Executive Summary

Q4 2023 was an inflection quarter marked by an extreme revenue shortfall ($1.8M) versus Q3 ($23.8M) and prior year ($29.8M), driven by sharply reduced system shipments amid bookings weakness and realignment; GAAP diluted EPS was $(0.28), with gross margin at (1,857)% due to inventory valuation charges and realignment costs .
Management pivoted from growth to “customer success, system reliability, and cost structure,” citing >15% sequential OpEx cuts (non-GAAP OpEx down ~17% q/q in Q4) and improved operational KPIs (uptime +10%, installation time −40%) .
Guidance reset: FY 2024 revenue $80–$95M and gross margin 20–30%, with Q4 2024 ~30%; company expects sequential quarterly improvements and free cash flow breakeven in 2H24 .
Strategic overhang/catalysts: CEO transition and strategic review (Dec 15), December financing, and defense bookings recovery (> $15M by Mar 26; $27M by Apr 4) positioning 1H24 pipeline; stock reaction likely tied to Q4 miss vs Q3’s Q4 guidance ($15–$27M), realignment charges, and bookings momentum into defense/aerospace .

What Went Well and What Went Wrong

What Went Well

“2023 was a transformational year… re-aligned… to ensuring customer success, improving system reliability and materially reducing our cost structure,” with bookings recovery (> $15M since mid-December; >50% from existing customers) and defense wins (Kratos Defense, Bechtel Plant Machinery) .
Operational KPIs improved: field issue resolution times −45% since Q3; system uptime +10%; installation time −40% over last 6 months .
Non-GAAP OpEx down ~17% q/q in Q4 to $16.5M; management targets >30% reduction from Q3 to end of Q1 2024 (excluding one-time charges), underpinning free cash flow trajectory .

What Went Wrong

Revenue collapse to $1.8M on “significant reduction in system shipments” amid H2 bookings shortfall and realignment transition; gross margin plunged to (1,857)% due to reduced volume, inventory valuation charges, and realignment costs .
Q4 revenue missed Q3-issued guidance ($15–$27M), signaling deeper near-term demand/operational disruption than anticipated during the pivot .
Cash and investments declined to $31M from $72M in Q3, reflecting cash burn and balance sheet pressure despite YoY free cash flow improvement of 35% (excluding financing) .

Financial Results

Metric	Q4 2022	Q3 2023	Q4 2023
Revenue ($USD Millions)	$29.780	$23.808	$1.806
GAAP Gross Margin (%)	5.9%	6.3%	(1,857.2)%
GAAP Diluted EPS ($)	$0.11	$(0.09)	$(0.28)
GAAP Net Income (Loss) ($USD Millions)	$22.607	$(17.396)	$(58.225)
Non-GAAP Net Loss ($USD Millions)	$(16.388)	$(22.541)	$(61.147)
Cash and Investments ($USD Millions)	$80	$72	$31

Segment revenue breakdown

Segment Revenue ($USD Millions)	Q4 2022	Q3 2023	Q4 2023
3D Printer	$27.010	$21.428	$(0.136)
Recurring Payment	$1.119	$0.531	$0.535
Support Services	$1.651	$1.849	$1.407
Total Revenue	$29.780	$23.808	$1.806

KPIs and operating metrics

KPI	Q4 2022	Q3 2023	Q4 2023
Non-GAAP Operating Expenses ($USD Millions)	$22.873	$19.993	$21.157
GAAP Operating Expenses ($USD Millions)	$23.662	$26.709	$24.544
Inventory valuation / realignment charges ($USD Millions)	—	—	$4.7 (incl. $2.4 inventory reserve; $2.3 severance/other)
Bookings since mid-Dec (as of Mar 26, 2024) ($USD Millions)	—	—	>$15
Field issue resolution time	—	—	−45% vs Q3 2023
System uptime	—	—	+10% vs Q3 2023
System installation time	—	—	−40% vs prior 6 months
Free cash flow YoY	—	—	+35% YoY (excluding financing)

Vs. estimates and guidance (context)

Item	Q4 2023 Guidance (issued 11/6/23)	Actual Q4 2023
Revenue ($USD Millions)	$15–$27	$1.806
Gross Margin (%)	5%–17% (excl. non-recurring)	(1,857.2)%

Note: S&P Global consensus estimates were unavailable for VLD via our data connector; comparisons to Wall Street consensus could not be retrieved (see Estimates Context).

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Millions)	Q4 2023	$15–$27 (11/6/23)	Actual $1.806	Miss vs guidance
Gross Margin (%)	Q4 2023	5–17 (excl. non-recurring)	Actual (1,857.2)%	Miss vs guidance
Revenue ($USD Millions)	FY 2023	$105–$115 (8/10/23)	$91–$103 (11/6/23)	Lowered
Gross Margin (%)	FY 2023	14–18 (assumes no non-recurring; Q4 21–25)	9–12 (excl. non-recurring)	Lowered
Revenue ($USD Millions)	FY 2024	—	$80–$95	New
Gross Margin (%)	FY 2024	—	20–30; Q4 2024 ~30 (excl. non-recurring)	New
Trend commentary	2024 quarterly	—	Sequential improvement in revenue, gross margin, OpEx; FCF breakeven in 2H24	New trajectory

