VUZI - Earnings call transcript Q2 2019

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Operator

Greetings and welcome to the Vuzix’s Second Quarter 2019 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 Ed McGregor, Director of Investor Relations at Vuzix. Mr. begin. may you McGregor,

Ed McGregor

and business Vuzix’s us update Paul Grant Vuzix everyone financial today quarter results CEO, Russell. CFO, and and conference Travers; welcome morning second to XXXX are Good call. With

over call forward-looking that management forward-looking uncertainties, you call statements, the turn are this I to I to to on may would remarks prepared and subject Paul, forward-looking XXXX. the management’s Reform which remind the like contain additional make for and that company Before risks safe statements of the protection Act question-and-answer in Therefore, may contained during session. claims Litigation harbor the statements are Securities the Private of

Actual of in and competitive and factors, results well any result certain by factors, or contemplated changes in including as as business changes conditions, business limited regulatory materially plans, attract could and economic to from strategy the but ability those general retain a forward-looking statements development personnel, requirements. as not legal qualified differ to,

projections in company’s XXXX. Vuzix to any conditions X, obligation update to In the no future August represent projections as these future management’s as change. market today, assumes addition, as the estimates of performance

Prior to issued financial press with company and morning, the this its XX-Q announcing the market filed its the results SEC. release a open

filings with which measure the can also in measures. at and call summary financial be non-GAAP this required, a not include of look accordance quarterly at the so, may www.vuzix.com. the at So discussed is call, wish Form may who all comparable reconciliations When provide GAAP, have results participants today’s sec.gov, to XX-Q company the those in available may company’s calculated already Today’s call. will done documents directly to presented on in as most financial found

then the overview provide Vuzix’s second will turn now over of business call the company’s second of quarter Grant Russell, who XXXX will who will will call an I operating CFO, results. give our outlook. to quarter financial an Paul overview turn and over Paul? CEO, Paul results company’s to Travers, the the

Paul Travers

the Vuzix you, the A Thank second has lot Ed. happened Vuzix. of Hello, call. conference XXXX and QX to welcome in everyone, quarter

great line partnership with expanding entire Smart our made Eaton Glasses. of our the have and now Vuzix to effort progress include We are ATEX-certified with

a the the supply to agreement tailor being them. with generation require made basis to to We drive glasses work next into of waveguide. we The people And want also form AR long-term power Vuzix for and future entered this expect are Semiconductors. factor required MicroLED that forms agreement Plessey displays significantly with MicroLEDs will wear. shrink will that These will

in its scene when first USS headlines that and on programs progress generate half first relationships We for business new our intro continues the build. look multiple made wearable news the timely of significant avionics technology the markets made we at to late. Vuzix and streams, responder requests partner waveguides OEM services the in Blade Vuzix OEM side security leading from an with around to and inbound a of from market XXXX of revenue the engineering follow-on of companies the orders further with debut at you announcement expect

new significantly been applications capability upgrades Blade’s hardware party applications. third and expanding have also We upgrades the These to the both software with and core and open opportunities. and Vuzix new sales markets

the the to applications report for drone I’m blade eyewear. an expected new that also with the million space proceeds gross used support happy coming of an the in drone estimated market safety many our in additional the over the and raised company be safety leading now over $XX enterprise example, to months. drones, requiring growth XX% manufacturer the application blade that can glasses in supporting DJI For new world

in M The smart growth revenues, three currently they markets of Vuzix we based our that feel that see optically consists and we key to occluded win great see-through We expect systems drive segments MXXX currently for shareholders. we devices security prosumers will glasses business produce but the the opportunities enterprise OEM and projects. Blade MXXX, for enterprise day. and business series time value with business the over waveguide like Our the for

waveguide can opening wave already based with reason this guides. Vuzix OEM the the and our is also This based We the first around product see has the so doors in happening invested as our incoming heavily blade are that around waveguide our optics. opportunities

over products moderate result a of all waveguide we solutions. would to expect to time, glasses our As smart display Vuzix based

our smart update the solution MXXXXL qualified space current on has leading remains our where that functional Let enterprise a industry highly productive been M-Series by an me glasses, customers. now numerous and provide and

