VUZI - Earnings call transcript Q1 2019

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Operator

Greetings and welcome to the Vuzix First Quarter 2019 Financial Results and Business Update Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

Now, I would like to turn the call over to Ed McGregor, Director of Investor Relations at Vuzix. Mr. McGregor, you may begin.

Ed McGregor

everyone. morning, Good Vuzix's Update the XXXX Results Financial Welcome Call. First Business Conference and to Quarter With Vuzix today us are Grant and Russell. CFO, CEO, Paul Travers;

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

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

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

Paul Travers

to welcome Vuzix's Thank call. you, and Hello QX conference Ed. the everyone

March for as plan on come instead skilled that operations and and The workers remote It warehouse, which and with have will agrees trip like X Glasses In of more exceed glasses our firsthand associated witnessing enterprise XXXX, Qualcomm, the and with of It Avoiding an the at years. Consistent time most of should good our start over bookings commitment AR The the XXX devices almost for industry to in accelerating inflection call, and smart starting have a that improves units results sending millions Smart but with the Vuzix year in QX last the solid of one that can the from multiple Eaton, now leaders global compelling. of the studies indicated recent goes made year-over-year. are growth to May quadrupling, production facilitate X up is our the to and remote over billions that more the already $X.X and are from total. connected next our of glasses of as that's solutions. point XX% on faster the a rapidly are on than approaching. the money, broader forecaster resources, we the the trialed deployment of connecting worker larger industries of numbers XX% to like smart revenue in with across provided of implementing the and Verizon years get in side and few chip of most usage risen of a QX taking this steadily importantly, substantially and I'm and worker, QX on-boarding, pleased smart the to lost dollars admittedly were off faster travel, expected, our The glasses. full no conference delivers this have surprise ROI, now by supply industry but on report be move cost Virtually, be AR value, years, of sales can enterprise and we to us, just that competitive grabs thousands picking million alone. companies Fortune dollars. time very same worker, hundreds indication list is week operations not from partners are is Smart time. payback to retention supports and the knowledge, investment terms transfer in next on. progress every shift as just of broadest more enterprise soft. and Glasses numbers XXXX behind revenue sales market suppliers players enterprise first growing an through saves their million softness be efficiency. Expectations only And will has Over set expanding accurate $X.X foundation, business rising in revenue Equipping for and safety of immediate with drives

wave long optimally and this rider Vuzix positioned have We hard we get it. for worked tidal lead approaching and to intend the be to on

call, Verizon, remote related will Vuzix Assist, As application. accessories, support been master X-year with affiliates Verizon, MXXXXL also Vuzix previously agreement our Blade Vuzix's the on Smart Smart Glasses M-Series Vuzix Since new and have last wheels has and now video their into then, announced, and the Remote entered our and turning. reseller discussed whereby a sub-resellers resell Glasses

the going Basking the gaining here time spent Vuzix's includes and the have to plumbing Glasses hit and second quarter. We've Verizon's team, running beginning system, completed necessary strategy needed sales an Smart structure. for We sales over with in marketing of Jersey, the extensive customer understanding This sales mobile various ground management at headquarters and Verizon's Verizon's ordering New their marketing materials. of team enterprise also most of Verizon's device preparation Ridge, in

will phase Our I'm of sales of solid pleased BXB with customers. to seen largest largest and program. had with the sessions to selling marketing deep-dive teams. customers introductory concurrently number their that during this has already report initial had X,XXX interest from the a and sales enterprise training They industrial be their we've team product Verizon meetings enterprise

phase medium-sized program and the businesses. customers second enterprise include to The expand cover will all of BXB small-and XX,XXX Verizon's of than more

