VELO

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.

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

Thank you, operator. Good afternoon, and welcome to Velo3D's fourth quarter and full year 2025 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. 2025 was a defining year for Velo3D. A year where strategy, execution, and market timing converged to unlock meaningful growth and position us at the center of next-generation manufacturing. We delivered double-digit revenue growth driven by accelerating demand for our Rapid Production Solutions and our unmatched large format additive manufacturing capabilities. Importantly, we exited the year with powerful momentum. In the fourth quarter, we achieved record bookings and built a backlog of approximately $31 million, which we believe is a clear evidence that demand is not only strong but accelerating. This momentum gives us high confidence as we look ahead to 2026 and beyond. We believe that what's driving this growth is not just adoption, it's reliance. Our technology has become mission-critical.

In defense, we reached a major milestone by becoming the first additive manufacturing vendor qualified under the U.S. Army's Ground Vehicle Systems Center initiative. This is a breakthrough moment not just for Velo3D, but for the broader adoption of additive manufacturing in defense supply chains. We deepened that relationship through a cooperative research and development agreement with DEVCOM, positioning us at the forefront of solving some of the most urgent challenges in the defense manufacturing-speed, resilience, and scalability. We also secured a key Department of Defense contract supporting Project Forge, enabling faster prototyping and qualification of components to eliminate bottlenecks in defense production. Importantly, we won a multi-year full rate production contract with major defense prime contractor, a strong validation that our technology is moving beyond prototyping and into sustained high volume production. On the commercial side, adoption is accelerating just as quickly.

Our Rapid Production Solutions are now being used by Intergalactic to manufacture advanced heat exchange components for next-generation aviation platforms, demonstrating how our technology scales seamlessly across industries with precision, repeatability, and performance. What truly differentiates Velo3D, and where we see the next phase of value creation, is the evolution of our business model beyond hardware. As we scale our install base and expand production capacity, Velo3D is well positioned to pursue opportunity in digital manufacturing data and analytics. This is a powerful shift. Every build, every part, every material input, and every design iteration across our growing network of production systems generates high-value data. With this expansion, over time, we expect to build a connected ecosystem that could deliver real-time insights across materials, design optimization, and process performance.

Over time, we expect that this platform would enable customers to not only manufacture complex metal parts but to continuously improve them. We see a future where engineers can design, simulate, validate refined components in a closed loop environment powered by live production data. Accelerating innovation cycles and unlocking entirely new classes of metal applications. This is about moving from manufacturing parts to powering next-generation digital manufacturing intelligence. Importantly, we see potential to extend across industries from defense to aerospace to energy, which we believe could create an additional revenue layer on top of our production business. This is a key pillar of our long-term strategy and a significant driver of potential future value. Now, stepping back into the broader market. Across defense and aerospace, we are seeing a structural shift. Customers are demanding faster, more localized, and more resilient supply chains.

Programs are no longer staying in development. They're scaling into production. They're doing so rapidly. We believe this creates a compounding demand effect. Programs that begin with a single system are quickly expanding to multiple systems, sometimes within months. As volumes increase and new programs come online, demand just doesn't grow, it accelerates. Based on the programs we have already won and the trajectory we are seeing across our customer base, we developed a long-term capacity plan envisioning up to approximately 400 production systems over the next decade, subject to securing additional financing and continued growth programs. This is a demand-driven roadmap grounded in real programs, real customers, and real scaling needs that we are seeing today. To capture this opportunity, we are moving decisively. We are developing a near-term expansion plan designed to significantly increase our production capacity.

This includes scaling our manufacturing footprint and investing in automation to drive higher throughput while maintaining the exceptional quality required for mission-critical applications. With demand accelerating, we expect to raise additional capital to move faster. Our approach to capital is disciplined and shareholder-focused. We are leveraging asset-backed financing as a core strategy, using our production systems as collateral to fund growth with minimal dilution. We already demonstrated success with this model and expect to continue financing a significant portion of new systems through debt. In parallel, we are actively exploring potential government-backed financing programs designed to support domestic manufacturing expansion, which offer highly attractive non-dilutive capital. Any equity we raise will be targeted, focused on scaling our workforce and operational infrastructure with the goal of timing dilution while enabling us to fully capitalize on the significant market opportunity.