to MXXXXL will of workhorse be We significant many volumes deployed that us in a remain the expect customers. our for by

deployed throughout as smart and customer, to retailer expect We well. stores. M-Series This large has programs they of works part time continues current one XXXX its the thousands the some out such begin as potential deployment of units being of their in quite their a for various to relationship for significantly more with roll glasses MXXXXL in been progress systems this one programs

we smart one employing customers Vuzix to collectively represent Vuzix expect will of is pipeline glasses business programs. of millions the discussed and has many with tens move of in continuing which past dollars work ultimately toward is expanded implementation fully of forward a These of products. full This the of their customers deployments

and MXXX smart commercially continues now are progress The and was to well. XRX customers MXXX key delivered glasses development being partners. our in to of May announced Qualcomm DVT units The software

OS our a customers of deployments. broad much the many for capabilities, large Asides upgrade from its many needed android offers superior by required MXXX

continues truly know, posed limited view the the its at a The glasses forward to android to the for market, all leading MXXX MXXX with upgrades technology ability through with past in update the OS customers. Q you best-in-class march our the in As some and challenge in OS smart least. version is

other both by afforded chip existing the new and AI android with customers up powerful that support features latest doors SXRX Qualcomm. the opening set is MXXX require The and from OS,

Another sizeable going that programs new it can of MXXX are the positive about the several MXXX with the that XL part is coexist as live.

competitor streaming video and MXXX top terms scanning the performance to display the performance right the in way enterprise any work by the chain OLED of of the of existing compared MXXX performance, consumption. device at box power when code much in space. The Many of other out crispness example food bar faster lower puts of the the AR with titles much on and

response announced of accounts We to DVTs been the test positive. upgrade very program such MXXX as of far MXXX we feedback. during our and adopter and most our units expect the Their design select has excite group And second key existing first testing or performance base. do quarter thus of early verification customer availability the shipped we for associated with recently the the a

to As delivering the we have to third beginning start previously MXXX quarter. customers indicated, in commercially we intend

MXXX possible. IS safe glasses with soon intrinsically Crouse now potentially safe we to the Vuzix our as market on to of smart partner, Regarding device work and smart our as and certification Eaton closely entire glasses line glasses, OEM bring solution intrinsically co-marketed, to co-branded continue smart our

this to together building are expected to initial been on receive support focused to Board shipments interest We’re to of glasses business as line and their companies product fall. and partner broad a long-term has and world-class successful this are excited Both leadership. hazardous products on from have a as work a come in building harsh to smart serve and in environments. Customer Eaton

second during glasses As Dynabook, the our relationships, thousand Inc. for several OEM Toshiba home smart to Foxconn Type-C formerly shipped MXXX quarter. other we smart glasses

We and move Vuzix OEM expect their such relationship relationships with working and program as we’re have that They Foxconn new are These as we aviation, defense. forward. areas two OEM past, include as smart we potentially has a off multiple diverse start around continue to will on. shipping, also the products relationships in glasses good other mentioned including automotive waveguides and

two On opportunity with services waveguide-based for commercial beginning programs second the of aircraft only early engineering but potentially have also. our aircraft for partner building pave aviation as project project with we military XXXX. partner we reviews qualified them that as the This the This received are will commercial programs, half significant ultimately for second sales a should represent for way our sizable business production not for as HMV in be aviation the could quarter. the side system follow-on

in on OEM begin front waveguide-based June an as the PR to volume Vision, strides been helmet in placed shipping great which Further is solution a should their has and RideOn making the alluded this that in an blade-based partner Smart ski that being of fall. we OEM OEM

good at feedback them new are is our and and can Vuzix. look new with at folks. this worth sharing fantastic partners. forward learn job, operational. business use product technology moving of new it’s They’re the is being a we customers doing as by on to new now to relationships more forward worked time. these You same their up case are really the Four a There the to really website gotten about They’ve with already look their three closed www.rideonvision.com, for from more being OEM going

sold ranging our Vuzix partners has utilize keep security that safe across and continued way. market and of solutions Glasses, and list customer out deployments is are to others. of sports, innocent a including being of help from blade people Smart the Moving cases Engineering ST flourish into the the the important opportunities verticals used NNTC, and and Blade on to market, Vuzix multiple area with growing visits, customer blade to security business our harm’s that have prosumer And virtual to growing Sword.

