Q1 2021 MicroVision Inc Earnings Call
[music].
Welcome to the Microvision first quarter 2021 financial and operating results conference call all participants will be in listen only mode.
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I would now like to turn the conference over to Lindsey Stepper. Please go ahead.
Thank you good afternoon, and welcome everyone to Microvision, Inc. First quarter, 'twenty, 'twenty, one financial and operating and operating results conference call.
Joining me on today's call are Sumit Sharma, Chief Executive Officer, and Steve Holt, Chief Financial Officer Dean.
The information in today's conference call includes forward looking statements, including statements regarding exploration of strategic alternatives sale of our product verticals, our technology sale or merger of the company or completing any such strategic transaction.
Maximizing shareholder value and managing costs.
A potential customer orders future royalties progress under and benefits of existing contracts and license agreements and the negotiation of future agreements customer product launches advantages of our technology litigation business execution.
And projections of future operations and financial results availability of funds product development applications and benefits availability and supply of products and key components commercialization of our technology future product Roadmaps Patel.
Product sales potential impact of products in the market.
Ongoing development of technology scalability of technology and designs expected performance of product comparisons with competing products or technology market opportunities and future demand as well as statements containing words like opportune.
<unk> per.
Hentschel, possibly intend believe goals.
<unk>.
Expects plans will could.
Would likely and other similar expressions. These statements are not guarantees of future performance actual results could differ materially from the future results implied or expressed in the forward looking statements. We encourage you to read.
<unk> various SEC filings, including our annual report on form 10-K filed on March 15th 2021, as well as various other SEC filings made from time to time in which we discuss risk factors associated with investing in Microvision, Inc.
These risk factors could cause results to differ materially from those implied or expressed in our forward looking statements. All forward looking statements are made as of the date of this call and except as required by law. We undertake no obligation to update this information.
The financial numbers presented on the call today are included in our press release and in the 8-K filed today.
Both are available from the Investor Relations section of our website.
This conference call will also be available for audio replay in the Investor Relations section of Microvision website at Www Dot Microvision Dot com.
And now I'd like to turn the call over to Sumit Sharma Sumit.
Thank you Lindsey.
Good afternoon, everyone.
The last 14 months have been incredibly busy and productive at Microvision.
Today I will cover some of the important achievements from our automotive lidar product development and their potential impacts.
Our target areas of execution going forward.
We believe will increase shareholder value.
To provide a business update.
First.
I want to thank our employees for their continued dedication and execution.
Multiple times in our company's history. Our team has performed exceptionally and delivered products based on our technology. So we believe we're far ahead of global competitors.
Our employees are incredibly smart and talented and I continue to be humbled by their dedication to make microvision to success.
Let me start us off today by updating you on our first generation long range Lidar <unk> sample and the potential impact it could have.
I believe this sensor could offer a much higher level of performance compared to any lidar currently available or announced in the market.
Our team successfully completed our a simple hardware and development platform on schedule.
Our a simple hardware are seen in the pictures share in the press release earlier this week.
Is targeted for potential customers.
Partners and parties interested in a strategic transaction.
And can be mounted on top or behind the windshield inside it does vehicle.
We designed this hardware to support automotive level.
Moving platform testing from the ground up.
Our robust design also allows us to target this hardware for initial sales in second half of 2021.
Following completion of internal and external testing.
I will elaborate on this a bit later on this call.
We expect our sensor to meet or exceed current target OEM specifications.
Microvision is lidar sensor is expected to perform 250 meters of range.
It is also expected to have an upward resolution of $10 8 million points per second from a single return of 30 Hertz.
A lot of our companies communicate product resolution in different ways as you may know.
I think looking at points per second is the most relevant metric to compare resolution performance of competing lidar sensors.
We believe our sensor will have the highest point cloud density for a single channel sensor on the market.
Our sensor has also been designed for immunity to interference from sunlight and other lidar sensors, using our proprietary scan locking intellectual property.
Our sensor will also output axial lateral and vertical components, a philosophy of moving objects in the field of view of 30 years.
I believe this is a groundbreaking feature like no other neither on the market greatly from time of flight or frequency modular continuous wave sensors are currently expected to meet.
Let me elaborate a bit more about the potential importance of this feature.
Yeah.
The capability of future active safety and autonomous driving solutions to predict the path of all moving objects.
I'll give to the Eagle vehicles at 30 <unk> is one of the most important lidar features.
This is significant because these active safety systems are cash when determining and planning for the optimum path to safety.
Providing a low latency high resolution point cloud at range is an important first step.
However.
Having a detailed understanding of velocity of moving objects in real time enables fast and accurate path planning and maneuvering of vehicles.
Sensors from our competitors using either mechanical or Mems based steering time of flight technology currently do not provide resolution or velocity of pushing the levels of our first generation sensor.
Italy.
Flash based panel flow technology has not demonstrated immunity to interference from other lidar, which is a big issue.
This potentially limit the effectiveness of these sensors to provide to be considered as a candidate for optimal lidar sensor or as a primary expenses can be considered for active safety and autonomous driving solutions.
Required for 'twenty 'twenty, four 'twenty five OEM targets.
Lidar sensors based on frequency modular continuous wave technology only provides the axial component of velocity by using Doppler effect and have low resolution.
Length of period for laser must remain active while scanning.
The lateral and vertical components of velocity missing lower accuracy of the philosophy data would make predicting the future position of moving objects difficult and create a high level of uncertainty.
The core function of active safety hardware and software is to accurately predict what will happen and adjusted advanced book a dangerous events.
He is listening velocity components could potentially mean, a larger are estimating philosophy compared to actual philosophy of objects and predicting and correct position.
Let me share an example.
And Eagle vehicle moving at 60 miles per hour and its target vehicle.