This is about scaling intelligently, efficiently, and with strong returns in mind. Beyond organic growth, we also see meaningful opportunities to strengthen our ecosystem through strategic M&A, particularly in areas like feedstock and metal powder, where vertical integration can drive both cost advantages and supply chain resilience. As we look ahead, we believe the story is clear. It appears we are in the intersection of two powerful forces, the reindustrialization of critical supply chains and the rapid adoption of additive manufacturing at scale. Velo3D is not just participating in this shift, we are helping lead it. 2025 was the foundation year where we proved the model, secured critical partnerships and built the momentum. 2026 and beyond is about positioning us to pursue sustained growth, expanding our footprint, building a category-defining digital manufacturing platform, and delivering long-term value for our shareholders.

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

Thank you, Arun, for letting me serve as the acting CFO during this exciting time at Velo3D. I am pleased to have Jim Suva, our incoming CFO, begin in early April 2026. Fourth quarter revenue was $9.4 million, down 25% compared to $12.6 million in the year ago quarter. This decrease was driven primarily by our product mix and timing related to the fourth-quarter government shutdown. We expect in 2026 to build upon each quarter to grow revenues. Gross margin for the fourth quarter was negative 73.6% compared to negative 3.5% in the year ago quarter and 3.2% in the prior quarter. As noted in our non-GAAP net loss table, we recorded a non-recurring $7 million inventory obsolescence write-off to better position our current inventory levels for 2026 production.

We expect margins to improve as RPS scales and new Sapphire XC systems are built to order. Operating expenses for the fourth quarter were $14.9 million, down from $20.6 million a year ago. On a non-GAAP basis, excluding $1.5 million of stock-based compensation, operating expenses were $13.3 million, again down compared to $18.9 million in the prior year quarter, demonstrating continued cost discipline. GAAP net loss for the quarter was $21.9 million, compared to a net loss of $21.3 million in the year ago quarter. Non-GAAP net loss for the quarter was $11.6 million, excluding stock-based compensation of $2.2 million, compared to a non-GAAP net loss of $15 million in the year ago quarter.

Adjusted EBITDA for the fourth quarter of 2025 improved to -$10 million compared to -$11 million in the fourth quarter of 2024. Turning to the full year results. Full-year 2025 revenue was $46 million, up 12% compared to $41 million a year ago. Excluding the $5 million other revenue related to the 2024 licensing rights, the increase was 28% growth in revenue. This increase was driven primarily by growth in RPS printed parts and XC system sales over the prior year. Gross margin for the full year was -16.1% compared to -5.1% in the prior year. As noted in our non-GAAP net loss table, we recorded a non-routine $7 million inventory obsolescence write-off to better position our current inventory levels for 2026 production.

We expect margins to improve as RPS scales and new Sapphire XC systems are built to order. Operating expenses for the full year 2025 were $47.5 million, down from $76.8 million in the prior year. On a non-GAAP basis, excluding $7.5 million of stock-based compensation, operating expenses were $40 million, again down substantially compared to $66.5 million in the prior year. GAAP net loss for 2025 was $71.4 million compared to a net loss of $69.9 million in 2024. Non-GAAP net loss for 2025 was $41.3 million compared to a non-GAAP net loss of $79.4 million in the prior year. Adjusted EBITDA for the full year 2025 improved to -$33.3 million compared to -$58.5 million in 2024.

As of December 31, 2025, we had a backlog of $31 million compared to $16 million at the end of 2024 and $21 million at the end of the previous quarter. This growth was driven in part by Q4 2025 bookings, which were the largest quarterly bookings in company history, reflecting strong demand for our Rapid Production Solutions and expanding adoption across defense and aerospace programs. Importantly, the composition of our backlog has shifted significantly towards RPS, fueled by strong demand from both the space and defense sectors. On the balance sheet at year-end 2025, our cash and cash equivalents totaled $39 million, up from $1.2 million at the end of 2024. The increase was driven in large part by the $30 million private placement of common stock and a $10 million equipment loan, providing a strong financial foundation heading into 2026.

We used a portion of this capital to reduce accounts payable from $18.5 million to $10.3 million, helping unlock our supply chain. In addition, in the first quarter of 2026, we converted an aggregated $15 million of debt into equity with $5 million of premium, reducing outstanding debt by roughly 60% to $10 million, further strengthening the balance sheet and reinforcing confidence in our capital market value. These actions position the company to efficiently scale operations and capture growing demand across our defense and aerospace markets. In summary, these milestones position Velo3D to capitalize on growing demand, scale production of high-value components, and continued driving growth. With a strengthened balance sheet, record backlog, and accelerating adoption of RPS, we are well positioned to execute on our strategy and capture an increasing share of market opportunities.

With that, I will turn the call back to Arun for a few remarks regarding our outlook for 2026. Thank you.

