Velo3D (VELO) Q2 2026: Revenue Surges 52% Amid Capacity Expansion and Operational Scaling
Velo3D accelerated revenue growth and margin expansion in Q2, driven by rising demand in aerospace and defense and strategic capacity investments. The new Livermore Production Campus is set to triple manufacturing capacity, underpinning the company’s transition to production-scale additive manufacturing. Strengthened liquidity and partnerships position Velo3D for sustained growth and improved profitability in the second half of 2026.
Summary
- Capacity Expansion Catalyzing Growth: Launch of Livermore campus to triple production and enable scaling of high-demand programs.
- Operational Momentum Across Verticals: Broadening aerospace, defense, energy, and space market penetration with increasing production deployments.
- Strategic Financial Positioning: Robust cash balance and reduced debt enhance flexibility to support growth and innovation.
Business Overview
Velo3D is a metal additive manufacturing (AM) technology company specializing in advanced 3D printing solutions that enable the production of complex, mission-critical metal parts. Its core revenue derives from sales of the Sapphire® family of metal 3D printers and related parts, alongside recurring payment solutions (RPS) and support services. The company primarily serves aerospace, defense, energy, and space sectors, where high-precision, production-scale AM is increasingly critical.
Performance Analysis
In the second quarter of 2026, Velo3D delivered $20.7 million in revenue, reflecting a robust 52.3% year-over-year increase. This growth was fueled by a 57% rise in 3D printer and parts sales, driven by higher average selling prices, favorable product mix, and expanding RPS revenue associated with increased production volumes. Sequentially, revenue grew approximately 50% from the prior quarter, signaling accelerating demand momentum.
Gross margins improved substantially to 21.5%, a 33.2-percentage point increase from negative 11.7% in Q2 2025. This margin expansion resulted from enhanced manufacturing utilization, operational efficiencies, and a refined cost allocation approach aligning labor and overhead expenses with operational activities. Operating expenses rose to $15.5 million, reflecting strategic hiring to support growth and capacity expansion. Despite increased spend, GAAP net loss narrowed to $11.5 million from $13.3 million the prior year, with adjusted EBITDA improving to negative $8.1 million.
- Backlog and Bookings Growth: Ending backlog reached $31 million, nearly doubling from $16 million a year prior, underscoring strong demand visibility and production pipeline.
- RPS Revenue Contribution Rising: Recurring payment solutions are expected to represent 25% to 30% of revenue by year-end, doubling from previous levels.
- Cash and Liquidity Strength: Cash and equivalents surged to $91.1 million, bolstered by equity offerings and debt conversions, reducing total debt by over 70%.
Overall, the quarter’s financial and operational results demonstrate Velo3D’s transition from prototype to production scale, supported by strategic investments and expanding customer adoption across critical end markets.
Executive Commentary
"We delivered a strong quarter, with 52.3% year-over-year revenue growth, expanding margins and disciplined execution across our business. The strength of our results reflects the increasing demand for our advanced metal additive manufacturing solutions, the successful execution of our commercial strategy and our team's relentless focus on operational excellence."
Arun Jaldi, CEO
"With approximately $91 million in cash and cash equivalents at quarter end, Velo3D has greater financial flexibility to execute our growth strategy and support capacity expansion, technology development and customer programs while maintaining a disciplined approach to capital allocation."
Jim Sua, CFO
Strategic Positioning
1. Manufacturing Capacity Expansion via Livermore Production Campus
The newly launched Livermore Production Campus is a pivotal strategic asset designed to triple Velo3D’s manufacturing capacity. Expected to become operational in Q4 2026, it will serve as the primary production center, enabling faster delivery timelines and supporting larger production programs. This expansion aligns with the company’s transition from prototype-level engagements to production-scale manufacturing, addressing the current capacity bottleneck amid surging demand.
2. Data-Driven Digital Manufacturing Transformation
Velo3D is evolving beyond hardware manufacturing by leveraging manufacturing data to drive continuous process improvements. Centralizing production at Livermore facilitates the capture of rich, real-time manufacturing data, which powers advancements in print parameter optimization, quality assurance, and intelligent software development using artificial intelligence and machine learning. This strategic focus aims to create a competitive moat through integrated hardware-software solutions that accelerate customer qualification and reduce time to production.
