Velo3D, Inc.

for our continued growth this year and beyond. Specifically, we ended 2021 with strong execution as we met or exceeded our financial focus while achieving a key strategic milestone with the shipment of our first CIFAR-XE system. For the quarter, revenue rose 20% sequentially and 54% year-over-year, both ahead of our guidance. On an annual basis, revenue growth was also ahead of plan at 45%, as we saw increasing demand from both new and existing customers throughout the year. We also shipped 23 systems for the year in line with our forecast, with record shipments in the fourth quarter. More importantly, as I just mentioned, we shipped our first SEPHR XC system to a customer during the quarter. This is a very important accomplishment as the SAFR XC will be the primary driver of growth in 2022. We had an outstanding quarter from a bookings perspective, booking 13 systems during the quarter. This brought our total 2021 bookings to 34 systems, compared to our goal of 24 for the year. Additionally, we exited 2021 with 23 systems in backlog against our plan of 20, adding to both our CEFR and CEFRxE backlog. Finally, our balance sheet remains very healthy with $223 million in cash, and we remain very comfortable with our liquidity position to fund our long-term growth plan. Given our continued execution, strong visibility with our record backlog, and the successful run of our CEFRxE, we are reiterating our previous 2022 revenue guidance of $89 million. On slide five, we are providing a brief summary on how we delivered on our fourth quarter and fiscal year 2021 guidance compared to our forecast, which positioned us well for 2022. Back in June, at our analyst day, we laid out the number of goals for the year, including achieving our aggressive revenue and shipment growth plan for 2021. delivering our new Cefar XC printer to market by year end and exiting 2021 with a backlog supporting our goals in 2022. I'm happy to report that we accomplished these goals and this execution is reflected in the chart. I would like now to provide an update on our Cefar XC ramp. Please turn to slide six. As I previously mentioned, the highlight of the quarter was the delivery of our first Cefar XC system to a customer. Key advantages of the Cefar XC include about 400% higher production rate compared to Cefar, lower parts cost by as much as 60% to 80%, the production of parts up to 400% larger in volume compared to our Cefar system. As a result, we continue to see strong XC demand from both our OEM and contract manufacturing partners as we exited the year. For example, CIFAR-XC backlog rose to 18 systems in the fourth quarter and remained a material portion of our 34 bookings last year. This is reflected in our expected CIFAR-XC revenue backlog, which more than doubled compared to our fourth quarter of last year. This gives us significant visibility for 2022, with close to 50% of our revenue target in backlog from our Sephar XC orders alone. Finally, our new manufacturing facility remains on plan, and we believe this facility will provide us with the sufficient capacity to meet our gross target. I would like now to spend a few minutes discussing our broadening customer footprint. Please turn to slide seven. This slide details our market segment diversification by total customers as of the end of 2021, along with the breakout by 2021 shipments. Historically, a significant portion of our customers were in the space segment, as this segment is characterized by strong entrepreneurial and innovative companies that are pushing the boundaries of new technology and additive manufacturing in particular. As you can see from the charts, we have significantly expanded our customer footprint from our initial base to include new verticals such as energy, aviation and defense, contract manufacturing, and other industrial applications. These segments now make up more than 75% of our community customer count. This trend is also reflected in our 2021 shipments, as we are also seeing broad adoption of our technology across all of our key industries. We expect this trend to continue in 2022 as we look to capitalize on increasing demand in these verticals as well as new market segments. Not only have we diversified by market segment, but also reduced customer concentration. Please turn to slide eight. This chart reflects the successful execution of our efforts to expand our customer base to reduce customer concentration. Specifically, we were pleased to more than double our customer base to 18, including 10 new customers addition in 2021, and expect to more than double our customer base in 2022. We are also benefiting from our land and expense strategy as we continue to see existing customers add to their Vela3D footprint with additional systems as repeat orders total about 60% of shipments last year. As a result, largest customer accounted for approximately 27% of revenue in 2021, down from 74% in 2019, and reflects the success of our new customer acquisition initiatives. We expect this trend to continue over the long term and are investing in our infrastructure to drive new customer growth. For example, We are rapidly expanding our North American sales force as well as focusing on developing our presence in the European market following our first system sale in the second half of 2021. We are excited about the opportunity in Europe and with the opening of our technology office last year, we are looking to capitalize on a market opportunity that could be as large as what we have in the United States. I would now like to briefly discuss a few of our key operating metrics for the year, as well as provide our 2022 outlook versus what we discussed at our June Analyst Day. As I mentioned, we firmly believe that our strong execution this year positioned us well for success in 2022. Please turn to slide nine. For the year, we added 10 new customers and exited the year with 18 