Thank you, Bernie. Looking ahead to 2026, we expect continued momentum as we scale our operations and capture growing demand across defense and commercial aerospace markets. For a full year, we anticipate revenue in the range of $60 million-$70 million, reflecting both ongoing adoption of RPS and expansion of our large format additive manufacturing capabilities. We expect sequential improvements in gross margins, with product margins projected to exceed 30% in the second half of 2026 as production scales and operational efficiencies are realized. Non-GAAP adjusted operating expenses are expected to be in the range of $45 million-$55 million, reflecting disciplined cost management while supporting strategic growth initiatives. Capital expenditures are projected to be in the range of $40 million-$50 million to support expansion of production capacity and enhance process automation.

Finally, we expect to achieve EBITDA positive in the second half of 2026. As we noted earlier, our long-term capacity plan targets approximately 400 production systems over the next decade. The investments we are making in 2026 in manufacturing infrastructure, supply chain optimization, and workforce represent the critical first phase of that build out. We expect to provide periodic updates on capacity milestones as we execute against this plan. Thank you all.

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 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Thank you. Our first question comes from the line of Jason Smith with Lake Street Capital Markets. Please proceed.

Hey, guys. Thanks for taking my questions. Just curious if you could share how much RPS revenue comprised in 2025. Then as we look at 2026, how should we think about that composition increasing, either exiting this year or for the full year?

The RPS is 10%-15% for the first year and the rest is systems. It will rapidly grow year after year, doubling that number. As we projected in the previous presentations of ours, it will take about 2-3 years to fully overtake RPS as our main revenue because of the infrastructure build and also project maturity timelines. This 2025 has proven the concept of how the demand is grown by. If you see the backlog, that tells you the story why it is the highest backlog ever in the company's history.

Gotcha. That's really helpful. Just looking at sort of the ramp of the printers this year, can you remind us how many printers you currently have? How should we think about that number growing to exiting this year? Relatedly, can you provide any update on the Midwest facility plans?

We have currently about 15 printers on our floor and 140 printers in the field. Our own hosting of the printers for this year will be at the range of 40+. On the expansion plan, the phase one expansion plan for next 100 machines will be done in California to reduce the operational cost at the early stages, and then the later stages, we'll expand it to the later part of the country, depending on the customer demand on those parts. This also gives us the time to build the timeline to have more teams to execute the future in next 2 years. Just to reiterate, we're expanding the first 100 printers of footprint in California, just close to the present headquarters.

This will help our operational efficiency and reduce the cost this year.

Okay, that makes sense. Just the last one for me, and I'll jump back into queue. I'm just curious if you could provide some additional color on the U.S. Army ground vehicle announcement, how we should be thinking about that potential size and the revenue opportunity.

As we mentioned in the contract itself, it's a milestone-based contract, and the potential will be, I mean, total potential will be much more, but the first 12 months is qualification and, whatever the number we mention in that will be, will be considered as a revenue part pretty quickly. Those are the details I can give now.

Okay, perfect. Thanks a lot, guys.

Thank you.

Thank you. Thanks, Jason.

Thank you. Our next question comes from the line of Alex Fuhrman with Lucid Capital Markets. Please proceed.

Hey, guys. Thanks very much for taking my question and congratulations on everything you accomplished in 2025. Wanted to ask about gross margin. It looks like gross margin was low single-digit positive the last two quarters if you exclude the inventory write down. You know, quite a number of drivers it sounds like that get you to 30%+ in the back half of the year. Can you talk about sort of what are the biggest drivers and kind of help us understand the relative importance? I mean, obviously it sounds like the growth of the RPS business is gonna be a really nice tailwind to gross margins. How much of it is just gonna be driven by scale and just improved pricing on the systems themselves?

Just any color on what that ramp kind of looks like in the first and second quarter on the way from, you know, 1% to 30% or more.

Last year, this is what we dealt with, like an extensive inventory we have in storage. I mean, if you go back and look at the balance sheets and P&Ls from 2024 to 2025, how we cleaned up, that is adding up for the loss of the gross margin losses. Like we have mentioned in our previous calls, like the overhead in 2024 were 400 employees, and then the total COGS on it was very expensive. These actually sitting in the inventory for too long is causing this overhead to drive down those gross margins. The new builds from 2024 later quarter, we started building the new machines have very least amount of overheads.