Moving at 25 miles an hour relative to the Eagle vehicle.
Covered approximately 11 meters in a single second.
Our sensor updates position and velocity 30 times per second which will enable better predictions at a higher statistical confidence.
Other sensor technologies.
If the target vehicles suddenly starts changing its position relative to the eagle vehicles.
In active safety system will do a much better job you could have more precise positioning of a loss of data of the target vehicles.
This could mean the difference between active emergency braking stopping short of an accident versus a potential collision.
Essentially that can provide an accurate detailed picture of physician resolution and velocity of all objects relative to the eagle vehicle at a faster frame rate.
Better active safety systems.
Delivering staple ability at the speed of light requires a sensor that is fast and data output is.
As high resolution. So it can classify objects has appropriate cost for large volume scaling and provide precise velocity and range of objects to predict what will happen in driving conditions all of his experience day to day.
Yes.
When evaluating later specifications from various sources.
Forward to consider the context of actual risk and the driving experience all of us have.
I would also like to provide a fuller picture.
What our product roadmap could look like and why it is important for our value.
We expect Microvision long range Lidar sensor, we'll have two versions in the future.
Our first generation sensor is the first product in this road map.
A future generation sensor would be a more advanced version that could have the same hardware layout as our first inertial sensor.
The future sensor could also include our proprietary software that will provide features needed, Florida standalone sensor use for active safety applications.
I want to expand a bit on the importance of this future product and the value of this could present for our shareholders.
I think what I believe to be the best in class first generation sensor gives us a huge step up against competition.
Yeah.
It also provides a very capable team with a hardware platform to further increase value from potential partners and our shareholders.
In the short term I expect our team to continue focusing on internal and external validation of our first generation lidar sensor and any potential confidential the valuation from customers of our partners.
And the long term I believe our future sensor could provide features like active emergency braking accurate emergency steering.
Pedestrian active emergency braking and active lane keep among a longer list of higher level Adas features with Microvision software running on our edge computing.
I believe our lidar sensor with embedded software that does not require massive amounts of external computing will ultimately reduce cost of the system for OEM.
Thus potentially accelerating adoption of vehicles with autonomous driving and active safety systems.
I expect key features as our first generation sensor like highest resolution flow velocity component community sunlight. Another lidar would allow an incredible opportunity for us to add significant value with our software for a greater sustainable strategic advantage.
I believe future products built with our software sensor performance edge computing and scalability.
It would be valuable OEM tier one automotive suppliers companies that our focus on mobility as a service and therefore, our value to our shareholders.
As we remain focused on exploring all potential opportunities to increase value of our company a portion of our team will continue building towards this roadmap.
I look forward to reporting on our progress.
Another major advantages of our technology it has capability to demonstrate scalability.
The demonstrated this successfully developed and installed a long range Lidar sensor pilot line in Redmond, Washington.
This product line is sophisticated.
It includes six custom active alignment stations that our team developed working with our automation partners to enable scalability and performance.
Our team has launched multiple product lines in the past for our display augmented reality and interactive display products.
I am very proud of our team's ability to fly their expertise and complete this pilot line on time, given the challenges with the global pandemic.
This product line will allow us to validate design and manufacturing processes in house in faster cycles.
We expect limited quantities produced from this line will support exploring potential partnerships.
Pilot line would also enable us to take our design process maps and control plan and launched a new highly automated production line to support expected initial sales inventory and second half of 2021 through a contract manufacturer.
This future production line in Asia will eventually have the capacity to produce between 12 to 15000 sensors per year, starting sometime in 2022.
The purpose of the second line is just show the next level of scaling.
The ultimate capacity of this production line can be adjusted to meet volumes as required prior to mass production in 2024 25 timeframe.
We continue to work to mitigate risks to our plan due to COVID-19 and other limitations.
The key element to do show scalability of our technology comes from being able to scale, our highly reliable cost effective solid state beam steering system for automotive use.
Okay.
This month, we launched our fifth generation meant to a 200 millimeter wafer side with our Mems fab partner.
This is of course, not a new effort for us.
We have launched our Memphis scale in the past with a third generation that was using Sony product and our fourth generation men that was part of our April 2017 contract and are currently in production.
Advancing our fifth generation meant for the Fab is a big step for this program that will allow us to demonstrate the potential partners our capability to meet future price targets.
I am extremely proud of our team to achieve this key objective with all the challenges faced in 2020.
Yes.
I would be remiss, if I did not mentioned that a long range lidar sensors designed and developed internally from our proprietary Mems based laser beam scanning technology.
This intellectual property has been developed and proven in various programs or more than two decades.
Our differentiated sensor has built a large body of intellectual property, including more than 400 patents.
I believe this provides us with a competitive moat and hardware and software for years to come and a very important sustainable strategic advantage.
I would now like to briefly update you on our exploration of strategic alternatives.
I believe our technology and products are at an inflection point in multiple verticals.
I want to emphasize that the company remains committed to exploring all strategic alternatives to maximize shareholder value.
In October 2020, we set the objective to complete a lidar product and said having hardware that can be product ties will be an important step from evaluation by potential interested parties.
We completed that objective in April as planned and are prepared to support any potential evaluation of our technology and capability to scale.
Yeah.
As I shared earlier today I believe our sensor technology is differentiated by features that will potentially be recognized as disruptive in the market.
I've shared with you that I believe consolidation in this space will continue and the signs of bids are starting to become public.
I believe microvision needs to continuously build value with our product roadmap and partnerships, while also exploring strategic alternatives.
Given the continued consolidation of the market I believe this is a pragmatic approach as we seek to maximize shareholder value.
I want to emphasize.
Our primary focus will remain continued validation of our first generation Lidar sensor and support any customized evaluation data from potential partners.