cumulative customers, we expect to add 24 new customers in 2022 in line with previous guidance at our June Analyst Day last year. This will bring our total customer count to 42 at the midpoint of guidance for the year. While this is slightly lower than our guidance last year, it reflects a higher portion of sales to existing customers in 2021 versus our initial plan. For 2022, we have significantly expanded our sales team and are properly resourced to meet our new customer objectives this year. We also shipped a record of eight systems in Q4, which brought our total for 2021 to 23, also in line with your guidance. For 2022, we expect to more than double shipments to 48 at the midpoint of guidance, and this reflects the scenario we outlined at our analyst day with an equal split between CIFAR and CIFAR-XC shipments for the year. Finally, Given the increasing demand from existing customers, we see our average existing customer purchase ratio in the range of 1.2 to 1.4, consistent with our long-term guidance. On slide 10, we are providing an update on our key revenue metrics for 2021 under the same format. As a reminder, year-of-sale revenue includes revenue recognized at delivery of units within the period. Recurrent revenue includes maintenance, support, and system-based revenue attributed to systems delivered. Overall, revenue was ahead of guidance at $27 million, with year-over-year increases in year-of-sale as well as recurring revenue. For 2022, our guidance remains unchanged at $89 million at the midpoint. Year-of-sale ASP for the quarter and the year was in line with our guidance at $1 million. We expect year-of-sale ASP to rise in 2022 to the range $1.5 to $1.7 million as the result of increasing CIFAR-XC sales as well as a shift in transaction mix to more printer sales. Before turning the call over to Bill to discuss our financials, I would like to conclude my remarks by highlighting our strategic priorities for 2022. Please turn to slide 11. Overall, we continue to see a rapidly expanding global addressable market for high-value metal parts, and we remain committed to providing our customers with the technology to produce the parts they need without compromise. First, we believe we can best address this opportunity through our Lend and Expand strategy by increasing our footprint with existing customers through follow-on system purchases. Additionally, we are also focused on new customer additions, which is an important driver of future growth. We continue to invest in our infrastructure to achieve these priorities as well. As we have more than doubled our sales force over the last 12 months to drive customer expansion, we are also ramping our European operations for our recently established EU sales and tech service team, in addition to opening our new technology center in Germany. Finally, we remain focused on working closely with our contract manufacturing customers to drive parts demand. Specifically, we have formed a business development team solely dedicated to securing part design rooms that we feel will be instrumental in driving system demand with our contract manufacturing partners. Our second priority is to execute on our manufacturing expansion plans. that we announced last quarter, which will provide the capacity we need to meet the growing demand for our software systems. This includes the build-out of a new manufacturing facility that will support the production of up to 400 systems annually when fully wrapped. We will do this in phases, and current capacity supports our 2022 growth plans of doubling shipments this year. We are also focusing on successfully managing our supply chain in relation to our production schedule. To date, we have been able to mitigate supply chain effects on our business, but this issue remains a material risk to our shipment plan. We continue to be proactive to offset any potential impact by building an inventory cushion as well as further diversifying our supply chain by adding additional suppliers. At this point, we remain confident in meeting our 2022 goals despite these ongoing issues though we are closely monitoring conditions for any changes. Our final priority is to continue to deliver industry-leading service to our customers. We believe our customer service separates us from our peers and is a critical driver of why we continue to see strong demand from our existing customer base. Specifically, with our end-to-end AM metal manufacturing solution, the ability to leverage Our common hardware and software foundation allows all customers to quickly benefit from any improvements in process or capabilities to drive better system performance, reliability, and quality. We also have a number of initiatives underway to help customers maximize system utilization. This is particularly important for our contract manufacturing partners, as higher utilization rates means increased throughput and parts volume while reducing their costs. We will continue to invest in our next-generation technology to provide our customers with the best solution for their ongoing AMVs. In summary, we are pleased with our performance in the fourth quarter as we posted strong revenue and bookings growth, added to our growing customer list, and shipped our first safer access system. Looking forward, the opportunity for 2022 and beyond is very exciting for all of us at Velo3D. our shareholders, our customers, and our partners. We are changing the way our most innovative customers manufacture metal parts by providing them the technology they need to develop and manufacture mission-critical metal parts without compromise. We remain confident in our future vision and our strong 2021 execution position as well for 2022 as we continue to push the boundaries of what is achievable with metal additive manufacturing. With that, I would like to turn the call over to Bill to discuss the financials and our guidance. Thanks, Benny.

