KOPN - Earnings call transcript Q3 2018

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Operator

Good morning. My name is Emily and I will be your conference operator today. At this time, I would like to welcome everyone to the Kopin Corporation Q3 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator Financial may Chief your Officer, Sneider, begin you conference. Rich

Richard Sneider

strategy, X, everyone XXXX, joining and projections, your not to, statements. and and and from Litigation questions. subsidiaries, that subject could with number differ of results a These morning. will the risks on actual our results I that Potential market I at thank will our remind estimates quarter during everyone, be level, include, those recent statements the uncertainties on conditions our discussed our to the us call. go a and limited through materially will with take of Exchange report undertakes to you and over to our that, obligation of company a turn Commission. results place in today's are most the current Securities demand other annual with to are statements today's call factors to other forward-looking happy Welcome, we'll and Thursday, for The risks Reform making cause products, operating forward-looking beliefs on expectations, Form and XXXX today's like prepared are November update we to the call no be for made documents filed during in forward-looking XX-K this the defined XXXX. I'll remarks statements taking And call, third then would based company's market. begin Act John discussion as of Securities John high technology conclude will and Private John. but

John Fan

of as of discuss cost Kopin wearable joining quarter is enterprise for many us Thank industry and was AR for and The in third space at you. our partners. enterprise option well cost developments adoption our as highlight sales. results to industrial QX Thank this a morning in enterprise the as for to accelerating our you

the of some QX. Let events me that review in occur

The major X was to AR initial display milestone at medical early environment. very AR and smart shipment a smart also training, was customers other company for smart in with productivity experts in launched workers U.S. useful display that generation mover of to for has hands-free our First, we modules of The a shipments the of by a improved to least our of functions soon with be an next document glasses to to [indiscernible] and glasses. have X,XXX of handset development Kopin. development are tier enabling data module benefits to remote was enterprise and safety in communicate provide glasses applications manner. the

rapidly in We shipment XXXX production. to full as to expect product moves ramp that

by order that across our We the of increases verticals enterprise AR. interest headset benefits are also many other seeing spending companies of the reflecting customers, significant see

our is companies being of also announced new countries example, Colgate-Palmolive goals across verticals applications has deployed and product and show its recently AR being XX the consumer utilized like partner in For as in companies Volkswagen which with like deals while is manufacturing RealWear facilities RealWear for XX leaders Honeywell. [indiscernible] unique with HMT-X number auto industrial headset many how with to it's working each a technology. such in

demand Another a [indiscernible] for Kopin's block as customers NXXX non-similar its device.

for We AR enterprise glasses XXX,XXX or display expect ship over modules to our units smart XXXX. in

fuel glasses quarter. customers smart targeting testing Infinity will this enterprise [indiscernible] our anticipate begin with the market also We

to what Chile It for that by quite look commercial a Kopin’s by a mini-PC controls. camera to display, different and Fortune tasks, in improved XXXX. Golden-i from advanced Infinity high-resolution or [Indiscernible] radio including no many connects demonstrated our Infinity is has interest user shipments providing. smartphone a companies integrated our approximately parental their a our factor multi-access have head QX and voice It technologies, has The it We that including very are unique cable. partners core tracker. and But helping customers a has restaurant. utility rate XX form hands-free potential XXX directly daily the recognitions display, to benefit instruction we workers battery begin utilize speech device. industrial or interface on whisper residing into high-resolution

year. now for our we that production military F-XX We’ve F-XX business. late Let’s was in pilot’s a business. in a contributor helmet discuss received contract September sales significant again have to military announced next

unit FWS-I we the production received has Our and first order. qualified, been fully

in under million follow-up the $X.X eminent being order and that expect We is shipping to begin informed coming. November contract we’re just

delayed, slightly We because suppliers. the and on was getting is issue shipment is of issue the track. believe our the Our supplier now resolved