Finally, we.
We ended the first quarter was $75 $3 million of cash and cash equivalents.
As Steve will share our cash requirement and plan for growth are under control, providing a sustainable runway.
This allows us to explore all options from a much stronger position to maximize shareholder value.
I sincerely believe our company now has been one of the strongest position in our history to be successful.
We are in a solid financial position and potentially have a disruptive new product in a market segment expected to have global impacts.
The work required on the road ahead, it's hard.
I'm truly energized every day I think about our future and remain profoundly optimistic in our path.
Now, let me turn over the call to Steve to discuss first quarter results Steve.
Yeah.
Thank you Sumit good afternoon, everyone.
For the first quarter revenue was $479000.
A 21% increase over last quarter's revenue of 395.
All of the first quarter's revenue was royalty revenue and attributable to our April 2017 customer.
We're pleased to see an increase in royalties over the fourth quarter and look forward to our customers' continued success with the sale of their products.
As I pointed out before royalties related to our April 2017 customer will be credited against the nonrefundable prepayments that customer made in 2017.
Once the prepayment is exhausted customer will begin making cash payments from royalties due.
At the end of Q1, the balance of the prepayments stood at $7 3 million to $7 3 million is on the balance sheet as a contract liability.
Okay.
Our first quarter cost of revenue included a $5000 credit related to the reversal of a warranty accrual.
The result is that the first quarter gross profit was 484000.
In comparison gross profit was 395000 in the prior quarter.
Operating expenses were $6 7 million in the first quarter up from $4 million in the prior quarter.
In the first quarter, we put in place and employee incentive plan to retain and motivate our team.
The expense recognition for this incentive plan increased our operating expenses.
The approximately $1 $2 million in the first quarter.
Total non cash compensation for the quarter was $1 6 million.
This expense is a noncash item.
Other causes for the increase from the company's portion of payroll taxes on employee stock option exercises and vesting <unk> Awards. It was also increased spending on labor and benefits due to an increase in head count.
And an increase in materials and subcontractors from the development of our first generation Lidar sensor.
Our head count at the end of March was 57% up from 47% at the end of December.
For the first quarter, our net loss was $6 2 million or <unk> <unk> per share. This compares to a loss of $3.6 million or <unk> <unk> per share in the prior quarter.
For the first quarter cash used in operations was $4 5 million, which compares to cash used in the prior quarter of $4 2 million.
Again, the non cash compensation I referenced a minute ago was the primary factor for causing the cash usage to be so much lower than the operating expenses.
Cash and cash equivalents at the end of the first quarter were $75 3 million up from $16 9 million at the end of the prior quarter.
The increase was the result of proceeds from the 200 Atms, we completed in the first quarter and we discuss those on our last earnings call.
Yeah.
I'd like now to turn to the second quarter and give some thoughts on our spending and cash usage as we move forward through this year.
I expect an increase in operating expenses in the second quarter as I mentioned earlier, we initiated an incentive program that uses equity to retain and motivate team members.
Those programs will continue through this year and the expense recognized in Q2 will be similar to the $1 2 million recognized in Q1.
And then expenses expect the expense related to that program to decrease to about $1 million in Q3 and 800000 in Q4.
Additionally in April the company signed a three year employment contract with Sumit as CEO we.
The agreement the agreement eliminates any cash bonuses and instead, primarily used as equity for CEO compensation.
The agreement was designed to align CEO compensation with long term shareholder interest.
The agreement grants and consume at one 2 million shares over three years and will likely generate noncash compensation expense of approximately $7 $5 million this year.
About $5 3 million will be recognized in Q2, and then about $1 1 million in Q3, and $1 1 million in Q4 again, this expenses and noncash items.
As for cash expenses.
We expect we will continue to add head count at the pace of around 10 to 12 people per quarter for the remainder of the year.
Primarily in our engineering organization as we further advance the first generation long range Lidar sensor and prepare to start production.
Additionally, we expect to backfill some of the support positions that were eliminated in our February 2020 head count reduction.
Taking those items into consideration along with other spending we see Q2 operating expenses in the $13 million to $14 million range.
Given that much of the increases in non cash compensation.
We expect cash used in operations to be in the five to $5 $5 million range.
500000 to $1 million from the $4 5 million used in Q1.
Additionally, you may have heard about tightness in the supply of silicon chips.
To mitigate the risk of supply shortages, we have ordered inventory for some long lead time components and we're expected to arrive in Q3.
But if they should arrive before the end of Q2, we could see another $1 million to $2 million of cash used in operations in Q2.
As Sumit said earlier development is progressing well and to ensure the supply of components needed to meet our plans. We concluded it was prudent to place orders for those long term lead time components.
Before we open up the call to questions. Let me add my appreciation for our engineering and G&A teams.
The engineering team just days ago completed the sample hardware as a development platform on schedule.
This feat was something that some said they couldnt do much less do on schedule.
And they were supported by a top notch team and our G&A areas that we're able to support the engineering engineering effort and also maintain the public company compliance and controls that are so necessary to our success.
We're very fortunate to have so many outstanding people working at Microvision.
And with that we'll now open the call for questions.
Okay.
We will now begin the question and answer session.
Ask your question.
Star then one on your telephone keypad sure using a speakerphone. Please pick up your handset before pressing the keys.
Draw. Your question. Please press Star then two.
Submit online questions at any time today using the window on the webcast.
At this time, we will pause momentarily to assemble the lobster.
Our first question today will come from Glenn Mattson with Ladenburg Thalmann. Please go ahead.
Hi, Thanks for taking the questions.
Congratulations on getting the.
D a sample out for the for the Lidar products. So.
You set a milestone and you hit it and that was a.
