Velo3D (VELO) Q2 2026 earnings review
Revenue Rebounds, Margins Flip Positive, but Dilution Foots the Bill
Velo3D delivered a breakout Q2, with revenue Accelerating 52% YoY to $20.7 million and gross margins sharply Reversing to a positive 21.5%. Management's pivot to the Rapid Production Solutions (RPS) model is showing real traction, driving a massive $29 million in Q2 bookings. However, the operational turnaround is being fueled by heavy shareholder dilution. The company raised nearly $110 million in equity during the quarter to fund an aggressive $40-$50 million CapEx plan for its new Livermore facility. While the balance sheet is now de-risked with $91.1 million in cash, the share count has exploded, putting immense pressure on execution in the second half of 2026.
🐂 Bull Case
The shift toward recurring capacity-on-demand is working. Q2 bookings hit $29M, fueling a $31M backlog, largely driven by defense and aerospace customers standardizing on Velo3D's systems.
Gross margins have climbed from a catastrophic -73.6% in 25Q4 to 21.5% in 26Q2. Improved cost allocations, higher ASPs, and manufacturing efficiencies point to a credible path toward the >30% H2 guidance.
🐻 Bear Case
The 'strengthened balance sheet' was bought at a steep price. Velo3D raised roughly $109M through a registered direct and ATM offering in Q2, drastically inflating the share count to keep the lights on.
Despite having $91.1M in cash, H1 operating cash burn was $39.5M. With $35-$45M in CapEx projected for H2 to build the Livermore facility, the margin for error is razor-thin before they need more capital.
⚖️ Verdict: ⚪
Neutral. The operational turnaround is highly encouraging and the demand signals (bookings) are strong. However, the staggering level of Q2 dilution and the impending CapEx wall make this a 'show-me' story for H2 EBITDA profitability.
Key Themes
Bookings Accelerating as RPS Pivot Works
The pivot to the Rapid Production Solutions (RPS) model is clearly resonating with the aerospace and defense sectors. Bookings hit $29 million in Q2 (up from roughly $12 million in Q1), driven by a >80% repeat order rate. This sustained demand is validating the company's transition from a hardware OEM to a recurring revenue production partner.
The True Cost of a 'Strengthened' Balance Sheet
Management heavily promoted their 'strengthened balance sheet' and 70% debt reduction, but this narrative masks massive shareholder dilution. The company raised $50 million via a registered direct offering and an additional $59.4 million through an ATM program in Q2 alone. Weighted average shares outstanding used in EPS calculations more than doubled YoY from 14.0M to 29.4M, permanently capping per-share upside even if the turnaround succeeds.
Strategic Partnerships Accelerating Distributed Manufacturing
Velo3D is effectively expanding its footprint without solely relying on internal CapEx by leveraging partners. Mears Machine Corporation ordered its fifth Sapphire XC system (with options for two more), and Velo3D struck a new partnership with Aurelia Technologies targeting next-generation gas turbine systems. This distributed network captures defense and energy demand efficiently.
Execution Risk on the CapEx Wall
Management's aggressive capacity expansion is Reversing the company's capital-light narrative. The new Livermore Production Campus is expected to triple capacity, but it comes with a $40-$50 million CapEx bill for FY26. With only $4.5 million in CapEx spent in H1, the company must execute an enormous $35-$45 million facility buildout in H2 simultaneously with attempting to hit EBITDA profitability.
Macro Profile: Institutional Credibility Rising
Velo3D achieved inclusion in the Russell 3000 and Russell Microcap indexes at the end of Q2. With $12.2 trillion in assets benchmarked against these indexes, this inclusion forces passive institutional buying and provides the stock with much-needed liquidity and visibility as it attempts to execute its turnaround.
Other KPIs
While revenue is growing, the core business continues to hemorrhage cash. Operating cash burn worsened sequentially compared to previous quarters, driven by working capital needs and an $11.1M outflow in prepaid expenses. Reaching the H2 EBITDA positive target is critical to stemming this bleed before the newly raised $91M is consumed.
An improvement from the -$13.3 million loss in 25Q2, but still representing a heavy lack of operating leverage. Non-GAAP adjusted operating expenses actually Accelerating from $8.8M in 25Q2 to $13.1M in 26Q2 shows that supporting the RPS growth requires significant ongoing SG&A investment.
Guidance
Accelerating. Raised from previous guidance of $60 - $70 million. At the $70M midpoint, this implies H2 2026 revenue of roughly $35.5 million, a healthy sequential step-up from the $34.5 million achieved in H1, supported by the $31M backlog.
Accelerating. Management expects sequential improvement throughout the year, targeting above 30% for the back half. This relies heavily on better utilization of current assets before the Livermore facility comes online.
Stable. The company maintained this range. With $21.2 million already spent in H1 (Non-GAAP), the H2 run-rate implies $23.8-$33.8 million, indicating a modest expected step-up in costs as operations scale.
Accelerating drastically. With only $4.5 million spent in H1 2026, guidance implies an enormous $35-$45 million CapEx spend in the second half, primarily to build out the new Livermore Production Campus.
Key Questions
Livermore Facility Ramp Risk
Given the massive H2 CapEx requirement for the Livermore Production Campus, what are the specific gating items to getting it operational, and what happens to the backlog if construction or machine deployment is delayed?
RPS Margin Profile vs Systems
As the mix continues to shift heavily toward the RPS business, how do the long-term unit economics and gross margins of RPS parts compare to traditional hardware system sales?
End of ATM Dependency
With the ATM tapped for nearly $60 million this quarter, is the company officially done raising equity to fund the 2026 CapEx plan, or should investors expect further dilution in H2?