It's glasses that joint and working its well ago, with the customers. to some sold available A the to in add new marketing sold Crouse-Hinds as co-branded Verizon Crouse-Hinds of become to that cookie-cutter Smart will as can for enterprise their harsh sales glasses. directly will our new line of be ATEX-certified points products to glasses opportunity as Vuzix than today Vuzix smart a Vuzix's note expect a for announced offer resellers, that Eaton software partners sales and conventional higher Glasses market, and marketing week one the update work and intrinsically price solutions hazardous agreement the with development Verizon team smart quite to also and important major much team. and safe significant, their we market to additional in Vuzix by their is with specifically by ecosystem smart with be Finally, by environments. contract be we customers. Verizon accommodate to products These

agreement has we bring product April, development announced much work of just effort been the Although, the already market joint this to in to completed.

smart and August booth, solution, our filled excitement outstanding universe to in the and prominently co-branded smart Houston, commence intrinsically intrinsically week, The Eaton our Earlier Annual to safe and glasses to safe and to which our in in and Conference September an on was players Crouse-Hinds hazardous which XXth the oil harsh attended Technology production this with in volume Vuzix space. gas frame. Offshore a interest. presented expect customer Eaton to smart introduce begin based featured M-Series glasses customers the opportunity glasses time selling We of

environments at thousands of have that like Vuzix companies We for trusted solution some to environments. exposure Eaton for of and co-branded operations are and to seeing of has from already existing What and hazardous aware Eaton booth the this firms sell already will were glasses developers most now that of energy our delivering service these manufacturing Eaton. these well customers that the another designed industrial firms Moreover, their event partner in Crouse-Hinds a extensive. in is companies or These already firms specifically customers. harsh hazardous the Eaton is of smart and partner the have world. largest that be a now product of jointly a to need indications with demand is about our two visited having harsh, field been salespeople are customers is great

a to for Vuzix base. represents global an Eaton, new their provide For cutting-edge into opportunity wearables and with relationship solution move together this customer a

marketing and struck and to value-added unaddressable entirely sales be place, of market than Tier other product companies X in whom to in this cost, the for ecosystem leader significant can't Eaton segment with we relationships number that be in us. at The underestimated. of by to substantially Vuzix, VIPs, increase going Vuzix additional resellers new already increase previously and the and will broad personnel numerous that a an opportunity products. space For partner There's our the represents Dynabook partner X importance with a comes deliver with This and our an of of other team sales the was consisting have relationship and across be margins partnerships. many a new selling adds Vuzix Verizon

broad orders in they at to current Beyond and beyond. enterprise as they build Eaton hand seeing and are continue win continuing the follow-on remain demand are larger partners and to VIP XXXX bullish Verizon, for smart our we glasses business see on

with of world with X and continue further and At time, and relationships. early them of same making whom These have the the progress We scale providing in the on significant glasses global with our with represent largest sales they to with firms engaged they the additional fall. we XX throughout are updates forward expectations companies engineers Similarly, to efforts look of for We we for planning just around larger customers development some our calls iceberg. pharmaceutical demands next thousands. the unit frankly, operate months. to future dozens represent facilities the tip about forge deployment several of closely our enterprise as internal our are into remained move the also deployments

Over days, XX the platform computers decided business focus smart expand glasses. to that two additional tablets we've have their into last beyond added and partners and

across to more ranging the by VSee Singapore telehealth more including applications, new our and technology HIPAA-compliant bring operations Germany Fortune U.S., solution glasses support that will imaging customers telesurgery VSee operating with leader enterprise customer used and XXX a SightCall in that and in Our glasses the is San to Blade, Francisco-based a telemedicine base. remote partners introducing X,XXX companies, than them enterprise XXX a San is over Jose-based many AR-enhanced companies. Lab smart the and visits. service telemedicine. is be more to all MXXX Vuzix France, video remote M-XXXXL field and They on customers, telehealth video from visual than Lab global telemedicine globe. U.K., their SightCall provides VSee and telehealth deliver training collectively than videoconferencing video with company X,XXX Using can

with pick robust steam. customers. field fit cloud leveraging by continues and solution bring to Our Blade product enterprise-grade platform, natural see-what-I-see solution their represents The to global communication a their video service will proprietary a SightCall their up

to continuing production catch the first finally improve by up demand. allowed been rates yields production us and end quarter, and with of have We immediate to the our the

only not quality removing call, generation last on manufacturing into volumes. and the As mix, waveguides, equipment we during the conference been adding focused we've touched second attain the bottlenecks increase production but also highest to upon