developed personnel exclusive Sword Vuzix feed the literally security The blade Blade remotely deliver gives Sword found recently while a and the has is iPhone visited to Sword The them head, alerts resellers to time the on number real stay connected and currently quite that product team and away the be from back by the with video in around a their a ability and market. from of exclusive security where their integrated not to Our sword being Apple’s security eyes product marketed impressive. based of station. to allowing informed in

over We in of expect in into pipeline revenue XXXX of accelerating for continue these millions dollars represent to and this and to other fall security expand us, remainder programs potentially starting the XXXX.

XXX,XXX, in the for the more DJI Currently units with drones. drones exceed DJI the In emerging the approximately starting market. XXX,XXX and sales sold U.S. than of and drone drone commercial alone drone supporting our represents is Smart annually XXXX, market, expects FAA Another to XXXX. by XX% Glasses market Blade the M-Series

invited the took having for using regularly safer fall. attend by my announcing drones, to personally Despite look it clearly I engaging been and only and drone team team, shades, drone of our first a is communicating Vuzix out a enabling has recently DJI’s this to at my Vuzix summit Vuzix Pro and by DJI Mavic DJI’s series experience maintain the annual support me provided largest to clip-on more equipped at with down DJI line-of-sight phone. Blade and with

It’s contact happen. a By make users to maintain person the drones. need law, the serve to drone this removes eye with are and Blade line-of-sight, called to as have required a separate help your spotter

enterprise ZXX.X ANSI rated Blade. This we’ll safety This option an the users. for of the certified. offering Vuzix is begin glasses new For already August, version Blade

now manufacturing going We’re starting field. of is floor version This customers out that ladder be fit the for $XXX will the at in and website. the next live is glasses safety priced the Vuzix’s require production on an Blade ideal and and week enterprise on

communications early excited adopters, glasses, and field to already out evaluating have all-in-one rolling that Blade rated smart rated their including are company glasses these to safety on smart technicians. large taking safety started offer we a eyewear orders We is

and For Video. run XX Amazon began for and the over browsers, on application The Alexa streaming the certification, including Blade marketplace. social supports month, platforms that media numerous Blade Prime natively support like its content, providers Netflix built-in Amazon prosumers, last on the glasses, the selling over video titles with now web Amazon

told Amazon in available. one In number few become Amazon the its of has on weeks selling our Blade Blade manager, that of has to us on the a selling Amazon, the smart over Development Business XXX quickly based become marketplace, has being the fastest sales accounts, has revenues. the number Blade one quickly other who Due short product product success the

warehouses now doing Amazon are of to on their through, number site. it selling up begin preparing step with the and we’ll Blade by We Amazon comarketing is of some expanding the

here achieved have done efforts. sales with we active and marketing everything been far, has So no organically,

developers with seen levels. signing In we selected over we’re also up have This our distribution increased seen new The of marketplace, Blade momentum, at from and newest product growing channels and expanding looking products addition growing we Vuzix’s a number XXXX Amazon outlets. to have Blade to year, gain enterprise and the to significantly online developers brick-and-mortar orders prosumers. continues support

listing, last almost our few tripled. since have weeks, for sign-ups Blade Amazon the in the developer Just

all In consumers. Blade product attracted Blade interested are developers developer fact, entrants. AR for Vuzix now applications the enterprise and has of to XX% in up signing supporting contest approximately our XXX develop app Separately,

I’d spend sector a now. minutes like to the telecom few on

continues Verizon external client projects with glasses projects for team. at a for relationship Verizon solution our number enterprise projects evolve, to Verizon on First, with coordination both internal where and are underway for of use smart

