MVIS - Earnings call transcript Q3 2017

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

Operator

Welcome to the Q3 2017 MicroVision Inc. Financial and Operating Results Conference Call. My name is Angila and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. this being note Please Instructions] conference recorded. is [Operator call Dawn Goetter. will now to the turn I over Dawn, and go ahead begin.

Dawn Goetter

results Thank you, quarter operating third everyone to call. Angila. I’d like XXXX to financial welcome MicroVision’s conference and

availability could, participants to containing In believes, Executive goals, information future and statements, Chief opportunities plans Stephen would differ in manage on market addition results conference cash Actual and prospective components; paths, agreements; are under expects, or expressed and used forward-looking similar words of to including future and today’s like include may President Officer; expressions. in future as advantages; future Officer. Alexander Financial implied other contracts Chief products call could product call supply Holt, today’s benefits results; statements and and of guarantees applications and operations Tokman, results These in of the not The forward-looking myself key as existing demand; and benefits; our plans, statements statements growth in customers; progress performance. materially operations, of well development, with regarding negotiation the from will, the statements. competitive include projections financial and

relating results; revise statements, changes actual or time-to-time. Additional and Exchange recent as of as federal laws, obligation Commission financial new from those our filed included information our included securities in and presented page of update in the filed to in the on are no the Securities any today, both our available Steve release be The will factors Annual filed session will other the events, call any press report by XX-K future to to Tokman. with will call whether Factors results company’s as for business that expressly I operation our will we agenda call remarks. there conclude Report report required forward-looking Commission under statements then forward-looking reports turn X-K a today call to financial question-and-answer today’s cause in the Alex to circumstances final heading by Investor some result over concerning the like the results; reasons. differ or will now the the Except Alex from other website. a information, and with on The undertake from And with Steve numbers publicly most are the materially could in an are on would and Risk then Form the Alex follows. the be

Alexander Tokman

Dawn. you, plants, third a these three important believe results. Thank joining for and trajectory significantly made years. executing while programs months growth morning. We business major in development the gains advancing our technology for engine you three companies. with Thank the could Good enhance us discussion quarter in MicroVision’s our notable past opportunities We of XXXX next

portfolio current three opportunities. targeting Our is product large market

state Second, where that contractual LiDAR experiences in market, new sensing technology industrial, our and target with First XD a market, our can is the search, mobility XD the automotive others large display portable emerging products mobility or segments. factor the small create third LiDAR to enable services without is engine engine devices where smart And our home device mobile changing create of small to power market be with family display of could applications embedded efficient sensing interactive which screen form media. connected could display Internet to Things commerce, extended combines where a IoT, XD solid inside solution consumer including

solution engine them be for LBS could technology or all and extended we’re the to display revolutionary laser developing our we’re platform later of the to targeting. company advances markets to applying Finally, major scanning a beam initially solutions that that

it performance the and will platform display new the further from for will competition. XD this both distinguish offer expect sensing us and We

QX results, look to jump revenue. at first Let’s

$X.X third that break proud the comprise one main let revenue me are the will it engine of the but quarter small delivery the elements history. quarter say to foreshadow units of was million highest revenue that the Microvision’s display or out contributors to of Ragentek. We in was production Steve,

other sales start their Let’s our LBS continued projector and in VOGA We with recap. at of smartphone because through quarter of of feature flagship to and countries. They throughout Ragentek China, a low channels time its with for Ragentek discussing begun sales us August started end potential QX mass pleased in as customer. deliveries shipments with that production engine products. the early quality and shipments and June. on the they and been the this power, quality have thinness, planned announcement made overall in has around Brazil future this with performance already commenced late the of solution roadmap our our focus-free Recall with

new XXXX. is feedback product as ASICs for general from desirable. QX possible accelerating others, terms from be half Ragentek, of launch customers as The We’re the product new XXXX. we delivery is to that electronics new requires achieve in display of which by finalizing the OEM allow very a enhancements of mobile develop combination in customers several with we marketing brighter brightness efforts new To a feedback of closing like plan that market and engines details. for internal Time of of prospective will a brightness increase increased we transactional second early the the received for process to our from schedules, friendly course, version and the people would engine development, features typically also what are heard given orders on