Assistant, day, current Blade for under volume to reached Vuzix being are now and each progress next Our as news RFPs respond configuration or our production we and OS only orders as to orders. but manufacturing and functionality are shipped added features the are the to point development Google store. applications, RFQs been have to able Vuzix capacity and Blade added to the where nicely, new update continues larger consumer-friendly has now weather, software Vuzix such sports, Blade app Yelp not being same

has Vuzix to ecosystem focusing It's to continue additions, great the on for applications see to features of broaden. begun recent influencers these and social units getting media and Blade With consumer-friendly further review. review media

On wave wireless are not order upgraded to by it's suite order year, continue camera enhanced availability Solutions, software with shared telco many solution. glasses Smart network what giants capabilities, but taken splash powered and their under prototype waveguide-based to aerospace we from have it the program order in announced aviation include case AR We're Blade. the glasses a at going a significantly to wireless this and of lost display expand. be expect customizable a application Europe modified Korea and announcement Client NDAs. these to call with smart should multiple and coming map give We're are Elsewhere, with the is the and and in would expand have shortly. Blade road carrier out which which across everywhere, this the actively map developing. The their global waveguide-based open Glasses, Vuzix. and opportunities for ZXX.X front excited to more will alone, relationships, our engaged them received areas built for we product formal a the Glasses system emerging. asking safety we X-year some the to many TierX placed should video demand a U.S., testing of over are this their AR a as a smart delivering carriers voice to for In can It's glasses Having these road product our factory commands, receive collaboration March, see from safety steadily product feedback. follow-on great application AR recently this in advantages prototype, usage Windows-based commercial formally have employ of Dynabook, speed follow-on change head-mounted QX, to is completing OEM purchase Other of Blade Earlier as certification XG support more Smart enterprise Dynabook for to this a plans Ubimax million another and come carriers. its just log done time, firm our on they version and glasses field. in these our After about screen Foxconn-owned for a a up Frontline this $X certification, industrial of based Toshiba they floors, are the well customers with

the upcoming very Separately, results. to so walk This which inroads product vertical full months, for responder over engineering revenue projects this bid ultimately bring defense, for waveguide-based Elsewhere, the XX engineering for over first Vuzix. These in couple five the RFQs now products the to serve with customized revenue to significant revenue market and through making automotive starting new for police program follow, with disclose some programs asked commercial we've aviation companies financial like to engineering would waveguide-based their another with and industries. could QX company. generate hope call been Grant? fees of that this in some book will substantial this Should been the We can Grant, be dwarfing very of next quarter Vuzix to we XX and that millions potential expect first ultimate the other QX, on is months. our with being could production we've I he pass in of to goal would potential. revenue substantial, multiyear deliver in some a the markets, deployments of soon. into

Grant Russell

you, Thank Paul.

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

ended months million $X.X $X.X for March same revenues, For compared XXXX. period Vuzix the XXXX, as to in in reported X million XX, the total

increase We in our Video in former led year-over-year, XXXX that last commenced sales services numbers. total first from a by iWear engineering any we've we're engineering QX the realize in Glass work sales new did million year-over-year of $X.X excluded when pleased resulted Of rose not revenues. note, our Headphones our were sales, revenue in of slightly product X% project. Our discontinued Smart overall $XXX,XXX a already quarter on versus quarter, decline report in the which in first year's XXXX to

There profit gross of Our of decrease. XXXX for were a the first $XX,XXX from sales quarter in XXXX the the reasons versus period. profit was in $XXX,XXX gross several

