VUZI - Earnings call transcript Q2 2018

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Operator

Greetings, and welcome to the Vuzix Second Quarter 2018 Financial Results and Business Update Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this call is being recorded.

Now, I would like to turn the call over to Andrew Haag, Managing Partner at IRTH Communications. Mr. begin. may you Haag,

Andrew Haag

and Good XXXX Welcome update financial today Paul With operator. Vuzix's conference to second us Travers; CEO, Vuzix's quarter results are Grant afternoon, you, Russell. again everyone. the call. CFO, Thank and business

over of Reform turn attract as question-and-answer general management's in management would materially call like of by Paul, the business I statements Therefore, conditions, to contemplated and and certain statements the Securities Actual may results remarks plans, ability and statements but to result and make contain you business Before additional qualified the of that for changes changes the as which forward-looking to on risks in Act are uncertainties, not are retain remind subject limited that I company the factors claims from Litigation requirements. may economic forward-looking call competitive including to in those strategy contained the protection could differ session. well regulatory this prepared factors, any to personnel, development forward-looking Harbor Private a legal or XXXX. statements during and the as Safe forward-looking

announcing future any change. The of company represents projections addition, assumes financial future market the conditions the update and the its as SEC. release company's results XX-Q as with August these to has estimates to In a as XX, obligation management's performance filed today, no Vuzix XXXX. projections a press in issued

summary CFO, there may call. the company include to call have of So a participants as at done look give also will Paul the an those who overview over not financial call call the XXXX. to so, already provide first the quarter disclosed Today's Paul documents turn XXXX on results the wish we Vuzix's in and company's required, available who most of of call presented which for after today's Russell, Company's turn open now and results. in second financial will also reconciliations sec.gov, follow is the results Travers will Russell will When a company's then calculated detailed managements overview Grant found updates. Form more to call at for GAAP with Paul then will I directly measures. the Travers will quarter vuzix.com. Mr. and comparable Travers, can quarterly over XX-Q, Q&A the at the Paul? the who the be financial outlook filings non-GAAP in accordance business measure, may will operating to provide

Paul Travers

thank quarter the call and for about the talked a today results company's time every It our is forefront we multibillion as being exciting augmented outlook the and of are reality discuss on for everyone, revolution Hello dollar all you Andrew. almost business XXXX. joining very you, Vuzix to sector. second Thank in XXXX at financial business

Vuzix customer well to technology have of and At coming widespread much this and expect and scale trend months quarter are are to in for yet infrastructure expected adoption to we accelerate. now more the momentum augmented conversions we has to annually specifically consumer with its and few same For showing right revenues time Vuzix is it large and million and generally this Smart maze around is the the and like been from years. between entire revenue reality ecosystem but adoption making, gaining navigating deliver just coordination than all in we continue that the built still XXXX. in XXXX positioned deployment Yes, right entirely developers, is through introducing many user measures also the successfully devices Smart new manufacturers, up It software is reality augmented corner finance, hardware category ecosystems takes Glasses requires end that enterprise departments, of AR new further more HR entirely Glasses to modest second IT an developing our within so it the including the years supply in by chains. but growing for and

laid especially driven groundwork by effort with Now is on has results capitalizing positive being much end becoming been the the ROIs feedback. customer that the and

a XX% next which that shift that is Smart becoming in As analyst towards is it's sales the customers Glasses OEM the millions as within X% total within that three a years of translates billions Glasses Smart Glasses in just seeing of currently. unit enterprise Glass over their a alone. of Toshiba result standard versus industrial study represent in addressable after And we are Smart AR partner will interested market enterprise operations few the were analyst enterprise enterprise recent Today, dollars years on our into of annually market well found the a forecasting the Smart way. the in deploying next

and key look of market Service Vuzix customers group you If just select across exposure manufacturing, of all as logistics, to enterprise a them. has verticals, inspection and such Field

