Our next presentation. First off, welcome to the 26th Annual Needham Growth Conference. The next presentation will be from Velo3D. We've got Bob Okunski, VP of Investor Relations, who's gonna go through the presentation. Bob? Okay, awesome. Good afternoon, everyone. Thank you for joining. Thanks to Jim and Needham for hosting us. I'd like to thank everybody in the room, as well as those on the webcast, to learn a little bit more about Velo3D. Water bottle. I wouldn't be a good IR person if I didn't mention that I may make forward-looking statements today, subject to various risks and uncertainties. Please see our filings with the SEC that may impact those forward-looking statements. I have a handful of slides I'd like to run through before we jump to some Q&A. As a company overview, Velo3D is a technology leader in the metal additive manufacturing space. Our focus is on high-value, mission-critical parts that our customers produce across multiple industries. We have a differentiated technology that was developed in 2014 by our founder to address a fundamental problem in the metal additive manufacturing space, where to design parts required a significant change in the part structure in order to get it printed in 3D. This is one of the main reasons why the 3D space has not taken off as many have expected it to over the years, is the fact that there has been some design limitations due to old technology that's been around for 20 or 30 years. In our case, we've developed a brand-new technology, both a hardware and software platform, designed from the ground up to eliminate this issue. It's critical for high-value complex parts, and it enables the customer to print these parts without changing the design, so essentially printing a part the way they want it to be going forward. We have a leading IP portfolio. We have over 50 patents on process and hardware and software. Very, very high barriers to entry for us, both from new entrants as well as existing peers. We obviously see a significant market opportunity. Third parties have estimated the growth in the space of about 20% CAGR over the next 10 years. That's primarily driven by customers moving from traditional manufacturing of casting and forging to the 3D AM space. Our go-to-market strategy is a little different than most. We focus on those customers that have needs for high value, significantly complex internal geometries. Think of gases, pressure, heat, fluids, things along that line, across multiple industries. So we address a market segment that our customers do not... excuse me, our competitors do not address because they can't, because they don't have the technology, because they're using technology from many years ago. We have a diverse customer base. Space is our largest market, about 30% of our revenue. We have business with contract manufacturers that print parts for end customers. That's about another 20%-25% of our business, and then defense and aerospace is about 20%-25% of our business. We're starting to see a significant amount of traction in the defense space. It's been a big focus for us over the last six months, and we are starting to see some traction there. And then finally, we have a significant global footprint. We have over 100 systems installed globally, with about 40+ customers across multiple industries. So moving on to the growth of the industry, as I mentioned, 20% CAGR through 2032 for the metal AM space. This is a huge opportunity because we're again, as I mentioned, we're going after the casting and forging market, which is about a $100 billion market. The metal AM section that we focus on is significantly below that $100 billion, but it is a significant opportunity. We grew rather significantly since 2019 through the end of last year, and we expect to capture further share going forward based on our technology. This is not a desktop 3D printer. These are very significant pieces of machinery. They're very complex. Your customers are extremely demanding, especially in the defense and aerospace and space industries, where you have very tight tolerances, you have very complex internal structures, and we're one of the few companies that can actually produce parts for those industries. So why are high-value metal parts ideal for disruption? These are, as I mentioned, complex parts, complex products with many internal parts that are really hard to machine. Think about rocket and jet engines, fuel delivery systems, heat exchangers, things along that line, pumps, impellers. These usually require very complex internal geometries, whether it's thin walls, low overhangs, that current technology can't address. AM essentially enables the differentiation for this. It also allows the customer to rapidly make design changes for their part based on feedback from their customer base or based on feedback from R&D, that allows them to improve the performance. For example, for a space customer, a 5% improvement in performance of the engine basically means you can carry 5% less fuel or carry 5% more payload. That's a huge advantage, and 3D printing enables the customer to be able to take advantage of that on a multiple iteration basis as we go forward. The other part of the high-value proposition is essentially shorter lead times. Currently, metal parts are done through casting and forging. That could be a 12-18-month process, where you have to put your order in, and then typically, when you get the parts back, about, you know, 20% of them are not at tolerance. From our standpoint, using