Greetings and welcome to the Velo3D, Inc. Second Quarter 2026 Financial Results. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. 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 airspace, 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 airspace and defense end market, 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. The gross margin expanded to 21.5% and 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 sheets 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 bill we execute at our own facilities generate 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 data set. 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 MIRS Machine Corporation. MIRS 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 distributed 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 announce 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 production 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 strengthen our corporate governance with the appointment of Lily May 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, positioned 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 Suwa, 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 negative 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 a 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. Gap 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 negative $8.1 million compared to negative $8.9 million in the second quarter of 2025. As of June 30, 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 30, 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, and 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 percent 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 a call back over to Arun.

Thank you, Jim. Looking ahead, we are increasing our 2026 revenue guidance to $65 million to $75 million, from $60 million to $70 million, reflecting continued adoption of rapid production solutions 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 to $55 million, as we continue investing selectively to support strategic growth initiatives. Capital expenditures are expected to remain in the range of $40 million to $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 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove yourself from the queue. And 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 Jason Smith 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, and then relatedly, just given the strength you saw in Q2, how are you thinking about RPS as a percentage of revenue exiting this year?

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

Gotcha. And then 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 are you thinking about the overall fleet exiting this year?

So we're building about 20 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. So with the new improvements, there is a 9 to 10 bay, which we're going to keep it here. and the next 10 will be deploying to Lake, I mean, Livermore. So that will give you a 40 machine capacity by the 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 Hallam. 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, you know, what are you seeing from your customer base as it relates to your current customers versus, you know, potential new customers? And then, you know, from like 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 metals additive technology is really accelerating right now.

Yeah, I mean, there are several bottlenecks, Greg, in general in aerospace and fields we are serving. like space, defense, and energy markets are booming. So if you see, there are a lot of new visions and new companies are popping up every day. And 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. So 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. So that is creating a market for a specific, you know, turbines and both fusion-fusion and other ways of clean energy. And in the space, obviously, there's a lot of space race and multiple space companies. now is really pushing the limits to speed up their production rates. So we're running out of space, and we're trying to catch up with the demand we have. So as I mentioned last year, we have already seen this, right? So I mentioned that we absolutely need 100 machines as of today to actually run all the programs on the demand we have. But we'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. So by next year, we'll have half of the 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. And those will be sold before we can actually build. So that's how much demand we are ramping up.

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

I mean, every company goes through supply chain problems. It's not that that is more worry for me. My thing is it's now the demand is higher than what anybody can create today. So my biggest problem is like, you know, getting the people at the skill level growth and then, you know, getting alignment with single point failures and creating the double layers of things. That work we have been doing from last one and a half year, as I mentioned, the last one and a half year for Velo is just purely. stability of the company. And 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. And the financial struggles in the last year didn't help us to really do what we want. And this year, we have the stability to create that ecosystem we always and vision for, and it's ramping up faster. And 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 foot already existent, and you don't even have a 250,000 square foot of additive in the country, it's quite evident that we absolutely need the capacity to bring back all the programs and all the production and the prototype models right now is moving on to the productions at a bigger scale. And we need actually, you know, 300 or 400 machines as of in the next one or two years, but we can only build 100. And metal additive is so hard. It's not that you, especially when you have specific requirements in space and defense And the precision, Velo is beating, you know, everybody on the tech side to prove that point. And we have been doing this for almost seven years on the printing side. And still, you know, I still feel like there's a lot more to go. So there's an absolute need on that.

Yep. Okay. And then two quick housekeeping, if I can. And I think you said Livermore operational this year. Will it start to produce revenue-generating parts later this year or early next?

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

Yep. Okay. And 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, and 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. But 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. So it's really kind of apples and oranges and not really applicable or anything that actually requires us to quantify. So it's kind of really a not relevant item to quantify. and so 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 and Pollitt with Needham & Company. Please proceed with your question.

Hey, guys, thanks for taking my question, and congrats on the great results. I wanted to just more 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.

So the demand is driven by, as I mentioned before, there is an absolute need for demand. 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. So that's 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. So multiple existing customers who have proven their prototype level is now going to production level at a high scale. And energy markets. So to run all this energy market, electricity is the key. So producing some clean energy on various turbines and design changes have led to a greater demand on production. So 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's a three to five year program run. So that's how we started these programs like last year, going to the prototype at the scale and now at the production at the scale. And as I mentioned, that's how the demand is ramping up and ramping up. And you can't create machines overnight. So the demand is superseding the existing capacity, and we need to catch up. So there's absolutely a need for our capacity increase.

Okay. And then as we think about the Livermore facility, could you maybe give some color on, like, how many systems you guys are planning to have operational maybe at the end of this year and as you 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 27 is what we are looking. So that will bring a total capacity up to 75 to 80 machines. That's the total manufactured and billed machines. So by mid-28, we should see about half of that capacity standing in Livermore. okay and then lastly might be one more for for jim just thinking about like 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's a sequential ramp up so a quarter after quarter what we projected is a because it's a capacity game like so So increasing the capacity should increase, you know, all the numbers. And the spend to basically, when it ramps up, you know, your gross profitability increases, and that reduces the operational cost eventually. But the initial capex where we talked and also some operational to increase the production requires some additional hires. so that will increase some operational costs but it should we're trying to very strategically balance the revenues and operational costs not to exceed and we are guided to be a bit of 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 1 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 questions have 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 of the labor markets and the ability to fill positions and things like that for your company?

So we are actually feeling pretty good. I mean, we hired about 16 new hires this year in a matter of seven months. So the labor market is pretty aggressive. And then 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. So, I mean, 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 it requires, I mean, three machines run is done by one technician. So we're not planning to hire hundreds and hundreds of them in the future. But we're also, by 27, 28, the idea is to automate so the existing pool can actually run a whole level more facility. So we are preparing the ground today on the workforce and eventually to automate, to balance that workforce, not to have too much operational cost.

And my second question kind of leads off to that. You brought up automation, but also in your preparedness, you talked about the data and using large language models and AI. 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. So 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. um the software will right now like you know you take the cad or cam or something you design and simulate and then you move to the production and all that but 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 without 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 there, 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 built or the parts buildup and also material studies as they actually melt and do the manufacturing. And also the Institute of Monitoring and other digital factors will create a software that actually can help you to actually literally change why you build. And also you can don't have to do too many prototyping that reduces the time and you can go to production faster. So these laws need to be applicable to most of the manufacturing in the future. So we're building that in-house by creating these data sets and having a hardware pull that data while you are on the floor is the most essential part, just like anybody done in the previous times. And that increases another product level of revenue for Velo. And that's what we're creating, not just manufacturing of parts.

Great. Thank you for taking my question.

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 close 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. And from here onwards, what we have mentioned from last 18 months have been proven. And now we're showing the real value where Velo is the next generation of digital manufacturers. 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 promise for the future digital manufacturing. And 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. And this effort will be fulfilled with the dedicated team at Wello. And I want to thank you again for taking this call and answering and asking these questions. I think I appreciate each one's effort. And thank you, and have a good evening.

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