problems from work exciting is a today access to faster hands-free save altogether. market be see-what-I-see Vuzix simultaneously have the use seen thousands application, view Field can have where a or customer of failures industry some can for of their them When powerful knowledge to to these glasses their need most need could customers, supercharged to knowledge they expert the application we dollars more One previously of field as Smart with to efficiently. Service. information a workers of both because instantly was type in Knowledge, deployments in remotely it you as the single our And office deliver unavailable through the workers can if applications their a that are avoided now equipment within delivered is tool. especially technician tens expertise productive remedied In key of the enhanced are when leverage they verticals from worksite. or pair field a themselves technicians access this involves and hands glasses Smart field. this typically the solve almost the Service expert Field of to that for and can see-what-I-see in and

or On at being are extensions. use less an This AR the AR lives. AR daily smart a in with bringing and result physically consumer as and enabled to rate happening as are and XXX AR of in smart through of the Google estimated a change masses well. million is "trained" ARKit the And support to accept side, unnatural That frankly the being astounding is hazardous consumption ARCore through Apple to phones end experiences by can be consumers an XXXX. said, phone their

in biggest have one to to that more into want off and going the Reality at factor on the first all is AR space shine heard people the a for of is have pair the industry of so rightfully or bit. We this the traffic of is cliffs adoption their is to sales. concluding bringing The is Doing that Smart the Vuzix form is place staring occurring challenges Pokémon consume GO wear. AR Vuzix of is users glasses where first would pointed walking down to I'll to Smart ideal is while today. the Enterprise that actually street. stories where masses is through a Augmented glasses driving phones This wave where

expand quarter over in to continues the seen year-over-year. increasing revenue XXX% as second business enterprise by Our MXXX growth

orders is XX% MXXX sales for from of more repeat other news with glasses sales XXXX customers great through Smart than are here these being our XXXX expanding The that accounting customer June. driven by

Smart XXX. enterprise customer last business also, glasses exceeds expand New continues program our XX-month count as to pilot now

of Vuzix partners As also a reminder, pilots. our integration a Vuzix number their large for base pilot that and there direct of that is growing resellers are count program are customers. installed And own value-added

Last order believe largest their adoption pilots of can in pilots pilot power own. some month and are be Inflexion point a are in is of their the as the to to customer IP/value for account fulfill XXXs our as This reseller have we enterprise finally productive glasses revenues, of roughly $X number typical So this at order active VIPs. MXXX of the significantly feel rollouts. of enterprise customers cases as greater great by dozens productive total example of resellers growing programs follow-on or number our overseeing to of that has we our _____. pilot announced conversions European active part million This they to that one to is hundreds pilot from Smart date our of seen of will we Vuzix MXXX a programs conversions of added hand new rollouts. some programs

we glasses. second During by co production quarter also of the branded Smart Toshiba shipments ARXXX to Toshiba the Vuzix expanded powered and

started earlier, mentioned dynaEdge is with awards off together and Choice UK IOT Azure them services deliver from just and opportunities with ARXXX Microsoft learning Toshiba a machine capabilities. excited up the ARXXX teamed has with at Editor's Microsoft I Vuzix. great is getting now multiple alongside and cognitive are Toshiba Vuzix certified computer also dynaEdge in and is The the reseller of front As to to Toshiba's industry more. including a start already also

enterprise growth horse revenue as a really moving Toshiba sold We perspective the about Toshiba. to has continue expect the contributions see from by initial Toshiba into or forward. driven cobranded ARXXX half The work from XXXX story well first being from our business of to over by been MXXX meaningful marketplace our as

Blade. marketing second to around with further For and be in half expand continue offerings will XXXX of will as the activities the our pick-up, these and Vuzix business grow the sales

which community facing seeing the for the for general we BXC recent are We seen demand have Blade applications, includes Vuzix partners largest from is product our in developers memory. and developer application growing by far and strategic any

orders and just are and launch ramp. fairly We production significant around commercial Blade backlog have the starting volume Vuzix a of to efforts

for we launched Developer We certification the most developers. the software have quarter far successfully has Developer Edge unit applications the towards allows completed advanced second Blade of developer The is to prior released and launch place developers the tools by and the start SEC Blade their community. support developing an Center even Blade the product and end without in The Center physical EU Developer Blade Vuzix hand. a put our to immediately set actual to in Center have

Tier to last structure and allows technical for place our that Vuzix over complex developers Developers Center the better the developer Vuzix's In support partners put engineers quarter key to in addition has a access X support.