As Verizon of know, received quite the Vuzix many has date, of has sales and other you sales to modest gone of Verizon from restructuring a orders has through team. that company. areas bit And impacted

in-person on we top actionable solution sales with to among team. be and solutions evangelized volume to pick Vuzix over our the Verizon Glasses enterprise relationship demos putting their focus their leadership are now within attributed to enterprise Smart continue up expect Verizon and decision-makers, enterprise accounts of extensive Vuzix their Verizon on remainder XXXX. and client key and our and

carriers During real-time also the team with can beauty on the with Meet. this language computing. wireless Vuzix the be Verizon’s second Blade XG of Blade has application drawn The Zoi bring Vuzix. translation the XG interested quarter, with real-time that is translation to interest to on language running partnered first Vuzix service market with edge language significant partnering translation in optimized Real-time from

a Meet to Twitter how this videos already If not you out and to so, there would have is. visit done check encourage I everyone see powerful the just Zoi on solution

smart the future XG wireless new And cellular and/or Wireless we’ll deliver XG products exploring carriers distribution a to extensive fully-integrated partnership looking our and stores. products, with revenue radio, recurring deliver carrier our envelope continue developing be opportunities Glasses advantage to cellular we’re to and significant retail the content service. Beyond push opportunities opportunities service could through as of carrier other channels. with LTE in With their with Blade with Vuzix such Blade Vuzix. The Smart we rollout several potentially of Blade Verizon, location are glasses Vuzix. opportunities distribution of wireless other of competitive and/or clearly retail for taking include

increasingly punch in functionality terms Form and performance. of factors that pack the more

here of AR consumer-facing race XXXX programs to takeaway as that The get to is the the of continues serious ahead budget out new main and beyond. stay Vuzix competition, committing rolling in to wireless the carriers of and millions dollars very in be support about solutions

over now Grant, to he our to so like financial walk results. I’d the through call quarter can pass second Grant?

Grant Russell

Thank you, Paul.

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

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

the to MXXXXL on The XXXX, timing QX MXXX driven glasses including along implemented the reduction single date with price combination overall smart largest sales was the at company’s is reductions smart current the in shipment during of of and products. end factors, glasses of in by a June what

deferrals the new Additionally, we arriving some of later customer in powerful this and order MXXX more Smart observed advance summer. Glasses

OEM to Toshiba, partner, those shipments impact Dynabook, offset not New factors. fully formerly the did of

of the Vuzix Blade $X.X and Smart services revenue product the the last quarter for nil XX% second second to in quarter. quarter sales continued the XXXX of quarter. for accelerate branded represented versus Glasses million of sales Engineering second Vuzix XXXX, in was year’s

revenue customer our the quarter should in quarter, demand. QX products and XXXX XXXX, expect but Looking the will this accelerate we nicely fourth be balance of new indicated similar to last with out on of our for second

$X.X sales a profit in in in period. year’s a of only, XX% million profit from costs to versus were compared sales direct product quarter of XXXX period. as of overall the the cost period sales second XX% XXXX million On gross product $X.X Our the XXXX the was in gross our of basis prior

was OEM glasses, decreases mix M-series glasses, our glasses – a compared along impact smart our earned increase from The lower in to on price which portion of May. the margins with large implemented as of resulting smart sales

June the primarily the reduction result $X R&D totaled period. months expenses to the million year’s for development million XXXX, in and The research compared was in three Our prior $X.X ended XX, decreased is software active when the XXXX Blade period, the work in was of effectively of cost now as use in-house. performed of the contractors still development. to this compared expenses external Much more

marketing XX%. spending; and show XXXX, June expenses reductions. and the expense primarily comparable and in or decline benefits million stock in three staff to XXXX to trade advertising, due Selling salary, due was the for in for marketing $X.X and versus commissions, $X.X was down ended The million a months period compensation decrease decreases XX,

loss expense stock quarter XX, per in administrative and net to The or for the quarter to $X.X ended $X.XX year’s versus million accrued compensation XXXX. primarily XXXX and reductions. salary decline was overall $X.XX the in decrease June for $X.X a as due a the staff benefits to three General in share expenses The was dividends million million loss million $X.X months second compared share period. $X.X the or per prior stock was after the preferred revision of in of related