We Glasses, sales period. XX% to Smart prior of have cost product Blade the a the in selling only, the in was model our on increased the M-XXXXL XXXX experienced period was and product MXXX of late prices direct [XXXX] of on after slightly earned original year's basis in First, we costs. manufacturing overhead XX% margins sales lower compared as the lower introduced we cost

expense legal costs and the additional XX, the March was Our to XXXX, R&D Selling million expense decrease months external like XX, software development as fees for to XXXX QX year on point the ended in million compared related stock show due in security out later. in $X.X share R&D consulting the dividends salaries, comparable months that to rate ended XXXX million share March area, versus run XXXX, fees preferred quarterly provision primarily million. salaries, stock accrued compensation increase the prior in expense headcount of trade for spikes a this the the increase in MXXX. per the of offset XX, quarter versus and down that it $X.X quarter in expenses. to million of IT that year's indicative million for result in period, result and X The research increase for I was of loss net $X.X primarily expense in for March would was and by a partially year's work marketing $X.X were as $X.XX decrease administrative for our period, the $X.X million of period. the on and $X.X consulting an slightly and show each $X.X compensation loss to X totaled first see XXXX. was to commissions, compared of $X.X X The expenses. approximately General prior quarter, contractors, $X.X development for $X.XX increased therefore increased first of the Vuzix per million and was or months after Blade XXXX, and ended The is benefits assessment not million the benefits our or trade more the commissions, an compared

sheet Now moving balance highlights. to some

in position XX, $X.X $XX.X working million position in cash of $XX.X including compared our was for as million the comparable Cash Our used operations, XXXX our changes March XXXX $X.X was XXXX the quarter million capital, million. net and as working period. first to capital totaled in

leasehold Our back $X.X completion in first are prepayments. Smart their levels, net to million in visible of Glass for non-compete moderate early for the This of approximately balance models prior Cash reacquire to cash rose which by meet to installment first in were in in XXXX. $X.X manufacturing Capital October activities after purchase of quarter finished transition adding investing by XXXX that levels, services primarily additional $XXX,XXX $XXX,XXX of quarter's the year's certain Also inventory our $X.X reflects we vendor with our half. the December final and amended million was markets. spending is XXXX. expansion, inventory expected At production we related these non-cash footage XXXX including in in XXXX, quarter to demand availability the million, second related increased period. glass now loss for when and $X.X amendment over first-responder The subject for our customer included $X.X new the smart April. to the operating and the X/X. figure planned million versus that remain about to products was in was goods quarter as The level totals We agreement model. waveguide rights to the million. charges ready has positive the was half XX in improvements well-positioned manufacturing include equipment certain increased made the the defense second market to of of products, In the square our commitments our the

during conference as growth costs show improvements didn't still Without the Regarding many first to our track near-term in compared XXXX innovation $X our improvements cost to are call, negatively overall results. last our reduction in impacting and mentioned of reduction our initiatives, obvious a quarter our meet annual million XXXX. we on operating goal of prospects,

mentioned, have are CES seasonal As modest a were first back that often be costs not of QX XXXX, repeated cost they previously in of take despite the been represent XXXX. these costs. quarter they and Many of Together, reflected Mobile that costs and expense in to could reductions in in February XXXX World early made be already, these January in wind-down not time commitments will implement in Congress implemented the numbers. and following each reduced. $XXX,XXX include progress quarters approximately our

Of level for Further now of sales still team, for savings Other be now March website should our recent the at presence trade that reduction per on reflect areas of reduced already show teams events is at these needs of over included maintaining contractors back the parts assumed XXXX. important this meaningful changes and spending represent of of cost implemented our by events. the alone course, consultants. our to office. closure external these XXXX scaled a our balance can of Barcelona and quarter restructuring include internal work a sales including $XXX,XXX we've for have while better our This software budgets

amount maintaining now area, have note, in quarters. product, significantly the the the we interruption. second to ready in to QX should spending our decreased for centers in quarter invest production and be it's without fulfillment and cash thereafter to markets MXXX office cover QX, $XXX,XXX U.K.-based In the delivery R&D following sales we commercial European MXXX please and in related that on reduced as exceeded However, and our Development are continued this summer. the