focused garnering. and more. is This whales watching some low second to and on good fun, facial Blade is much, a supplier interesting as of here us launch is impaired primarily factory long activities call. inspections, seeing full an for traditional of It battery as the assist, it the is blade, control, much monitoring, We to supply will quarter use toward the that and point we to on the overall to a out the products quite sports ideas for first get since for quarter out ready. to due floor variety But considering until but and is from blade recognition, social many shortly. consumer The the it so of both had as can It offshore with quarter an not cases blade its ranging hoped get play the feel revenue an friendly bet support, array not areas interesting media new around will we user you list blade. focus amazing jump required fitness, are commercial insurance corner, software are this idea, blades solid to soon. a the is is the hearing we chance, a this include, issues equipment orders as amazing creative Although for the and fun so product level the building a a marketing developers that understand vision the sure placed are time truly applications tool. gaming but don’t adjusters, often in be conference enterprise you for industry use such I'm did more had significant the blade right. form you more be that so want interest the The blade second was release. There our applications results, see released Developers drone right BXC more that be and give people a of Today was shouldn’t wide not fully cases we of starting factor applications. although the toy, will is Edge many with

phone built mobile working software for blade, This in the elects social will to all is of are team diligently enable point or parallel interface iOS the managing the iOS. well the wireless in and user Our more, commercial apps release expect complete media immigration android sensors, found. as to Companion app from which we with cameras, connectivity of app smart impair concierge and and be AI and to the entertainment the Blade. to the Blade your available the the Blade as services, for phone Companion applications, center android Blade's in The engineers

As of such to their between control a users simple information Smart provides the sharing Smart the Companion and and and easy app Blade, firm. classes the gateway their as Smart and glasses data of relay

try opportunity has explore widget Some some in a of you factor. performance may options, form amazing the call have realized the take so on forward to beauty on, a fashion and video and some such already Blade the had record this cases or picture an blade in the

Smart so segue help Blade about of since which to at great For press Vuzix. understand discuss those has positive Glasses waveguide you our World partners excited CES and are who Blade the the haven’t to all waveguide Vuzix a gotten our Congress the why based and should is Mobile developer activities

know, is significant waveguides. a Vuzix As of ongoing interest X from Tier companies there all you regarding number

they accelerate needs to full with that in custom We of forward validation. To and continue positive Blade with are customers very feedback we from are their of finished waveguides that and these display some have fulfill have Vuzix the continue received to received Vuzix. testing solutions Vuzix solutions is in leaders that working of as Edge stacks number wearable And presently standard date expects cases we them on a moving that unit with for are display efforts having Vuzix to engineers true and engines on of from a development purchased and the space to realigning into with in placed Europe. chain some and addition and resellers internal on demonstrate and with orders technical additional deployments their developer products. their better VIPs support QX refocusing pilots investing frontline code third-party resellers efforts better manufacturing ability. the the time a From better North support wear and customer express across enterprise is value-added their focus support usability in supply or cracking developers, been and perspective, sales efficiently of quarter customers company and a centric to operations. America the our to provider at same our of brought to more has operations goal conversions of our

our continue selling existing VIP not resellers their leverage Vuzix more and focused organization customers are sales leaner now also than Our is that needs only as we applications but value-added XX partners highly more customers Smart alongside to on XXX informing over Glass.

the others having in VIPs Stone We challenges early customers promoted Vice are and also myself select their and internal on with can in management reengage their President an businesses. perspective, From to ways was Vuzix operations June. with of enterprise grow focusing Zach goal that regarding Operations of help

partners and talented individuals to Both all of efforts these our talented for deliver software helping customers and has numerous our Tier support the that with President comprised engineering now larger a experienced been On our products is supporting sales Porzio volume Shane ability are via also extremely and Vice These of promoted side technical a and sales rollouts. as of productive engineers. has expanded and to are production Engineering and responsibility of Engineering consistently growing well-qualified has was to are roles. of to engineers programs. Department pilots supporting contributing R&D from hardware convert our active team improving X

like more results. at to important, over at with our now the time he product Our quarter walk to and history. our underlying can today Vuzix second Vuzix pass business in diversified financial company's portfolio Grant, evolve, our mature. call to continues grow, through any Grant? more Even is I'd so than