their point speakers Amazon smart interactive of the a variety and devices this intelligence has with tell earnings to bit a begins since of about Microsoft, of it’s own which for cars. digital dedicated it’s connected case It opportunity. for But let artificial own with have front Echo XXXX. services speaker it it assistance. their digital display and serves this to first not is these The into including gateway assistance, Alexa all jump communication, they intelligence Google, a bellow The Alibaba switch in AI end Apple, access as extend assistance with results, introduced Many grown assistance into a of as significantly as before me result home search, digital digital or a Samsung, for smart device companies, you followed smart market smart such now smart engine. artificial I as digital a speaker, with Let’s exciting the expect speakers and about commerce. media, number

contractual a voice the interact is for through it the command limited home is real basic Smart where provide on user digital cetera. music, can AI of interaction very in a voice here? is opportunity weather MicroVision So news voice-based most these But to with et time because only get products assistant products. today services information

integrated sensing a goal a contextual expand for presentation in content such Our create and natural more that of devices compact to that XD of display interaction. feature and new enable services a OEMs can new family solution the visual through offer is products for touch

OEMs in get the engine OEMs developers have evaluation third-party We select and demonstrating QX their to planned early to begun kits this of we software and shipped to as interactive and display first evaluation the feedback. capability

it in our application XD to ODMs XD for and integrating into is made our players point the – their as designed for which it’s brighter This ambient inside category cloud feedback, software devices for product. interested The other OEMs their to by images display display time model flight a of the is latter devices we create often one to XXXX. software most converted this present extra also gestures Through introduction learn point XD so companies as only engines event XD kitchen. customers not for and who engine portion. A thing inside kitchen and our a seeking products environment one also product. that portion initial engine be events and touch from before developed is data because discussions the conversion of that products of are output time for high need with stated in solution interfaces their XD whom The is operate build this in application far such who customers most requires commercial display Tier in around will visible point feedback output such could interactive ready received it’s and products that not LiDAR Our clear, by cloud initial point applications step, we’re cloud the software additional our light their these to cloud we such

As of both developers development. a to applications kits to OEMs year and software provide development will for we software findings third-party this continue result

for required engine We’re account develop our software applications launch for time also products. realigning this and to commercial them to scheduled the

enhancement market engine into are development display on development interactive to and feature working software corporate plan engine. interactive requested display While the for they our to first applications use brightness kits we the our

result the availability a is half in planned now that to As commercial the engine XXXX. second of be for

increase As engine the for only used ASICs SKU’s be and to by I both display possible will new multiple that through brightness new and earlier, mentioned electronics creating we’re different display is interactive create customers.

XD engine onto LiDAR status. Moving

to X shrunk Our of from largest points tools demo CS industry add allow per X.X our output all better to cloud one the assess doubling product quarter the last better visualization will original second, stellar times, the access team cloud. to progress developers XD point which by to XD in is and today, made million an software better point while

and features resolution engine, dynamic dense and customer LiDAR better will Why tradeoff XD increase and attributes of applications to As of December ability spatial evaluate ahead the wait XD and customers. performance. various considered given our it’s between very classify performance XXXX made. ask? from XD for a this interest state high very kit well can accelerate particularly of planned very objects are has fly that possess second you has see scanning of to of year. solid engine of It schedule. performance for we quarter temporal point decisions before this just our a resolution timeframe by typically industrial mentioned be LiDAR system classifying involves XD Almost cloud supported important high-spatial ADAS availability a The feature. automotive sensing originally allows be object result these desirable six to to original I detect the the on development months important as If an and to scaling high kit plan to to development

then ADAS to before a detect On classified simply could it’s been object fast become the other moving if hand tries improving temporal resolution system important.

Our engine sensor we providing display end products revenue resolution a with progress gives opportunities application engine in comparative The for plan is MicroVision we such deliver to the quarter inside and can the for and others. display We Once the portion XD the plans us technology the of We development future $X.X use system. XD expect advantage the high real for new to new firmware LiDAR generation recognized produce be of believe kits capabilities, LiDAR production which over company project whom MEMS, be exploring a we in during completed Starting components industrial ASICs incorporated technology performed. for is goal display with Switching OEMs to million LBS agreement working a and good and with $XX to resolution sectors. made a company. display it’s this system. Black consumer and product. The with major work now. this develop automotive programs to development high our Box of to million gears development

we’re excited opportunity really really for We’re disruptive up mobility, to designed we be it pursuing extended really into innovative the IoT, us because that resolution of about customers and platform segments all are and head not very is excited. process display important creating LBS our high we’re revolutionary This product, the also and LiDAR. XD in being only really, are could ARVR, a a we