Moving on to our quarterly financial performance, please turn to slide 13. Revenue for the quarter was $10.4 million, up 20% sequentially and 54% year-over-year. The increase in revenue was driven by six printed sale transactions in Q4 versus five in Q3. Recurring revenue declined slightly for the quarter due to temporary contract delays leased system buyouts which occurred in Q3 and other factors. We expect recurring revenue growth to resume in Q1 of 2022 and to continue on a quarterly basis through the year. Gross margin for the quarter was 16%, essentially in line with Q3. Q4 gross margin was impacted by lower launch customer pricing for the Sapphire XC system shift in the quarter, higher material costs and overhead and service costs associated with positioning the company for significant growth in 2022. I will say more on this shortly. Adjusted operating expenses excluding stock-based compensation rose 21% to 18.2 million in Q4 compared to 15 million in Q3 due to increased SG&A spending to support our growth plans in 2022. Sales and marketing increased 1.3 million as we expanded our direct sales force, while G&A increased 1.9 million due to costs associated with being a public company and increased facility costs. GAAP net loss for the quarter was $14.4 million. On a non-GAAP basis, which excludes stock-based compensation, expense, and other adjustments, net loss was $17.5 million. Adjusted EBITDA for the quarter, excluding the same cost, was a loss of $14.7 million. On slide 14, I'd like to provide more detail on those factors that impacted Q4 gross margin and the expected gross margin trend for 2022. As you can see from the chart, there were three main factors that impacted our gross margin in Q4 and which we expect to have a continuing impact primarily in the first half of 2022. The first is the impact of world pricing on launch customer orders for the first 10 Sapphire XCs compared to the other orders in our backlog. In Q4, this had a negative margin impact of 4% when we shipped one system and will reduce Q1 and Q2 2022 margins by approximately 10% as we expect to shift three to five systems per quarter. These deliveries will be completed by Q3. The second factor is higher material costs compared to plan, primarily for the Sapphire XC. This reduced Q4 margin by 7% and we expect a similar impact through the first half of 2022. However, as we stabilize the supply chain for this new system, and take advantage of growing volume, we expect we will be able to meaningfully reduce material costs starting in Q3. Finally, we incurred excess labor and overhead costs compared to planned in Q4. As compared to the first build of the Sapphire XC, we expect unit production costs to decline progressively through Q4 as we accumulate substantially greater experience in building the system. Given our large backlog of orders and the benefits of moving down the experience curve and building this new system and the roll-off of launch customer pricing impacts, we believe we have good visibility in reaching our goal of a gross margin above 30% in Q4 of 2022. Turning to the balance sheet on slide 15, we exited the year with a very strong balance sheet and ended the quarter with $223 million in cash and very limited debt. As we outlined in the chart, more than half our cash usage in the quarter was tied to non-recurring items, including $22 million for expenses related to our merger in 2021 and the retirement of $21 million in debt. On an operational basis, cash usage was approximately $31 million. CapEx was $10 million, including $5 million related to the build-out of our new manufacturing facility. We expect to spend an additional $5 to $6 million in Q1 complete the project and provide the capacity necessary to meet our growth forecasts working capital usage was primarily driven by increases in accounts receivable and inventory to fund our growth we also build inventory to provide a cushion against current supply chain conditions for 2022 we expect total year cash usage to be in the range of 80 to 90 million with quarterly usage being front loaded in the first half of the year before it declining substantially in the latter part of the year. Looking forward, we have significant visibility in achieving our 2022 revenue forecast. Please turn to slide 16. Overall, our confidence is driven by the fact that we have high visibility on more than 60 percent of our 2022 revenue target. Of this 60 percent, our firm backlog of 23 system sales accounts for 48 percent of total revenue, or $42 million, with the balance of 12%, or 11 million, coming from our growing recurring revenue base. Given these factors, we remain very confident in our ability to achieve our 2022 revenue target. Looking forward, we also want to provide some color and distribution within the year of our 2022 financial performance targets. We expect our business to continue to grow rapidly on a sequential, quarterly basis. Our current forecasts are that first half will account for between 37% to 43% of our annual revenue target, annual targets for revenue, shipment, bookings, and new customer additions with a balance of 57% to 63% coming in the second half for all four metrics. I'd now like to provide our guidance for 2022. Please turn to slide 17. This slide summarizes our guidance for 2022. as well as how this compares to our prior guidance given in our Analyst Day presentation in June of last year. Our revenue guidance remains unchanged at $89 million. We expect continued growth in our bookings rate with 2022 bookings in the range of 47 to 49 systems. We expect customer additions totaling 24 new customers in 2022, also in line with our Analyst Day guidance. Finally, our shipment guidance remains unchanged in the range of 47 to 49 shipments. Our guidance is based on and consistent with 50-50 Sapphire to Sapphire XC shipment mix scenario presented at our analyst day last year. In summary, given our continued sales momentum, large backlog, strong demand for our Sapphire XC system and solid balance sheet, We are well positioned to capitalize on what we see as significant growth opportunities in the AM market in the years ahead. With that, I'd like to turn the call over for questions. Operator?

Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question is from Brian Drab of William Blair. Please proceed with your question.

Hi. Thanks for taking my questions. I was wondering if we could just start by clarifying the gross margin on slide 14. I guess the blue line or blue column is the gross margin forecast. Is that right, Bill? And in the first quarter, what are you telling us about gross margin? Is it zero or below zero for the first quarter?

Yeah, Brian. The blue bar is the expected gross margin. And I didn't create it on the chart, but It's impacted by a confluence of three factors. The large customer pricing, the higher than planned material costs, and the excess labor and overhead. So those are the three sections. And our expectation is that we'll be around zero in the first quarter when those three factors are at their height. And then as those factors are reduced going forward, the reported margin will increase. And just to comment on the launch customer pricing, this is the impact on margin of the difference between the pricing in the launch customer contract and the rest of the orders in our book. So that is, as we deliver those systems, that impact will go away. So we know that that's gonna be largely gone by the third quarter. The material costs, it's important to keep in context that we're starting a large new program here, and that as production matures, material costs come down. We've had that experience on the sapphire. On the sapphire, for example, the material cost on the first sapphire we ever produced are approximately 2x what they currently are. And then on the third factor, which is labor and overhead, as seen in many production environments, the labor and overhead that's required when you produce the first system is a lot more than the labor and overhead that we expect would be required as we produce, for example, the 20th system in late 2022. So those are the three factors. Those are why we expect them to come down over the course of the year.

Thanks. Thanks for that. Would you expect that the launch customer, who obviously was given very favorable pricing for good reason, is ultimately going to you know, be a good customer at regular pricing down the road? Is that kind of part of the assumption of giving them the favorable pricing?

Yeah, so this is Benny. So the favorable pricing for the first customer, as you mentioned, is because this customer, when they purchased the system about one and a half years before the system was shipped to them, there was just plans for those systems. The system was not even at the beginning of development. And they basically took the risk, making a commitment for 10 systems. And as a result, they got a significant discount for this order. They helped us to develop that. Going forward, the pricing for this customer will be in line with the pricing of the closer, much closer to the pricing that our customers will pay.

Yeah.

Brian, you can... Yeah, okay.

I was just going to say, you can figure all this out. If you look at the size of the launch customer contract, you know the number of systems. If you look at the balance of our XC backlog and the number of systems, you can figure out that the average pricing is significantly higher. The balance of the backlog are mostly those that got the really good pricing. And then for the orders that were booked subsequent to that, the pricing was even higher still. So there's, you know, our pricing has steadily been stepping up over time on that system.

Got it. Understood. And I know we've talked a lot about that. Right now I'm just trying to get to the, just one last follow-up question on this. What inning do you think you're in in terms of expansion? with that launch customer? Do you see a growth runway to sell more machines and expand with them as they grow? It's obviously a very exciting customer. It looks like they need more engines and that their growth is on track and more engines per rocket and more engines per space vehicle. It just seems... Like there's maybe a lot of growth there. I'm trying to get the sense, are you going to sell more machines over the years to this customer potentially?

Yeah, so the answer is you all follow the public news about this program, and the Starship has not launched yet. And as the Starship is planned to launch a lot of launches this year, and accelerate launches next year, we anticipate the production rate of Raptor engines will increase, and with that, the need for capacity. As you probably know, some of the uncertainties about the timing of this program, so I will not venture to guess about the exact timing when this will happen due to this customer's uncertainties about the timing of this ramp-up.

Thanks very much, Benny. Thanks. Thanks, Brian. Thanks a lot.

Our next question is from Jim Rusciutti of Needham & Company. Please proceed with your question.