Let’s turn our defense next for to product. the defense contract development program

glasses. achieve the dominant armored military to pay to These And the are FWS-TS we’re revenue. AI supplier and two expected previous the for Kopin enterprise smart continue In both by be programs the continue strong demand program. bring vehicle a for very production summary, for we applications. milestones two products We the significant seeing to

likely a While enterprise gaining understand those spread to is and a believe AR matter, assignment, minimize our sharp what AR components impact. traction, [ph] a a product the will to in VR the situation drone our be war a this push and discuss I'm for noticed strong especially applications. is VR especially VR the time to the wide adoption, there for VR with the flying customers, which for similar wearables, enterprise industry becoming pause reassessment affected can Asia is pilots, and to negatively fail, before we certainly tariff move to consumer in initial China, AI undergoing who to Further tonight done momentum. our complicating by buy Chinese that a trade is it suppliers over the applications challenging market. further we applications It’s After [ph]. customers,

would details of discuss financial quarter. turn to this call Rich Now, I to the the

Richard Sneider

compared to Thank $X.X million million for $X.X the XXXX, results you, of John. quarter Beginning third were third total for quarter with the XXXX. the revenues

to in reflecting an in September was due $X.X a income in R&D of in million quarter - expenses, as primarily to QX XXXX, XXXX. third XX, XXXX the increased representing were of the expenses a expense NVIS margins XXX% third offset XX, the of SG&A was in maintenance increase $X.X result XXXX As in promotion of three million In a revenues $X.X fees. product military filled contracts lower of XXXX. the of a XXXX R&D million with compared expenses last year. XXXX income compared reminder of funded million had the ended with in and QX those a certain of essentially was place. compared third internal Other $X.X compensation, in the XXXX, were third the quarter quarter volumes. quarter XXXX of the XXXX, revenues. stock-based and million they the in in compared about product months the quarter acquired cost due with third to $XXX,XXX third increase for and million XXXX quarter legal of $X.X by three of $XXX,XXX compared September $X.X third SG&A contracts quarter in third expense of for decrease months Gross for third head the as as and XX% patent quarter the $X.X roughly sales decreased Cost approximately $X.X R&D. with two XXXX, of absorption quarter million of ended lower in we lower of expense million

of The foreign in XXXX. currency foreign of the includes of compared quarter quarter gains as XXXX $XXX,XXX approximately third third approximately with losses currency $XXX,XXX of

per net our bottom-line, in the the or loss $X.XX controlling for loss approximately of to Turning was the a XXXX. interest attributable third of or $X.X per compared million share with quarter $X.X quarter $X.XX million to share

full the from quarter AR in previous current with and the to conclude million The no debt. discussed the cash million While marketable million securities sales industrial our with amounts the $XX FS-X year revenue quarter I $XX to and demand are outlook shipments, million from slight long-term in we we delay expect estimates. $XX VR to weakness consumer million. fourth of We and reducing strong $XX.X are just in approximately the and results military $XX.X in our

So, amounts. With filed September XXXX for call me, I’ll I’ll the Excuse turn our review XX, the third we’ll take remind final John. that that, was XX-K operator, sorry. I’m with listeners Form to to or And over quarter ended questions.

Operator

the course. from Instructions] our comes line Galinko Of Matthew from first National Securities. of question [Operator And

is line Your open.

Matthew Galinko

maybe… morning. good guess Hey, Thank you taking questions. my I for

John Fan

Good morning, Matt.

Matthew Galinko

Good morning.

you display modules So, just in expect you of as what AR to one to in that a inclusive for quick -- on of of expect XXX,XXX Golden-i? enterprise ramp the XXXX. I the ship Is you part one think ship mentioned

John Fan

customers. external that’s No,

Matthew Galinko

how curious it. you the talked for that front, Okay. commercialization your didn’t And And bit hear of there? you on consumer going a little product Got building on you. past, wearables about touch channel that, distribution particularly then developed, I sort is we’ve a in the internal

front? efforts are going how So, that on

Richard Sneider

So, looked -- are in been product as remarks, this hand it we people’s get we to up over months those QX. with at reception while strong mentioned, starting we we in quarter Fortune into at showed expect has XX companies expect AWE very noted awaiting several and to our the shipment back, recently we as XXX the production have samples and and

as to model and going identified to also centers. signed we’ve distribute contracts fulfillment bar we’ve We’re And use discussed it. a with

place. and part together coming in most is network distribution the So, for the it’s

QX. issues behind be those So, all us as we enter should

we need the initial then point, as revenue. product. start shipments on just And generating in this feedback at we would QX So, the expected,

John Fan

glass? Matt, are the consumer AR the Golden-i the you talking aspect about talking about of And you are or Infinity

Matthew Galinko

consumer The athletic wearable.