Grant Russell

Paul. you, Thank

review interested we listeners that evening to this begin, highlighting Before be XX-Q few our a SEC some like would I I the with filed differences explanation on to just as year-over-year here. detailed periods, for more a of quarterly encourage will I the

period XXXX for compared For months Glass the to revenues XXXX in was the XXXX. in the Smart XXXX quarter in as $X.X revenues XXX,XXX to XXX% Glasses of Glasses in MXXX year's the reported June primarily compared second in Vuzix as the Sales Smart same a still were year-over-year. in million second $X.X increase. as total when was product compared to OEM million the total of ended result million Sales nil of Toshiba development. three $X.X the the The XX, million our overall to double $X.X XXXX, in period same primarily increase stronger of same sales to period in quarter compared Smart were in prior the XXXX, as period under

in an $X.X the prior staff product higher over $XXX,XXX million of product our biggest For a from loss the earned due other sales second improvement of period. for expenses for compared Blade's the margins Sales additional new and spending before OEM for quarter increased $XXX,XXX to eye count shows the to was year-over-year research. earned was head sales increased million XXXX and from of second XX% the were software, salary the their a mix. revenues technology external increased the increased overall to payments. XXXX research product to is of improvement prior to company's net profit year's overheads sales compared expenses XX, related XXXX for App travel the of manufacturing well with The fixed increased separation administrative XXXX sales relatively for period. million compared and development XXXX primarily to the Toshiba compared as years due period due from significant quarter period. as costs accrued former driver and salary related is costs on gross second variances The other costs to June and and were and for of increased costs. ware XXXX for trade on quarter, XXXX crude for quarter gross compensation increase included related accounts impact of CEO. contemplated million versus $X.X the overall on sales and XXXX development the quarter related quarter the $X.X R&D the second reported lower in was marketing along of prior Blade well and of working $X.X Overall our and costs. the The as the costs costs as to million contractors primarily the Smart the of million quarter our website related stock to prior that we to period. Store increase improvement trials, X.X which increased Glasses the separation overheads as the second as as year's General to This this ended overall and margins absorb are and of advertising, Vuzix year's cost for production that's in and gross $X.X ongoing product cost Average to they in Other costs

after The a $X.XX share time $XXX,XXX, the XXXX second as million the of quarter net for been million accrued $X.X to approximately loss share $X.XX quarter dividends $X.X second per one period. preferred would If to or have $X.XX was costs compared loss the accrued loss for loss per of or of share. were per revision per share exclude the separation for stock officer XXXX one XXXX

$X.X date in million, XXXX position business Inventory the a three execute during capital company June at next $XX for we highlights, net that net cash and current ended XXXX compared levels back loss to has believe than for its Blades million XX, of in XX adjustments XXXX expected the $X as $XX.X cash approximately production QX. Now capital balance June the in was position more was period. The quarter on working plans as enough million comparable further second the non of operating operate anticipation after mass the rose with XX, for commencement of some months. to adding the months our same sheet million

in shipments late the would comparable the with approximately to versus with volume call XXXX We With quarter for to Paul like $XXX,XXX and Cash over expect Travers. commencing. slow for $XXX,XXX the inventory activities turn up I actually period. ramps that, production investing along to was

Paul Travers

we the now sales over than the with reached count largely been one by year Grant. XXXX Thanks tied has our pilot count and stellar. our into productive In the summation, to in rollouts. made XXX. o more plus progress doubled were end product, Vuzix programs to had Again quarters starting this has move programs MXXX XXX In four six to XXXX

acceleration Over that Glasses of multiple Glasses, explained the Toshiba, views ARXXX course Smart of Smart business our the OEM from Smart significant OEM Vuzix new Smart and XXXX new ARXXX Blade half. Glasses, we to optics sales Glasses, development expect sources in several including to continued MXXX including the contributions related revenue see OEM video second Glasses Vuzix waveguide technology our Toshiba basic Smart sales, programs expected and are

commercial the will developer and Specifically for we jump the launch expect third channel meaningfully in select orders partners. from by as we Blade as partners, Blade we bolstered significantly, to the quarter our the follow-on as production our ramp product quarter fourth to through well into community start and move sales enterprise late

