MVIS - Earnings call transcript Q3 2018

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Operator

Good afternoon and welcome to the MicroVision Third Quarter Financial and Operating Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Lindsey Stibbard. ahead. go Please

Lindsey Stibbard

afternoon XXXX Good everyone MicroVision’s to Thank and and operating quarter financial results third you. welcome conference call.

results Relations today’s Holt, paths, components; The to contracts and Joining Officer; plans, could, ensure, including and technology; statements not manage These call development, market well statements. on call availability under Mulligan, statements, will, our other Perry performance. other date me commercialization existing expressed in benefits our in call, from Chief are includes statements. our in and our and XX, statements SEC to expressions. would, of including information. XX-K used negotiation MicroVision. of we Both and forward-looking operations and risk release the filings XXXX, progress Steve goals, in of in Chief operations; as presented implied information and Officer. All investing section with section future factors supply business to of words press license regarding today. the undertake financial various results Form for in Financial the from law, in customers; www.microvision.com. today’s at we and growth today or conference cause August call our expects, prospective February no as to are by of plans numbers and We except cash associated risk could you replay are of forward-looking the containing from similar future materially future of as transforming discuss the advantages; XXXX, key this SEC made evolve, Investor implied Investor in those factors statements Relations benefits; be could available MicroVision’s in agreements differ made results filings, execution; financial This of audio or filed update forward-looking included guarantees expressed will as demand; review in and call These statements opportunities differ filed website. forward-looking Form applications believe, X-K anticipate, on on are of Annual products also this obligation product results; encourage website the available on Report with X, and on agreements; from XX-Q Executive like the which The our filed and future the our projections competitive are time-to-time Actual required conference

Relations provides on on posted overview our the also this will that these slide Craig-Hallum posted two website. now, conferences the over in the MicroVision of have XXth to call Annual a Perry the of our Main City, And an MicroVision Event Information deck in Conference about be to New and Investor quarter, in York Select section like Perry? events I’d We Investor section website. Relations plans Alpha of Angeles. LD Los Micro the turn Mulligan. to participate

Perry Mulligan

everyone. and good What afternoon year a a Thank makes. you, difference Lindsey,

our Tier I role, devices, artificial platforms. large targeting vertical am to to companies technology in markets. implementing X made. that edge the making off Tier X that adopt you have approach progress our our capabilities We excited computing customers five Intelligence we products telling first by on easier said OEM their it into we this provide Machine were started sensors, our could for intelligence we my with I by in that in share As anniversary you We

proud on as five this business We earned right well the OEMs remain have us with or Automotive technology license of the products executing these each achievements reality, as both of near in work shown thought our we are as to have Now, I and I we markets, pleased one our the leading am display, through journey, made has focusing we interactive core first the am to verticals. that and year we customers. targeting we completing say done committed leadership in augmented to on our the plan display-only for partner. vertical products LiDAR, these LiDAR, of mixed Consumer that namely, have engage

on opportunities capital to track working in could which transform business being the our Machine X potentially As profitability product working short, MEMS previously we now with technology, families These discussions having and Digital, the XXXX believe solutions innovative volume Tier we company customers our launch minimize ASICs, ultimately and position are with second successful Intelligence these technology component during basically Based partner provider a us XXXX. are the to To have support we components could a our of a allowed our solutions requirements. positioned activities leading are this sales to developing MicroVision value products shared, remain work, enabled product the achieve we our technology in and from be shareholders. evolve for to Flight half overhauling and the support late we process associated and firmware, core plan of reward ready our are to provider, with our in for on Analog manufacturing we launches, ongoing our with every Time technology that into while In to R&D of unlock including XXXX three companies. module significant our of of capabilities.

