Velo3D's Strategic Transformation: A Pathway to EBITDA Profitability in 2026

The additive manufacturing industry is undergoing a seismic shift, driven by the urgent need for supply chain resilience, lightweight materials, and scalable production solutions. At the forefront of this transformation is Velo3D (OTCQX: VLDX), a company redefining its business model to align with these macroeconomic and industrial trends. By pivoting from a capital-intensive equipment provider to a high-margin, recurring revenue platform through its Rapid Production Services (RPS), Velo3D is positioning itself to achieve EBITDA profitability by the first half of 2026. This article evaluates the strategic logic, financial trajectory, and macroeconomic tailwinds underpinning this transformation.

The Strategic Shift: From Systems to Recurring Revenue

Velo3D's traditional business model revolved around selling high-precision 3D printing systems to aerospace and defense clients. While this approach generated upfront revenue, it lacked the recurring income and margin stability required for long-term profitability. The company's 2023 strategic realignment marked a pivotal shift toward RPS, a service offering that leverages its proprietary technology to provide end-to-end production solutions.

The results are striking. In Q2 2025, RPS bookings surged 79% quarter-over-quarter, with 78% of these orders coming from new customers. Notably, 54% of RPS demand originated from the space sector, and 33% from defense—a direct reflection of the growing reliance on additive manufacturing for mission-critical components. This shift is not merely a revenue play; it's a strategic alignment with the aerospace and defense industries' need for localized, on-demand production.

Financial Trajectory: From Losses to EBITDA Positivity

Velo3D's financials tell a story of disciplined cost-cutting and margin expansion. By Q2 2025, the company had reduced non-GAAP operating expenses to $8.1 million, down 39% from $13.4 million in Q2 2024. Gross margin, while still negative at -11.7%, improved sharply from -28% in the prior year, driven by operational efficiencies and a shift in product mix.

The company's cash position, however, remains a concern. As of June 30, 2025, Velo3D held $854,000 in cash, a decline from $1.2 million in December 2024. To bridge this gap, the company raised $15 million via a secured convertible note and $17.5 million through a public offering in August 2025. These funds are earmarked for working capital and general corporate purposes, signaling a commitment to liquidity management.

Despite these challenges, Velo3D's guidance is optimistic. The company expects EBITDA profitability by H1 2026, with gross margins projected to exceed 30% in Q4 2025. This trajectory hinges on the continued ramp of RPS, which is expected to contribute an increasing share of revenue in the second half of 2025.

Macro Trends: Additive Manufacturing's Perfect Storm

Velo3D's RPS strategy is not just internally driven—it's a response to a perfect storm of macroeconomic and industrial trends.

1. Aerospace/Defense Market Growth: The global additive manufacturing market for aerospace and defense is projected to grow at a 5.9% CAGR through 2031, driven by demand for lightweight components, high-performance materials, and supply chain resilience. Velo3D's RPS model directly addresses these needs, offering scalable production of titanium and nickel-based superalloys—materials critical for next-gen aircraft and spacecraft.

2. Supply Chain Resilience: Geopolitical tensions and global supply chain disruptions have forced aerospace and defense firms to prioritize domestic production. Velo3D's U.S.-based RPS offering, with its emphasis on rapid innovation and localized manufacturing, aligns perfectly with this trend. Strategic partnerships, such as the $15 million MSA with Momentus, Inc. and a $22 million collaboration with Amaero, underscore this alignment.

3. Government Spending: The U.S. Department of Defense's $849.8 billion 2025 budget prioritizes investments in hypersonic tech, solid rocket motors, and unmanned systems—sectors where additive manufacturing is a game-changer. Velo3D's CRADA with NAVAIR and its focus on defense-sector RPS bookings position it to benefit from this spending surge.

Strategic Partnerships and Operational Discipline

Velo3D's RPS strategy is bolstered by a series of high-impact partnerships. The $15 million MSA with Momentus, for instance, includes a unique equity component, with Velo3D receiving a mix of common and convertible preferred stock. This structure not only provides recurring revenue but also aligns incentives with a strategic partner in the space sector.

Operational discipline is another cornerstone of Velo3D's transformation. The company has reduced non-GAAP operating expenses by over 30% since Q3 2023 and anticipates further cuts in 2024. These savings, combined with margin improvements from RPS, are critical to achieving EBITDA breakeven.

Investment Thesis: A High-Risk, High-Reward Play

Velo3D's path to EBITDA profitability is not without risks. Its cash position remains fragile, and the additive manufacturing market is still nascent. However, the company's strategic shift to RPS, coupled with favorable macro trends, creates a compelling long-term opportunity.

For investors, the key metrics to monitor are:
- RPS bookings growth: Sustained momentum in new customer acquisition and sector-specific demand.
- Gross margin expansion: Progress toward the 30%+ target in Q4 2025.
- Cash flow breakeven: The ability to fund operations without dilutive financing.

If Velo3D executes on its RPS strategy, it could emerge as a dominant player in the additive manufacturing space—a sector poised for explosive growth. While the road to EBITDA profitability is steep, the potential rewards for early adopters are substantial.

Conclusion: A Bet on the Future of Manufacturing

Velo3D's transformation from a hardware vendor to a high-margin, recurring revenue platform is a masterclass in strategic realignment. By leveraging RPS, the company is not only addressing the immediate needs of aerospace and defense clients but also positioning itself at the intersection of macroeconomic tailwinds. For investors with a long-term horizon and a tolerance for volatility, Velo3D represents a high-conviction bet on the future of industrial manufacturing.

As the additive manufacturing market matures and supply chain resilience becomes a non-negotiable, Velo3D's RPS model could prove to be the key to unlocking sustainable profitability. The question is not whether the company can achieve EBITDA breakeven—it's whether it can do so before the market's next inflection point.