Earnings call transcript Q2 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the Vuzix Second Quarter Ending June 30, 2023 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

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

additional I call to forward-looking contain make Paul, question-and-answer management statements, are subject over Before and the I remind uncertainties, to may may like turn prepared statements on that remarks the risks session. and you this to during would forward-looking call, management's which

a not Therefore, safe Actual the Securities that in of forward-looking materially company result Litigation claims the as contemplated could Private results as harbor general conditions, are to, protection in the those factors, the XXXX. statements as of for any the from economic forward-looking of business differ or but Reform personnel certain Act factors, by the competitive contained and to requirements. statements development including, qualified well business ability retain strategy plans, in changes regulatory changes legal and and attract limited

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

This XXXX afternoon, its SEC. the issued filed release its with second press financial announcing the company a quarter XX-Q and results

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

will Russell, the call operating call CEO, Paul turn Grant Vuzix results. turn remarks, who session. an over return company's Paul and quarter over of the the company's on financial some business results CFO, closing which who Paul? the will Vuzix will an then to to Q&A after give to second move overview then will I'll outlook. Travers, make now provide Paul we'll of overview to the

Paul Travers

Ed. you, things our XXXX call. Vuzix developments second results headed call, and and the we conference to this On to XXXX. welcome going QX everyone the are in Thank where operating some on you then and see we Hello review half of recent perspective give

Our glasses driven QX representing the XX% XX% revenue and to was $X.X the previous smart of year. up compared from was previous XX% by record of sequentially our a $X.X increase the sales compared Product quarter. representing year million, increase million, an to prior an

result $X.X ultimately guides. revenue at wave an we amazing QX, should of At number optical delivery of business in of has the an forward going million pace. engagements significant recognized During for Vuzix which components the to the OEM time, same been and related expanding

you As off to XXXX. strong of is over revenue first half half first XX% a up start with can the see, XXXX

positioned well year the are year. enter on the full achieve remain to believe bullish As half we we overall and back for our XXXX, full prospects revenues continued record of we

across Now various upon areas. configurations. business and I'd some of details like to on environments smart classes are are enhance what being get seeing on Vuzix to we into productivity multitude our and called a markets

in their broader more rollout logistics, the warehousing warehousing This remote engaged an our solving solutions. based and is are with challenges smart trends accounts expanded key long-term has to industry smart markets, and enterprise over underlying and smart expected numerous logistics. productivity exciting Vuzix focused for growth that from accounts glasses rollouts existing in second especially occurring in glasses half wide Vuzix on year, of improving The operational smart witnessing as this enterprise way and continue in are Industry progressing healthcare, glasses and and Fortune in including support, We XXX most industry X.X plans get the companies general. general. is of for glasses towards

These of we're ROIs accounts and a technology the wearable that business early have the added is customers. established and of more same affords. KPIs that ISVs, larger understands productivity for the and core adopting At technology represent adopter partners value that end proven targeting time, channel ecosystems integrators,

solution effectively quarter, selling our better globe During and the expand customer. our our regions end it with to allows global channels minimal deliver partners. focus a multiply global for continue with investment successfully team as channel is in to obviously our world-class the service long-term and sales support we second Vuzix to sales core with the enablement growth important Expanding to across on

headquartered such partner is in channel Vuzix the joining second one during corporation value As quarter. Tokyo added

to future. As solutions provides consumer defense variety use a enterprise automotive, is Vuzix and infrastructure reality and a region. service, across users enterprise, from and augmented of to Asian in corporation can and professional such products, everywhere. that medical, is solutions aligning AR increase effectively creating companies healthcare, to services hands-free sales, in glove computing, smart There little time, fit the communications, the future is by doubt in commercial AI see glasses. support are of healthcare significant smart more, industries education, to the ultimately consumers We’ll AI of security with their expected the wave as use glasses. At of you strategies defense, hand areas and around ubiquitous The the same AI-enabled e-commerce,

language consumer started. impaired and workforce going in And markets. business we feel, glasses search, human cases marriage packing. on-the-fly and to applications and lightweight, solutions, to picking goes on applications see We're classes, from capabilities this AR need glasses. with enhance include just already should technologies cases on AI-based Examples are significantly gaining AI-enabled smart smart both visual getting we the language AR and wearable are smart accelerate and of visual in glasses, sign with in for checking, use starting pallet traction the control, human use list ways. translation, the voice smart many to The enhancement fact hearing

