Q1 2021 View Inc Earnings Call
Greetings and welcome to view Inc's first quarter 2021 financial results Conference call.
At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Please note this conference is being recorded.
I will now turn the conference over to our host Samuel men head of Investor Relations at view, Inc. Thank you you may begin.
Good afternoon, everyone and welcome to view as first quarter 2021 Conference call I'm, Samuel Me and head of Investor Relations at view and I'm here with Dr. Alamo Quarry, our chairman and CEO and the dual per cost our CFO.
On the call. This afternoon, and Rob will provide a brief introduction to the company and an update on our products our customers and our operations.
Afterwards, <unk> will provide a detailed review of Q1 financial results and our outlook.
Before we begin and I would like to remind you that shortly after the close of the market today and you issued a press release announcing its first quarter financial results.
You May access this press release, and the Investor relations sections of view Dot com.
Today's discussion includes forward looking statements. Please refer to our press release for a discussion of factors that could cause the company's actual performance to differ materially from those forward looking statements.
I would also like to remind you that during the call we will discuss certain non-GAAP measures related to abuse performance.
You can find the reconciliation of those measures the nearest comparable GAAP measures and the press release.
Now over to you.
Thank you Samuel and a warm welcome to all of you joining us for views first earnings call as a public company.
We had a strong first quarter and we do will cover details of our financial results given.
Given this is our first call I'd like to start by providing context about a few important areas for all of you to get to know us better.
I will summarize my remarks, and a few distinct sections for.
First I wanted to give you a sense of who we are and why we're building volumes.
And the big opportunity and our technologies.
Third our products for the market and our customers and fifth and finally net operations.
So and the first section who are we and why are we here.
I was inspired to start this journey over 12 years ago with the mission to solve two of the biggest challenges and opportunities of our time.
Climate change and human health.
Those of US on the initial team at view came from the semiconductor industry now and our technology team, we have material scientists display experts device engineers and software.
And ml experts and.
As a result, we've been able to build from the ground up and end to end full stack product from Adams to bitch.
We are fortunate to have people with such diverse backgrounds, and what unites says is our mission and our culture.
We are passionate about creating a positive impact.
Recessive about our customers were hungry to learn and we're driven to excellence from an engineering point of view, we'd like to simplify things down to first principles and we believe and the power of innovation rather than just the power of brilliance.
Now in the second section I'd like to talk about the big opportunity and our technologies.
When we look at the real estate, the largest asset class and the world. It has had the least amount of change and innovation and we see for massive opportunities multi decade trends really.
First the issue of climate change and the need to build more efficiently.
Second most of the real estate industry has had significant gaps between the user and the buyer and the opportunity to bring focus to the user experience as we witnessed in so many industries.
Third human health.
Much like we learned that the quality of food and the consumer has a profound impact on our help and we are learning that the quality of space. We consume is a significant determinant.
And our health outcomes. This is a unique opportunity to repay and value creation and a massive industry and the pandemic is actually helping accelerate people's awareness around this issue.
And finally, the potent and the infusion of technology.
Today, we are tech enabled and all walks of life, except for real estate has lagged and tech and we have a significant opportunity to infuse technology into the fabric of buildings and drive beneficial uses for people and business just as we have seen and phones and automobiles and other industries.
And view, we are serving these needs and opportunities by building for enabling technologies.
First material science.
Advances and material science, and especially nano materials have created revolutionary changes in many industries yet the buildings industry has seen little change.
For example at view, we add one micrometer, which is 100 and the thickness of human hair for the skin of a building and fundamentally changed the terminal and IMAX of the entire building.
Second high performance low cost devices semiconductors by way of sensors computing and storage.
Third ubiquitous connectivity, both wireless technologies, such as five G. But also wired connectivity by way of fiber and high speed cable.
And fourth and finally artificial intelligence as you know every industry is poised to be disrupted by AI and real estate will be no exception.
Over the last 12 years, we've been carefully assembling the building blocks in these technologies. We're at very early stages of value creation and this vast industry and we already have over 1000 patents issued and applied.
Now and the third section, let's talk about our products.
Our base product is the humble day to day window.
As a material scientist I find glass to be a magical material and that it is a wall you can see true and as humans. We are lucky to have discovered this material.
But traditional windows have two fundamental flaws for.