million loss of The of adjustments operating net XXXX, adding XXXX. for $X in quarter second down million quarter XXXX non-cash and was million as the cash the quarter second of back to compared for $X the from after first $X.X

have Our spending. XXXX, control the to we expense started of bear in to visible control second quarter our and continuing fruit efforts are

million In now two offering sheet a early from equity of And July, registered $XX.X balance institutions. with highlights. raised Vuzix direct for cash some net

our be additional manufacturing The XXXX. including proceeds of immediately upcoming for fund cash waveguide-based approximately equipment business the quarters, technologies. activities from operations was next-generation million, this $XX glasses products, ongoing this pro important work R&D smart for forma Our new raise, following and the will accelerating raise through our used in our position, to development sufficient display

of expected in and second our QX. in decrease we over and so XXXX, the do our products In new sell-through and to again while QX, quarter levels the modestly they as existing of rose expected XXXX, manufacture to balance inventory are are

used in investing for million second Cash activities period. was versus the quarter year $X.X the prior in million $.XX

million quarter’s of manufacturing our the the of equipment additional improvements included leasehold for improvements leasehold purchase for plant expansion. of $X.X second and near-completion The primarily total waveguide

were reacquire in included investment the final Also agreement made XXXX amended to payment XXXX. non-compete that the in quarter’s was second to amount rights the certain $XXX,XXX subject

the be less is XXXX. for balance than XXXX half expected spending first the of to capital of Our

As discussed on remain course flexible cash the call, of last needs as our evolves, as evaluating responsible will we in company would. business our any

In investigate strategic product product-exclusive involve this new relationships investments capital could Such include may by prepayments. that to offering, customers of market regard, we initial and, custom with purchase access commercial arrangements accompanied course, partnerships co-branded and commitments. continue potential and order significant

Operator

question At question-and-answer Nehal [Operator line a Group. from this comes with we’ll time, proceed with Please first Instructions] the conducting Maxim be question. your Our of session. Chokshi

Nehal Chokshi

Yes.

percent So Q-o-Q. Blade of price tick cost, increased pretty that is out talk drop. as you did result great. a revenue, up did pointed product significantly And as product about the you a revenue, that percent of which the And was a of how

safe based say that GM above prism-based GM? is to hopefully waveguide- is So the the that

Grant Russell

and OEM Glasses the was The I make to competitive as the of at introduction MXXXXL half done Dynabook. a commercial mean, reasons for of the implemented as the we what decreases MXXX selling Not smart in there normally MXXX. stage. the margin glass. about pricing the was the are this margins Smart of I mean, well on sales impact our

$X,XXX price, our retail change margin. from So We no retail reduced our clearly, in $X,XXX and cost. that to price went

on The That implemented down that impact had over summer, I forward. the actually during a margins $XXX. still went – at gross the reduced of seeing gross you’ll are reduction on So the our Blade, start mean, profit did Blades some impact. $X,XXX to We minimal – quarter, of that XX%. margins that. QX going But price from end pretty QX But profit. we the also on the our

Paul Travers

on ANSI to and bit price little is certification that that. week, Blade, markets a have that $X,.XXX version add is The next really also glasses, a because me it’s for the focused point. ZXX.X a enterprise safety got we here Let

grads It or quite special So But we’re keeping part fairly that not not of dads program for determined whether $XXX price yet will we be and a thing. that kind of did a frankly. we was it’s well, a point. permanently working

odds stay. it’ll So are

Grant Russell

our be able For products the than we going a forward. to margin waveguide-based the superior do long-term, feel prism-based earn will products

Nehal Chokshi

as Great, it for far thought calendar calendar that okay. talk the plays of year, towards you put get then for about And the that end did the the thanks year. still guidance if breakeven. would you color did revenue you And probability that how the Previously, the happening expectations Does on as you possibility? of remainder of possibility that towards include where does? out

Grant Russell

impossible, Well, I’d the it’s has of probability clearly decreased a that not little. but say

less QX, mean, other I But QX. and QX, the in the So QX we’re clearly to than QX. of will for that timing loss new achieve much products factors, the probably I be going think some of don’t looking at just

Paul Travers

It close that. will to be

Nehal Chokshi

Okay, Thank you. great.