metal AM allows you to shorten your lead times on a supply chain to a week or less, and once you have the recipe built and the design built, you can actually print parts in days, rather than waiting a year. Spend a little time on our product family. Essentially, we're a little different. We have a complete software/hardware package, from front end to back end, under a common software platform that is designed to optimize the software and the build. We have two main product lines, one being the Sapphire. It's a 2-laser system. Our second product line is our Sapphire XC, which is eight lasers. Obviously, more lasers means lower parts cost and actually higher volume. We also offer a derivative for each of those, which is our 1 MZ product. That allows customers to build parts up to one meter tall. Okay? As I mentioned before, we sell to a lot of different industries, so we work with a lot of different materials. This is just a sample on the right side of the slide of some of the materials we work with. What we found is that certain industries are very specific to certain materials. Obviously, the M300 tool steel is for the automotive industry. Obviously, copper and aluminum is space. Aerospace is big with titanium, and nickel is primarily used by our industrial customers for industrial customer parts. As I said, we have one single software platform. Our Flow software is our print preparation software that helps optimize the design before the print. We have our Assure software on the back end, which is quality control, allows you to view each individual layer of a print, which is critical because there's parts that our customers make that could be 10 or 20,000 layers thick. So knowing what's going on with each individual layer as you go forward, goes to tolerances, goes to quality control, and goes for qualification. Underlying the whole piece is our Intelligent Fusion software, which ties it all together, ties the hardware and the software, and optimizes print quality and performance going forward. And when we sell our system, we sell the entire package to the customer. We do not sell our software separate or our hardware separate. It comes complete as a single system. We have a differentiated AM printing technology, as I mentioned before. Those that are familiar with the space might hear about supports. We can produce any design with the most complex internal geometries as one part. This is a fundamental physics issue, and the problem that has been had by the metal AM industry for the past 20 or 30 years. It's basic physics. So basically, what you're doing is you're taking a bed of metal powder, and you are melting it with a laser, okay? You get a melt pool of the metal, but when the metal cools, it wants to warp, okay? So in the past, what has been done to avoid this situation is they would put customers would put supports inside the inside the part to kind of hold these parts hold these walls from warping. The problem with that is if you're building a single part and you have supports in it, once the part is done, you can't get the supports out, so it becomes a very expensive paperweight, to be honest with you. That's been one of the big limitations of 3D printing. In our case, as you can see on the right of the chart, right of the picture, we can produce that same part without any supports. All right? And a lot of that's done because of proprietary software and our proprietary technology. We have figured out a way to be able to offset the way the layer is made. We've been able to offset some of those limitations of previous technology. A lot of that has to do with our non-contact recoater. So when you're building a part layer by layer, you're dropping the part into a powder bed, or it's a bed of powder. Then you have to basically for lack of a better way of saying it, squeegee off all the excess powder, so you have a flat plane of powder for the laser to hit to melt in order to make your layer. In the past, the problem with a lot of 3D printing is, while we want everything to be perfect, when you melt metal powder to drive a layer, you're not gonna have something that's perfectly flat. You're gonna have protrusions of various lengths, and. But we're talking microns here, it's not inches. But, the problem is when you bring your recoater blade back over the build in order to get your next layer of powder down, if you have protrusions and your recoater blade is exactly right on the part, you're gonna hit these protrusions. So you'll either break the build, or you'll damage your very expensive recoater blade. So as you can see on the right, what we've been able to do is actually develop a non-contact recoater blade. This allows us to do very low angle geometries without potentially damaging the blade or potentially damaging the part. So this is a fundamental problem with 3D printing and metal printing in the past, and we've been able to overcome that. Okay, a lot about technology. Let's see what it's like in real life, okay? This is a compare and contrast between conventional manufacturing and metal AM from Velo for a simple heat exchanger part. Okay? Just looking at the graph, you can tell a lot less steps in doing it with the Velo technology. Okay? So you're looking at about 65% fewer manufacturing steps. Additionally, it takes from original design to build the first part to get your recipe down, takes about 4-6 weeks, okay? Versus casting and forging, which could take anywhere from 12-18 months. So a significant reduction in manufacturing