Traditional windows do not dynamically controlled solar heat entering the building. This problem requires tremendous amount of energy to pump cooling air through a building as a result buildings represent 40% of all the energy use and sell.
Traditional windows use blinds and shades to control glare, nobody likes blinds and shades and for good reason blinds are unsightly and make spaces unhealthy by cutting off People's access to natural light and views of the outside.
And we use smart windows dynamically tend to control the buildings energy use while optimizing for natural light and views of the outside we reduce HVAC and lighting by 20% and light.
And energy and importantly, we also reduced peak load requirements and increase usable space by up to 10% does smart windows have the potential to drastically reduce carbon emissions as the world strives towards net zero goals.
Regarding health view smart windows create healthier and more productive spaces by optimizing people's access to natural light and providing views of the outside we are investing heavily and understanding the human biology, physiology, biochemistry and psychology and how they are impacted by the quality of space we consume.
Recent research has shown that headaches and ice cream go down by more than 50%.
Occupants with new smart window sleep over 30 minutes longer at night, and most striking improved cognitive function by over 40%. These are big numbers and these benefits are the reason our customers are delighted to use view smart windows.
Electrochromic glass technology has been around for 60 years, and we were the first to build a complete product.
Louis has historically held back electrochromic glass for mainstream adoption, we achieved a breakthrough with our gen four product that eliminated the objectionable gluten and resulting in a more neutral Blake great color.
Our Gen four product went into commercialization and 2020 and will represent the majority of our shipments this year custom.
Customer response to Jen for has been terrific and we believe this is a key driver for accelerated adoption this year and beyond it.
And at the end of last year, we announced also several new exciting products, including view net which is our intelligent building network platform that consists of power data and communication infrastructure.
View sense, which is our environmental sensors that enable healthy environments by monitoring air quality and humidity dust and noise among other things view.
View immersive experience a transparent high definition interactive display.
We are very excited about the new opportunities. These products open up and the intelligent building space. When it comes to smart building systems cost of installation is off and much higher than the cost of products and it's important to note that our network infrastructure is installed and very early in the building construction process, giving us the first wire advantage.
To provide additional products and services and our smart buildings platform now.
Now and the Port section, let me talk about the market and our customer activity.
When you transform and everyday product like a phone a car or in our case a window.
You have the opportunity to unlock a massive industry.
Real estate is our largest asset class and the world and smart windows represent over a trillion dollar annual total addressable market.
Today, smart windows represent less than 0.1% market penetration and we believe the rate of adoption will be the dominant driver for growth for the foreseeable future.
View is the leader and installed base of smart windows across the U S. The geographic breadth from New York to Hawaii, and Florida to Alaska, the benefits of smart windows apply to every human centric building and we have installations and every vertical including offices airports hospitals higher education.
And multifamily residential.
Eventually every window can and should be a smart window.
Now turning to notable wins and installations and the first quarter.
We had a terrific quarter with key customer wins and airports Dallas Fort Worth International Airport, a strong repeat customer for our base product began installing view smart windows for their terminal D expansion project, including Dfw's gate of the future.
This installation will be the first in an airport to deploy view net view sense and view immersive experiences.
We're also excited to announce our first win with Chicago O'hare International Airport as part of the terminal five expansion and modernization project will be shipping view smart windows. This year.
And the office space Google's, New York headquarters the St. John's terminal topped off with view Smart Windows recently. This is a one 3 million square foot commercial office building by Oxford properties book.
To save you smart Windows now unlock the longest unobstructed view of the Hudson River, and New York City.
Hubers, New regional headquarters in Dallas, Texas started shipping and the first quarter as well.
This is a 470000 square foot office building developed by West Dale asset management and as expected the house about 3000 employees behind view Smart Windows. We were also very pleased to announce view was selected as a smart design feature for more than 30 additional buildings and lake Nona and 17th.
For miles visionary community developed by Tavistock Development Company and this is an example of a forward thinking customer taking view smart windows fleet wide.
One of the bright spots and real estate and and the office sector has been the life Sciences sector and life Sciences, We ship view smart windows to Trammell Crow and Fulton Labs, a 400000 square foot office and lab space in Chicago. This is the second lab space to use view smart windows as part of the Fulton market District redevelopment and Chicago.
Also in life Sciences view Smart Windows were selected for three University place, a 250000 square foot commercial lab space and Philadelphia's innovation corridor.