Operator

the Our from question. Please Schwab Christian comes next Craig-Hallum. proceed of your question with with line

Christian Schwab

my then on, Great, secondly, QX, about us type could thanks you applications in for you expectation what driving of – you the would which we talk host for we give a as revenue did anticipate XXXX, XXXX customers for look in to on questions. you customers, products. of anticipate revenue them? And what that tell and ramp if like? or you many the any elaborate us products Can Can looking taking

Paul Travers

it we’re products to will contribution. So, good all going that quarter, in business sort Blade have. OEM through our and mean, clearly fourth an of the we that sectors business – be, to going uptick this I so see three believe, I There doing M-Series you’re a be

Grant Russell

good to pent-up be there start big contributor The demand see MXXX should that. for a we because some

Christian Schwab

Okay.

about revenues million? feel roughly to up anticipating to – better guidance? are breakeven, than X So ramp closer QX we better getting just Or right to we now,

Grant Russell

we’ll should better confirm be $X say really multiple million that. it a can’t But mean, we than achieve this guidance. that stage. QX of I think, can at I confidently

Christian Schwab

follow-up then just And outlook for the okay. XXXX. Okay, a on

As product two that we or XXXX, most there you most look be the customer to excited closely? monitoring should about one or that the one is you’re

Paul Travers

Well, [indiscernible] – across And are that $XXX in and over million. are have – there, guys I our this modest. board. of frankly, there it’s the there guys mean, Christian, there are pipeline it’s whales are

I think will be that a there’s customers getting there’ll a exciting go big lot of start guys going way. are few a that in to and rolling

qualifications it’s of accounts So a these real everything. it’s things start me amazing – MXXX rolling business. there’s business on gone size to are impact be The has with it companies is through that and to the But say, a going rolling will MXXX the regard. of that of that planning it to bit that there like really I high the that from percentages we’ve many identified are also. reasonably into X.X big years also in going are and

So in XXXXtogether. MXXX MXXX be would and well

Christian Schwab

questions. Awesome. No other Thank you.

Paul Travers

you, Thank Christian.

Operator

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

Jim McIlree

or talked retailer MXXX? about Yes. to you retailer deployment Thanks. make, the morning. deploying? XL Good Paul, it the going or were MXXX and is that, referring to you the is when the What is the that retailer the

Paul Travers

with Can second, one just Jim? me. am you I Bear sorry.

Okay?

Jim McIlree

Sure. Yes.

Paul Travers

that MXXXXL. particular XL, qualified the is – It’s client the

Jim McIlree

customers in talked for wait but also I – – puzzled I’m as XXX from the talked contradictory XXX. Thanks. the here? you QX bit deployments to But a to what’s was I’m about waiting just confused customers, what the a the a I’m and XXX. by It XXX call, And Okay, just commentary, great. heard. transition Q, the the seems XXX going just your other specific then as Is customers in delays function of bit you about in the delays in of aren’t the the big for little theXXX. little on

Paul Travers

lot MXXX sort are users it. the going of customers. into that around MXXX and It’s factors and/or dynamics with of There’s a

and they we the them spring them, that glasses are we preannounce not announcement, of it partnership did coming a we well, thought their knew and their in pair of rollout First a IT going android. were to was We’ve at And bunch make of going have. with Google need of from that this as also we of got all, into this all through us year, a of on departments Qualcomm, of OS that because friends important friends our customers, our the going partially efforts, level they’re blank we, next-generation bunch that. saying, to but

a said. unfortunately, other they’re It’s not MXXX, there taking are to or long to talk as this to lot And even deploy. the okay It’s anything there’s it’s want OS there get They’re qualified. of that we the It’s don’t happy cost, MXXXXL. and – low been else. guys with very a with get if or But X.X them it. X.X that model are guys we’re saying, can’t I going about better,

also. So that that – we issue facing were

their Intel put doesn’t another different their up any Unfortunately, on item, upgrade. they OS it have a the product just rolled because platforms. have longer to get competitor support also had We that this

was We this customers needed the they So needed our reasons. that world us really we customers competitive We coming. product to and next-generation this said change. had coming had that to OS show

kind still. marketplace the MXXXXLs they said, there’s People the That top on XL the of each differentiation love going to versus going in the we be to sit successful So MXXX. fully expect be things. forward, other. And a of price very

