The additive manufacturing (AM), industry has experienced a turbulent year. No one has felt the pain more than AM. Velo3D.
The transparency of being listed on the stock market highlights the bumps along the way. We can see if a difficult quarter has knocked them off track with their revenue targets. we can see when they have been forced to reduce headcount as part of a 40% reduction in operational expensesWe can also see when the value of their shares drops.
Velo3D, a company which made the jump to becoming a publicly traded company within five-years of entering the market, has probably encountered all of these scenarios. There are bound to bumps along the way when companies, particularly start-ups open themselves up to public scrutiny. We have the result: just two years after listing on the New York Stock Exchange, the company will be worth $1.5 billion. It had been served a notice by the NYSE of non-complianceBenny Buller, the founder of the company, had He stepped down as CEOThe company had begun a strategic evaluation that could result in the sale of Velo3D.
The exact wording of that latter development was that Velo3D would ‘explore strategic alternatives that may include, but are not limited to, a strategic transaction, potential merger, business combination or sale.’ So, as things stand, what does Velo3D’s future look like?
“There’s not a whole lot I can comment on the details of that particular process. I think we’ve mentioned we would be exploring partnerships, mergers, sale, and that continues to be true,” Velo3D Interim CEO Brad Kreger told TCT. “What I would say is, I think we feel like there’s a tremendous amount of value creation potential for the company, whether we operate as a standalone or go through some sort of strategic transaction. As far as the day-to-day execution of the business, we’re focused on the fundamentals and executing.”
On the day Buller resigned, Kreger was named Interim CEO. He joined the company as EVP Operations in December 2022, where he was tasked with putting in place systems and processes that focused on quality, addressing a ‘confluence of quality issues and reliability issues’ that stemmed from ‘rapid scaling and rapid production innovation.’
“A bit of a commercial execution gap started to materialise,” Kreger said. “If you look at 2022, it was a year of radical growth. I think the company struggled with growth and demand. It caused a lot to move in the company, and a lot to scale up quickly. The consequences of that were, in many cases, there wasn’t time to put good rigour and processes in place.”
Velo3D, which announced some promising signs last month, would suggest that progress has been made. The installation time for Sapphire metal 3D printers has been ‘significantly reduced’ according to the company, while an approximate 40% headcount increase within its Customer Service and Quality teams will help to provide on-site support in ‘all major metropolitan areas.’ The time it takes to resolve customer issues has also reportedly come down by 45% in the last six months, and then there’s the headline figure of around 12 million USD of machine orders being secured since mid-December. More than 50% of those bookings have come from key strategic accounts – in other words, existing users – which the company believes indicates customer satisfaction and confidence in its technology.
Kreger notes that last year, Velo3D was hearing from customers that they would hold off on their next machine purchase until their Sapphire system was ‘running smoothly’.
“We’ve been able to turn that corner,” Kreger said. “We’re seeing the results of those investments in customer service and production quality. The way that’s being observed is we’re seeing those customers now come back to the table and placing those orders.”
This gradual return to seeing manufacturers part way with their capital expenditure to invest, or re-invest, in the Sapphire metal 3D printing technology can be put down to these ‘fundamental’ and ‘rigorous’ processes in the background. Kreger Michelle Sidwell EVP Global Sales and Business Development is credited with providing assistance.. Sidwell is said to have come with a ‘deep, rich set of tools and processes and process rigour’ around value selling, while a collection of new faces in senior management roles has given the company some new perspective.
“One of the things Benny did over the last year was bring in a lot of strong, new leadership. I think Michelle leading our commercial organization, with Bernie [Bernard Chung] stepping in as CFO, myself, it’s bringing a lot of fresh eyes to the situation and a lot of solid business experience to bring mature best practices in how we operate the company.”
In a former role at Fluidigm, Kreger was credited with ‘successfully leading strategic initiatives’ to increase production of its mass cytometry technology, improving the company’s ‘customer experience through operational efficiencies, enhanced infrastructure and streamlined execution.’
He has experience working for early-stage companies that want to scale. As he revealed to TCT, this included dealing with mergers & acquisitions.
“A lot of my career prior to coming to Velo3D was doing a lot of integration work in companies that were making acquisitions and folding in companies of comparable size – 100-150 million USD revenue companies,” he explained. “A lot of that was putting in best practices, business processes, business systems. The beauty here is we have an amazing product and amazing technology, there’s not a lot that needs to happen there. It stands on its own; it speaks for itself. What this company really needed is to get the fundamentals in place as a business, so that we can leverage this technology and create the value creation that I think we deserve and that the technology demands.”
Kreger, as he surveys the additive manufacturing landscape in general, is optimistic that the next 12-24 month will be better. A decline in interest rates should see more capital deployed, while a diversification of market segments should mean AM isn’t so reliant on the same few industry verticals. But he acknowledges that mergers and acquisitions will continue to be a trend in the industry. Will Velo3D fall under this consolidation?
“I do expect there to be a certain amount of consolidation in the market. I think for where the industry is at this stage, that’s appropriate. A certain amount of consolidation in the marketplace is probably needed,” Kreger said, after explaining: “That’s something we’re exploring, looking at all opportunities. But as an organisation, we’re focused on the day-to-day execution as a standalone company.”