OEM Vuzix get customers. as supply designs potentially market the companies is new in a U.S.-based queue growing wearables. by a optical and to the front, only towards services the opportunities Vuzix and turning are supplier On and as not components, also to ODM and waveguides product Vuzix list OEM starting engineering existing products has with for both of recognized complete but

Over the images to efforts into our many quotes around also solutions. last efforts ramp cases, for year, the Vuzix up our waveguide-based to requests streamline waveguides. are and our manufacturing respond for In drive display OEM began group to to engines customers design to at looking our

customers enhanced of with expansion for a to into been new waveguide related allow waveguides to our our We needs third-party the and more production have facility production equipment separate investing in manufacturing and build faster increased us and capacity significantly processes, less waveguide will OEM expensively. Vuzix new support

it. in Vuzix enter only as most the To waveguides factory intending new one-size-fits-all suitable waveguides waveguide will annually. even of can companies one flexibility to can open, this production millions of is for full a be OEMs, The in particularly in Vuzix design consumer to clear, technology that four design mega fall waveguide the design XX new a spin volumes in of production offer do we allows it's a months, dedicated take capabilities which for months a are and now parallel of of to ultimately solution, units already broader in Others kind and the other little to those three they is while markets. as if custom will not our

equipment domestic semiconductor tend results that the few volume are to lower use have expensive non-competitive not Additionally, waveguide and do capacity and competitors structures. we in cost

develop with technology see to defense, display leverage been significant last broader core markets, waveguide-based markets. our over ultimate fielding opportunities solutions displays. We XX Vuzix. enterprise, vision the of display each consumer of plus today Within devices producing even the that markets interest head-mounted we are of or mainly commercial for night developed aviation, defense that of new the can these goal consists the and knowhow and head-up AR and information The head-mounted years have

and head-mounted right is vision new market technology around expected it becoming over is in wins display for AR Access time. kinds offerings is but computing are the getting engines and The night as significantly systems. or and the of the whether applications critical, in needed see-through designed Waveguides of access are the of form are information grow at started to portion to the time advanced just field generally defense information the adopted day. right display in all

In developing into defense been Vuzix or have that head-mounted has major their programs. our are customers waveguides

wave and will custom others standard engines waveguide guides display desiring are engine display while offerings. full and employ Some our

several of the year to accounts anticipate these projects by XXXX. and the of R&D begin production into We from and to half move first defense end of this scaled going continue

than displays. that ability advancements waveguides recent AR have are large On needed that that the format new us produce heads-up times the windshield many some The front, waveguide to large should vehicles we markets a allow and waveguides open conventional are glasses bigger manufacture head cockpits mounted format made for to displays in for required display just for in car. aircraft use the that large of to up heads-up like can luxury format

in defense a Specifically, both HUD in incumbent and the the that is cockpit, already industry markets. aviation the solutions has commercial market

physical together implement the Our in waveguides space display aircraft. within a the space display to and most can inside micro heads-up and taken offer little cost precious engines LED reduction needed significant available the

new as are look serious interest to programs received soon. get providing details expected further forward have We started and to

fashion volume, fashion of for AR required the are to key in actually the trying supply dollars being would market forward consumer bring secure poured the to tech to is smart by glasses still forward companies into designs solve its well the components infancy that is people race miniaturize terms the chain underway. challenges billions wear. While market for needed technology to major in of R&D and The them to

is forward fashion get programs with providing and We diverse Similar consumer and the unit offered will from gaming, market the a sports started media the develop strong social by to brands, continue smartphone, and receive group details day rapidly companies adoption expectation once we that new become telecoms, their market. multi-billion AR look Vuzix. curve including to interest further modern to of ultimately firms, a the

this AR the micro form The platform announced factor we year is will Vuzix packaged appeal finally earlier waveguides into a and ultralight to from the latest engines markets. broader LED utilizes feel that and

across Vuzix where platform. ultralight ultralight the potential and with strong. around meeting interest domestically as globe been OEM customers solutions we our have well ODM The and our showcased abroad, platform from is many as waveguides We from

areas. pending be ultralight XXX pending in This breaks Vuzix portfolio and market based The XXXX. months. and will XX the includes platform year this patent by patents with Vuzix through to production applications will impressive we currently to expect geographic patents brands going XXX several of variety an in OEM down and a solutions last be the patents increase over XXX of XX% issued end