transferred QX, licensee have a color a let technology more we we announced required the agreement a under little May. made albeit in Now, profit QX. provide we to that in successfully our in profit. the quarter, achieved We display-only progress the the me to small In

so for total $XX in of work activity perform some payments Licensee was non-recurring revenue we October as our received been required as that The looking required. have customize take any this we OEM XXXX. will first customizations agreement in the display engines that far, half NRE This these entirety is received for place recorded to the expect million the our products, We no second to bringing expected, for the good early of earlier we which If $X implies or in this to the aligned closely payment said expected designs the to be QX. under for. are License news Licensee’s customers. it year references NRE customers that The engineering what million, are to

We continue $X.X the We are in this QX, that $XX awarded we revenue on XXXX. from progress million issues of booked contract behind make to the In we were challenging program. million technical most another April believe in us.

the QX $X.X and million a QX first expect quarter. the million We end customer a part for XXXX total of the invoiced million $X first toward invoice of final in to in with twice of first our the $X.X

to plan XXXX and to mentioned using market are sometime being timing specifics last regarding I during their product in customer plan. still This is XXXX. a our of As our the our advised us Tier technology X The product still finalized. size call, bring they the launch

did technology a outlook September, smartphone will that not we on for While that QX on the did the quarter. website the clearly equipped AI custom proceed with options manufacturer it how video fast interactive artificial order that the recognize is provide our we The demonstrates conjunction additional an smart captured revenue demonstration of matter, We plan well for different with with video this in Ragentek display and in how this during quarter, more inventory display post on and to In reach agreement our Steve how them. using many results as we to technology, to posted intelligence speaker, our could an item commentary interactive as final solution with built a with or from natural video an we our be an used. assistant. quarter.

form when another today with step Intelligence combined LiDAR significantly a deliver and capabilities, major resolution Our comparable a in factor, than forward Consumer category’s solutions represent available the Machine evolution. higher in

of product our at dev be as expect to end this kits QX planned. We available for the

of expect more our will to our software be application very technology than before first in kits display XXXX. likely adoption, adopted and as support customers’ our being time take Consumer the disruptive display-only and plan adoption engineers the market To interactive half we integration of explorer developers such, or available solutions. make in solutions will to We the powerful LiDAR market of the

last more Automotive provide count factor, technology during higher-line and LiDAR a form today. can As cost-effective I our solution a than the we market believe mentioned those resolution, smaller call, the in

solution our highest of our have would with density bits per the Within LiDAR million space, a as the available output. XX point XX-meter part second cloud

of Intelligence our we We look in our the at especially demonstrate remain a the to the we avoidance Machine Additionally, XXXX. will sensor through collision on to system the deployment adapt latency provide will feature should proof automotive solutions for this be as believe solution applications. to important concept of that advantage track have that

in from late and sales and the in cycle limited sales with long opportunity earlier would launch are of during with the our in last us XXXX, families and mentioned that to for progress the the potentially revenue half of over XXXX. as which leading XXXX Based industry, testing to XXXX extensive we technical units our late position see in discussions likely initial supply year achieve expect to product could ee the AI the owners believe, we’ve Given I profitability made chain platform automotive on partners, we ongoing the support evaluation XXXX. and positioned three second more

provided it an plan who I platforms our are with company it could X a MicroVision with and R&D we solutions opportunities AI technology licensee, conference a performance our increasing provider forward up. voice, Steve, our enabling you in the AI the innovative that through the that customers are full-year Let third updating and user that monetization how and ultimately transact, see along spatial reward LiDAR remarks to I'll awareness, our display a through commentary for interact technology into calls will significant the easier be and platform, look capabilities by now value display-only financial customers. Tier to remain our our input/output to from our me for the of on XXXX turn progress discuss some convinced we interactive saying, of solutions unlock conclude and CFO, with to the call offer provide future interact to shaping being for of quarter provider, our my can over products, By shareholders. products opening Consumer them image, track for users business making with with unavailable easier today. gesture should on transforming

Stephen Holt

Thank you, afternoon, Perry. Good everyone.