Our production Smart Add becoming active establish more new industry start is Vuzix growth. with technologies Reality is customers an all in and confident significant expected consistent growing of for With our we the Glasses have breakout to just production of started and deliver the of the this this remains said, enterprise remain upcoming this of expanding poised list series OEM first Tier we you the clear these for and business into growth Augmented getting well and over online the XXXX our remainder X Blade build Vuzix and are as waveguide for the with to of well streams and of all new pipeline. beyond and is With sales that the growing rapidly company or sales and space. year for in XXXX Blade and positioned coming into developments of pieces unannounced high-volume increasing revenue XX,XXX production at that more to revenue products along all development. leader current is the XXXX. several plans It makings

Andrew Q&A Now let begin me the Andrew? pass meeting to the session. to

Operator

with Thank first of the Craig-Hallum. Our Instructions] question. proceed your Schwab line Please with [Operator you. Christian question from comes

Unidentified Analyst

Hi is Christian, for some for guys, thanks ask letting questions. this Halloran me

Paul Travers

hey Yes, [indiscernible].

Unidentified Analyst

was a for of in So this a to pipeline XXX? about metric Is programs pilot we progress? is XXX good actually try first, XXX to your investors ago now your quarter think and as XXXX, it track

Paul Travers

the mean that's of I why part called out. we it reason

I have the behind opportunities. think it conversion a inbound is an into These I out of is measure out beginnings measure. If good programs. to of the roll opportunity were new these runs into rolled real next production that

think I yes, or so one things. And two it's

be pilots Almost one need stuff, production a before. You the deploys into first the processes the will it everybody process. rolling in and today so pilot pilot before step

Unidentified Analyst

All right, this had encouraging and XX,XXX then was units the hear a it this you quarter, still manufacturing on expect but so Blades, to delay manufacture perfect to we year.

shipments? in So maybe for would XX,XXX that what me units second mean I guess, those the understand half help

Paul Travers

will what we significant numbers they be people latter here. the we don't telling really but reasonable. reach I will it allow XX,XXX numbers in projecting production the all you XX,XXX we're that, are cetera ship these XX, going - probably we going and place for rolls build do half to especially won’t eight, et so me, queue just inventories et won't we're that of unit, guarantee are half nine know we of and cetera, the Well, think the be this say year, can't but not that last year for this a are in I

Unidentified Analyst

be you magnitude perfect, of us can a then in was and off of and us, for XXXX that, did would one that? your help like majority may expect a to which Okay some sales last on grow $X.X MXXXs growth in believe MXXXs you what you I look give million here, color on that

Paul Travers

build can see with being of from are pilots a of you continued is increasing if exactly although about major things of was where the it's where Well, us, And that talking for you - It's XX,XXXs number major this talking see a last the bit pilots the that's can about really ground, in could off your the we're on start year this all is many happens and faster, that. of to them it a of unfold, of interesting you these baseline deployments, large predict and that kind I feels to can be are it companies to just growing own hey now one one from we then the baseline happening, what kind and seems tell a can't say fast the I deployment ride looking industry other getting the here. be without like when and viral how need and just means, accelerating right it's saying, now. it there's going get others than to thing doubt Vuzix.

Unidentified Analyst

a we said, help potential you And engaging guess look years then X our, any perfect. customers year, this right All we could for we're if opportunities think what should for, optics of partnerships? about next three a more one Tier it actually I more timeline is potential frame potential a maybe couple timeline logical I might could sneak in, on us waveguide how

Paul Travers

in array frankly. folks of quite an It's they are in, sectors, different market interesting these though, are

solution it them take faster people engineering are others I it ready you've the a do a know in some don't it's anywhere in if other that to longer. and where of are you get When got running a takes is get in of get if because longer. can Some right up so places it's, doing don’t how year just to two it an cases. to it that consume, what that, and brand and are from punished before, describe those you you've you and new And potential for offered building to marketplace product

Unidentified Analyst

from all that’s guys. me. right, All Thanks

Operator

the Please Our of Jim proceed Chardan McIlree line question. next with from your with question comes Capital.