executing switch they Let’s solution you about revenue for this develop the anticipate deliverables we that and inform since payments. evaluating the ADAS major on. that other in QX programs that to prototypes to ADAS, customer with tech recognized the last with receive under were development company solution. we final tell to the completed their contract will after year been all another us we’ve now pleased next steps. Starting to our I’m We

project. is This all reality delivered. evaluating were Regarding another AR, had technology major we customer we completed deliverables and company in to addition received for augmented ADAS remember the also payments. we demonstrators also The

summary, and on are I pursuing summary, can clearly probability paths listen and you want of to display market production say the engaged continue customers larger the the next ensure business. timed we of customer brighter with to our for plans of business, burn. in that, Based In engine technology improve engines to to data we are the minimize are go-to-market are plan concurrent and into customers. cash multiple business So optimizing licensing gross high launch orders success engine see go-to-market of to to engine our our voice accordingly generation our available our the we investments pursue that to timing two our commercial version. Since accelerating enter we

align such display timing application future expect months by end We year the have accelerated program other considering available increased the the and with evaluating commercial sensor by engine better to customer for products rather and we time XD interactive the and XXXX timing kits development of the year. software And next are needs approximately additional of LiDAR or quarter second six have brightness. for to this as development

in solutions review companies that I’ll high for and be interactive our January XXXX. $XX guidance. important in XX engaged we lower have not our the XX period to same adjustment have Given and development This very developing very with revenue that us technology included development from of know $XX at to The is stop programs financials. over guidance contribution time by to the we well at revenue year we’re the million earlier All of progressed the time anticipate the million well. display to Steve engine, participation this markets. to contract of we gross the the $XX past shift end to over million market largest should position engine expect the months

Stephen Holt

Alex. you, Thank

quarter which the revenue As the and company us recognizing April in Alex revenue we contract contract two in form revenue history. other on highest of small factor when our combined begin on with engine the contracts quarterly shipments and gave mentioned, our

of down million $XXX,XXX contract from as was reality The product breaks quarter $X.X for the factor from $X.X revenue. million $X.X small Third the and revenue million $X.X revenue agreement contract – follows; II of revenue million augment contract and from samples. the engine, Phase royalty $X.X comprised our completion of the million of orders and and form revenue April development contract ADAS prototypes of

the decrease to profit down is higher last of recorded of of year. XX% in than the mostly development gross profit quarter’s we revenue million experienced in for $XXX,XXX and quarter revenue which total $X.X $X.X is offset in QX $X last million of times $XXX,XXX, on $X.X than $X.X from X and QX revenue Gross profit profit revenue Our quarter million by gross the was last the $XXX,XXX, and product of last year. The higher million royalties. to that’s of related negative gross related million agreements was

negative on let’s So profit the look at product. gross

small of and stars see factors. began three experienced was negative MEMS similar engine costs form me first component the started negatively So we by on factor we the margin only first production customers. when in say our were of with line production XXXX QX let that when our expected to impacted sale we production what for and what to is in engine

– the production, more expect experienced start one and the during we quarter becomes would were first, what that yields lower the during established. than production once of First, increases

depreciation given old a and cost in overhead number fixed-cost relatively the result value. new high quarter relatively of of using equipment a Second, the of $XXX,XXX value the third, the production we the lower on quarter. down MEMES are process during cost And as which we were we That wrote and which contributed began about to sold salvage to recognized units revenue. low goods

deployed expenses our recorded would operating and as resources down recorded to a be normally due is in over of contract. in cost were were revenue. that mostly $XXX,XXX result research on operating Now this April contract And development QX to $X.X of quarter being million expenses, last

and Our of QX operating year higher last expenses. QX expenses mostly were $XXX,XXX headcount due in than increased to subcontractor

Our The share $X.X loss in $X.XX third to per million per share. lost share net or or it QX. in XXXX of was was $X.XX per million quarter of QX million or loss XXXX $X.XX compares $X.X a net $X.X

operating cash for Now flow.

of usage to receipt and related and we This raised we to were million. was $XXX,XXX. the $X.X to quarter quarter hand The our quarter, due the last agreement. from the $XX.X XX, common million generated the upfront was QX payment and financial agreement. from $XX.X was million. million depreciation the That related our $X.X the and we year million operating had cash September end at which development operations million, development for reflects April $XX stock. $X.X quarter quarter million compensation April cash a million of on the million most balance engine of results. sale had amortization $XX.X Cash In ago cash of usage at $X.X contract equivalents X Backlog the non-cash order of cash related in of cash $XX.X is shares first $XXX,XXX of to revenue concludes was the million,

We will now call the open questions. for

Operator

you. Thank

now [Operator Please will the begin Mattson. go Instructions] Glenn is question-and-answer from We Our first ahead. question session.