our scaled research-related reduce should by projects over as some during be revenues, our on well position year XX, expense we cost the been to fund growth, the should this for growing implementation million, XXXX and Further as NREs back March to $XXX,XXX, continue visibility costs of XXXX cash At XXXX. ending working reduction the full compared expectations and Additionally, made $XX.X right-size consumer and on operations here inclusive controls adjustments needed of as of paid of properly longer-term enough in evolution, business and balance revenue through will have expect our total both this response engagements, point, year. side. we to market as our enterprise actual based $XX.X as to to for our the of planned of capital a reflect position our be million timing company the our annual of various OEM

over Such relationships even turn joint include we and examples, ones, call are a of will would. company responsible and and as investigating management partnerships, of broaden flexible to back strategic access simultaneously needs could we related regard, that, Paul. forms have this course to closer funding, is evaluating can I like market of certain exclusives would new in strategic team discussing prepayments, remain development In now various where several any investments, large the cash With commitments. to our ties with We while one order ways entities. and relationships

Paul Travers

momentum to have stronger. continues Vuzix grow never been tailwinds underlying in and The for

customers pipeline as Blade continues enterprise. usable to and engagements repeat as expand a prosumers sales with product broaden. is our just emerge both volume-available and a to from enterprise Our starting

into as as as in that for going high-volume that on into wins. significantly finally a XXXX, think partners possible for We our to with programs been continue I an for do it Overall, converting growth market production should Vuzix greater I enterprise develop that expand and at another the multiyear and XXXX and revenue enough business much and XXXX OEM focused while, numerous representing is expect projects opportunities customers, can robust than meaner organization industry going right and we We've will verticals, most a for see to and smart servicing but year of we're Vuzix beyond. this opportunities is influx in now, in this our future in high-margin, many don't from is coming stress leaner can into represent is to of the glasses for whole Vuzix opportunity a imagine. waveguide-based

the May, and World answers. in now Craig events. and question seeing the I to Expo Ladenburg these over moderator for We Augmented Thalmann to at Investor Vuzix and be call Display like will Finally, turn Hallum upcoming attending and you forward the conferences would to Week. look

Operator

from with [Operator Instructions] Christian The first question Schwab comes Craig-Hallum.

Tyler Burmeister

This is a for on of letting Tyler Christian. for couple questions. Thanks us ask

mix launch that on same waiting half? think be delaying the second of possible their of I coming and replace over product? the MXXX of orders So, it -- of that and to may year MXXX set in or MXXX of some your quickly that do the largely in in it's here, that ship first between the then customers to continuing MXXX the your with half the second how will tail half what line, be guess, the long MXXX the MXXX? you And Will be a some for

Paul Travers

they're don't delaying I think Tyler. right now,

in second quarter our the fact, think previous might've discussions for with expectations are In that I in revenue had. line we

So I these on moving of them. in doubt, without are lot really into about series. MXXX work looking production they're devices the been put with think there has the a MXXX, excited they people guys, at approved are and a but And

front at gotten regard, shape in least has the just this in way the juncture we're MXXX and MXXX at gotten the in of think in I that So, MXXXXL has of yet. the not good not the -- MXXX

Grant Russell

the MXXX price and for [$X,XXX] at materially [$X,XXX] [$X,XXX]. I mean, and points. They retail different XXXs are XXXXLs at going is at the to

to -- we end but XXXX it series right be MXXX. take so seeing the to sell -- and for will all MXXX models, So But with all the think each thereafter people far our of would now. MXXX of it deployments through are probably useful

Paul Travers

that's have and number job the to all does of the efforts a what offers the we tender responded and fair it around. built MXXXXL the of been Yes, documents and for

were in like the So frankly. confident of anticipation including video is there good quite and the of a position. some just is MXXXXL But lot around of and streaming pretty of hell the this of that to is It's lot stuff, And work, a processor MXXX. piece XR-related a things beautiful. do again, this we people a for

Tyler Burmeister

larger size now VARs traditional a go-to-market maybe then guess, and and a with Verizon your and size your a And OEM and point where this of are in great. the opportunities, and summary I you the opportunities, you Can ramp? here. agreement can somewhere distributors your those Eaton, future question maybe other Eaton That's at comparably maybe different and fuller kind avenues, then Verizon at