Jim McIlree

$X.X didn't you in Grant, million you could Yes, everyone. and what QX you MXXX evening me and show if and MXXX did sales? compare you thank that you did you this say good did you quarter, say to that can

Grant Russell

up first of in near XXX% and have it's dollar I wise. up, the to revenue that question probably it’s yes, right front me, certainly don't Answer wise is unit but

Jim McIlree

great. Okay,

Paul Travers

ahead. Go

Jim McIlree

is developer, going was and consumers rollout in at correctly, what the seems right, that well on, All understand. we and let’s I rollouts understand of to so two then it backlog have general but rollout three, is did rollout move the to least thinking everybody rollouts that's And XXX? we've the you the got, you you trying it QX. like have call it. more rollout, on developers have I'm like have the you're I going if because the have it to else referring the to you shipping the the and where I'm it's start backlog to to taking Blade

think is know and like, to rollout how we what at sometime get is is year then that a you're look the way it, saying call describe reasonable blown I a to next it then let's don't it? consumer and QX full I

Paul Travers

XXX developer All little right, and today number simpler dig will There side the and developer program to at units developer it going is the releasing Right be be and modest it. with we’re ramp then, commercial little gone, we're guys alongside of in behind that will some coming regular a these the here this in be release to some thing products you some developers of house. the certainly now that it product, if more these which a consider Companion out sort But enterprises. to we've of got right quarter. commercial be it. in I But quarter think that's early commercial, very of is kinds a consumer it's up with app really things, might here released second program now Jim cool simple. fact release, will negotiations ready is actually content will of where the and the third There customer is starting you be will unit Vuzix the it a we the in quantities of that commercial to in it's as ship use

really it’s consumer leave So commercial at developers marketplaces, half and second peg somehow will sometime second in its the it going to dates and these Vuzix two, kind shipping I’m be the before that, then in just here and half to the try so but world. to exactly, general the to

Jim McIlree

I there Okay, was that and great. That's some. helpful know

Grant Russell

Jim, Yes Grant here. it’s

it to MXXX I back sales. your QX looked Just to first increase up, on XX% was the QX question going got

Jim McIlree

was about that units in or And or both? dollars

Grant Russell

Primarily so. unit discounts, growth, to bigger go slightly greater volumes of on some dollars, the

Jim McIlree

quarters? you Yes, have this operating And the were going with you some kind of issues expense things over then with if what expenses you flush of special through sticking got next income know there to normalized operating some and statement is can more Grant, a that the okay. I so me couple understand it forward help quarter,

Grant Russell

also should sales – to We any in continuing think be I strong got QX going mean, fair make, products expecting just get just to we're not QX. some investments G&A fine bit marketing decreases area should where out we're but are a back R&D opportunities recorded and there. close to they come and some continued what down we're due this good investing versus we with would to determined because down XXXX, The our at generation one-time and in we’re there come I in is line in stage. costs next

Jim McIlree

reasonable if Waveguide last could, months, a the up the there six that around a the XX-Q going is and least of a the at one get sales ramp and year so according in we that for the second half the you thanks as this to Waveguide in first are possibility or we the start half XXX,XXX sales or well see ramp Okay, second year? next is to amount are for I about

Paul Travers

engineering So, ramp roll some that not how that put of wants then together Jim dollars inside I’m NRE Waveguides there actually sure Vuzix is Waveguides that can that and not associated the with programs Waveguides I be, around should go are typically Waveguides that it much. you on with engineering they and break tell that increasing. that all to be out are should

Jim McIlree

Okay, great. I’ll Thanks back lot. a circle around.

Operator

question with from Brian next Global comes Brian live. line Our your with now Partners. Alliance your Please question. question. Kinstlinger, address is your Kinstlinger of line proceed the Please

Brian Kinstlinger

was Sorry I mute. on

about Sorry that.

which of to about rest ask see and to they you're revenue One commitment, providing the about the the the little you how I math be them. XX% $X talk about of I bit if annual ramp behind so for out year expect have that the is particularly revenue of Toshiba, questions exclusivity wanted year may a the million