Terrific work I guess, then people will start thinking about what the next milestone is and you kind of hinted multiple times that there'll be <unk>.
Available for shipment in <unk> or four <unk>. So.
I guess it is.
Your expectation that you would have multiple.
Multiple shipments by then if so when would the timing be like would you be able to announce them, maybe not announced the customers but that.
Similar to April 17 contract that you got a customer or two or three in OEM.
That sampling the equipment any any thoughts on the kind of roadmap.
From the news flow over the rest of the year on that on that front.
That's a good question Glen.
So I think the way to think about it is I think Stephen I have both mentioned that these are initial quantities.
So we're looking at a couple of hundred and.
Think about them in the terms of.
More like direct sales, if somebody wants to buy and do moving platform testing and they need.
<unk> sensors for their fleet or whatever.
A range of options that come through this right. There's lots of companies out there are not only available publicly because at that point, it's been validated by us and external parties and.
It would be something we would offer goodbye.
MFC has to add something but I think it's the initial quantity part is important point to remember.
I think what we said was we're.
Where can you get the production lineup in Q3, Q4 timeframe, we will be doing our internal and external verification reliability testing compliance testing and B and then plan to sell.
His initial quantities in the later part of the year. So that's sort of the what our thinking is for this year in terms of getting the product out there interest sale.
Okay right, if we take our April 2017 customer right.
That contract running in production therefore, we always have.
There is a proof of concept that we are in that space and we are providing part the automotive lidar, creating reputation for long time is important. So therefore this line subject Vishal scalability is very important actually and I think I mentioned this last call as well.
Equally as important is technology.
And we are actually in a very good position from that.
Right.
In the past you've said.
The getting the product.
Completed would kind of derisked the story potentially four.
Potential acquirers and you kind of talked about that a little bit in your prepared remarks, but I wonder.
Was there kind of a lull in negotiations while people wait a few to finish this and do you expect now.
That it would pick back up or just any color or clarity on.
On that would be great.
Yes, I think we were clear that having the ability to prove what we were trying to what we were saying we could do was critical.
Progressing things along and and.
So.
Total can't comment on the process.
Other than that.
Yes.
Okay. Thanks, and the April 17 customer there was.
You know a large technology company that one day and it's very large.
Uh huh.
Contract no asked six weeks or so.
I guess can you.
Whether or not you can comment on.
On anything about that or how it would affect you if.
If it's related I imagine you can't comment, but I thought I'd ask.
Yeah, Yeah, we can't we can't comment on that Oh go ahead, sorry, Okay sure and.
So just Steve on the expenses for the components.
That's the only kind of cash.
The major part of.
Most of this is non cash.
Related to the stock comp stuff, but the $1 million to $2 million you said it could come in Q2, but.
If it comes in a little earlier, I was $1 million to $2 million and otherwise I guess that would come in in Q3.
Joe.
Yes.
Okay, Yes expenses, Oregon.
Yes, the day target I guess I'm trying to say, we're thinking that Q2 cash used in operations would be in that $5 $5 $5 million range.
But I wanted to sales there could be $1 million to $2 million of inventory should arrive early that'd be a good thing I guess, but <unk>.
Inventory purchases go to cash used in operations and so I just wanted to put that out there as a caution.
Yes.
Right.
On.
Certain quarter, one day versus the next year could be a $1 million to $2 million swing, depending on how many units Iraq.
Sure.
Okay, Great. That's it from me, thanks, and congrats again.
Thank you.
Our next question will come from Kevin Dede with H C. Wainwright. Please go ahead.
Good afternoon, gentlemen, thanks, so much for taking my question, Steve You mentioned head count going from 47% to 57 day end of the quarter.
And summit you mention.
I guess development software development for that generation the second generation I'm kind of wondering how you're teeing up head count to address the challenges you might find in that with that initiative.
I think thats in the numbers that you gave last time, how we would end up the year I think we worked very closely it's accounted for so there is no changes in.
I gave a little bit more detail today, all what's value right. How do you think about step by step, but I think we've.
Everything we said is it's.
Already accounted for in there.
Today, Kevin we're looking to add 10 to 12 people a quarter, probably the pace, we would see this year.
Oh, Yes, you spoke you addressed support staff and I guess I was just wondering.
What youre going to have to do on the software development side.
Yes, we will be adding people in the engineering team in production areas, adding support staff and that's that's all of those areas are in that 10 to 12.
Per quarter.
Okay.
Got it got it thanks, okay. Thanks.
Can you help me.
Sort of put valuation perspective, gentlemen, net.
What almost $2 9 billion market cap.
And maybe a 20% premium.
I'm wondering how you think that might size up against.
Alternatives I know you spoke to some that you spoke to.
Frequency modulation and I'm I'm, just wondering how you guys look at that.
Yes, im not going to comment on valuation obviously, but.
Think about it.
We said, we will talk about a lot of detail on the call today is specifically.
You have a disruptive product that's able to do something that the final application needs and there is a spectrum of technology companies out there. They are solution does army regardless of what the comparative valuation is I'll, let the market decide that our job is what we control we take our technology to make sure people understand the value of it as depot they want to go as broad they want to go.
And in fact is going to have so I think Mike.
Numbers like you are saying right I think that's.
It's all relative.
And of course, I'm very optimistic about the company I think there is room to grow I always do.
But you know.
It's something that.
It's important for everybody to get to see why from so much time to talk about the innovation that why it's so valuable.
You have a disruptive product in a hot market.
Okay.
Give me that.
It's hard to.
It's been down right.
Yeah, no absolutely that's why I asked for your view, thank you for that.
Hi.
Sure I'll go up and down in our <unk>.
<unk>.
Based on what happens, it's really not like what we have is disruptive and that's the that's the point we estimate.