Glenn Mattson

Question A on question the – going guys. on Thanks Hi. Ragentek. on. I guess lot first

you think the of say to couple the how Is the I fulfillment mentioned that – you is that year over of press the see progressing? by next end release mean the or orders of kind that in you something months.

Alexander Tokman

our current plan. That’s

Glenn Mattson

the Great. the and… multiple was it – little finalizing potentially that talk for more first about at can Okay. thing you next for highlighted you you’re is talked that QX orders then engine. key of customers about And a Maybe looking XXXX

Alexander Tokman

Sure, more are orders. we working Glenn. expect we – Basically with

with this of customers closing in are in several the latter We Asia. for stages several orders new engine

to but transactional done longer. hope take details certain things, this call get are before We it

timing the QX of and So potential the delivery. several be we line products we in are their with that on would hope working orders

Glenn Mattson

smaller you size generally want… same or or How do about or the one as it they first bigger magnitude? Is

Alexander Tokman

you customers, I’ll tell comment on I to larger proportional of customers size couple just are couple this, there there can’t companies. the the are and smaller the orders

Glenn Mattson

two interesting flipped before it’s little they before then And the LiDAR other the now interactive kind the kits the development of a – So more Great. interactive. right? right Okay. it’s it’s LiDAR will be engines on bit available

Alexander Tokman

uses specific the events Glenn, recognition they and cloud is kits of engine we they product face what that develop to the we’ve of develop to all engine that gestures which software will application. sensor application months all than after the that and for will the learned that display need. engine, – it a to over the past cannot is point for events is LiDAR our provided interactive OEMs first that to the point XD and of every the the need ODMs provide output three require have we whatever anticipate takes in cloud and converts that our convert Because they objects and it their process and products different they XD we else a

for deve lot thing to to a we what do we kits engine is earlier us is best LiDAR of realize So than the the anticipated. get initially

can they product. to start time their for this earlier, shorten So market which hopefully groundwork will

Glenn Mattson

Okay.

then the later? be And be or coming think good. it completed there than two the phase next work the the do those you could contracts would ADAS other for What’s contracts step product it and you – expect sooner AR. you do further appears Sounds development that for on – next

Alexander Tokman

have wait. We’re to going to

evaluation recognize the We delivered all end the provided. to to cycle what we able we’ve quarter, at were are But start hopeful feedback. wait they very and receive just but of of their the payments. We for have we just

time hopeful we a obviously have could and to give come. us we’re little them – So something feedback. But give wait that let them to

Glenn Mattson

it straight do say fill recognition the next the you that? you on Steve Box a just pretty think contract do in be And or what all? quarters Black line that at great. Okay, will have on five Is the over revenue

Stephen Holt

that. predict to hard It’s Yes.

this I QX, what it look Be QX at this with what again and to think was consistent we if million $XXX,XXX went in quarter. more $XXX,XXX was did we’re up $X.X you – in seeing it quarter.

Glenn Mattson

for Thanks. Okay. guys. great. That’s it me All right,

Alexander Tokman

Glenn. Thanks,

Operator

question next from Our go is Please Dede. ahead. Kevin

Kevin Dede

the taking thanks for question. guys Hey

since think end of what account think – I the the share the you you’re year. at do be

Stephen Holt

million XX about at shares. we’re think I

Kevin Dede

the Thanks. long loop. the you How then back think ADAS Alex and will further that Okay. feedback development to bis? the and and And feedback AR do

Alexander Tokman

sure question, it it The delivered in we It’s past Kevin. the a know takes shorter. few so far great between sometimes takes engage they sometimes for We longer, we is that it difference sometimes months, what different like. players

they because test after it that anticipate drive Again it’s it’s predict a specific. timing feedback. so is difficult hope and we internally we So case depend to on

