Velo3D surges 15% on defense momentum despite weak Q4 results
3D printing company guides to 30-50% FY26 revenue growth on $50M+ defense contracts and cash infusion
Velo3D shares rallied 15% on Wednesday after the 3D printing manufacturer posted weak fourth-quarter results but offered investors a bullish outlook for 2026, fueled by a growing pipeline of defense contracts and a fresh $30 million capital injection.
The company reported fourth-quarter revenue of $9.4 million, down 25% from the prior year, with earnings per share of negative 54 cents, matching analyst expectations. However, gross margins plunged to negative 73.6% following a $7 million inventory write-down, underscoring the company's near-term operational challenges.
Despite the disappointing quarterly figures, investors focused on Velo3D's forward guidance, projecting fiscal 2026 revenue of $60 million to $70 million, representing growth of 30% to 50% compared to 2025 levels. Management indicated the company is on track to achieve positive EBITDA in the second half of 2026, a critical milestone for the unprofitable manufacturer.
The optimistic outlook hinges on Velo3D's expanding footprint in the defense sector, where the company has secured contracts totaling more than $50 million. In December, Velo3D announced a major contract worth $32.6 million with the U.S. Department of War's Defense Innovation Unit to address manufacturing bottlenecks for a critical weapon system program. Earlier in August, the company entered a $6 million agreement with the U.S. Navy to develop and qualify copper-nickel alloy for the Maritime Industrial Base Program.
In February, Velo3D further strengthened its defense credentials with an $11.5 million multi-year production agreement with a major U.S. defense contractor and became the first additive manufacturing provider qualified to support the U.S. Army's Ground Vehicle Systems Center.
The strategic shift toward defense contracts has been accompanied by a significant financial restructuring. Velo3D completed a $30 million private placement in December, bolstering its cash position to $39 million from just $1.2 million previously. The capital raise provides the company with sufficient liquidity to execute on its growth strategy and meet demand from the defense and aerospace sectors.
"These defense-related agreements represent a validation of our technology's critical role in national security manufacturing," said Benny Buller, Velo3D's chief executive. "The capital raise ensures we have the resources to scale our operations and meet the growing requirements from our government and defense contractor partners."
The market's positive reaction highlights a classic case of investors looking past current operational pain points to focus on potential future catalysts. Velo3D's fourth-quarter results reflect the challenges of scaling a specialized manufacturing technology in a competitive environment, but the defense contracts provide a clearer path to revenue growth and eventual profitability.
Analysts remain cautious about the turnaround. The stock currently trades with a price-to-sales ratio of 5.9 times trailing revenue, reflecting high expectations despite the company's negative EBITDA of $52.7 million over the past year. One analyst covering the stock maintains a buy rating with a target price of $6.00, according to market data.
Velo3D's high beta of 2.14 indicates significant volatility, and the stock has traded in a wide 52-week range between $1.43 and $23.84, reflecting the market's evolving view of the company's prospects. The recent rally brings the shares back toward levels not seen since the company uplisted to the Nasdaq Capital Market in August 2025 alongside a $17.5 million public offering.
Investors will be watching closely in coming quarters for evidence that the defense contracts translate into actual revenue and that the company can stabilize margins following the inventory write-down. The path to EBITDA positivity in the second half of 2026 will serve as a critical test of management's turnaround strategy and validation of the market's current enthusiasm.