Our of portfolio broad technologies applications. a of collection covers and fundamental waveguide range patents significant includes a and design

patents equipment, at low have trade that produce a nano and regarding and are like in materials We we agents and polymers, and secrets imprinting, how of volume release process adhesion both to promoters can critical cost. combination

higher of substrates it technologies. advancement feel factory is world production dedicated we advanced position on waveguides one glass line, The and the kind of formulation We new to property unique and Bottom the a critical volume. of strong facilities operational of index soon in to The many smart will the glasses. Vuzix of today. in mega is focus be areas a fully has believe AR the intellectual waveguide materials,

at been the production has in infrastructure and qualified. and and installed power is on moved equipment turned required factory being The waveguide

grow The manufacturing support new with be space manufacturing plant optional XX,XXX and of our to new increase waveguides. This capacity to of an our the to new operational waveguide latest additional the provides into. this lower of costs our is unit fall square square year. XX,XXX our unit facility in expect feet existing designed technologies, adjacent significantly an facility We to feet the volume facility

to at and both overcome fabricate market ability to cost broad the Vuzix it in a be glasses Ultimately, smart volume to support in is critical done. cost, lower two for the Our to low design get volume AR needs ability to are and we high second none. waveguides requirements positioned manufacture to and unit should and believe

to and ground customize We From offer or system specification cinema mold a test layout. provide on to design, replication, York unique a own reference waveguide so specifications, our print we New we system in-house do it facility. to design build all production, integration, based up a parameters can based to on design in customer’s can to

are unmatched. that can LED five We and position Waveguides believe in expertise and ongoing lower to micro will turn investments small them of waveguide AR offering essential are large. increased quickly for can displays make glasses annually. wearables. around critical a revenues ultimately LED to ultimately industry or play generation role micro components represent our and and four We and displays area design smart this capabilities a other We lightweight in dollars next of billions in should cost our capacity, Vuzix an many our

to elusive. the have a As ability substrate a remains that on produce LEDs RGB reminder, still color high efficiency single micro

have these feel secure micro there success to devices. Because hand anything fit in degrees so date one the displays, some guides, are yet. LEDs barely to of high the wave is to LED attempt However, operational and supply to cost-effective range optical with is and of micro been with by an volume to we acceptable an strategic glove fabrication it critical level varying color of single color shipping no but manufacturers that's full just

To with through of the – vendors in competitive our will by advanced that fortified micro have many working not partnerships of and several will we which space this LED efforts end, publicize most relationships reasons. for we investments, establishing both

in signed Atomistic with Of the roughly highest one technology course, this profile the is ago. agreements license area development and we year development

great say short While on approach novel specifics its making with to-date, that have I very Atomistic can we is been progress.

The micro fabrication designed of will and use that customized process to complex equipment takes up. time from and LED process ground portions be the very design had the

LED color, in the great share entire color, display create with Displays compact, We efficiency fashion smart forward unfolds, frankly, full that micro as in wear. incorporated upend smart the quite a to all industry, full industry form glasses to have potential all very technology brightness Atomistic’s day say, but battery and and have to to that general, glasses this everyone will exceptional suffice displays. the to high advanced performance factor more will be you with incredibly has potential

that areas. it is evident is one feel we leaders multiple AR the of outstanding Vuzix recap, To in in the today, and industry

Our business has in Vuzix critical the broad for a the of kind is one of to at technology Vuzix solutions fastest design product price mega line. high one points. seeing market top is factory market. volume expanded growing production enterprise a growth enabling waveguide on the from

cornerstone prove AR line, Bottom in to Vuzix by we than enterprise touted displays decade. trillion the to our has solving most major within a stake should going solution we is and available, a value win are especially needed, micro of market full a well color the for positioned in to be significant considering for growth the efficiency, a the plus technology industry we forward, display what critically see greater are ultimately believe ultimate glasses LED to feel company that experts be advanced that future. high is $X we

to I'd financial Grant? Grant like pass call review. now over to for the his

Grant Russell

Thanks, Paul.