Kevin Dede

best fulfillment I’m Okay, fair what you of Ragentek touch sort – your sure the are What’s enough. think of selling what of the take they’re field? end do you’ll you aware orders customer post distribution I keep us to. of sort mean, on in and can. you

Alexander Tokman

we’re know, that. not you involved As in

What in know So in launched the for that to and us Brazil comment. they and we in is it’s hard European we several several what we the channels countries. know press discover China, phone

the of of dig they the that limited Some to started a at shipping remember August. little positive out we reviews able end were but again

five in looks said, it market a and three what who in who product our it their now. seamlessly So hand potentially four for on we’re hope But looks box, on. latest They then have plan they able goal. like or to months has to and talk the generations good, they’ve future from what saw it it’s only anybody months do hold is our integrated. and very we’ve then million phone, functionality We can and impressive projector, all the them months, reorders. turn That’s this understanding phone, been about actually our to the good two right will seen after very has

So looks it’s a look phone, it projector very, doesn’t like like ascend, even phone. it very a normal actually

Kevin Dede

could you’ve what that this the and bit a in with And that that phone. to from So of other think from you little Moto threat coming they larger smaller seeing glad moving I’m competitive see both address Do Asia? are characterize brand. you customers mentioned you to Could they the some talk had particular interaction you you Alex. a

this. to technology. I given technology you general you superior just if DLP laser what how you other phone seems sort be you before, And a the said you could of manufacturers looking it think could in this that appeal was implementation. it’s think based think DLP at to be see wondering characterize a I based

Alexander Tokman

Yes. one thin things like fact the applications because embedded strongly display about people small it’s we of so that can smartphone very and allows Especially to is very, really be believe the the for engine embedded. The difference and embedded they Ragentek is between cell engine the the form at Moto without inside an directly the is factor. attachment sold Moto $XXX. our Z phone Z compromising separately and example for

Our phone, the clearly Ragentek, don’t again something whole attractive. what to received pricing we RMB think which relatively $XXX phone tell. – market know will but price like I XXX,XXX, are $XXX we But they the exactly is which

basically fundamentally the to which projection. have phone you So thinness, with thin it’s allows

is consumes X is a engine the power a watts, our of than the consumption technology. of less one don’t know power big Second know you DLP which consumption fraction and that’s because I other the

hates hours And continuously can wheel. feature. free focusing focus to X the up full obviously desirable battery it everybody a on it’s charge run for finally single the – So

we know larger believe mobility advantage we power valuable. competitive specifically factor as and important. applications So Obviously DLP definite have three that has merits is have. consumption But differentiation we specific for not device a that for for the the some we form these are

Kevin Dede

Okay.

be you the that expect the me. an ADAS sort just of of of talk resolution. So you offer and spatial One thanks you last for for to speak you all Could XD in And sensing corporate that us for temporal Could how cloud? to advantages. implementation to the your and device one example Alex. both

Alexander Tokman

Kevin. Absolutely

take Let’s example, a vehicle the give application. productive let’s

until vehicle it One it to bullet driver of higher accurately proof, In what’s available to all. or front of this has it make technologies behind at need LiDAR confidence you of is LiDAR. to radar, was or of it this the a ultra systems, the ADAS, advanced vehicle and safety. to component margin recognize safe. of everything different keep side Because aspects combine but the can has a – to have it in there’s the be decisions of with invisible, in is do no actually key LiDAR occupants autonomous the or was combination order fur you a sound assistance make fact essential it to LiDAR and difficult, degree it’s

So space. we’re the sensor LiDAR in operating

objects specific do the that say some you detect as In of very fast we first at further a out if background a and car just it is this backgrounds Now or moving to look there And is becomes or automobile at offer? moving is question the speed what an example, priority really practical scenario of let’s kind a well. is distraction it fast noise. object is are

temporal would you this quantify to the of need So high a performance system.

ultra Our out is rate sense, our speed. fast the freeze to basically that frame increase frame the fly at LiDAR and to sensor has ability the on something moving far

detect the object car So can potentially it is real a or not.

to can this it make basically to more the do At it classify to need characterize and to make so it, in a describe car Now classify properly this the need resolution what this system inside high once the get point frame object. you – time next. it brick you you a a detect decision to something a resolution. now you can cat. this you closer need performance, high you and to you this Is high car any temporal that need is need rate And a high or spatial do spatial don’t or

down because you description object. gives resolution, important dials automatically of dials higher it spatial highest it’s rate this even spatial frame the system the and not Our

it classified more be So accurately. could

dense to that point feature that this will one is in of very cloud crowd. in the addition we specific have So believe industry separate the highest we us the from

Kevin Dede

you able you at think might CES I before Alex. of give right, January? Wow, outline be you us go All okay. show Thanks can an what everybody just to in

Alexander Tokman

not more advanced the one that see seen. development but to describing foreshadow, to what to in kits show every next-generation’s enhancement is want of and developments try typically you’ve goal those to versions our from We today. we’re We

So you some products very system, engine have going are impressive our we’re as display LiDAR with the going to display interactive obviously XD showcase see and to some performance on well.