Jim McIlree

Okay.

ware? as you inventory. MXXX a But much is you on going be, still that? that video stranded How is I have long it’s not there’s as what getting remaining goes, of is much that think the to think as successful as as you’re the far then And – worry well, the how as issue inventory at. I inventory see as the on

Grant Russell

XX%. Blade The

Jim McIlree

What answer? Grant. your sorry, was I’m

Grant Russell

over... Little XX%.

Paul Travers

right? Blade, the mean you assuming, Grant’s

Jim McIlree

the there. Yes. No, I thought consumer video you still had in of old wares some

Grant Russell

gone. is eyewear Zero. The

Jim McIlree

all That’s done.

Okay, great.

Grant Russell

right. All

Jim McIlree

All great. That’s right. you. helpful That’s Thank

Paul Travers

Anything with the to happen MXXX.

Jim McIlree

MXXX in Did then And of the the – you missed remarks the Swim. you opening your about in Smart manufacturing in that talked I Right. and and Right. address Q, or... volume just sale it

Paul Travers

get We year, of I all roll it And is fantastic. the They units say address and look it. got to our that first not this the through we’ve did qualified out. rest will finished, in. goal

Jim McIlree

Great. Okay. lot. Thanks All right. a

Paul Travers

Yes, thank Jim. you

Operator

Global Our with proceed line the next comes Brian your of Partners. with from Kinstlinger Alliance question Please question.

Brian Kinstlinger

Great, looking revenue quarter, quarters. $XXX,XXX thanks. the Q, The in lowest was and six the in Smart Glasses is at the

So – and is history or time products, adoption. has told taking up that us some Vuzix that glasses the new ramping the ramp for smart

gives XQ orders hand is you at in are confidence ramp? actually that already? there what And So

Paul Travers

that Brian have multiple the know we We right they’re accounts of rolling. numbers million-plus kinds now, that in that are

Grant Russell

you models at the earlier the near in this also, between more. do XXXXL new plus right and XX% bunch case, There’s MXXX, whole compatibility MXXX. everything a just – MXXX gives XX The

So in compatibility advantage bit testing new with that our little finding to capabilities. tweaking. the of initial of the pilots they’re partners, software there’s want And software partners some to our and course, take of of a XXX%

So in it go we than you And notice adoption to most got now. can a past. much OLED the drop than other it the really in it’s cases, people in better anticipate in rates display nice gorgeous and won’t

Paul Travers

And it’s performed was the it’s streaming so outstanding example, the just much MXXX. better. I – with as mean, video, an

Grant Russell

batteries, accessories are compatible, everything. All the

So it’s...

Brian Kinstlinger

what is they quarter customers try start to as and the don’t that just technology that’s I stronger. telling more quarters when I in million I fourth in to is questioned you’re bulk. shipping buy opposed was $X whether guess, I doubt two Look, the a to maybe out handful they here. orders

Paul Travers

through bulk expecting orders We’re year time. the following

Brian Kinstlinger

you And retailer, Jim’s mentioned, following the to up question. large

of mistaken, was pieces. at you said looking retailer large thousands I that are think, there if particular one I’m not

is And or a that of is brick-and-mortar is online? store event that quarter XXXX? terms fourth timing, a that more that First, in then is or

Paul Travers

deploy. And in brick-and-mortar we doing to – third a expecting these to that it be customers. not – not in they’re there start will some know We’re tool to that’s using store. a And sell that it. They’re even quarter here it’s it’s doing as the

Brian Kinstlinger

the Okay. number. missed I And then

you in numbers think quarter? it I the you second didn’t terms Dynabook, provide that number, actually get in of provided in were and I orders, Q. what for just the through the Can

Paul Travers

couple shipped thousand We pieces. a them

Brian Kinstlinger

Thousand pieces.

were Okay. And pieces? what total

Paul Travers

I’m sorry Brian, X,XXX.