Paul Travers

I directly the looks of what that's mean, know Vuzix is we value-added channel. partner part and VIP like reseller business

what year. for this look ATEX-certified We our a think market upon have that it, like what going a after. don't into lot is demand device much believe with for The Verizon to for do, would Eaton have but pent-up feel conversations scaled we Crouse-Hinds is they're them from it very Vuzix. through they We've I the we business, going the a inbound based gotten there of and requests

Tyler Burmeister

this the are is opportunities. you sounds potential other end color. on is like it for right agreements, and that's that way focus now at? on the automotive here like then last about Alright, one that, the defense of perfect think some different to And kind looking the of OEM, OEM my kind the aerospace, then still display guys markets opportunities maybe there Is that

Paul Travers

what's where product there. suggest is I also challenging Yes, doing consumer some the products aren't has there and it's been in the that to other right trying I suggest that is would marketplace well. consumer that would the still figure the next so marketplace and out marketplace going

wants RFQ? to this value please great, I And these in to I companies many you R&D egg clear for And have we of that really on waveguide them. the a there others there's this These obvious face it's very for just Vuzix, their in easier to their so, space I your deliver solutions have have enterprise, is It's because is the that these in to think. it. that So, from mean for lower right requests dollars an was really Vuzix demand can need stuff lot there's is inbound picking nobody fruit, space. this, for efforts. say there's is not companies saying, and hanging I focused, think would to respond budgets

yes, because to I you these opportunities more with in immediate oriented the it the think be you're can going things, So, of kinds see kind of and them go switch today. enterprise-ish flip

Grant Russell

too the some particularly yet, growing forces seeing we're some seeing but responder police there around can't of uptake And in say just also our the we strong good And some world. interest some with much we're with first market, products.

Operator

question Our next Partners. from Brian comes with Global Alliance Kinstlinger

Brian Kinstlinger

what or orders also When XQ, said you And by can in helpful if guidance, quantify orders you maybe say some exceed the appropriately. quarter-to-date? you book is Maybe the the then, you. can softness so you've magnitude, be already provide behind investor set for those it'd of revenue expectations be

Paul Travers

guidance. forward hard give don't we So

say, first in let's first go, The Brian, coming you're all a to programs can then bit, be. to you fees back second the what we it now with with I are go, will they the hey, that we've of we asking. around tell little been that anticipated There's the business, you is but in fill off before. details there in OEM the robust engineering on in would realized predicted talk the coming. that what let's maybe and which I in what tonight, I quarter we're I these are think we comparison you business itself let's think quarter. the saying, go, some later are here can weren't guys going quarter MXXX

robust be pretty going quarter. a should it just it's second be to -- So,

Brian Kinstlinger

capacity And reached have then you demand. now Okay. mentioned

inventory build So discounting that of how the reconcile quarters? where maybe then MXXX, the in much P&L the impact talk next the happen you and that with might inventory and is that might maybe, how of can couple about

Grant Russell

MXXXs. the on in we of November, decreased Well, already the MXXX Series, -- the we price

product to adjustment and did our a XXX little affecting the because making same value which The just say MXXX is lot discounting mean make that higher is that less. contemplating the to Blade without -- a MXXXXL. as made we we're a the already add a be We're still currently The margin -- margins it's We're going of be product. little looking down for a margins not to negatively. mix. gross came we've So, a on I margins result, required bundling going can some opportunities will XXXXL, at

Paul Travers

some they're But And ATEX-certified are reasons. quite device margins the solid still is significantly on of the this the for device, it's lot device. of inventory ATEX-certified expensive actually And -- good more device. for the on a a

Grant Russell

mean the can we'd chains I a component get be have taken pay position and supply time where I at to us [indiscernible] And against now mean, it's cost the to we're frank, orders. deliver production previously, inventory. rates a And we to up. indicated Blade yields still

So, rebalance discounting mean them we more achieve But there. to that. got any that to shouldn't