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2023)	Previous Mentions (Q3 2023)	Current Period (Q4 2023)	Trend
Strategic focus	Strong demand; cycle time improvements; margin expansion; reduce OpEx 2H23	Realignment shift from top-line growth to cash flow, customer success, cost structure	Execution on realignment: bookings recovery; defense wins; operational efficiency	Pivot sustained, operational improvements progressing
Bookings / backlog	Record new customer orders; bookings below plan due to delays	Pipeline below plan; expect bookings growth in Q4	>$15M bookings since mid-Dec (Mar 26); later updated to $27M (Apr 4); backlog $23M	Improving into 1H24
Gross margin path	11.9% in Q2; expected further material cost improvements	Expected Q4 GM increase barring non-recurring charges	Q4 GM deeply negative due to inventory/realignment; expects positive GM in Q1 and ~30% in Q4 2024	Near-term trough, recovery targeted
Cost actions	Planned OpEx reductions in 2H23	>20% RIF; ~40% overall cost structure reduction by Q1’24	Non-GAAP OpEx ↓ >15% seq.; target >30% decline from Q3 to end of Q1’24	Executing reductions
End markets	Defense/aerospace presence expanding	Cited bookings delays; still optimistic	New defense customers; DoD funding cited as catalyst	Strengthening defense pipeline
Leadership/strategy	—	—	CEO change; strategic review for alternatives (merger/sale)	Strategic overhang

Management Commentary

Brad Kreger (CEO): “2023 was a transformational year for the company as we re-aligned our strategic and business priorities from driving revenue growth to ensuring customer success, improving system reliability and materially reducing our cost structure.” He added excitement about 2024 market opportunities “especially in defense given the recent $825 billion Department of Defense funding approval.”
Kreger: “We’re continuing to execute on our cost realignment programs to improve margins and cash flow, while prudently managing working capital. By doing so, we believe we are well positioned to profitably capitalize on the increasing industry demand for leading-edge additive manufacturing solutions.”
Benny Buller (Q3 release): “We made the strategic decision to realign our operations… to optimizing free cash flow, maximizing customer success, reducing expenditures, and improving our operational efficiency… we believe that this strategy will ensure the company will have the liquidity it needs to achieve its profitability goal in 2024.”

Q&A Highlights

The full Q4 2023 earnings call transcript could not be retrieved via our document tools; public transcript links are available (Seeking Alpha, MarketScreener, Yahoo Finance) for detailed Q&A review .
Management clarifications (from company materials) emphasized: expectation of positive gross margin in Q1 2024 and ~30% in Q4 2024, sequential improvements in revenue and OpEx, and bookings momentum underpinning 1H24 visibility .

Estimates Context

S&P Global consensus estimates for Q4 2023 (EPS and revenue) were unavailable for VLD via our data connector due to missing CIQ mapping; therefore, we cannot quantify beat/miss versus Wall Street consensus in this report (default source would be S&P Global) [GetEstimates error noted].
However, versus company-issued guidance, Q4 revenue and gross margin materially missed (see Financial Results and Guidance Changes) .

Key Takeaways for Investors

The magnitude of Q4’s revenue shortfall ($1.8M vs $15–$27M guided) and gross margin collapse (to −1,857%) signals the realignment’s near-term disruption and underscores execution risk; monitor Q1/Q2 shipment cadence and margin recovery to validate the sequential improvement narrative .
Bookings momentum into defense/aerospace (> $15M by Mar 26; $27M by Apr 4) and a $23M backlog set up 1H24 deliveries; watch conversion pace and ASP/mix to gauge revenue and gross margin progression .
Cost actions are tangible (non-GAAP OpEx down ~17% q/q) with >30% decline targeted versus Q3 by end of Q1; track OpEx trajectory and free cash flow breakeven in 2H24 as critical milestones .
Strategic review and December financing add overhang and optionality; any transaction outcomes and balance sheet developments will be stock-moving alongside operational updates .
FY 2024 guide ($80–$95M revenue; 20–30% GM; Q4 ~30%) is ambitious relative to recent performance; the proof points will be sequential revenue and margin improvement and sustained bookings/backlog growth .
Operational KPIs (uptime, installation time, field resolution) are improving, supporting customer confidence (orders >50% from existing customers); continued reliability gains should aid repeat purchases and service revenue stability .
Near-term trading: volatility likely around delivery timing, margin prints, and strategic review headlines; medium-term thesis hinges on defense/aerospace adoption of Sapphire XC platforms, margin normalization, and cash flow inflection .

Additional Relevant Q4 2023 Press Releases and Events

Leadership transition and strategic business review (Dec 15, 2023): CEO stepped down; interim CEO appointed; board commenced strategic review (potential merger/sale) .
Registered direct offering (Dec 28, 2023): financing terms and placement agent engagement disclosed, affecting capital structure and liquidity runway .
Reduction in force (Oct 10, 2023): ~21% workforce reduction; estimated $1.4–$2.0M costs in Q4 2023 tied to realignment .

Notes:

All quantitative and qualitative data points are cited to company documents and public transcript links as required.
Wall Street consensus estimates from S&P Global were not retrievable for VLD; comparisons to consensus are therefore not included.

Velo3D, Inc. (VLD)·Q4 2023 Earnings Summary