3. Strengthening Strategic Partnerships and Market Diversification
Expansion of the distributed manufacturing network, exemplified by Mears Machine Corporation’s fifth Sapphire XC system order, enhances domestic supply chain resilience and manufacturing flexibility. Additionally, the new partnership with Aurelia Technologies broadens application scope into next-generation gas turbine systems, supporting design consolidation and cost reduction. These collaborations deepen Velo3D's footprint across aerospace, defense, energy, and space verticals, driving pipeline growth and diversified revenue streams.
4. Financial Fortification and Capital Allocation Discipline
Capital raises totaling nearly $110 million in the first half of 2026, combined with significant debt reduction, have materially strengthened Velo3D’s balance sheet. This enhanced liquidity underpins investments in capacity expansion, technology development, and strategic initiatives while maintaining disciplined operating expense growth. The company’s ability to align capital allocation with growth priorities reduces financial risk and supports long-term value creation.
5. Scaling Production Fleet and Workforce Development
Velo3D plans to increase its installed printer fleet to approximately 40 machines by year-end, with 20 to 25 new builds and redeployment of existing units. The company is actively hiring skilled technicians and investing in workforce training to support capacity ramp-up. Concurrently, automation initiatives aim to enhance operational efficiency and mitigate labor constraints, balancing scale with cost control.
Key Considerations
Velo3D’s Q2 performance reflects a company at an inflection point, transitioning from development-stage to production-scale additive manufacturing. Key strategic and operational factors to monitor include:
- Capacity Ramp Timing: The pace at which Livermore becomes fully operational will critically influence revenue growth and margin expansion in coming quarters.
- RPS Revenue Growth Trajectory: The increasing contribution of recurring payment solutions signals diversification but requires sustained customer adoption and operational scalability.
- Workforce and Automation Balance: Hiring skilled technicians while advancing automation will be essential to meet demand without disproportionate cost escalation.
- Market Demand Dynamics: Strong demand in aerospace, defense, energy, and space sectors is a tailwind, but the company must remain agile to evolving customer requirements and competitive pressures.
- Capital Deployment Efficiency: How effectively the company invests its strengthened liquidity in capacity, technology, and partnerships will determine execution success and margin leverage.
Risks
Risks include potential delays in bringing the Livermore campus fully online, which could constrain capacity and delay revenue recognition. Labor market competition and skill shortages may challenge scaling efforts despite current hiring success. Market adoption of metal additive manufacturing remains subject to qualification cycles and customer procurement timelines, introducing revenue visibility risks. Additionally, macroeconomic and geopolitical factors influencing aerospace and defense budgets could impact order flow.
Forward Outlook
For Q3 2026, Velo3D expects continued sequential revenue growth driven by capacity expansion and production scale adoption. The company projects gross margins to improve sequentially, targeting above 30% in the second half of 2026 as operational efficiencies materialize. Non-GAAP adjusted operating expenses are anticipated to range between $45 million and $55 million for the full year, reflecting selective investments to support growth. Capital expenditures are projected between $40 million and $50 million, primarily allocated to RPS expansion and Livermore campus development. Positive EBITDA is expected in the second half of 2026, marking a key profitability milestone.
Takeaways
Velo3D’s Q2 2026 results signal a company successfully executing a growth and transformation strategy centered on scaling production capacity and evolving into a data-driven manufacturing platform.
- Operational Scaling Drives Financial Improvement: Revenue and margin gains reflect growing customer confidence and successful capacity ramp initiatives.
- Strategic Investments Build Competitive Moat: The Livermore campus and digital manufacturing capabilities position Velo3D to capture expanding market demand and improve operational leverage.
- Execution Risks Remain Manageable: While capacity and labor scaling challenges exist, management’s focus on automation and disciplined capital allocation mitigates potential bottlenecks.
Conclusion
Velo3D’s second quarter demonstrated meaningful progress toward production-scale additive manufacturing leadership. The company’s strategic investments in manufacturing capacity, digital capabilities, and partnerships, supported by a fortified balance sheet, create a foundation for accelerating growth and margin expansion. Execution of capacity ramp and operational scaling will be critical to realizing this potential in the coming quarters.
Industry Read-Through
Velo3D’s performance underscores the accelerating adoption of metal additive manufacturing in aerospace, defense, and energy sectors, driven by supply chain resilience and production agility imperatives. The company’s emphasis on integrating hardware with data-driven software platforms reflects a broader industry shift toward digital manufacturing ecosystems. Other AM participants should monitor capacity bottlenecks and the strategic importance of manufacturing data as key competitive differentiators. Additionally, Velo3D’s success in expanding recurring revenue streams through RPS highlights evolving business model opportunities in the sector.