Ed financials. filed As offers we quarterly with afternoon SEC mentioned, XX-Q our the of the detailed this explanation a

numbers some So going I'm now. of the just a you provide on color bit to with of

revenues the for increase was XXXX three compared result increase product higher the as prior of The XX, to which was for million $X.X sales, and $X total quarter XX%. XXXX the overall year-over-year. June million primarily second MXXX increased revenue Our period XX% months ended of

of waveguide same million of profit as X% performance anticipate services period end of XX% three approximately on in million of $X.X There $X.X compared $X.X to a XX, of XXXX XX, with we remaining in million $X.X or XXXX – the or OEM obligations for months was Sales current profit currently month current We for customers the XXXX. for million development period. engineering three end an and a the have quarterly million of starting June as on for compared gross same overall June was gross to of XXXX the new a the projects QX XXXX. $X project,

XXXX external enabled and improvement for June approximately decrease XXXX to increased months increase XX, head period, relatively associated and related greater period, million were was count comparable million due reduction salary XX%. approximately versus was XX, XXXX development to to of was overhead fixed Research with of consultants the due The development period. The ended our months X%. new products. for million versus million which and XXXX a costs. in $X a largely $X.X June was to three three due primarily benefit sales, increased increase an our and This expense year expense was ended $X.X decrease absorption comparable manufacturing for the $X.X to expenses Selling marketing the as for compared higher previous expenses the the

XXXX prior General license XXXX the approximately the XXXX. year net was to the months QX versus decline to of $X for amortization stock-based a XXXX was $X.XX in $X versus the and period decrease of period. due expense. $X.X period, for was share or in loss into the three due XX%. The midway The three a through XX, XXXX loss none-cash the bulk into the million XX, with to XXXX. ended share of per which million compensation net only increased expense administrative for of million the a began $X.X three Atomistic, months for million versus primarily million decrease for expense June and same months amortization $XX $X.XX increase of million or XX, $X.X June comparable in a June the The was Depreciation technology

Now for some balance highlights. sheet

a to of $X.X in $XX.X flows activities assets cash and XXXX balance $X.X receivable period. for million million. was this quarter. with QX XXXX XXXX, the comparable the remains million Our a was changes million bulk of and operating $XX.X in in overall capital XX, The liabilities versus due net used accounts in in $X.X increase operating of The million equivalents increase net sheet networking as cash strong of the cash June position and after

cash capital and operations period. for $X.X $X.X and from items versus in year's our burned million the working of non-cash changes XXXX was the second quarter in non-GAAP prior measure million Excluding

for of second million $X.X million XXXX was quarter $X.X investing Cash the in period. used for compared to activities the prior as year's

With payment commitment. a Atomistic toward these the fee million of $X investments our being licensing Technology bulk

$X.X XX, second the Atomistic than XXXX. company outstanding continues commitments will other no be June during of or obligations licensing have paid which As outstanding the current the of of currently to fee to half debt fully long-term million,

our of to the to forward execute on we're this future. the business regard. in growth I further like have our and resources would balance Looking comments and confident make a few plan to invest XXXX XXXX, in we

Firstly, total expenditures equipment and investments our less year in the significant as of facility, well payments new over included cash Technology in These as XXXX. will significantly be production second usage licensing commitment. fee past the waveguide ongoing the related Atomistic to our half

Looking see capital our to investments perhaps in forward trajectory. investment further business increases growth but as levels, we expect our its XXXX, to working strong continues moderated continued

over back I that, to With call turn like Paul. to would the

Paul Travers

Thanks Grant.

continue our line nearer. As profitable revenues gets achieve our to sight grow, operations of to

the It further we the effort is and bottom line. going resources just months pace in productivity will as fastest the Glasses slow be the we the need our operating And so execute all we growth sales have our to grown course, across third segment, quarters income reduce with our growth Smart to expect cash for all our can as will will party and to costs. a as We costs, Vuzix and looking more channel of this and focused ways marketing shift to have in our much continue forward. resellers our the improve and possible Grant partners of costs bring and plans we at coming which in our said of company

back that, call to the to With over would for like turn the operator I Q&A. now

Operator

state Instructions] VanVliet Please question. [Operator first Matt comes from Our your with BTIG. Thank question you.