license we which $XX.X Third associated we million announced announced in XXXX. and related was May million contract $XX the the $X.X million with $XX quarter to April revenue included million display-only agreement in

quarter, full For quarter revenue Xst ASC retrospective Standard, Revenue million, the the have we met XXX, ship In was million. the Chinese $X.X them. Ragentek reached the a inventory in and our agreement half about to agreement the been January on of new a an XXXX maker, was comparison the price. we QX revenue which expect The $X third Ragentek, new this inventory reduced ago the built approach. the and numbers fourth quarter regarding purposes, year for in on we we built prior in with year, adjusted of them using we adopted for at for smartphone quarter, Based the

to ship in expect XXXX. units remaining the We

As in write-down we million. a display-only Gross This The fourth worth value a the profit expect was and in the is we result to primarily for third the thousand improvement lowering the of we was $XXX the ship $XXX of a quarter, down the over inventory inventory million for $X.X profit cost of the year quarter gross of $X on built wrote the the $X.X prior result $X.X section quarter in income quarter prior ago. statement. the price, quarter is license. of the The the reflected revenue compared to the negative million thousand that to Ragentek. in by same due with

we We loss $X.XX $XX.X net the in operating net slight loss $X.X quarter were per Third lower revenue our the that include to million expenses per than a The $X.X call, $XX ended the million and million same share million quarter comes at the a the total prior the the of at end a and update QX quarter, in compared This months or a $X of does to I QX, and with $X.X April profit a not in in last QX quarter XXXX year $XXX $X share from end of million; ago. cents in the quarter’s same comparison, cash in to the $X.X potential sources display-only and a we year recapped $X.X quarter of revenue, year million, quarter for in our million recorded have Xst with thousand, $XX.X October to of we million in $X.X of now. of In $XXX on ago. XXXX, equivalents of $XX thousand September million revenue same compares first $X.X $XX.X the earnings received a compared quarter announced expenses on revenue quarter the million, the XXXX. nine a were cash licensee. lower zero to million million higher we the Through million ago. prior XX I million ago. $X.X per and $XX.X On year share. under or with resulted expect of prior recognize The operating which contract expenses will relative

in the expect between we now quarter. mentioned, to and record million revenue in $X Regantek I with agreement product fourth $X.X As revised and our

designs has not licensed to make the indicated As to licensee needed call, MicroVision. from on display-only customizations Perry they our the

the the As our expect XXXX are forecast. that is for $XX.X of back our this compared to call opening XXXX from full-year $XX.X some range a over the to we for we result, to to $X.X now to standard. comments turn when call The backing these work we NRE the adjusted between result questions. last new before for expected revenue year million updates out revenue now I'll Perry million,

Perry Mulligan

tremendous. believe I made that have is Steve. you, the Thank we progress

we steps committed the our up took value who Tier to open and believe the of are we can late in XXXX supply We have achieving partners our X that, we now technology the for launch the to with solutions market. proposition to our are cash shore potential bring three call the with on product to chain families to In innovative necessary will that position quarter working provide, capabilities in support questions. we leading sights XXXX. now profitability our With second targeting the leaders

Operator

Thank you.

come [Operator The question ahead. session. will Please first question-and-answer We now Mike Markets. begin go Instructions] with Capital the Latimore will from Northland

Mike Latimore

just your families. to a Is little product in of So, product able support I three being Perry where families contract three around questions to able guess families Can it is from the separate come you the And a comments three inclusive from? being bit April companies? on 'XX those couple just or three potentially display-only? that may of support product explain

Perry Mulligan

and products. display contract So, products, the from the three product of the are display-only families license product April we're interactive referring XXXX the

preparing three the are those So, are potentially support in launches XXXX. that we to

Mike Latimore

families? that families, that does more can there a Or just And that you what families explain -- there? versions multiple type mean do when is product? product can little you just on say is of elaborate Is you you separate of one mean products? bit by Or

Perry Mulligan

verticals. each are So, potential be the for as we of we see derivatives one of there targeting, the verticals the could we that address within offerings these that

given could OEMs So, customized requirement. think at by said their any differently several and product, solutions market product you at time, display be launched be to in interactive for to formats specific unique there Mike, try more different of that if our the of different

Mike Latimore

potentially Or talk these launch seeing you half that’s these families of see latter about orders these is that’s business product they would in you when that when from when from you three mean Do customers? would that the then, 'XX. And mean products?