Kevin Dede

the appreciate I time very taking much and you Alex. the questions. Thank

Alexander Tokman

problem. No

Operator

next ahead. from Please Henry is Our question go James.

Henry James

Good morning gentleman.

the a to of I just you million would like that guidance say intact? clarification to million. get Still $XX on the was sort Did First $XX that

Alexander Tokman

still The we’re Henry plan of saying display in because what changes but the intact for engine. guidance commercial interactive go-to-market go-to-market

target you to lower of guidance engines – had the our the going guidance original of market. out the implied engines in We’re it three was two end because the remember

out on engine. we’re Tier time and the to based need display are who additional software also They from the getting A Now the develop engine. for interactive players brighter feedback some asked seeking they

point two of the a in the factors those the interactive availability display So sometimes combination half. second engine

result a As we in going the guidance. this the the lower shift we – of because of revenue to for we’re operate especially most from engine first expand end of

when of we the not to $XX did new revenue or going provide remember, we million to is revenue that the additional the guidance revenue have gave contract However, engine.

So developing the with some we contract. expect to make up

Henry James

Okay.

million. So the contract then the part is a million development $XX $XX to of

Alexander Tokman

exactly, was of $XX million not was it It absolutely. part not originally to a the $XX

Henry James

Okay, okay.

efficiency size engine an interactive of I talking to the well as for enhancements with wondering is engine, have impact on And the to both initial engine. the about guess increased was Now and as going the respect power we’re of the the I engine brightness. that

Alexander Tokman

is you are tradeoff, things. world a always this different to have trade. free, always right. Nothing a absolutely in There’s you is There tradeoff

power. little example, for bigger, and bit consume bigger little bit it much but engine a will So the not be will brighter a more

That’s will less and stationary important, for or want number display? devices you about the interactive smallest the talking the desk, relevant for get you display brightness the is power. interactive these Once that mobility the inside on one the be requirement. Obviously it smartphone is on Now why be be cost to Remember, table. would are to important are important. lowest

so always becomes power important kitchens devices the important plug because So these and bright be will last they power the is will example. in brightness be more very for placed

is always dim And they be environment. this be increase on lights very slight I’m able I increase in on, less point to and small, slight willing at [indiscernible] they size and less critical in be going you don’t So brighter always people care with to live give to to if consumption going size because time in have are bright the a and something critical is the to me and power. it’s power

So care as prefer small something depending that power increased some is possible be increase to live with consumption they the power lower it’s a some applications going prefer will and as and don’t size, brighter on willing will low about combination, people people brightness. and

Henry James

so increased this brightness for there for initial is even desire there And engine as sort of well. a but

Alexander Tokman

Absolutely.

brightness same accommodate then we Just side and so to a I that stick something be somebody have my we applications. customer XX applications well. have a say you the is just And again, we’re we for these somebody willing it Sony we’ve XX lower years our also going increase could we of display my applications, XX progression is a engine, about if and larger over these the to interactive significantly introduced a to going engine as engine goal by helped mean, for build or to with preference know we’re with If the of I’m I be said, to XX made which to X% factor for willing look couple moved an to phone form woman brighter if mobility think live past going with started but woman we done. women, I’m have absolutely basically social option. far increase from specific at what used you to what

So forcing we can people one choices source. of into create and sort

Henry James

talked we Okay. to just far vehicle that vehicles. And application you be the you used that guess expecting for – sensor, in are I engine that is about just talked as as then something the about LiDAR