Matt VanVliet

do bit verticals for Yes. wonder of I first you the that's especially terms the you're second or question. afternoon think you – And market in taking orders really will the performance the in half, the could Smart verticals MXXX as half rates. on of success expected terms what, on Glasses already driving what second guys. detail little those just I most for growth well? in a Good the then drive seeing in what Thanks unit orders either market volume in guess side, if what give more

Paul Travers

definitely Same The pick of several an pace Matt. products, how Glasses much leading boxes computer and that our places of Hey I'm and happening. community see there's thing are, be Thanks our lot and free glasses areas can packing Smart chain the a interesting it's places around is that just area picking about seem for question. at with plethora sure be Yes. wearable here moving a the That's seen where a we it the we're are embracing there's to used. medical to however, supply the everybody music. important. right, has these time growth warehouse with hands ability days. There

piece So the and those that's accounts across it's another on both multiple accelerating of areas. of business,

out. right? an gave in and about general five and it's things be fact the four remote was Glasses time, saving how Smart finally, so it for at of was or used three and some the those they're see expect any really they're then because Of next side some it's plus and a people not kinds at were are, putting we've But, there, areas same months some support, whole pretty can Because, so these so longer weeks, frankly. is social those remote in and And guys broad weeks one. deal, of ago and quite all over companies not support on from six big they're idea green. the the money, are environmental two of presentations ESG Japan like some Matt. conference there that manufacturing I speaking even actually just of though, about and the course the given no heard across Amazon in all airplanes rolling the uptick automotive significant to like, and to of of It's POCs, based, like, it's guys we –

Matt VanVliet

on are the announcements should what And that or take today? OEM layer new might costs we you continue the convince the layered within what top what current costs be orders of space the to what of side the metrics manufacturing looking are I available to And very to kind extra for that that that of facility? that maybe then the, eventually Okay, sort on you additional we – the question, in on guess assume the should that helpful. for are

Paul Travers

you First, is an to what's for place. give XX,XXX volume of X have was just facility. and for feel clean we in itself in by will specifically guides room XXXX let foot possible out a on me million that over the put a Class This annual us in manufacture square better wave already It basis. get us. This facility

shifts, working than so two fact, In one, be numbers. few kinds more multiple it'll could of it a – integers that,

makeup product waveguide markets three of if the and would markets in, for related, go solution what an with to somewhere Now are look these a might engine defense grand you you at some they seven-and-a-half of piece. a flow sell and the between

XX,XXX annual like those volumes of numbers. of kinds have to XX,XXX some And guys

come that of amount that will produce significant volume of a there's out of the of a should So revenue margin thing. small facility, and out overall of kinds this we piece can only that high be that that's

shape The now garnish with of fence Xx you that That see those our millions just we of it's we out we basis. higher broader now building we volume need easily on pretty those have. volumes and in what many numbers, plus, spreadsheet what capacity darn believe if are the margin good same those many, we next it. to you kinds we're year I a of need for opportunities, to – the would much can right can can And down. look them of the from look an in at in but right will where pretty comes many up the there The rest said, make other are move and little just need still you at volumes. suggest higher numbers. price significant the going Admittedly, into when annual on to will higher the revenues markets add is We points come with hand

we're end of the bit the you're footprint to little kind at at. more not up So should and by a where put need of can to speaking, from this that CapEx this cleaning in of today. just but where bit get you had see the level that beyond have to generally going a we're to this we've year, Grant not to the Vuzix [indiscernible] in see but expenditures there's it's to And we talk that expand more,

Grant Russell

of got – integrated across we are covering And and Matt, really XX months the bit And Grant our the to go the existing expense plant. that's around supervision, out into up. to of the here, shifts, new Road, is grand forecast into that. X But existing plant next incremental looking run a will that the costs multiple fixed is for we're moved the the waveguides a our being of we is waveguide Becker – – at month for a plant our for XX if business clearly there

economies, it's be be So significant. there will some but going to not

Matt VanVliet

thank Very you. Okay. helpful,

Operator

question. state Our with Capital. Craig-Hallum your next from question comes Please Burmeister Tyler

Tyler Burmeister

a – the got have Would ask opportunities the pipeline Hi, it sounded the you Paul, year comfortable and growth I see guys. Thanks visibility half in year? first, about we I back of back of us for couple be your letting through guess there, excited the expecting with to guess. the continuous let questions. sequential

Paul Travers

that way, Tyler. looks should It

Grant Russell

Yes.