Okay fair enough. Thank you.
Could you help me understand the OEM the auto Oems qualification cycle.
And maybe the time involved.
So I might be able to compare that against your.
I guess time to development.
Cause you suggested.
I guess full manufacturing in the $24 25 time frame.
At volume.
Okay.
I'll make sure I understand how long it takes them to.
Yes, yes.
So net production lines that can make a sample which is the first step except did say simple design will go through reliability and other things and it could be available for direct sales to anybody obviously.
Beyond that the real answer to your question is that if let's say an OEM was interested in something you have stages <unk> sample to sample and so on which is their development cycle. So whenever they make sourcing decision rested a step by step.
There are always in the market standard features that.
Everybody is aware of.
And its standard qualification of <unk>, <unk>, and GAAP loss and more euro and GAAP loss those are standard with an oem's each OEM because they're competing in the same markets. Each other they have their own confidential things behind that.
Just it's a hard question to answer but the point is those phases as what they stack out look at the maturity of the technology. We look at the majority of the company to look at the maturity of the supply chain.
It's a safety critical device, that's going to have a 15 year tail they want to make sure that they can support it.
For that long. So those are all the things that goes into it so as far as the qualification once they have a target in 'twenty four 'twenty five model years, it's backtracked, and it's pretty well known what the decision will be and how you would go and how they are to value. So the production line the way to think about it is it's a demonstration obviously, there's nobody in the world that can actually demonstrate that level of scale.
The building.
The whole concept of excuse me the perfect Lidar using bunny ears on the phone here.
Perfect.
About the features it's also about scalability long term cost reliability moving all of those things and this production line will just let us allow us to show up what we've done all the time you know as I wanted to emphasize over 20 years. Its not the first time. We've done. This we've done this multiple times successfully so I think we're in a good position to.
But really that schedule is controlled by the individual OEM Theres no general steps, except while generally known that Theyre. After a b C and so on sample to mass production our share production.
Okay, well I can speak for myself, but I'm sure Glenn falls into this as well we've been around through a bunch of those cycles from it. So we understand it I guess it was just.
On the production side right.
It's just kind of hard to fit.
Where you are and how that folds into what.
Actually goes into a finish complete vehicle.
I mean as I understand that there is a.
There is certainly the OEM qualification and then as the intermediary and I was just trying to make sure that.
I had a rough idea of how to think about it.
Alright, alright. So the thing is if you think about it any simple product obviously from an FPGA alright make an ASIC.
But the timelines are known so those are all compounded in and obviously for us from a timeline standpoint, those milestones are probably more important because that's the biggest cost reduction right. There is a great thing. So some of the features that may be NDA application processor like velocity for our first generation product and are putting into our Soc redo Houston.
Cost, we have a lot more flexibility for that so as far as youre thinking about timelines for that.
The first thing is the tier one.
Any company margin Microvision. An example of any company, that's going to be providing or theyre going to be a tier two supplier or the licensing to somebody else. Those are the things that has to be figured out but the OEM. So the question is hard to answer because of that but scaling of our technology, the timelines and whoever does it.
I have to do it or somebody else has to do with those are the ones that have been checked off first and then a decision on how the commercially do it right. So the two separate thing, but the milestone of the kind of set any design that would have an FPGA needs and logging ASIC digital ASIC.
<unk> cash right.
We do something very unique where we are.
Put it all inside our Soc.
Not have to require huge amount of computing, that's actually very important.
And we have a line of sight to that so just demonstrating that as the steps ahead.
Or it will be required for something like thank you so much.
Yeah.
Okay.
Well, thank you very much for the color and the and an ultimate on the road test platform.
Many sensors the Microvision type would you suspect any one vehicle would need.
Hmm.
No.
Let's talk about in general So you see a lot of numbers and Tam There's software there's lots of things mixed in.
If any of us are going to have the scars that happening affordable you can't have mass amount of sensor.
But they definitely want more than one but there is up to five sensors, one could imagine, but there are combination of highway pilot versus traffic jam pilot versus parking so depending on the future.
I read that GM said that they have 30 models targeted for EV and <unk>.
For a five year timeframe for example.
How many of them are going to have these been advanced features those are things that are going to become clear as you know any company who's with us or.
Just a handful of sensors required to get to those higher level of sensors now.
Is it car needs forward collision warning and active lane keep for example.
Our fees are other sensor obviously has had the wide field of view that's required but has the added benefit of two other fields of view. So it gets resolution that range.
So it's very unique in that sense, but it's a real warning required when there'll be another one so it's really dependent upon the kind of features that day.
We're offering in those vehicles, although target vehicles. So a general answer is a long range Lidar, which is the important one which is going to do the.
The real active safety.
That's required and then theres other potentially flash base or some other kind of.
Lidar sensors required for lower speed.
Maneuvering that work in concert with their work individually.
Certainly could be more than one.
Let's be honest because getting as much awareness as possible of your surroundings and these vehicles will be very important for the first generation products. So it's unclear at this point that.
All of US have the same marketing data that that's available and it's got wide ranges of numbers in there and they're all accounts where different numbers of sensors required.
But in general right definitely more than one.
Okay. Thank you Simon Thank you very much thanks for taking my questions.
Pleasure talking to you thanks, Kevin.
Our next question will come from Thai border, who is a private investor. Please go ahead.
Yes, Hi can you guys hear me.
Okay fine.
Hey, congrats congratulations on.
To you and the whole team on all the progress made over the last 14 months.
Well I've got a quick question for Steve and then I've got another question.
Steve last year, you guys had to declare.
<unk>.
And one of your SEC documents and estimate.
For the 2017 royalty customer do you have to do that again this year.
Yes, Yes, you are talking about under ASC 606, the revenue guidance.
<unk> you.