Perry Mulligan

see half product So, expect but the our your launched are of trying the the again, if occur, timing questions. we if to would customers question to that what answers I'm not when in two is, of would you discern from your second sure XXXX,

Mike Latimore

likely that? months and So, what before then or revenue you of kind would see X orders X

Perry Mulligan

and magnitude. offset of an right availability our the there for Yes, during will be module orders

Mike Latimore

those holidays half really? of timing of And question, around into assume last U.S. ties latter ‘XX the kind then are just I

Perry Mulligan

that our all comment sure strategy quite effectively of customers. for the I on go-to-market potential Not can

So, we’ll at that, leave it Mike.

Operator

come next Please with from The question go will Glenn ahead. Mattson Landeburg Thalmann.

Glenn Mattson

I that going think I like shipping because about space lot soon the really thoughts obviously Perry the it's I on Portal it's in quarter, it would in year. A mean, this device. clear Facebook I on the assume obviously during not curious guess am you're your I

we're you is you form with of guys So, I right that been in that maybe of but that direction, they of that the a I this. signal and the in not that about, AI talking the curious back are about lot AI to doing around went understand located anywhere. device to how hub the can local things there guess talk computer question kind be they I'm on things if using have they to going a on mean you device of talked be vision follow to lot a but about, about going able users is be going are They the when multiple the be even users. room central -- is going they’re -- and to said,

your that and the consumer going of on direction So, about your with you're that how curious thoughts it and device and into about thoughts LiDAR ties kind that?

Perry Mulligan

you been of affirmation I space. that ways appreciate the that of recognized the many talking the and fact about direction this the in direction we’ve

and suspect expert but not they’re we commented to shipping out to XXXX. LiDAR have your quarter compare and You the of the year Portal the expect And considerable I the end in we before matter how our simpler do easier on kits developer said, dev think with this we and product, they’re with out do kits agree point power accomplish way and capabilities advantage believe forward CMOS they is a a for. the subject from it when again be our on am requirement. bring a which products the performance I will that we to next looking to achieving that a track with will versus platform assessment be still of clearly described. and offer That explorer our itself compute using shipping could device. LiDAR as that we trying CMOS we’ve technologies a previously technology on this solution, It to we look I we’re consumer

Glenn Mattson

And are display-only accepted about little revenue. marketing I they partner. need to this before, -- At are they the the think probably have, out why bit point, qualify on they that Have do or to a secrecy they’ve now? there wonder I been get all mean, point? the curious this? I marketing stuff some am working this now Why this still they if to the marketing more OEMs to guess you word whatever customers. their at I curious I that their but aggressive a make needed trying they're offering about they unnamed? they this recognize to at is have started am now I And there that involved they’re splash much

Perry Mulligan

be conversations orders to their are calls to why market take in platform we go unnamed they that we have We’ve and continue doing a me wouldn’t comment strategy. to to relative co-marketing they comment. how I those AI previous other with for the all too, say. that engagement decides I on go-to-market to position articulated not remain progress, with their are can't why continue they to is in And position company a to engagements support

Glenn Mattson

them be that And you've display-only spoke about was last would question them. expect Would launches? expect in to you Or of and the that mentioned would the there I three Or guess? able that one them product launch have you to multiple without be from from partner? families get you one --

Perry Mulligan

last part of didn’t I the question. hear sorry your I'm

Glenn Mattson

you'll more don’t there be there that be I one satisfy would more you mean one mean number with. I hopeful or you be expect multiple will than but I when is mean that launches,

Perry Mulligan

your question. multiple So again, dimensions to there I is think

said are volumes segments dealing We each of we one within these significant. that. have are repeatedly The

Do in satisfied the to expect position the speculate they have not in the a customer? how 'XX, I'm single going they would that to customer of second market. they of that. vertical maximize capabilities want expect the be would to I again, would bring course. But we engagement single they half on restrict the to So, with that in I not to are opportunity