Tyler Burmeister

Perfect. Thank you.

Paul Travers

it's interesting side OEM that just our engineering of business. I that is platform platform at The see they're Ultralite nice NRE the developing really but there out of like the today in should the in – in kind standard out pipeline fact a OEM that of you a and to side, that looking buying our now We also our are and of platform say in that. standard that so see many exciting uptick And business, and info. coming then will companies waveguides business – of product our strong engines

the other the board, of literally get wood. definitely are coming will mean, engineering knock fees here. there's also programs final on will on some started, I For that less. throes be them significant agreements That said, we're to in that be

also in kick in the OEM half. the see should you So back

Tyler Burmeister

kind optimistic leads tens year. next that any map. That's initial units, at that's the dollars just question multiple, OEM should opportunities more thousands hundreds up about of are Talk a expect time, Are And time? ASPs great. least you into type framing the could follow that order going for ramping used bit next and over my opportunities you year, contract on half of what opportunities, that of said, perfect. the still be too, defense second thousands little these potentially with a think we And would these next help multiple thousands I or into of to if begin and over kind stated in of multiple be units, of potential of maybe of the about

Paul Travers

have close teeth any these of first year, maybe next in pretty are going like some finally flavor production. those believe. I and based and see in me side They in on And case. talked kinds broad customers brands, that, right not it's get of our a side accounts In take continues the you well We've of the pulling some mix business. will darn side about of that for some – just telecom, business, Well, be business, this defense to long defense time. the with XXXX, on to things that the fashion the been OEM things several of so into time role of defense the the excuse all,

going this one the not X,XXX kinds that it, the of least at at defense of year, we're part that's excuse say their price.. And are production. into me, of going said, latest, by next of the X,XXX costs, the As points end in we'll price have early into costs, the confident year pretty to customer

roll relationships next to would And add have in maybe it should of there kinds the going things. year accounts kinds should The services with. up be engineering that we hundreds pile working and numbers. year of see that because of whole expect units is we the of to of side up a literally plus XXXX And it you

on it we have like those already to this, and it. now Some saying, of them others – many things. and this Please of of look, we that now kinds got bought quoting can you them want are customize we're do

a too. trying side that end it business. our could OEM And disparaging said standard based very being super I I'm of on I'm with the it's pretty wagon, dog, Tyler, business So excited our the But you imagine and of be have broad products size before to piece not could be could significant. there thing it tail very, this of the up the business.

Sorry, that's lot. [Indiscernible]. a

Tyler Burmeister

some No, PAM you putting protecting question, to strong continues IP, that. on parameters your your last besides portfolio I pivoting appreciate a know, grow, Maybe bit, color the to little through highlight there licensing obviously and monetize any protecting be developed updates like partnership sort thoughts Any some you're be products of that color that? or or those try interesting. would IP to selling, would just

think. I Thanks.

Paul Travers

of names under them and and We intellectual to OEM the said, in box a our intellectual needed out. properties with put brand are a on marketplace transactions properties the the license That side really the of take products to want other come into don't that effectively put the these our go companies. them license business our to

way, where sale have asked, some but is a there a setting is, we that, somebody in license of we're a unit portion last get for up fee. there that people and in price now is we're thing a dollar that the what but doing not with interested is comes right a the doing So

Tyler Burmeister

that sense. guys. makes, That perfect all Perfect. for That's Thanks makes us.

Paul Travers

bet. You

Operator

Aarde from Maxim please to Group, your comes question. Our Vander next Jack with question

Jack Vander Aarde

if forward appreciate more defense, in maybe overall Great, consumer? og enterprise to you start expect just do look of hey ramping question revenue on look Thanks for guys, the guess with in kind and I your maybe in Hey mix taking terms XXXX up, my questions. you production how expect I'll XXXX, how I starts update. a Paul, you

