then find better options to expand in the future. I hope I answered all your questions.

Yeah, that's helpful. On the last call, you mentioned some momentum in munitions programs. Just given the consumable nature of those programs, they seem to be pretty sizable. How should we think about those programs impacting the P&L both this year and 2027 and beyond?

Most of the contracts we announced, we are hoping to capture all that backlog within 12 months. That's the time period. We have a couple of full production orders this year, which has already been announced in March and January. That's why the push for building more machines, because the capacity is parallel to what we can produce, and that increases the RPS revenue. The speed of building machines dictates how much revenue we can actually capture this year.

Okay, that makes sense. The last one from me, and I'll jump back into queue. What percentage of revenue was RPS in Q1?

It's about 25%.

Perfect. Thanks a lot, guys.

Thank you.

Thank you. Our next question comes from the line of Troy Jensen with Cantor Fitzgerald. Please proceed with your question.

Hey, gentlemen. Congrats on the results here. Maybe, Arun, just a couple of questions on the RPS. I mean, obviously that's kind of a key story going forward. How much of the backlog with the RPS business of the $30 million exiting Q1?

Yeah. If you see, we just have the announcements, what we have won on the 11.1, that's purely RPS, 11.3. There is another development program. You can say half of the backlog is RPS.

About $15 million. Okay. I guess my question, Arun, like getting to the profitability goal in the second half of the year is based on your ability to kind of deploy a lot of machines and drive the RPS revenues. Just thoughts on capacity utilization as you turn these machines on. Do you have enough bookings right now through the end of the year to get to 40 to drive these 40%+ gross margins? Or just thoughts on utilization of the facility as you scale up.

We are building these machines parallel to what the demand is, and all the 40 machines will be fully occupied by end of the year with the programs we have. That's why we are sequentially building. That is not enough. This is only first quarter. There's more to come in the future. We are preparing the capacity because we expected very minimal turnaround of these, but it's like 10x of what we need as a capacity now. Basically, we're trying our best because it's not easy to just stand up everything overnight. This is manufacturing. The supply chain and everything is involved, but we're making really good progress. I'm super impressed by my teams, how they're progressing and how they're pushing the limits to get this done. I would rely totally on capacity.

I'm not worried at all, about filling those because we have more than enough work to fill them.

Okay. Jim, do you still stand by or endorse the goal of, I think it's EBITDA profitability in the second half of the year?

Absolutely I do, Troy. The way to think about it, first of all, is the past, you know, month or so, I've been spending a lot of time with our customers and also operations, and our customers keep asking us for more and what more we can do for them and how we can help out them more and more. This is aligned with the customers. Then operationally, we see some efficiencies to help out those margins. Then Arun referred to the capacity site expansion that we're diligently working on too. I absolutely stand behind that guidance.

Awesome. All right, guys, keep up the good work.

Thank you.

Thank you. Our next question comes from the line of [George Maremma] with Pareto Ventures. Please proceed with your question.

Good afternoon, everyone. Got a couple questions. I was curious, what kind of efforts are being made to sort of ease and simplify the processes for third parties using Velo machines in production of scale?

I mean, our field service and, basically going back to most of the platforms and, services out there, I mean, our systems out there, and just, trying to see how we can fulfill our present demand with the capacity we have. That's been very receptive, and, we're supporting them on a financial model that actually works for both the customer and us.

Okay. You're building a nice snowball with 70% of your orders are repeat orders now. I'm sort of curious, of outside of defense government procurement areas, what are the top sources and what's the sales and marketing motions to fill top of funnel outside of defense?

Apart from defense, space is picking up pretty intensely. There are several applications. What we are doing today is been ramping up in the production orders. Apart from that, energy and semiconductor is another areas which we are really focused on, and we're moving ahead with some of the semiconductors. I mean, you can see the demand. You can correlate the demand with AI chip and data center manufacturing, how they're increasingly in demand of the, you know, the chip manufacturing equipment providers. That co-correlates to what Velo does in a future generation semiconductor market. These two areas are so intensely getting things done compared to last year.

One other area you want to really focus on is energy, because all these requires energy and a way of, you know, supporting energy requirements for all the infrastructure we are building here on the data side and also the equipment side and different side. This is actually a long, long, long duration tailwinds, I would say, which these kind of programs can run up to decades. That's what I would look forward on our tailwinds, what we are doing, and it's helping us quite out tremendously.

Okay. That's phenomenal. Thanks, Arun.

Thank you.

Thank you. With that, there are no further questions at this time. I would like to turn the floor back over to Arun Jeldi for closing remarks.

Thank you, everyone for supporting Velo3D and being with us and joining this call. This journey has not been easy in the last 16 months of what we have done. There's a lot more to go. I truly appreciate our investors, our suppliers, our employees, and everybody who is involved in this journey. We look forward to keep going this momentum for the rest of the year and decades to come. Thank you again, once again, and have a nice evening. Bye.

Thank you. With that, ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful rest of your evening.