VELO Narrows Losses and Sees 48% Revenue Growth—Margins Improve as Defense Demand Drives Expansion

Revenue Surges, Margins Turn Positive, and Losses Shrink

Velo3D delivered a strong start to 2026, reporting first-quarter revenue of $13.8 million—a 48% increase compared to the same period last year. Gross margin for the quarter improved sharply to 17.2%, up from 7.5% in Q1 2025, driven by a higher average selling price on Sapphire XC systems and increased parts production revenues. Notably, the company trimmed its GAAP net loss to $7 million from last year’s $25 million. Non-GAAP net loss also narrowed, coming in at $5.1 million versus $9 million in Q1 2025.

Defense and Aerospace Demand Underpins Growth—New $9.8M Contract Secured

Recent business developments reinforced Velo3D’s strategic direction toward high-value sectors. The company secured a $9.8 million, five-year contract with the Defense Logistics Agency’s JAMA Pilot Parts Program, underscoring demand for scalable metal additive manufacturing in defense and aerospace. This follows a robust pipeline as existing and new defense contracts become a core driver of revenue growth.

Successful Capital Raise Supports Expansion and Balance Sheet De-Risking

To fund expansion, Velo3D completed a registered direct offering in April, raising $50 million in gross proceeds. Combined with a debt reduction—down approximately 70% in the quarter to $9 million—the company is positioned to invest in talent and operational infrastructure. As of March 31, 2026, cash and cash equivalents stood at $16.56 million, with $30 million in backlog and $12 million in new bookings, demonstrating a healthy revenue runway.

Operational Efficiency Improves, Outlook Reaffirmed

Operating expenses fell to $9.33 million from $12.22 million in Q1 2025, as Velo3D sharpened its focus on efficiency. Adjusted EBITDA loss improved to $3.59 million from nearly $6.94 million in the prior year quarter.

Management reaffirmed guidance for full-year 2026, expecting revenue between $60 million and $70 million and aiming for positive EBITDA in the second half. The company also anticipates >30% gross margin by year-end and notes that RPS (Recurring Parts Solutions) production revenue is expected to become a larger portion of overall sales.

What’s Next: Key Investor Takeaways and Sector Implications

Velo3D’s Q1 report highlights a disciplined move toward profitability and operational strength, buoyed by strong sectoral demand and a proactive financial strategy. Upcoming milestones include ongoing fulfillment of defense contracts, ramped-up RPS contributions, and a focus on achieving EBITDA positivity in H2 2026. For investors, Velo3D’s narrowing losses, improved margins, and strengthened customer base in defense and aerospace mark it as a company closely tracking its turnaround ambitions—though sustained momentum will depend on delivering further revenue consistency and cost control as markets evolve through 2026.

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