Glenn Mattson

speed was that on annually, somewhere still the again by timeframe it be I that a should up would -- that be there around $XX ramp. the that? contract that would of once Is think ramp And case? you when on deal they million first I anything when minimums to and guess once the happen signed mentioned is got they it there

Perry Mulligan

you are So, correct.

our that to We that. to in within that or of product second see have half market satisfied for The have start the required be minimums possible launch shipments the XXXX year. in minimum We that does discussed though would minimum. required year first purchasing expect requirement XXXX we the on for volume not

Glenn Mattson

they know you the last you in of would expect to in launches to to about these And be win back as What don’t awards understand can able might that the you order be that half meet guess able I you But latest talk them would internally, them. think be I you 'XX. then just do get order not by I you question be latest the get to about talk far to when when hear would as objectives? those about

Perry Mulligan

place would fully expect of could necessary take supported. that we QX of 'XX latest the to for be Yes, in this be ramps the

Operator

question next from come Jeff Please go with Bernstein ahead. Cowen. The will

Jeff Bernstein

Just to go question million down I the $XX.X from a quick did almost guess that cash $XX Where cash, million. exactly? it's on

Perry Mulligan

that after burn that of is quarter, the biggest the quarter. $X.X $X $X course We've $XX.X the and day operating we million came million We had the cash expense the from million, million running cost primarily in in each have the then been driver.

Jeff Bernstein

the I see quarter. in mean I breakeven

see just wondering so cash the where balance scratch went the and I'm could don’t head actually on my sheet, I So, I

Perry Mulligan

in, good the $X that’ll in next came guide and Yes, cash quarter $XX comes million a came million $X million in QX, be QX. so that

didn't it QX much. So, affect

Operator

HCW. Please ahead. with Instructions] Kevin [Operator comes go next question from The Dede

Kevin Dede

year explorer me or apologize. Can that of an you Perry some you a available Glenn’s -- please? got your out But of the and Again, missed of you first you kind for when I I quarter. modern end of bit to in you reiterated said answering little formal comments nuance kit were the the clarify dev technology, question. them know coming the apologies, customers but before you I

Perry Mulligan

we’re kit dev quarter. The that by the the into be QX consumer for LiDAR releasing will available

We at this released that’s dev intended a simply talked and with end, with quarter an kit outside more the of developers explorer volume providing by more customers. kit this unit familiar about in the work So, device preproduction for explorer we’ll kit, it the to have use solutions. robust, become the as could a experiment lab engineers and them condition within their help is potentially

think So the be and cross kit a is by just available of next broader of hardened team used section it to a year be more dev XXXX. will slightly of the engineering development in population that

Kevin Dede

expecting And March one so, you’re that’s the in quarter?

Perry Mulligan

I Yes. sorry. think specific talked we don’t March anything True. Kevin, of in quarter

Kevin Dede

with The was but integrators? really other to the interesting were of your the what the themselves talked kind the sensor XX-meter sensor that you're associated some them maybe and rehash compare seeing companies OEMs OEMs other of that the developed LiDAR. Could to those specs you not maybe auto or thing that auto and you I deliver

Perry Mulligan

we factor and plethora of our example. players what's device. with is the a just capabilities. think an And LiDARs announcement called discussed second the would the bit companies, compute per comparable. is of values to to the recognize those the today our we solution be to XXX the cloud space our form knows use to There’s them detection I to call for ability Kevin at most lot you of the XXX other most points But state it relevance as enable overall. spinning leading important that that lines and have been system a product -- We as We if So on resolution the that where localize million come believe look that them, edge, do today more algorithms of trying major leading solid learning machine of can. on the aspect a company in solution improve is to edge level revolution to system respond out They latency medium Company quickly, macro cloud lines is XX on and that in heard Velodyne. the the of that of product our point densest a was it will I the the from one the is object

the really we at clarity that to it's device well. beyond that truly capabilities the the processing device expect think So, significant level the is come of itself, improves latency we from resolution as that