Project out what your deferred revenue and contract liability recognition is going to be for the current year and that's in our 10-K that we filed back in March $3 2 million and.
In the Q when we file that.
Okay, Great I must have missed that sorry about that.
Okay. Thanks.
Right right kind of read the footnotes.
Yes.
I've got a question on the software actually maybe two questions on the software I mean assume that you've spoke about the development platform, which I assume is a software platform.
Is that is that a platform that is going to is used to collect analyze slice and dice. The data that's received from hardware or is it a software platform that actually allows the hardware to be configured based on maybe different.
Different types of F O V a resolution or stuff like that or is it both.
It's both it's a development platform because.
We have already sample anything you want to put on there you want to add some place that you can test it out and put it on and of course, it's apples gas on path.
Potentially if anybody wants to do something unique that day, they want to test for themselves, we would not upset our path of RNA sample because there's a group of people that don't.
Definitely maybe wanting to look at that so our hardware platform that I'm talking about software hardware platform is.
So it could be.
I mean, its flexibility that gives us the flexibility of what is the right place to provide what's needed right. If anybody asks any potential foot person interested in assets are unique.
<unk>.
Either.
But we are starting to want to take like somebody has a question like upsets the entire thing.
Yes.
More than one triple net REIT, so it gives us even more flexibility.
Alright. It makes total sense makes total sense right, where it should be a little bit nimble.
And then and then regarding the software comments you've made today for the potential.
Next generation future generation.
Yes, I heard.
<unk>.
That the.
I view that more as embedded software that's sort of just completely integrated with the hardware and the software to do a bunch of work that would have to be done outside meaning higher latency probably in.
Maybe not as efficient as that is that what you're referring to there when you talk about that kind of software and the potential future version.
That is correct so.
We have all of us.
Focus ourselves on well first of all we don't do anything me too products. So I think.
Most of the investors when they listen to other competing companies everybody talks about quote unquote software. So let me be very specific.
Systems, while we've always said.
We make hardware there is a lot of our hardware and anything would be would be at the edge edge computing, let alone.
So there's companies out there that of course, our mobility companies that have significant software suites.
Another level of automation, a much higher level of five high level four or level for let's say.
That's a different market, a big market and Pam and level III, that's where most of the tons are going to be.
And having something that embedded software that works with the EC without requiring massive computing like five or eight kilowatt water-cool computer that's not reasonable those are okay for development costs moving platform development cars, but.
Computers.
We are very expensive. So you cannot imagine a real kind of ever having done. So is a lidar sensor at high enough resolution fast enough frame rate and free profit lots of data, which our sensor then our sensor has somewhere between one five to two gigabytes per second from massive pipeline of data the processes that edge that.
Allows us to somehow.
So the feature validation independently then you can actually be considered potentially for a primary sensor right now nobody can say if any sense of a refinery or not so that software that I've described today. It is actually a big important part of the story now we have our first generation I want to be clear we call them first generation COVID-19 is a product into hardware and I call. It.
Our future generation without giving a number because it's on the roadmap showing what the value is.
Every one of these things don't have to be turned over if you want to really know what the value is how what the impact is what disruption you've actually caused the arbitron over any of the show people what's possible.
With Dr Technology, and leverage and what it does now if somebody had a path of that future cost of that full sensor suite.
Just from could be reduced.
<unk>.
Once a project that potentially.
The options easier because you have more affordable solutions.
Yes.
So actually the part of the conversation.
No wonder we have actually.
Sure so ultimately.
That.
Your.
Painting, a picture telling a story about how.
Microvision could provide that software and ultimately that is just really to reduce the cost of the overall system solution. It sounds like to me and more efficient as well.
The way I look at it let me just go a little bit higher for us right.
Theres lots of larger companies out there from today's call in the last call I talked about.
Consolidation is common sense, but youre not going to have massive made alpha.
Two hands worth of Lidar companies automotive favorable condensed out.
And everybody wants to know who's going to be at the final payable.
Is it going be specs is gonna be scalability right you can imagine that all the valuations, saying whoever is going to win is going to wind base.
These revenues are multiple years out why devaluations valid because people are making the best maybe they're making Nevada potentially that who is going to be at the pharmacy channel who's going to win.
Right. So you want us all of the components of why you have something that projected out that far.
As a very serious chance of being Katanga.
And.
David and I will speak today, and we're just going back and talking about airbags I think when <unk> came out in the early days same exact thing, but when they became regulation. There's only a handful of companies that are out there in the world that we're supplying all the Airbus. So yes, you want to shorten this is much more high tech compared to airbags as far as what this will be required to do.
So it's in our best interest to make sure that people understand not just the high resolution and those specs, it's beyond that because that data stream or what do you do with it with the software and you first update and you can actually do something actionable.
And there's lots and lots of testing and other videos on Youtube allow you guys to find that out.
I'll take a look at it right and they show you actual accident situations, how fast that happens just I would imagine a computer has to do it faster than a human that was driving that.
I think the interest in good years, I love watching them because it kind of blows your mind acquire FTSE perspective from me, what's important why like all of the things our team is driving from some.
Some of the best people in light of our work at Microvision, Inc.
There's some real good work so that does that.
The top level answer I can give you is that it's really about the consolidation how and converge and you can think about our software is a meaningful part because ultimately that overall system cost has reduced.
Okay, great. Thanks, and one final question can you tell us how many entities have requested the sample is that a fair question.
We're not going to comment on that.
Okay, Alright, alright, thank you very much.
Thanks.
Our next question will come from Jim chronic or who is a private investor. Please go ahead.
Thank you for taking the question my question is.
How.
<unk>.
A buyer or a partner has an automotive company <unk>.
One of <unk>.
Members of its group.