John Fan

Yes.

think I SOLOS. is this about

here. there introduced hardware. find are second is pretty John One Fan good. me two late Let hardware happening. things that speaking quarter, sometime And is in and actually quarter second -- actually this We the the answer the SOLOS actually are is late

What additional benefit doing we is people is with the fact, good I making the are only cyclist be application of become are you very soon. software, a people’s are market software softwares benefits the with said people we connecting in partnerships that, that are now a good. with coming and for With will clear. seeing very the that that as everybody’s the we companies lot hardware and I’m very one In inroads is reviews now think sure

So, and the with are we the are with actually rapidly working and happy easily we benefit. hardware very

still from hesitating. enterprise very think to has now. I everything AR So, we that’s really to Remember glass has people said, The world consumer. go AR consumer, are problem enterprise transitioned military even interesting to because for a today as

be I think is -- it the stage is to consumer. next going the

We from are nearly consumer. military and has jumped a to

for think they now enterprise first. the [Indiscernible] work world are and I then pausing

Matthew Galinko

Got you.

and and are talking established to are approach merit of and wearable to reception partners that against what of on the units industrial kind then Okay. Golden-i and first they or of wearables I cast appreciate market? design and existing sort up maybe kind that. sort you different your the evaluating it’s Golden-i, on without design doing. sort the have at its sort than comparing fairly own the of of customers And of of looking wearables industrial potential lining looking How this are on a necessarily at is other are their

John Fan

this broad through industrial different layers the for industrial think world, me that middle in [ph] where and and get even Let enterprise, ruggedized it applications really question. they is wearable consumer especially of mobile the in where I They eventually going answer world, world. assistance. industrial See workers application that especially want is

are mobile workers. So, their truly is what targeting in fact we

and had lightweight, probably radio they very no lower So, because they -- battery, processor. no are much cost no low

You are just already industrial cellphone people using. their existing in coup or PC who up mini to existing

and very want So, any phone a contrary have battery. way some category. don’t me that to thoughts to it’s in tied you’re different cut actually is PC It’s that to a normal

as which the all have different were jobs. distributed. the And I it’s They now. in of So, they entire the of work and a probably a customers right handsets production. to right There customers, thing about world we we because ultimate talk do in enterprise did recognize is we such too the also, the the the our mobile, market lot thing partners we with pioneer And because appealing know, broadly workers. no now kind XX% think world and and have industrial in

more of say with the would know we many because it’s our this cost, lighter really actually say I weight customers. also that -- a many screen So, some like in is what broad, -- camera. smart the lower ways we’d And of see liked really just customers there, to customers a --

much they their PCs piggyback, very all on Maybe So, is already outdated, performance system that. it’s don’t speak for the too and you phones, change I a get enterprise if world. good very,

next I’ll the question. So, take

Matthew Galinko

mic the queue. hogging I’ll I back think I’ll and stop jump in the

So, I the appreciate color.

Operator

And from Newbridge. the next of [Operator from Metcalf Patrick our Instructions] question comes line

open. Your line is

Patrick Metcalf

guys. good Hey morning

John Fan

morning. Good

Patrick Metcalf

how product and question good And for customer that information before give you my on you have feedback from it customer? internet the you’re a some Whisper update to this you company more can maybe business us is technology John, then getting that? on U.S. on units done next you with how Chip is see roadmap is playing XXXX an or the and out the the is customers this shipped brand-new

John Fan

world AR is that noticed the smartphones interface Okay going have - trip for I’ll wearable is the customers customer be by many good Whisper of to whole human be been with to Back about both held in look one to touch is John What before. Asia for The hand a in very-very is question have glasses it the recognize is importing years. is and But it the anything Whisper. a one wearable you touch. there now screen that done partner on people to of one my business is can good invented is that doing answer to voice, AI voice. for to is talk a thank us wonderful going the first, humans, for purposes actually thing begin now avoid the It that or touch Peter it’s of you question. we was and so good they smartphones. we a it have touch ready know

now voice as to the is are going the were activities a touch. on there next lot voice of so, the And be