Hi. Thank you. Looking at the pickup in gross margins beyond Q, we can appreciate the mix change, but I'm wondering as you're dealing with higher costs and just some of the inflationary pressures, how comfortable are you that you're going to still be able to get that kind of a pickup in margins? So for instance, are you maintaining prices as you deal with some of the cost pressures for the rest of the customers?

So Jim, thanks for the question. It's important to highlight The change in the gross margin, you know, the temporary decline and then the recovery of the gross margin are really entirely around the launch of the CFRXE. The aggressiveness and the rate at which we ramp up this program is such that this new, this introduction of this new model it has a very large effect on the total gross margin of the company. As Bill mentioned, we are gaining experience in the manufacture of these systems. We shipped one. We are going to ship a few this quarter. And every system that we ship, we're gaining a lot of experience. And with this experience, we amortize the labor over many more systems. We are much more efficient. There's much less waste. in the efforts, we document the manufacturing process much better and people are more efficient. And the material that we purchase is also less wasteful and more representative of the final material. So all those drive dramatic improvement in the gross margin together with the fact that systems that we are making are all at a significantly reduced price compared to any other system that will be sold in the past. But again, I want to put things in perspective. Our price has not eroded at all during this period. We were able to maintain price and the inflationary pressures are relatively negligible in this scheme compared to everything else that we mentioned. We do not anticipate needing to increase price to our customers to absorb this inflation and price increases because we don't see material price increases, for example, cost increases in the production of the SAFIRE system that is already much more mature. No need to roll this cost to our customers.

A couple of other points. The first and second quarters of next year will be unusual quarters. And the reason for that is that we have this confluence of the launch customer orders representing in the first quarter more than the majority of our revenue. So you have an early stage product, you have concessionary pricing, and it represents more than a majority of revenue. And over the course of that, the first quarter of the year is also the lowest revenue quarter of the year. So you have a concentrated effect of those factors in that quarter. And as we progress through the quarters of 2022, for the reasons I described, not only will the factors in absolute terms become less of an issue, but their importance in each successive quarter gets smaller and smaller, just on a mathematical basis. And then the other point I would make on margins is that this is all about the maturity of the XC program. We are already at, on a product basis, gross margins of greater than 50% on the Sapphire. And that's because the Sapphire is a product that was introduced two and a half years ago, three years ago. So we have every confidence that we can get the XC to the same sort of program status over time.

Thank you. That's helpful. Maybe just switching gears for a second, just as we think about the ramp, In the second half, I think you alluded to just some of the supply chain challenges. How comfortable, how confident are you that you're going to be able to manage through these supply chain challenges to be able to ramp as much as you're looking at in terms of the revenue target that you're forecasting for 22? So as of this moment,

we were able to mitigate all the supply chain effects to our shipment schedule. About two months ago, we had a lot of pressures in the supply chain, particularly in the area of electronic components, but we were able to acquire the components that we needed, secure the components, build inventories, and now we have what we need to execute this year. There are other components that are dramatically more expensive, that it is much more expensive for us to build inventory for those components for the full year. So far, we haven't seen supply chain disruptions that are going to cause us to worry about those. But if the supply chain, the global supply chain, will become so much more fragile that even those will become at risk, then this could result in us having to adjust the shipment schedule. We don't see this happening right now. We don't have any indication that it is supposed to happen or can happen. And as such, at this moment, I have relatively high confidence. But we are living in a global world with events happening that are outside of our control. So I wanted to highlight this risk.

Okay, understood. And just one very quick question. Looking at the shipments in Q4, the eight, how many of those eight represented customers who now have multiple machines and presumably your large customer, putting aside your large customer?

One second. I think we shipped to, so we shipped in Q4 eight machines. Of those eight, I think, two were to new customers. So if I'm not mistaken, six are to existing customers? Am I right? That's correct. Got it. Did I answer you? Thank you.

I think I actually do. I'll confirm this, Jim, but I believe four of the six are multiple machine customers. Yeah. Yeah.

Okay. Great. Thank you.

Yeah. But six of the eight machines are.

Our next question is from Troy Jensen of Lake Street Capital. Please proceed with your question.

Hey, gentlemen. Congrats on the great year and the XC shipments.

Thanks, Troy.

Thank you. I guess I want to hit just the launch pricing one more time. Was pricing renegotiated in recent months? Is this what the surprise is? Okay, so just the margin surprises on what these machines are going to be doing, not the revenues? Say again? Just the gross margin surprises on these machines, not the revenues.

