Velo3D: Navigating the Trough of Sustained Losses to Capture the Additive Manufacturing Gold Rush

The additive manufacturing (AM) sector is on the cusp of a transformative decade, with the global market projected to grow at a 23.3% CAGR through 2030. Amid this surge, Velo3D (OTC: VLDX) stands at a critical inflection point. The company's recent financial performance—marked by steep losses, modest revenue growth, and a cash balance of just $1.2 million as of December 2024—raises questions about its viability. Yet, beneath the surface, Velo3D's strategic pivot to a value-driven business model, its dominance in mission-critical AM applications, and the explosive potential of its Rapid Production Services (RPS) business suggest a compelling long-term investment opportunity for those willing to tolerate near-term volatility.

The Financial Reality: A Company in Transition

Velo3D's fourth-quarter 2024 results underscore the challenges it faces. Revenue rose to $12.6 million, driven by Sapphire XC system sales, but this came alongside a GAAP net loss of $21.7 million and a negative 3.5% gross margin. Cash reserves plummeted from $24.5 million in 2023 to $1.2 million in 2024, a 95% decline. These figures paint a picture of a company burning through capital while struggling to achieve profitability.

However, the story is not entirely bleak. Operating expenses dropped by over 20% year-over-year, and adjusted EBITDA improved from -$50 million in Q4 2023 to -$14.6 million in Q4 2024. Management has also secured $15 million in bridge financing, providing a lifeline to fund operations while scaling RPS. The company's guidance for 2025—$50–60 million in revenue and a 30%+ growth rate—suggests confidence in its ability to reverse trends.

Strategic Shift: From Volume to Value

Velo3D's pivot from a volume-driven model to a value-driven approach is central to its long-term thesis. The company is no longer just selling 3D printers; it is offering end-to-end solutions through RPS, which includes design consulting, production, and engineering support. This shift is paying dividends: RPS is expected to contribute 40% of total revenue by 2026, with contracts like the $15 million agreement with Momentus and the $22 million partnership with Amaero signaling strong demand.

The RPS model also aligns with broader industry trends. As AM moves beyond prototyping into full-scale production, customers increasingly seek integrated solutions that reduce lead times and costs. Velo3D's proprietary Flow and Assure software platforms, combined with its Sapphire printers, position it to capture this shift. The company's recent $4 million deal with Vaya Space to produce hybrid rocket engine components exemplifies this value proposition, leveraging advanced materials like GRCop42 and Inconel 718 to meet aerospace demands.

Market Positioning: A U.S.-First Play in Mission-Critical AM

Velo3D's focus on high-end laser powder bed fusion (LBF) systems places it in a unique niche. While competitors like 3D Systems and GE Additive dominate the mid-market, Velo3D targets sectors where reliability and national security are paramount: aerospace, defense, and energy. This positioning is a strategic advantage in a post-pandemic world where U.S. policy emphasizes onshoring critical manufacturing.

The company's partnerships with defense contractors and federal agencies—such as the CRADA with NAVAIR and the Amaero collaboration—underscore its alignment with these priorities. Amaero's supply of refractory alloys, including niobium and molybdenum, further strengthens Velo3D's ability to produce parts for extreme environments. These materials are critical for applications like satellite propulsion and turbine blades, where failure is not an option.

Risks and Rewards: A High-Stakes Bet

Investing in Velo3D is not without risks. The company's cash burn rate remains unsustainable, and its path to EBITDA profitability hinges on scaling RPS and improving gross margins. The AM market is also highly competitive, with giants like HP and EOS investing heavily in industrial 3D printing.

However, the potential rewards are substantial. The global industrial 3D printer market is expected to grow from $12.96 billion in 2023 to $88.28 billion by 2030, with metal AM—Velo3D's core strength—projected to grow at a 28% CAGR. If Velo3D can capture even a fraction of this growth, its current valuation (trading at a market cap of ~$150 million as of August 2025) appears undervalued.

Investment Thesis: A Long-Term Play for Patient Capital

For investors with a 5–7 year horizon, Velo3D offers a high-risk, high-reward opportunity. The company's strategic pivot to RPS, its leadership in mission-critical AM, and its alignment with U.S. onshoring initiatives create a compelling narrative. Key catalysts to watch include:
1. Gross margin expansion: Management's target of >30% by 2025 is critical to achieving EBITDA profitability.
2. RPS adoption: Execution on the $15 million Momentus and $22 million Amaero contracts will validate the scalability of the RPS model.
3. Government contracts: Expanding partnerships with NAVAIR and other defense agencies could provide recurring revenue and margin stability.

While Velo3D's current losses and cash constraints make it a speculative bet, the company's long-term potential in a $90 billion market justifies a small, strategic allocation for those who believe in its vision. As the AM sector matures, Velo3D's focus on value, not volume, may prove to be its greatest strength.