time, significant reduction in manufacturing steps. The other advantage we have is we can build that part in one piece, versus the casting and forging, where you have over 100 pieces that are gonna get welded together. So you have much fewer points of stress on your welding. It's a lot quicker to produce, and because it's an automated process for us, when it comes out of the build chamber, it's ready to go. As I mentioned, we have a very diverse customer base. Space, obviously, as I mentioned, defense, aerospace, hypersonics, we've been moving into oil and gas. We also have a large footprint in the contract manufacturing space. This is where we have contract manufacturers that will build parts for specific customers. A number of our customers don't wanna own the systems. That's not their core technology, so they will contract out to the manufacturers in order to build the parts for them. We work closely with both the customers and the contract manufacturers. It's kind of a win-win circle situation. We drive parts customers to the contract manufacturers. The contract manufacturers build more parts. They need more machines, they order more machines from us, we can go out and sell more parts. So basically, this footprint, as I said, over 100 systems installed, is a significant footprint across the space. We believe we have the biggest footprint across the most industry in this type of production. So moving on to our strategic initiatives. As many of you probably know, Velo3D had a very difficult 2023. There's a lot of changes in the company. We announced a realignment in Q3, on the Q3 earnings call, in order to shift from focusing on revenue growth to our path to profitability. That required a significant change in strategy and how we run the company. So essentially what we did is we instituted a number of programs, including an expense reduction program. We reduced our headcount by 20%. We expect to reduce our OpEx by about 40% from the end of Q3 to the end of Q1 of 2024. We're focused significantly more on cash flow and profitability. We have an inventory constraint manufacturing plan in order to reduce working capital use. We have essentially frozen inventory purchases. We have enough inventory right now to get through Q2 based on our forecast. So inventory will now become a source of cash rather than a use. And we are now gonna start to build to order, as opposed to building to forecast. We've invested significantly in improving our customer satisfaction. We went through 2023, we launched three new products rather quickly. Our customer service and customer support engineering teams fell behind a little bit. We did not train them properly from that at that launch. So when problems arose at customer sites, the systems were not working as to spec, they were not happy. And essentially as a result, we saw our existing customer orders, which were typically around 50% of our business, kind of drop off. And that had a lot to do with customer dissatisfaction with our support. It has nothing to do with the technology. This is not a technology issue. This is a customer support issue. So, what we did is we ended up actually adding to our customer support organization from the resources that we got from the strategic alignment on the cost reductions. We are seeing a lot of green shoots out there. We have seen a number of existing customers who, in the past, last year, were hesitant to engage in additional discussions about buying systems, are now getting fully engaged again. And a lot of that has to do with is a big focus for our CEO and the company on customer satisfaction and part quality. Okay. We also instituted a new sales service programs for our bookings. Bookings and backlog is a driving growth, and that is a huge focus for the company. We brought in a new EVP of sales. She's done quite well, Michelle Sidwell, in getting the proper processes and procedures and discipline in sales. We've also refocused our efforts on a smaller end segments where we have a very strong footprint with a lot of referenceable customers, and that's primarily in the space defense and aerospace business. We're looking to resume booking growth starting this quarter, but so far so good. We're pleased with the results we have with the change in the sales organization. Ultimately, the goal here is to position the company for profitable long-term growth. We think our realignment that we have in place is getting us there. We're seeing progress, and we're very excited about the future financial potential for the company. So just in summary, as we mentioned on the Q3 call, Q4 2023 will be a transition quarter as we position the company for profitable growth. We've right-sized the business. Obviously, I mentioned the 40% reduction in OpEx. We've adjusted our procurement and manufacturing plan to improve cash flow. Our priority remains ensuring customer success that drives existing sales. And we are laying a very strong foundation with the new sales go-to-market strategy to rebuild our pipeline for 2024. You know, our goal is, it continues to be to reach profitability by the end of 2024. We think our realignment program that we have in place and the changes that we've made, and the feedback we have from the industry and our customers are letting us know that that is quite an achievable plan for us, for this year. That's it. Any questions? Kind of top revenue level do you need to be at, at this point, quarterly, to get to break even in that? Yeah, I mean, if you do, if you do the math, we