Brian Kinstlinger

pieces smart were glass X,XXX. the And quarter? shipped you what total the in

Paul Travers

for that reasons. it break don’t We out kinds of way all

Brian Kinstlinger

finally And side. Okay. on the then engineering

year, there? more are well? is typically those ramp? Is of on half kind a second Is quarters I expected got XQ pullback as you more there the – looking a lot think like projects? you’ve the there a Can Is of there visibility that.

Paul Travers

Looking going ramp should at it’s maybe bit. we fair of stuff a the it quoted, pipeline that –

Brian Kinstlinger

Right.

that looking a quarter we’re suggest will product similar than second sales slightly third Would quarter? be Okay. if quarter at the lower

Paul Travers

right. probably Yes

just on being here third quarter We’re our numbers. revenue cautious

where will We it really goes. see

modest comfortable bigger. could the be We’re more with numbers, but it

Grant Russell

that read QX existing But might In yet – the tier, some had year. this of time for of come Brian, $XXX,XXX say remaining probably and in it performance other to know on I the there’s we you of QX, obligations morning, that. top programs we’re expecting did this no

you’ll the at the see between of end least and $XXX,XXX now So year.

Brian Kinstlinger

Okay, great. Thank you.

Operator

to like final the management call to now I’d remarks. for turn over

Ed McGregor

I’d submitted We the prior get Yes. few. Thank to some you, questions and call, a to operator. did like take

But a answered on already them dialogue have of Some in here’s this been Paul. call. one,

great create to glasses. enjoy have technology, You than why to not able products be so other other people for

Paul Travers

And a in and can of That’s lot a third-party good related. different and is employed are technology ways. with question. working being glasses Vuzix where have their technology, partners we our fact, put not it’s does in products, amazing in be it

we the big able a we’ll about down marketplace. know to haven’t sharing just that road. to been going yet, share be more tight smart going will have a focus this on glasses. folks is the but And be say, to We We we that very

successful being there. on focused we’re So

Ed McGregor

Okay.

info some capabilities. really production Blades Another many Vuzix monthly? question. on We’d being produced How are hard like

Paul Travers

quarter, going a a and at you’ll second see CapEx And run chunk of on if look the there we’re at spend equipment plant dollars week. you is should on XXX Currently, units was the that’s show the spent upgrades, the rate a it’s of and number right next to improving all weeks. related couple, manufacturing and three the within floor the qualified here on now Blade plant That of on basis. And up being monthly floor. equipment in a

Ed McGregor

Is have Vuzix of including that these One are devices? more aware patent another released Vuzix which XX% been from to involved Vuzix. multiple the from and potential these Glasses, use And produced of any the patents? Disney illustration, one with accurate Smart of Samsung by is that question. company applications There Blade

Paul Travers

to Vuzix so of are for may may not applying this And I relationship is what have [indiscernible] business can’t the of our augmented of companies within side technology those wrap comment on the patents that and leaders, where good one because some be a say around the companies. space, that or happening we’re and to the doing. what they technology other often reference reality it’s of in Vuzix going is we’re shows future

because, always doesn’t frankly, Vuzix that property Vuzix thrill intellectual that Now some that of is already of. is owners

cases, case-by-case Vuzix that dealing cooperative in and is and on in some is a it’s this with inappropriate because basis. it’s so other straight And actually cases,

Paul Travers

the I markets. in a in I everybody. the areas you, today’s really on to AR Vuzix to that would reiterate has roadmap clear participation multiple call. like Thank appreciate success

infrastructure have behind the in the We to the needed technology and the company, at capital place us deliver.

X.X look exciting should We really November, results. again at we when our we’re to to very report third forward in be This the years again. excited next you Thanks quarter ride. about speaking Vuzix. So a XXXX

Operator

concludes This today’s conference.

for lines you day. your and have wonderful time. disconnect Thank may You a this you at participation,

Vuzix (VUZI) 10 Aug 192019 Q2 Earnings call transcript