Kevin Dede

The an upgrade discussion kind you other into are really some interesting of process? how gets was of of tech Perry MEMS. bottom top and in the ASICs of influence I'm wondering that incorporated thing that development working to customers was timing new delay customers your where that not And whether the going the market? devices touch the your have and that are already to you within the decide Can to might on there new lab? on your or your much

Perry Mulligan

machine of MEMS significant And and have learning, ASIC any firmware one cost. performance the every that improve opening lower to digital remain one I we required analog of are improve to Thank you those referenced these evolutions solution, any for time undertaking. to much appreciate that to with Anybody really or ASIC, of and that quality, up are and so us. each a solution current in understands for platforms technology length question. to of you for the that’s been

For us time to in a are be that they this flight, and team. in this all you point to able XXXX production to at all testament support all tell ready landing expected to in is as

still and that for to how the us idea You devices the we our are on what a proud level as X Tier those we demonstrating has because Very having organization. of we is team have earn we contributions and those OEM significant said right have the that did truly at the progress valuable conversations there. how been with enabled and they no are performance of a processes high

Kevin Dede

and simple year next be that got just that is customers will to said? we I you like -- I stuff into answer the going for our we all So, equipment yes, mean of we basically, have guess ready

Perry Mulligan

Exactly, in fact process. cause that things and and the this many not a recognize it over that recognize trip like fact organizations their is the many, dumb and assemble delays question,

not are those we we are are fact promises We that proud making to ready go. of and that the

Kevin Dede

question Next to intend hope you that me you you? what come how And just wow there? to show on people CES for to

Perry Mulligan

hopefully that us. do I of be to you trust that visit come those will one people

you and customers interactive As be our in the suite will demonstrating CES, entertain we capabilities products. our know, LiDAR and our of private display of consumer we

excited how So, we will really be about those received. are

Kevin Dede

Would that video you second that you by that that available discussed point? would you expect that expect be

Perry Mulligan

be I December. that will available video expected second in

Kevin Dede

and contract. This did the one, of $XX you that some tough that contracts to for chance initiatives more other the you provide but speak reference But is could million of a that of can the there underway? probably some -- is have a size interactive that you sort space given that display

Perry Mulligan

Just of that we support that transfer May and year recorded of the in to to agreements products this the exclusively we our $XX only in as licensee agreement clear was requirements and the sale to have to Kevin, display occurred, this license, be that’s and why manufacture revenue of signed QX. million the

to of components market So, be products enable that was our support. implications manufacture, specifically to and would come technology and to those so supplying to them to

Kevin Dede

going guess misunderstand I revenue no there's that There no other with agreement other Perry? that are did Now forward. -- associated I

Perry Mulligan

that No, we Kevin. specific were very on

use component that we with identify the to we were components there’s to minimum time required right. and that them, requirements so, us the signed the purchases. sales expected the do us We technology, associated need enable from there to at from that component agreement the They

was technology and production. into to there for the transition that stabilize allowed also a period the move We identified them

of quantities $XX in articulate immediately. didn’t that on the million components. would So approximately We an those minimums did annual on order minimum depending mix represent basis kick

ongoing So that’s relationship. how that sized we

Kevin Dede

some second other similar product year. next contribute the around wondering of the you hope in you that that could was I to half parameters there discuss if of to to those revenue families were

Perry Mulligan

Yes.

volume we timing So, ramp haven’t identified the our we’re that for module interactive the and sales for displays. articulating

Operator

any and gentlemen, like turn Mulligan back would to Ladies question-and-answer for to concludes session. remarks. conference the this our closing I Perry over

Perry Mulligan

business Thank several their a employees, over you, reporting Have next we the thank partners to progress quarters. and closing, our and for operator. day. great I forward In to our support, investors look want our

Operator

presentation. you is conference Thank Thank for now today's concluded. you, sir. attending The

disconnect. now may You

MicroVision (MVIS) 25 Oct 182018 Q3 Earnings call transcript