Paul Travers

in to on releases think I growing, I million hard a we we will because is second not keep few and heard to is don't except things miss happened and the cases positive I Their press a those XX-month but that. right other for will, period believe we’re what and say really some it liberty commitment period are mentioned details a about exclusive it everything was orders around I program, you've customer that's very orders in line product seeing half talk and to has and of over things like, yes we've continue those As the time this Toshiba to at They the a their past in it's have in the some a inside commitments. of in not the they more time base as order announcement us times of do we're seen mentioned on expect know around you unfolds. going what worth many just $X now of XX-month to of Toshiba just

Brian Kinstlinger

then and pricing question the MXXX? my think the should versus in pricing. we to about other relates How Blade Great is

Grant Russell

average Blade MXXX consider retails are discount wave. direct average and sales, sorry we on for XXXX reseller you’re net when average $XXX XX% price selling Blade The that sorry, you sales so about retails the expected just looking $X,XXX, a on recommend bucks

Brian Kinstlinger

much. so thanks Great,

Operator

from with Nehal Group. the question proceed question. next Maxim of comes Our Instructions] Chokshi your [Operator with Please line

Nehal Chokshi

check are isn't doubling double strong that ‘XX, least on thank expect Good that's very ramp sign I you that should for, Yes, you believe just at guidance reentering revenue your you a that that correct? there case congrats the there. want for guys calendar to and good.

Grant Russell

by thank correct, way that's very Yes, you the much.

lot a but here the hard to been and get performing. it's of to see work great Now it gratifying company is

Nehal Chokshi

that guard high any would could on heard high what rails the color believe end you expect? some guard of you don't rails on I on that, around you've provide Great.

Paul Travers

damned you're we in so going it's point to much where that sorry. there's growing. guidance can We kind and of I if but exciting hear say reserving there actually the point be upside potential that so we're this it's mean, game only I it's you them. and you really time don't and can't we're in there's give at also, that when it's at

Nehal Chokshi

Shifting I'm development we of ray understood. a really year the - reflectors some development what is with you if exciting that you year over it actually can June you grading XX, out patent on the every replacing where expect of next two that technology do the you by was have that to critical or to and of turning about more the Great, that there? within issued that a mentioned products a three wondering up talks R&D as way. yes, tell year idea show the to But is

Grant Russell

actually has or XX our the pointed Qualcomm. as alongside quarter number you patent these had of quarter of some out filed the so. we ourselves patients during filed have friends would relationship point over we things and just new just last significant [indiscernible] with applications Vuzix at we in a the last So year in mentioned issued, that some the of them so introduce, products pending, a

and a is all these piece of next generation us with called around Another big portfolio works. get how trimmer devices company kinds [indiscernible], a sSexier that revolving products and slimmer all that these patent and relationship of are

Nehal Chokshi

field and projection of the second two enabling could those for each one object is I’m is is you to developments one critical other? two, particular the you increase that and developments R&D think share relative with view two there Okay, looking manipulation, R&D where of priorities ultimately in the you XD

Paul Travers

that little Yes, play the probably beyond there. them roadmap pick binocular roll I stepped mean we and out I Vuzix’s shows side are in that have form do on and demonstrations. you'll it's is back like is is with Vuzix really stuff the that they reach and mean systems definitely a have where already they the it because look we why with huge some critical not Mack business with you the today. carry kinds a to first can large look need fact around Vuzix book form stressed point ability not in they factor view see be of it's heads a curve has There like but applications at smartphones the should fields of time and with growing up you are come for truck a just optic not view gaming display. up anymore. being that reason These where are that more in are plus work, and out make field the very yet today, gaming to good. where to Productizing think working and that is factor to a is have said XX some even the space of modest and systems fields to at oriented in that that's of we fields that really of that see on the have view you business we're Vuzix we're these excited in be real about Waveguide. things amount degree successful We

out our in that’s the I that, there So that? It’s of did of bulk answer queue.

Nehal Chokshi

You did, you. thank

Operator

of to end the for the reached Paul and like remarks. have back would we closing turn the to gentlemen and Ladies call question Travers and answer session I

Paul Travers

for with Bye exciting and shareholder. conference forward being an Vuzix look times great for everybody will it��s call. everybody future our in Thank you thanks joining for Again the

Operator

This concludes today's conference.

time. you at your Thank the You may your disconnect participation. lines for

Vuzix (VUZI) 9 Aug 182018 Q2 Earnings call transcript