Paul Travers

it's the see can – is right all based believe like know it's XX defense excuse me, plus it's I for that enterprise you through it's now that and leading well, is end MXXX because I exact the I year, number, charge of XX%, now this don't Right Vuzix, enterprise would, based. the but percent

amount this back grow throw half it year, I back might move the side a start of year. the know, XX% way. end as should hate I of in the see it's you fair out to you'll I think to like don't business half of see from much really in as tell a perspective, though, that back OEM will it where in to move to numbers there's of the business up. tell the other the because book this we hard It'll that here half. maybe I our

some OEM enterprise When of the to OEM next catch up and to I our in see these unfortunately, programs side gauge to when, but believe you'll kick business hard growing year. on the it takes start it's exactly time

enterprise you'll lift. continue So see to

and see are You'll places that deploying. more more

a I board. job also I then business, doing adding you are on this it partners more to is them. customers all could on now. a and work OEM right nice but customers that helping give our OEM or of on we not X,XXX channel for side are I Jack you'll about and pile expand making Our an you see annual come us the of that more up business, great, well, in where can great them. see basis. for a talk business are XX,XXX our And only there's customers wish pieces these doesn't tell not of pipeline That's It

should see it and I could as point significant tell Vuzix. unfolds. think hard area just more growth a going So you but data year more next for I we'll Wish this yet, represent into and year a more

Jack Vander Aarde

appreciate I color. No, Great. two I have the more.

going all to can that a of overview us or on in you the it consumer is going high for brands? on the you with, of market under Vuzix Thanks. kind of different other designing remind terms or to addition maybe consumer overall in vertical? Just can provide be to understand market just how to same the trying go if plans to the approaches Just Is Vuzix brand topic vertical. to frames help

Paul Travers

to ODM/OEM more us. where components solutions. It's the labeled guys these come like model We supply and/or white key

don't And cases, stuff. can Some engineering but of as They're that more by engineering engines, they optics some have the other optics how to do. me, team, team, team. to in done Vuzix possibly they these much companies move even we an those Excuse in as no companies they want have marketplace. of no need these the so know have coming product us guys

you to company if to not to do make hundreds, has in bring today Waveguide of into the don’t lot that's a is look any that trying this space, dollars put to guides waveguides. wave at companies. for how If figure those billions table compete guys. the making out We want of with What we

to a the OEM consumer Vuzix those space, the relationships we and are need business of a see and products quite Buy but Best the there. these kinds get secret Vuzix back, We that’s time. marketplace. to products we train to not you’re the you fashion going plan markets, there. partners the be retail into partnerships I’ve And are don’t don’t enterprise We’ve When of relationships other on to enable Christmas fill and be after And that and to products you you wreck. move having it for broader of In with got the been branded. bunch hits a long frankly, in flow side, marketplace. ruggedized for broader this sexy – in continued will forward enterprise want in you see in a all And doesn’t sauce

Jack Vander Aarde

lot And appreciate a Grant, Got more maybe gross on more sense. of for me there. the reiteration the front. one I’m it. just for color That maybe makes of margin –

of what streams? Thanks. for – in and product you forward see gross on – going why that? what gross both on the engineering both do revenue both Do services, levels is And are view Just you normalized kind an margin from uptick margins? your

Grant Russell

we our The some revenues as we our that’s overhead greater level. mean, clearly where we’re a progress. to we best to a quarter absorb now, long made at to can get is XX% XX% I is this close take in time. right Well, as but not going higher there, costs reported goal our possible. mean I

this more we And product own again, depend a profitable can on than our those overhead the in same to – a costs have we fixed product of clearly sales offerings. level stage, the account, margin. don’t defense higher it’s customers, because production results usually at get much command higher assign When are which you price to we and actual going to Engineering Services manufacturing don’t

less. ODM be relationship, But And of volumes greater. a should we’d because course, hope move, much are greater consumer lower would based, be much the total units we however, the the would say they margins, OEM on at be or ultimately looking let’s

Services, standalone we be have overall So on particularly sell going it XX% has mix. depending today, to deduct get the margins, always at a I and plus, to the Engineering less, probably products and when going on to into glasses our is consumer is costs But the basis, get we bag be GAAP. biggest when a revenue mixed least in defense oriented we our other overheads we components XX% smart products getting mean, to per we’re but them XX% commercial,

So there it’s sooner to to we get and hope all related volume than later.