haven't given any specific guidance for 2024. But it'd be around or probably around $30 million in revenue, $25 million-$30 million in revenue, depending on, depending on gross margin and depending on OpEx. But you could do the math. I mean, it's, you know... You'd make an assumption on our gross margin, you make assumption on OpEx, and pretty much that's break even. With the raise and the existing cash that you have, do you, at this point, you know, do you think can give you the sufficient flexibility to- Yeah, we believe, we believe we have the liquidity to get to our goal of break even. Obviously, there's a lot of caveats to that, but, you know, we have a fair amount of liquidity right now. We've restructured our convertible bond and our term debt. We just did a successful capital raise. We have a fair amount of receivables on the balance sheet, so there's lots of different ways of collecting liquidity at this point, in order to fund this. But we, you know, we firmly expect to continue to reduce our quarterly cash burn every quarter between now and the end of the year, and the goal is to obviously get to break even by the end of the year. Any other questions? Yeah. Yeah, I'm just wondering here. Essentially, what you're saying is your product, your machines can make equivalent products much quicker? Yeah. Right. It's not a real big difference in quality. Well, it's a big difference in quality because you're essentially building a part as one part. Okay? You're building one part rather than having multiple parts with welds and things along that line. Understood. If that is the case, are people designing parts around your machine? So in other words, before we couldn't do this turbine blade ... now, we can with your, with your machine. That is correct. And the biggest, the biggest, beneficiary of that is the space industry. Okay? Sure. We actually had a customer go from design to launch in less than a year. We have a very large space customer, who I'm not allowed to mention, who currently has more than 25 of our machines. It's critical to their engines. Can't name them, as I said. But they've been our initial customer since the beginning. They’re very much happy with how they can design parts. So the key here is to have them design parts based on our technology, and a lot of that has to do with the complex internal geometries that a lot of our competitors can't do. So yeah, the space industry is a perfect example of that. How, I mean, is that a good... What kind of market would you size that as? I mean, it's tough because obviously they couldn't do X before- Yeah ... and now they can do X. Yeah. Now, it's a tough estimate. Yeah, it's a tough estimate, and you know, I can't comment on any specific customers. But we think it's a huge opportunity because in the past, they'd have to do casting or forging. So this opens up a whole new market for us. I mean, I showed that the CAGR growth of about, you know, $20-$30 billion by 2032. We only need a small portion of that. So there's an opportunity for us. We are becoming a lot more focused on our end customers ... both by industry and by part capabilities. We do not wanna play in the commodity space. Right. It's just not, there's no value to be had there, and customers aren't gonna pay for that capabilities from our standpoint. So we have a unique set of customers that that need our technology, and that's kind of what we're doing. So we, you know, what the ultimate end market is you can flip a coin from a third-party standpoint, but, you know, as I said, it's $30 billion in metal AM. We have an opportunity to get a small portion of that, we'll, we'll be fine. Yeah? How long does it take you to build a machine? To build the machine, our Sapphire XC probably takes about fo ur weeks. Our XC could be 6 weeks. Okay, and when you guys were working on a forecasting model, what was your delivery time to the customer? At the time, back in 2023, it was about a 3-6-month delivery time. We're very, very strong. We had a lot of strong demand, so it stretched out for a while to meet the needs because we were trying to ramp up internally to meet that demand. But typically, it's a longer sales cycle. I mean, these are very expensive pieces of equipment. And typically, the approval process, and there's a test process goes on. You build a test part for them, and it has to be qualified, especially in defense and space, and aerospace. It's you gotta build that in as well, so it does take a while. Okay, Any other questions? Are you- Yeah. Are you- Go ahead. Pricing your equipment- Mm-hmm. Could that be better? Could you improve that maybe? A lot of it, I mean, we typically don't sell at a discount because we- I mean, up. Up. Oh, yeah. I mean, we've experimented with that in the past, especially related to our XC. We've put in some price increases, small, but they've been fairly sticky. Okay. Is there a... you know, it's all a cost benefit based on- Absolutely. Yeah. You know, I mean, if, if we can drive a lot more value or convince the customer there's a significant more value than they're paying, then we can raise the price. That would be the goal, and that's a big push by Michelle and the sales team, is to increase the customers' awareness of the amount of value we can provide them, not only for parts that they're making now, but other parts within their manufacturing base that can eventually be printed in 3D metal. How do you determine that value? Okay. Awesome. Thank you very much for your time, everybody. Have a great day.