Correct. Yeah, and when you say surprise, retrospectively, we probably should have thought about this better. We didn't forecast that in the detail.

Yeah, look, I think a lot's changed. This contract was negotiated in early 2020. A lot's changed with respect to global supply chain conditions. Right, yeah, that's true. For 20 months.

And the system was developed under extreme pressures in a time where it was very difficult to hire. So the aggressiveness of the schedule. So you have to understand that between when we signed the contract and started to hire the team to build this product and when we delivered the first product, it was all in all 17 months.

So we hired the team to build this. Good response, gentlemen.

I get it. I want to point out earlier that the The early bird pricing, which represents the bulk of the orders that are in the rest of the backlog, is significantly higher than the launch customer pricing. And then once the early bird pricing expires, the subsequent orders that were taken since then are an even higher average price. So we assume progressively higher pricing for the XC because it's a system that that is in very strong demand and has a great value proposition for customers.

Understood. Bill, I'll follow up for you too. Can you just talk about how you think OPEX is going to come in for the year?

Sure. First point is that Q4 was our first, quote, normal quarter as a public company and reflecting and reflects full public company costs. and also the facility costs for the expansions that we've been recently making. So I would take that as a base, and we would expect moderate growth on a sequential quarterly basis from there over the course of 2020.

All right. Got it, gentlemen. Keep up the good work. Thank you. Thank you.

Our next question is from Brian Drab of William Blair. Please proceed with your question.

I just want to ask one follow-up. You have so much of the revenue forecast for 2022 covered by backlog. You have really pretty good visibility. What would need to happen for you to exceed the guidance in terms of revenue for the year? It seems like you could end up shipping more systems than would be required to hit 89. And then I have one quick follow-up to that.

Yeah. So I want to make things clear. We do not want to give any hint that would cause you to believe that we are going to hit more than our plan this year. So our plan for $89 million is almost three and a half times increase in revenue compared to last year. We have the backlog of bookings for that. We have a very strong pipeline to deliver on that. And we have the capacity to deliver that and maybe to deliver beyond that. The challenges that we have to overcome at the same time are pretty enormous. We are, as a company, really good at solving problems and we're really good at delivering on what we say. But I don't want to set the expectation that we're going to beat our $89 million guidance by emerging.

Yeah, it's obviously very impressive growth. I just wanted to get your take on that. And then do you have better visibility now in terms of what percentage of the shipments in 2022 would be on the recurring revenue model versus the outright sale?

Yeah, we actually do. Sure, Brian, yeah, the Sapphire, we've indicated in the past that the Sapphire portion of our transactions or our shipments are broad brush 50-50, 40 to 50% recurring revenue in the balance sale transactions. The XC order book is... you know, very high percentage of that is sale transactions, you know, the vast majority of that, you know, basically all of it is sale transactions. So, you put those two together and that pencils out to a sale versus a recurring payment mix of approximately 75-25, somewhere in that zip code.

In three units, in unit counts.

In units, yeah.

Okay, thanks. That's helpful.

I would also like to add that over time, we would expect, so that's a higher percentage of sale transactions than in 2021. Over time, we'd expect the recurring payment transaction percentage of total to increase for all the reasons that we talked about in other presentations. In the recurring revenue?

In coming years.

Not in 2022, given our expectations for that, but beyond 2022, we expect the recurring payment transactions to become a higher proportion than the 25%.

Understood. I think you were talking about around $11 million in recurring revenue for 2022. I'm not sure I saw that number mentioned today. Yeah, that's the guidance, yeah. That's the guidance still. Yep. Okay. Thanks very much.

As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for additional questions. There are no more questions at this time. We have reached the end of the question and answer session, and I will now turn the call back over to Benny Buller for closing remarks.

Thank you so much. So I'd like to summarize by stating that we have started this journey with a vision to a really great market opportunity. which was a very fast-growing, emerging market, and with an application where we are a very critical supplier to our customers, driving a land and expand business with those customers, as we have shown you today. Again, this is all driven by a very unique technology capability that sets us apart from other competitors. And one of the things that I am really proud of is that we have been able to continue to deliver on our commitments. And we are not part of the theater of promises and excuses you can see from many SPAC companies. We are delivering on our commitments, providing a lot of transparency about our business, and making sure that we are hitting all our goals per hour detail guidance to the street. So we would be glad to answer more questions as they come. Thank you so much and we're looking forward to great 2022.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation and have a great day.