As we push those out in the first quarter, second and third, fourth quarters, that's the driver for your highest, I mean, big gross margin increases. That's why we took that effort to clean up all that downdraft and the inventory levels that we don't want to carry to 2026. As we promised to the investors, we want to be gross profit profitable and then EBITDA positive is driving that, not having that overhead, dragging our feet. Okay, we cleaned up the balance sheet, we cleaned up the debt, this should give a good momentum for getting us where we want to be.

Okay. That's really helpful. Thank you, Arun. Then I think you mentioned that most of the growth you're expecting to see in the RPS business is coming from aerospace and defense. Did I hear that correctly? Are there any other sectors where you're focused there? You know, is that just a matter of where the demand is or where you've put more marketing efforts? Thank you.

We are still focusing on our key areas of defense, Space, semiconductor, and energy markets. The main force to drive RPS will be the qualification speed. Defense is moving as you see the unmanned vehicles and munitions programs and everything going on. It will be still a big driver, but space is also expanding the same way. We consider those two as our main bread and butter in addition to semiconductors. Semiconductor qualifications take longer time, and these are expensive feats. That will come as a third layer, and then the energy comes as a fourth layer. By 2027 we should have a full good mix of all of them, at least, you know, 50% on defense and 20% on space, and the rest is semiconductor and energy markets.

That's the mix we are looking, but we're not depending, like previously, on few focused customers. It's now broadened, and we are adding more logos to our customer base. If you have seen just in 2025 how it's diversified and how the interest grew by reducing the barrier of entry to what we do is driving that $31 million backlog which the company has never seen. In 2026 we expect even bigger numbers as we projected in our revenues and others. It's a snowball effect, like you start slow, but second, third, fourth, by the time you reach fifth year, you're tremendously profitable on these because of the gross margins and the amount of operations to do this is very least because of the.

I mean, if you consider each machine as a robot and they are automated, you don't really need too much of overhead. That operational efficiency will begin within next 2 years, and then you start seeing the growth at 4th, 5th year. It's very clear on our how we wanna expand and Velo is not gonna be just based on that. We are also now targeting the product market and expanding our portfolio in different areas. That should give us a good scope of what we wanna do.

Okay. That's really helpful, Arun. I appreciate the thoughtful response.

Thank you, Alex.

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

Hey, Arun, congrats. Thanks for taking my questions here. A couple quick questions. The backlog that you quoted, can you just comment on the duration of that backlog? Is that more than one year or is that within one year?

It's within 12 months. That's the backlog we have. We'll capture all that with this year.

Okay. Perfect. All right. I guess I get a question. It's been a while since I got an update from you, but is your fleet entirely Sapphire systems still? Your fleet.

No. No. Like, we have three variations and, like, I mean, we still have Sapphires, but they're different sizes, right? The biggest one we have is Sapphire 1MZ. So that we can print up to one meter Z height. I mean, in the future calls, I will disclose some of the things what we are doing as an engineering feat, so there is more to come. Right now, I think this fleet will suffice most of the RPS needs. We have, in a way, two ways to do. I mean, the size of the machine is not more important, the design aspect and other factors also matter.

Okay. Well, I got two questions for you. I guess my question was, is all of your machines in your RPS service internally developed by Velo? I guess I'm asking the question because I've always thought that your machines were so much more sophisticated, much more harder to operate. I'm curious if you guys would consider deploying other metal machines that may be more efficient. Can you also just talk about the automation that you've added to these machines, if I'm wrong on the cost of kind of running them?

I have mentioned this before, like, Velo is not going to just settle for laser powder bed fusion. As we expand the offerings, what we give to the customer have to come from customer demand on various sides of it. At the same time, we're not gonna compromise our technology itself. I mean, there are two reasons. If you think RPS as somebody can just buy, you know, different kinds of machines and just run it, is the most impossible hassle that you can take on and not successful, because then you have to have different people for understanding different machines, and you cannot control your own technology. The powerful thing Velo has is an OEM which can control its technologies according to what we wanna do, okay? That's a powerful tool which others will miss.

I mean, if you think of any of these machine shops or the guys who are contract manufacturers can do this, right? What is that we are adding as a value? I mean, the market is missing that point. When you are an OEM and the technology at the software and the hardware side, you have much more success to fastly iterate and collect the data to the point that no one has the abilities to do so. When you can do that, you are the powerful machine on the data that all these companies are missing. You cannot go and wait on a service. You cannot go and wait on somebody to fix your software or upgrade software or fix your machine.

At the same time, when we take upon any technologies, that's going to be under Velo wing. When I mentioned M&A, the mergers and acquisitions, we have a strong focus on the business for next five years, where Velo will be the AWS of data and analytics company and a product-based company at a defense level, which what you see is the base of start. What you see in the next seven years is the vision of Velo, where Velo will make sure that we are ready for the next generation manufacturing and digital platforms, which is very siloed at this point and does not have access to all the things I'm talking.