Alexander Tokman

to very to is the and So of six density targeted by accelerated kit its application. that we high year could – – XD remember, resolution this we’re let rate with one that by clarify. point have going the we end a The depending output a high point very converted frame be to high me into specifically months very cloud or the to give going development to on

is industrial couple to this to hands people our opportunities specifically goal – the guys to kits – the give robotic of guys a we give give to going So robotics, industrial robotics it find we’re these put in them. there’s the lot have it so to a given – to in of and

we with what to captured to guys we want what the by like consumer we to LiDAR to there’s market so We’re – some many the ability the many cameras. focus and Like important, capture most going determine because been XXX this interested and degree point data cameras we that so to cloud just quickest socialize be on. the in opportunities are automotive add it in that – for already can also with dense could space, there’s LiDAR to something a also consumer for in are heard potentially applications is – applications. information the applications And the

revenue into put convert we possible. people feedback. of in the to this kits consumer their the industrial, development these And need So to get automotive soon we and hands as can in as do this space

why it the is And we the many of first months ROI more six can over of of what At on next developers start give main hands than by what the couple we years. shortly tool process there’s the if then just be predict reasons this resources to time the to OEMs what little availability is in we will XD our opportunities So this point is a application, and that’s more is of has what LiDAR so what focus in accelerate and one important. we going important we best know we this put cannot in depth less know earlier.

Henry James

the latency the to ability And between your spatial applications tradeoff and feel of you and vehicle? do do resolution theory this like resolution other beyond has the temporal

Alexander Tokman

that the something know overnight different utilized many autonomous is not going is to going it a outside on – obviously, happen that a sensor Absolutely, because would applications by could – XD target LiDAR is be to we vehicle vehicles come we take.

So could around warehouses, if have warehouses seen have the in opportunities of that sensors There robotic today. mapping. look our the this has multiple mean, into robots purposes. anticipation kind the all this Amazon what’s cargo produced simple in map are not we’ve at be in know for robots stage, that developing used applications like street. that shoving around to some What company that and I today run in require the to is be some what We and could you’ve happening for we used XD I mean, they and robots seen you I bought these something that even else. don’t

be robots So it’s or or police actually something walk security And many physical developing. it opportunity There there a others. something sample could just of are utilized around we’re that applications. like are in many, an

to to going how as deve we feedback, will the it product prioritize can can so we’re case as soon our is the get business kits soon goal our again, on then have it So to us and decision provide possible, where we will all get based best we for and market. be

Henry James

you. thank Okay,

Operator

Our Please go ahead. is next from Rob Stone. question

Rob Stone

guys. a Hi, Thanks. have I few questions.

on more First, little I wanted gross to a product margin color. ask

You’ve quarter. up REG-Intec in this talked do off about start rate you run tangents? the of expect of you challenges as production. target for ramping orders you And typical those kind on margins the then regular know finish What production to gross

the absorption? getting one. And about the that you’re to Thanks. how for think So negotiating. I first a you volume That’s orders do that’s by new good assume driven overhead

Stephen Holt

to in be ramp the we that business margin expect XX%, once XX% production we up there. Right, engine

with that. We’re growing up and

I on you – what else as far margins. As could about tell

and expect that making going to and through October. cost make improvements, operational things are are well We

a we you timeframe the and obviously that’s required increase So when give that we were manufacturing for some variability to are volume, us. in and would premature pleased volumes with that. we working specific but They’re hit predicting

Rob Stone

Okay.

Alexander Tokman

had since REG-Intec. what anything on exceptionally. And you the quality we up to mentioned had no out production, just the quality. We the been customers quality issues point any with Since operations and to the to we’ve Steve started to related – provided

Rob Stone

to to operating expense respect ask trend. your with Okay. I wanted

work delivery reallocation ASICs You’re STKs on from contracts. for accelerating as you engine, the of to new some a the and R&D noted doing on display going to brighter costs the COGS be

So How quarters? think should rate the expenses your trend plate? operating next we the was for all that run about on for of few sort

Stephen Holt

– that range so in. next kind we few so, I the reasonable last quarter, look quarters, at of For now. and think the see are When I quarter to the quarter this last be you that’s where those range or

Rob Stone

But that fact you would R&D you’ve expect of because the and caption? reallocated R&D completed back come those to get the back to so couple resources contracts some a up

Stephen Holt

months admin for was on AR, Yeah, contract and recognized you’ve contract. on that got to the that have been sheeted the the the in – those completed Those balance reality they those the over and basis. a and six-nine cost well, – hours eight contract past remember because –

– know than being contributing quite as that So to have down. And that five four contract OpEx so another think. when the with we down. to go you to million is rate run going is being the that one do quarters, – $XX more didn’t that, on three, the project The really so much even or for is I

keep that will being for the it – So period. OpEx lower a keeping

Rob Stone

inventory, provide fair you sized there know, was breakdown. a increase you sort of color Could any Okay. sequential the on

Stephen Holt

– And units. finished some but Yeah, were you we they REG-Intec, shipped – we that part then is completed we in to the of production we’ve biggest that know, finished when those in September transit.

that’s reflect a they there’s big and so inventory as the And reason popup.