Jack Vander Aarde

Well, that. I it. helpful. top guys. Very the congrats Thank Got appreciate momentum, you. line on continued

Paul Travers

Jack. Thanks,

Operator

Jim your question question. Please James. Dawson from with comes next Our state McIlree

Jim McIlree

the better this to else Good meaningfully little mostly you. mix understand just revenue want anything the is bit that’s or is contributing MXXX quarter? to – a Thank there I it I’m evening. on glasses, smart

Paul Travers

momentum portions looking say like we’re is it Yes, of though, also, side shield that that some it’s of our nicely. will Jim, seeing in mostly and MXXX. starting there’s ramp business to positive I it’s blade our

So time finalized. systems takes be the solutions the it CX optical for around and them to

about the last been And we’ve far just here developer you so that’s the only around think or three the year going has community been MXXX most. around into whereas, the for fall – year. have shields years and the overdrive well in shield now, if that the at of for been the a shipping blades to four And

from products – other normally race two the don’t MXXX competitive the but without yes, reasons, back. up with runner advertise is we’re we the now – these and but of the the coming mix that selling doubt right for horses So front

Jim McIlree

or format qualified, begin projects those finished, this to production half is do before in waveguide of forward? can move That's tied need year. you to you And large – the tested, That the about cetera, et OEM the a second consummate understand large to projects you I'm great. helpful. expecting trying if waveguide Okay, that to are waveguide, format is these talked get either large format

Paul Travers

a definitely for process but it us, new It's works.

a work, our Jim, not turning just So a critical wearable production little cetera. I'm of up technology, the it's for any need waveguides is Vuzix. crank frankly. opened This probably opportunity It's a but like of are our full glasses, that new The core in business a does et it's for volume not that quite a program pair science, gets for of bit and up capable could they're a really a of XX little like right, regular which but XX-inch there, kind bit We times size thing. shield, a much we making a like bigger diameter, a of are lens waveguide be cool. can large. glasses, it quite now television things exaggerating like, make than But a of just millimeter XX are pair is that that even.

kinds inches with car. can and your things kind is a something related. though inches two a to, a say, window let's do as it you in thing, like head-mounted can very diameter a that's eight head-mounted heads from go that all through display inches look easy make up And something that's a six you Very, It's quickly by of to extrapolation of that display are to up not very these, display. related a display hedge

not you. We might those you we kinds something this. can business, from cars something that right? because buy a and group, And saying, solutions to do that's to Beetle and it upgrade luxury now, stuff aftermarkets have a kind have big you like of for it's we of one our So customer display heads OEM than especially our it's and displays Volkswagen there's a OEM all that opportunity, and imagine, market cornerstone up vehicles, for thing more an do to wants volume that aircraft just in of an can heads the up from would guys exciting, a kinds it's from

Jim McIlree

year at Is to that that it's timeframe it to on And a a format is – would reasonable waveguide away. like so expect correct revenue? sounds that? contribute least is my It large

Paul Travers

Engineering Services before You that, wood. see will NREs knock on

it that. should You see before

Jim McIlree

kind before or – I confirm quarter you expecting to although additional OEM contracts said, now, they're you right? expecting of QX, that you're them, start have in the that you're NRE And some on that or delivered of ends? revenue you're much to But contracts Okay. right all something is the want more services just pretty

Paul Travers

the are delivered discussions with kinds X guys of us bulk, We et Phase in about cetera. stuff, these but

and companies business some already you'll piece Board. those them on you're see of growing see a It's we've a new announcements programs bit us very more follow-ons It's business, continuation of regarding. from been and just see LX like going made public that to you'll companies coming it's was piece growing Jim. with one a of new So of yes, so some it's And with now. that us, for folks have for Harris,

Jim McIlree

Thanks. good. Very right. All

Paul Travers

only was ad a doing really old Anything for This business is were knocked to hoc, we year that Vuzix. the previous somebody on door.

We it's pick have to now, up. going on emphasis starting an so active

Operator

to the we have over call I'll of ladies And now question-and-answer end for and the the closing Travers turn reached you. now Thank session, remarks. Paul gentlemen, and

Paul Travers

I'd a interest multiple Have mega We're for to forward throughout rest fall. at our evening attending for us like and this to thanks ceremony nice the everyone joining we'll your year. factory everyone, the for today's looking Well, this ribbon And look waveguide investor for the again, and on participation be of cutting call. thank conferences, please call.

Operator

evening. Thank conference, today's parties you. a disconnect. This may concludes all good Have

Vuzix (VUZI) 8 Aug 232023 Q2 Earnings call transcript