And you wanted to work with them and then the second group comes in I'm thinking of like Microsoft had decided they wanted to go into lighter business and they are going to work with GM second group could be Google and interest from forward because they have somebody on the board that used to work there is your lidar going to be constricted because.
Net.
Little slightly premium.
Relationship with one partner is it going to be.
Strictly to the single automotive manufacturer will you still be able to do business with.
Many more.
Auto manufacturers.
Let's take that question generic Greg because I think it is very speculative right a lot of things you are asking about but let's take a generic I'd like right now.
I think so let's say there is no OEM, one OEM to say <unk>.
Some pockets of people that maybe interest said are going to evaluate the.
The benefit we have is everything we have is homegrown.
Proprietary to us with grown this all from ourself, we own it all.
Somebody else required the company they own it right. Then it's of course, you need to that one person right and our job as you guys can imagine what it is right now but in the case that if somebody in a multiple people want a partner there is no restriction at all that we own. It's the book value will be there is no restriction on one versus the other because when <unk>.
<unk>, probably not as a good can't book I forgot it along around but when a company sales in the air backed company an OEM and then they are not the total over time could be its about commercialization they want scale.
Globally, So I think that that specific way to think about it right. We never talk about OEM general specifications of any other product vertical nobody talks about that and automotive some generic ones. They made public. So yes, if we can comment on that but the keys from CCAR right. So this is a unique industry. So.
So I think think about it that it just you know you are as a company you have to roll it out and it depends on what.
The commercial options available there, but there's a lot of switching to us we want everything.
But you could be making a restriction in who you ultimately decided to partner with.
If they are the best buyer.
It's really hard to speculate on because I mean, I'll comment on because it would be speculative.
What anything would be who knows but I mean, the fact is it's all hours and.
<unk>.
You have to give them a compelling reason why this is.
B a paradigm shift for them. That's about all we can probably say so I think you're trying to draw conclusion that I'm, just saying, it's impossible to even get to that point because there's various scenarios.
Everybody wants a better economy of scale, obviously right.
Yes.
Ultimately.
What competition that may be or may not be it's impossible to.
To comment on.
I think you're very honest answer actually.
It does I don't know I don't have a crystal ball to say what people think but Dennis there's two companies.
We can trade with anybody force.
Yeah.
We don't license anything from anybody.
We owned it all right, we choose who we work with right we will sell through any volume.
Any any pocket of customers that feel confident that this is not the one absolutely.
Okay great.
By the way per home for all of your pre season.
I'm talking to you. Thank you.
Our next.
<unk> will come from Adam Jones, who is a private investor. Please go ahead.
Thanks Sumit.
Looks like you're moving from successful development to marketing now sales and marketing.
And a lot of that was laid out in our recent job growth for our brand marketing manager.
I'm wondering about a couple of points from that maybe you can illuminate one of those points worth about bringing the brand and product story to life for customers investors employees I'm wondering how you see that story, how you see it unfolding and what kind of ROI do you expect it to generate.
Let's take a step back operating perspective, we've received a fair amount of questions about this.
If you think about it we have.
We have lots of communication to be done while the new product new market.
US too that's value to the shareholders, obviously, because you want to make sure that everybody has a fair understanding of the impact that we have.
Created here.
I think like one position there I don't think it's that.
That big of a deal because it helps us make sure that people know the right story.
It's not going to organically grow into it so it's kind of important that that's done.
Communicating to investors or investors have some things right I mean, we have a small team here, we can't we can't have.
I think I think as all of you said like Hey, we want more.
And more about the technology side of things and its not the marketing in general and if you think about it I think one thing you said thats, what I am saying.
We want to just.
Turning to marketing it as part of our normal company building value. If you got something valuable if you don't get the message out how do you know that you have that not enough value on the table.
I would remind you the way right people need to understand what they say it then I can describe it as my enthusiasm right, but it takes more than that to tell the real story step by step to understand how to solve it. So I can talk about the concepts and what the business impact is but it takes a lot more than that and I think we share.
Sure.
We've gotten many questions from our retail investor base wide range of them and it was like Oh that would be nice to do accept it can add to the resources. We had so far so I think that's a I think it's just part of the value that you have to create when you have something valuable.
And I think our ROE.
We'll have that person to help you tell the story I think it's beneficial for the company.
Okay, Great that's really my only question.
Yeah, I'll, just add sorry, sorry.
Yes.
Net net.
To do corporate Communications company presentations.
Web site.
Things like that so overall the role.
That rule is going to do.
And a challenge.
Where your websites updating takes too long right. So we are a tech company right, where you have to act like a tech company than necessarily just aligning to what is expected.
So, but in terms of marketing or working with potential customers I believe it was in the 10-K, you mentioned that that's the executive management team is that still the case are you guys, making those inroads.
Inroads correctly.
Okay.
This is this is more if there is exposure that we go into a bunch of work we've done to have a floor show.
Stephen I can't do that.
I mean is it.
We're not right, but you have to get to know you have to have your sensor out there.
If.
We end up going to CES or any exports. If you go to just imagine there's a bunch of work to be done to be presented to the market. So we always are excited to come visit us and we always welcome you. So why don't you do have a good experience because this is something new.
I guess, so maybe I was just getting hung up a little bit on the semantics within that where it talks about customers or senior stakeholders and maybe some of the differentiation do you make in terms of who does what.
The realm of the business.
Yes, yes.
Maybe so.
Okay.
Congrats on reaching a successful milestone this april.
Thank you. Thank you.
Youre welcome.
Okay.
Our next question will come from Joe rule, who is a private investor. Please go ahead.
Joe Your line may be muted or about that yeah. I was I was muted there good afternoon gentlemen.
Sumit I was looking at the pictures.
