Velo3D, a leading innovator in metal 3D printing, recently held its Q1 2024 earnings call. While sequential revenue growth of over 30% grabbed headlines, a more intriguing story lies beneath the surface: a potential surge in defense spending that could propel the company to unprecedented heights.

While the market focused on Velo3D's improved bookings and drive toward profitability, the transcript reveals a subtle shift in narrative. Velo3D, traditionally known for its space market dominance, is now strategically positioning itself to capitalize on the escalating wave of defense spending, fueled by geopolitical tensions and a renewed focus on hypersonic technology.

This shift is more than just talk. The company reported a significant increase in defense clients, adding three new names to its roster in Q1 alone, bringing the total to an impressive nine. CEO Brad Kreger emphasized a newfound "traction" in defense, a market he sees as a "tailwind" for the company, not just in 2024, but for years to come.

Here's where the whisper turns into a potential roar. Velo3D is strategically positioned to benefit from the recently approved $825 billion Defense Spending Bill. The company highlighted "multiple system contracting activities in progress" directly tied to this bill, with one purchase order already secured and more expected soon. This isn't just good news; it's a potential game-changer.

Projected Defense Revenue Growth

Velo3D expects full-year 2024 revenue to fall between $80 million and $95 million. Assuming a conservative estimate where defense contributes 30% of this revenue (up from an estimated 20% in 2023), we're looking at a potential $24 million to $28.5 million revenue stream directly from defense contracts. This projection is visualized in the chart below.

The $825 billion Defense Spending Bill represents a multi-year commitment, meaning Velo3D's defense pipeline could expand significantly beyond 2024, potentially driving a consistent, high-growth revenue stream for years to come.

Velo3D's unique technological advantage – the ability to print complex internal geometries without supports – positions it ideally to service the demanding needs of hypersonic technology development, a key focus area for the Department of Defense. As Kreger pointed out, Velo3D is the only U.S.-based supplier of large format metal AM solutions with these capabilities, giving it a significant competitive edge in securing lucrative defense contracts.

While the initial whisper in Velo3D's earnings may have gone unnoticed by many, the potential for a defense-driven revenue explosion is becoming increasingly clear. The company's strategic positioning, combined with escalating defense spending and a unique technological advantage, paints a picture of a company poised for significant growth, potentially far exceeding current market expectations. The whisper is growing louder, and those who listen closely might just hear the roar of a defense bonanza about to explode.

"Fun Fact: Velo3D's technology is so precise it can print objects with internal channels thinner than a human hair! This level of detail is crucial for applications like hypersonic engines, where intricate cooling channels are essential for performance."