Rob Stone

Okay.

Stephen Holt

within yeah. So it transit, finished was just

Rob Stone

is question Alex this guess. Finally, for I

of far the costs know, trade power sort size you have the consumption engine. on, you ASICs? you development that going then engine you display mentioned the think when what the new effort done? effects how as off to So you it’s brighter that’s Can comment the and as of for on And might cause

Alexander Tokman

Rob. question, Good there already a – is couple We of things.

products investment all offering. in for other new across would million. typically specifically is the – would leveraged all, $XXX be of cost already our invested the We brightness ASICs And First of are of boost that reasons. we the be ASICs ASIC to

So be and over will by LiDAR other by the and engine LiDAR technologies. – past XD the XD example, engine. we used to ASICs some is already have display interactive the display six into months. the engine investments same spoke investments for Steve made The by We

So, it’s serves purpose. a investments all one-time

can it’s – we trade specifically do. anticipate they DLT competition In slight honest the to increase you terms be what in off, you, increase fraction size some in know, a a we of fraction anticipate power, of and with but

say most watts. the high, than And to consumption faced the pretty brightness, engine exceed more when brightness the few and of well within higher XX% the the of more advantage. power do still the acceptable received people need regions up – than they size dial can no That’s get brightness. it we instead mobility So by increase let’s the and double doesn’t

that and only prefer. put to the people who which they little cost device, super choose to important will So have more have be to to slightly a decision that’s you people willing larger you able is how off what make thin are them really the to trade that a and really that, want up battery

Rob Stone

result the engines, the on cost OEM see cost spread mentioned I as the of – it engine but going across multiple is in a end your you and for a well. But brighter development pay an the to higher price –

Alexander Tokman

I higher it’s actually engine, of brightness, lasers asked. am question. – glad to So, To higher get number it’s we very engine. good the to in increase the also you need

a will a little again, – more consumes a something versus have little And that little that trade achieve some will made, an a it it’s trade we something made off, other is The that. off off thin are targeting. or a have tradeoff we of cannot cost low increase going bit bigger technology bit and doesn’t brightnesses and There to with be expensive OEM power options they cost it more that but of little So the power be brighter. that is definite to – by with more of up guys. effective same cellphone brightness. any a It’s gives a made very trade could it’s and

Rob Stone

Okay.

of to the realize cover additional it in sense would of components. increase premature, price gave it the us a much how and I power sort point you So size need maybe but proportional higher

Stephen Holt

current so just have the if interactive don’t visible And one somebody information lasers display, of wants and to lasers brightness today provide engine – for we to – with go display. to role it’s three we three infrared. this again would engines have obviously for to has brightnesses We lasers need display the light different going five would

will other and lasers, infrared. five visible hand brighter the one have version lasers On the five

the and in how basically to need it’s difference put dial. want is So many to how the engine you lasers you brightness much

Rob Stone

that. The Thanks very helpful. for detail guys. Okay. Thanks is

Stephen Holt

Okay.

Operator

for to remarks. over Tokman I’ll Alex now turn call the closing

Alexander Tokman

a strong another and hold Look with you. third on to thank quarter. strong Okay had quarter point we

of see pursuing the and markets. you order in two LiDAR and clearly success, new build the mobility, these XD to engine go-to-market in increase opportunities create target probability we for to a other As concurrent business markets are business can technology, paths IoT, licensing

I behalf major of like in this Thank call at your global development actively optimizing technology to programs continued we work to leaders, markets. align market growth Don, better time with customer close and The participation we listening believe do continue engaged positions We’re for this participation. high would feedback to and all we us the well. to strategy well engines and and customer on for go-to-market support progressed with And needs. our your in for you Steve. have the very have for

Operator

gentlemen. and ladies you today’s concludes participating. Thank you conference. This Thank for

may now disconnect. You

MicroVision (MVIS) 2 Nov 172017 Q3 Earnings call transcript