handsets. Golden-i we in Whisper’s the and Whisper Golden-i in product fact Golden-i power in our in Infinity. Golden-i of the SOLOS So, Infinity actually both in in Infinity launched wear also also is we is why our the real that’s actually Whisper course

now and it, our check in market So, but a panel the our and the is on customer and ability going we performance right now is LED in Whisper noisy environment. in the check better especially

in Golden-i done So, has and no active is is by has so thing is now ever this to is Whisper people whole in is we product well we by touch, the no the see voice right in head has thing any human should more first I’ll which starting the really be there’s tapping think free, time time products gesture. you The the so accustom performance to is all Infinity product, hands going as Asia voice, touch very talking be about interface the control that it whisper totally to going doing by see experience Golden-i and Infinity go it are to the first by I there’s as no and come well it. in there’s and whole been up and good it - the by

Patrick Metcalf

is with like software that Bluetooth I roadmap Whisper Bluetooth the would believe licensing to any there a or Okay, something in have a great. chip to patent on Whisper granted Whisper that the had you then a And a the one Chip embedded company be Qualcomm been like is follow-up possible? or you the Chip chance

John Fan

loaded importantly Yes, can micro-controllers many we can Whisper too. kinds, be that it’s appealed loaded into in processor any I there think be of

algorithm there it’s licensing of model that a will into of chip So, we sale chip processor which get there is our the then processor. standard course so and people have model with a a also deal a is model the Whisper a

because VR a to many very people begin next of that I’m what takes are to interface. by little there but -- excited think kinds had coming very, So, recognize is And up. different models it, in I time it ways,

Patrick Metcalf

medical this -- a you great. saw And signed I a partnership Okay, device… with just

John Fan

are We them about Most around patents of -- Whisper. a of them lot XX issued. have

excited we’re that Whisper. So, the glad very about I’m asked yes. you question,

Patrick Metcalf

equity company And Okay. done up you’re for New IP them idea different world just had your Can Did think market equity the you AR BOE, VR build venture. with Good, a an company, on so an that in the you or stakes your for in in using stake then a have to medical don’t up the how RealWear, AR ventures guys little signed to device us a because Vision, IP device color in of good. like that? joint lastly, recently you surgeons. for you many deal with give Lenovo’s appreciates I give bit your

John Fan

Yes.

Let me answer BOE is at transfer an In It’s all. is that. important joint case, venture, there the IP question actually. no it but

technology no is transfer. there fact, In or IP

In and concept of lot model models, the our do with our clear model the which models in between. is for equity. some licensed somewhere We of a product the of is lot is model, concept very significant reference licensed a the a like the that of we do one a joint glasses. smart of reference get We reference deeper in which In involvement case, so, a our equity our models license, Infinity, actually full a normally case. remember venture Lenovo Lenovo, RealWear of care we with we reference model, there. one And and of again -- which

the promise and on reference and loss So, of are -- also model, as of course license anyway as we components is our this now they especially license some reference of our small our the equity. that exclusive of by well aggressive the that, part for they top And can’t significant royalties very model favor and start-ups. are of kind right pay now patents

license We models. reference them will especially

Patrick Metcalf

big the is And Well, going the this you’re think be work. I tide to Okay. I a up opportunity. doing. good like when turns; what Keep

John Fan

Yes.

what’s and then earth. happened the industry you between VR if companies overseas of it were the happening a and disappointed And rapidly, The what’s significant the stock everybody wearables The here in and in wearables. fell impact. look especially whole very spike as area, we disappointed. VR it. the trade seen think And the with certainly the recognize to and aiming happening well as many is war I have huge some is around everybody was VR

XD However, come it’s a will We back from TV. things again. think reassessment, nice it’s and pause different regroup and a

Patrick Metcalf

Okay. Great, John.

-- buy You in market seems it greatly referred done VR past stock, one would point, bottoming the seems you. great in be you’ve appreciated. would Thank be AR with be and last it step the like market here, your to

John Fan

Thank you very much.

Operator

for Instructions] no back this John questions Fan further call turn over I [Operator at have will we to And remarks. time. closing the

John Fan

for very see joining Thank you. much January. the hope you this in CES next Thank coming of to you I some us morning.

Operator

This conference call. concludes today’s

now may You disconnect.

Kopin (KOPN) 8 Nov 182018 Q3 Earnings call transcript