Yeah. If I could just ask one more, and I'll cede the floor here. Have you talked at all about what your margins are on the RPS side of the business?

Mm-hmm.

what they may be at scale?

Yeah. Margins on RPS is between 40% and 60%, depending on the project, but that's the highest gross margins you can see compared to any of the machine sales or anything. Our machine sale gross margins range about if you make a brand-new machine and sell immediately, it's about 35%. This is why it's so powerful for us to expand our fleet and have that adoption very quickly, rather than just depending on the sale of the machine. We are selling capacity now. We're not just selling machines and put it on somebody's floor to struggle with it just like other machines. We're customer-focused mostly, and we want to be customer-focused to give them the easy access to the parts they want.

By end of the day, these tools are made to make parts, complex parts, whether it's a secured location for the customer or a non-secure location for us, we want to fulfill both ends, and we will cover all of this with different technologies in future.

Perfect. All right, sir. Thanks, and good luck.

Thank you. Thank you.

Thank you. Our next question comes to the line of George Mariama with Pareto Ventures. Please proceed.

Hi. Good afternoon, Arun. Nice to see the business model proving out.

Yeah.

I had a question. Could you provide some color on your plans to strengthen supply chain, you know, feedstock materials you mentioned?

Yeah. I mean, if you imagine the scale of I mean, there is no one in the whole country has what we are building as a fleet. Velo is taking the first initiative. I always believe that if you can control your feedstock supply chain, you have a tremendous value as a company. Just like if you take some of the companies which are vertically integrated, you see the bottom line of their main source of metals or anything they build themselves, okay? This is why our supply chain has to be robust if we have to scale to that 400 or 500 machines in scale. We're building a total ecosystem of how the additive manufacturing at scale happens.

I'm focused on that metal powders and the feedstock to be very well secured for years to come for us. When we promise to the customer, we want to deliver it on time. I don't want any vendor wait. I mean, we don't want to wait on vendors to give us what we want. At the same time, at the post-processing side, we want to make sure that we have full collaborations of contract manufacturers and a supply chain robustness to give the end product to the customer. It's a big feat which no one has done, and we are taking upon that as first digital manufacturing million square foot facilities.

Velo has a big project to do, both on the data of the industrial manufacturing as digital and also future, in future how the manufacturing is done, which is used by any OEMs, anybody who wants to do a product.

Okay. Thank you. One other question I had was on the acquisition side. Would that be sort of into the data software sort of to create the AWS sort of idea along those lines?

Yes. On the acquisition side, we do have our internal IP-protected software, which no one has the ability. I mean, no one has that kind of complex software that can actually do algorithms that produces a complex part, which some companies outside is trying, but they're not actually in use of what they make. Velo is already adopted that and most of our products are at a production scale and also prototyping scale. Not only that, but the traditional manufacturing is super important for us to make it digital and collect all the data.

The whole line from the material side to I think every layer of what we print, every layer of what the material is used, and all the way to giving that finished product to the customer is the targets for us to acquire and then M&A basically give an ecosystem that is fully digitally manufactured. Now the siloed data is not working, and that's why you have these supply chain problems. When you transform some of the traditional parts into digitalized data collection from the early stages of design, it will really help everybody, not just one OEM or a prime, to adopt those in scale. That's where you see the product being designed differently, manufactured differently, and analyzed differently, which gives the full scope of what Velo is trying to do.

Very exciting. Thank you, Arun.

Yep. Thank you.

Thank you. There are no further questions. I'd like to pass the call back over to Arun for any closing remarks.

Thank you, everyone who asked the questions so fully. I answered your questions. The vision is clear for Velo3D, and we are advancing and marching towards what I have mentioned in our questions. We're not trying to just be an OEM of machine manufacturer. We are transforming the digital manufacturing in, while I talk, to the future, where any part of the world or to the stars, this can be transferred, and this is necessary to manufacture and build things, and we're taking that step as Velo3D. The future is bright, and we have proven our remarks and concept in the year one. Year two, three, four is actual stability of the company financially, progressing towards the full digital manufacturing, full fleet of digital manufacturing shown in numbers, and also satisfying the customers as their needs come through.

I hope we'll have a great journey in the future, and thank you for support from the investors, employees, and all the supporters of Velo3D. I appreciate everything you say about us and hope you have a wonderful day. Thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.