Paul Travers

moment. is discounts There is at the -- nobody getting Blades on

Brian Kinstlinger

on older talking version. No, that's I XXX, more the the was but of discounting okay,

been estimate Verizon, your from In to expect material last and they when what have communicated, business benefits my terms is, you to able question or cycle this of have is, sales relationship? the you

Paul Travers

We in here second sales happening should the quarter. see

Brian Kinstlinger

material And the will they be still half year? will they of second early small pretty the Or on? by be

Paul Travers

today, intentions are that make to have I the happen. solutions. they their cookie cutters it to customers are that their They and to motivated all the it these this teams network, mean, sales going part runs think stuff quick. are need does be pretty because that over go I of are

see should we think from I contribution Verizon. nice So, some

Brian Kinstlinger

had order One your that. from an yet solid have orders you had In Verizon? follow-up so far, from you

Paul Travers

Yes, had we yet, some significant They not have though. Verizon. orders are from

Operator

Capital. Jim with from comes question Chardan next Our McIlree

Jim McIlree

you the product talking about bookings, or were for entire the product when XXXs, Brian's up Paul, all engineering, so specific about to the referring talking follow you suite, you're orders To about about QX, on the Blade, line? XLs, were the talking question just orders we

Paul Travers

of [rolled] batch in. the No, we've just kind

Grant Russell

Total revenues.

Jim McIlree

that QX? in that was orders a delivered confused. And would it be you used, the Were the bit or that you've the little received was I orders received saying phrasing

Paul Travers

would all that be is stuff This delivered in QX.

Jim McIlree

RFPs commentary, the if are RFPs, Okay, way at great. Blade start if of in characterize in you remarked or now can And end that RFPs of you capable markets, responding I'm any about or you a RFPs. That's you number those helpful. is place just the capacity more just characterize you just maybe those can to. Also of responding can to size where in your wondering

Paul Travers

that in next into crank people. we production, to a starting lot well, of north in can going talk, side to would little those so I like of that the we're -- making can XXX the other ecosystems markets are it's this and have police year. easier many they're of kind just There's like, it's some rollouts a are and represent guys thousands delivery And able bit. kinds the a deliver? orders, to when I of that the putting mean, business do XX very in the with how this the work well, having it to and you And mentioned early people What's of -- these thing, could into Grant together of you with am in fall software had of talking and fit rates? folks to soon up kinds numbers. be down Asian discussions is, the sit to that How -- I pieces.

Jim McIlree

you the strategy is, And M-Series months? next and can for update the then last just let's your XX one the status what say my is, manufacturing for

Paul Travers

for month, today could Well, business. stuff the to it time production but you make right to us. I here lot assembly, going lead is if do X,XXX a give Vuzix New getting to them in as [Jedo] MXXX a current of final need do they The X,XXX in will for Rochester, for that. just of first you York. done our parts to say it, know, we month the you a Blade could of round can and China, to got of the facility but get think handle is do The to do work out X,XXX here done States, in with full-up locally now Vuzix enough do and with I to we're we that kind it [Jedo]

all of do hand around. difficult when in square of In move I can first get an New a lot from We're with now. issues ISO we've automation York. full-up in and Rochester location. doing Maybe. in course units here to equipment that Vuzix and QA ISO there and I Jim, those quite would it seem it here and them are pick is it then we it now that in the into some offsite you great of to volumes systems these they would up, With appropriately it's here, we all And and at days. tell can got have built working too, with do remotely. make all equipment, fact, feedback and we're Rochester, -- know shop when we be things certified you it to production it is flat well improvements, automation an transition And to

Operator

session ends now to this Travers turn Q&A today. Paul the and for closing back I'll gentlemen, Ladies for call remarks. our

Paul Travers

XXXX It's looking call at today's report would for everybody. you and to participation like quarter and we look speaking on our in August second Vuzix, again Thanks everyone an results. your this exciting forward thank I when with time interest to we to forward fall.

Operator

great conference. This Have parties today's disconnect. concludes a day. All may

Vuzix (VUZI) 9 May 192019 Q1 Earnings call transcript