Either unit yesterday, and the one with the cover off there was a lot of talk.
Sort of among various shareholders that thats, a very big ASIC.
And we were wondering.
Is that something that was a proprietary design of Microvision or did you go to someone else and use their partner partner with someone else from designing that could you give us a little bit of color about it.
Internals of that thing.
Yeah, So Scott.
A lot of discrete analogs, obviously that drive all the analog side of it the Mems and the lasers and then there is our FPGA based.
Our magic sources of course on a family jewels in the digital which we're trying to make in the future, but it is an FPGA level and there is a.
There is the third word on top which youll houses.
Uh huh.
Processor and external processor for.
It's a platform right because you want to have everything there. So if you are required to create something youre not scrambling. So it's part of it.
Is it getting to use or not use that.
No, we're not going to comment on that because.
It's unclear what long term as I said, our first generation product our intention would be to not have that in a significant cost to have any kind of application processor with GPU and CPU in there.
Our credit butter is we are very good at to actually put it into our <unk> Soc.
That goes up to the DSV level right and that's that's why products that we make are.
Great features and yet they have.
With competitive price points that we can do that you. So think about that ACI flow. It's serving the purpose. It's supposed to be which is a development platform. So we have multiple <unk>.
Preparing for anything may or May not come do you have everything there. So you can respond quickly and you don't have to keep developing new hardware.
That's the best way to think about that.
Okay that makes sense to me. Thank you.
I just wanted to add a little note right. I mean, you probably don't want to the reason why I wanted to put that picture out there right I think it kind of got a little annoyed I'm not shouldn't shouldn't get annoyed so easily.
People are saying that microvision, they don't know what theyre doing in hardware they've never done hardware what business, they have and that kind of.
Rob me, the wrong way and I'm pretty sure up there had a lot of people that work is longer. So it's kind of important to show you guys like the guts of it I mean, obviously don't want to talk about what's inside I mean, a lot of things were let's cover book to show.
Real hardware, just like the housing top and bottom that anybody can do that and that sort of stuff in there right.
So I hope.
I mean this is a brief look into it right, but I think.
That's quite a lot in there.
You know me.
I'm always up for talking about the tax.
Sure.
Thank you.
Okay.
Our next question will come from Jeff <unk> Who's a private investor. Please go ahead.
Gentlemen, good afternoon congratulations.
Thanks, Jeff Thank you.
Following up on Joe's question, there appears to be and I don't know if you can comment on it or not but there continues to be an nvidia.
Jetson.
Xavier Index component.
Can you comment on whether that is that's what it enables.
Can you comment on what it enables I think.
I mean, you can see logos and stuff like that just think about that as an incidental choice. We could have another farm. There. If we wanted to just pick one that makes sense from what we're doing but it's.
There's nothing more to really comment on that so I think the point about the first generation I really want day.
Jeff is the takeaway is it's our intention so think about it there is let's say there were two products. One is going to be your first generation, which is going to have a very specific price price target. The other one it's got software probably got more tourists more innovation there was going to have a different price points of these things are like future things what our current hardware has to start thinking through what the different options.
Before that and to demonstrate that we thought about scalability as average absolutely. When you do things at the factory, but also your designs are scalable that when somebody looks at it that it's like it's not another tenure invention all the key ingredient sales.
Orange is a very good actually just meant that they think true like multiple steps ahead of how they would want to scale. That's what's impressive about them. So think about that as an incidental choice right now and we can share what are we want but if our business benefit is to put it is that our soc. Unfortunately to do that we can provide a feature at the lowest cost. So I wanted to be clear incidental that's how you think.
About it because.
It has to go to their advantage if everybody's got the same chip you know of course that is going to limit some things, but there are some features that people want to put in that are not required.
Right and this is public data. So if somebody can do active lane tea. For example, that's a pretty big important feature fixed priority or anything else where lots of books.
The public comments from people need so again think about that chip.
As the instrument of choice every day and.
Recruiting somebody else's ship with day delight.
Ignostic do it is what I want to say.
Okay.
Additional question.
It relates more to display.
Can you talk about the current state of direct Green laser diodes as opposed to save 10 20 years ago. When the company was founded.
I think green lasers, and unfortunately more than one.
Partner in the World that has been lasers now so I think theyre not.
Supply limited Theres no. They all have their own IP the mature processes.
I think it's more demand limited so I think as the market starts opening up.
<unk> does not.
I'm not going to stop any kind of rollout of any kind of are in fact, a display or 90 products that we have or the display on New York.
The green laser diodes are much more common now.
Comment theres only a handful of Orient, but.
Art anymore.
So the more prevalent now than they were.
Oh, yeah, absolutely yes.
I mean, if you think about our attractive display I think we worked on that for a long time, obviously, that's part of the supply chain things that we have to open up and we had growth on that.
Confident that that would not have had any impact.
Okay Alright.
Alright, that's all I have gentlemen, congratulations again.
Thanks, so much thank you.
In addition to some of the questions today and we also received quite a few.
Our questions were submitted we've run over on time I'm just gone through the list of them and I think we hit most of the stuff that was covered in the questions that were asked today. So I think in the interest of time and not being redundant questions. We've already answered that.
As disclosed in your closing comments.
So we thank everybody for joining I think it is a good time I think we really have to think about.
We'll continue to build value, while we explore anything you can do those things simultaneously and I definitely wanted to emphasize that strategic alternatives is something we focus on very seriously, but we also look at every opportunity to increase shareholder value and we.
We will continue to be prudent.
As Steve described how we're moving forward and focus on day areas.
Because the value is coming amongst so thank you for joining I really appreciate all the all the effort on the energy and devotion everybody is putting in thank you for that.
Conference has now concluded. Thank you for attending today's presentation you may now disconnect.