Over the last year, we've seen an increase and renovation activity as well a great example of large scale renovation is the completion of 733rd Avenue, a 60 665000 square foot office tower near Grand Central station and New York.
This building serves as the headquarters of TIAA and Marine and completed just in time for the other turned to office later this year.
Finally, we announced recently that view has been selected for Walmart Bentonville campus. This is a massive corporate campus projects, representing a $26 million contract for us that will start shipping. This year view smart windows will be in 12 office buildings across more than two 4 million square feet.
And of office space in Walmart and 350 acre headquarter campus.
Now and finally in the fifth section and I'll talk about our operations.
And he was the first company to achieve large scale commercialization in the industry.
We are proud to say that we have over 1 million square feet of manufacturing.
And for Mississippi with over $400 million of capital invested.
Encouraged by the strong growth and positive demand from our customers, we are investing and our production capabilities and started to ramp to 24, seven operation and the first quarter.
We're also investing and our customer facing functions and sales and customer support and in the systems needed to scale, our business and serve our customers and a fast growing business.
In summary, we're excited to start our journey as a public company with strong positive indicators from customers and accelerated growth through the full year of 2021, we are already capturing revenue from our new products and see endless opportunities and the intelligent building space for these types of applications.
And we're confident and our plan for significant growth this year and for the foreseeable future with that I will turn the call over to renewal for a detailed review of our financial performance and the quarter and and outlook for 2021.
Thank you al and good afternoon, everyone envelope for cash and we will cover our financial results of our first quarter.
And my comments I will refer to GAAP and non-GAAP results. Our non-GAAP numbers do not include stock based compensation and other one time items from.
More details and our quarterly results, including a reconciliation of our GAAP and non-GAAP financials. Please refer to the earnings press release on our Investor Relations website.
And Q1, 'twenty, one view and public and is now trading on the NASDAQ under the ticker V I E W.
And the process of going public we raised 815 million of gross proceeds.
Used a portion of the proceeds to pay off existing debt and delivered a debt free balance sheet with the exception of a $15 million interest free loan facility from the state of Mississippi.
Factory is located.
Importantly, we ended the quarter with 506 million of cash on our balance sheet and are well capitalized to drive growth for the business.
And our profitability milestones, both gross margin positive and EBITDA positive and ultimately transform and industry.
Now to our Q1 results Q1, 'twenty, one was a strong quarter for the company with sales of $11.8 million representing.
Representing 29% year over year growth and 52% sequential growth.
This growth was driven by an increase in volumes with strong pricing.
And increased market adoption of our product and release of our new products that are now generating revenue.
Non-GAAP cost of revenue and Cogs was $28 9 million and the water and represented a $6 1 million or 17% improvement from the prior year.
This was driven by better manufacturing metrics and tuning yield a reduction and cost of materials and lower labor costs.
It is important to note our gen four product has better yield and throughput than previous product generations, and we expect to continue to benefit from improving factory metrics through 2020, one sequentially non-GAAP Cogs declined by $1.8 million or a 6% improvement driven by continued factory performance and lower <unk>.
Customer support costs offset by hiring the factory as we ramped back up to a 24 by some and operations.
And the first quarter, we managed operating expenses totaled $7 1 million, excluding stock based compensation Opex was $26, seven delivering 25% year over year, and 4% quarter over quarter improvement.
Non-GAAP R&D expense in Q1 was $14 7 million 20 per cent decrease year over year, and a 21 per cent decrease quarter over quarter.
We manage cost and the quarter by lower line time utilization and the factory and lower software costs.
Looking ahead, we expect R&D expense to increase throughout the year. Other technology company, we continue to invest in R&D and added head count in the quarter and both are based product and our new product development teams.
Non-GAAP SG&A expenses were $12 1 million and improvement or 29% year over year, how do you manage head count and travel and other expenses and non-GAAP SG&A expenses grew 29% sequentially and the quarter due to higher accounting and legal fees and good for our IPO.
Non-GAAP loss from operations and Q1, 'twenty, one was $43 9 million or $17 4 million improvement from the loss of $61 3 million a year prior driven by high revenues improvement and our cost of revenue and improvement in Opex.
We reduced non-GAAP loss from operations by $7 1 million sequentially.
Interest expense and the quarter was quite point and chemo and offline when compared to the previous year as I mentioned previously we did.
We retired our revolving debt facility this quarter and will not have medieval interest expense going forward with our current capital structure of the company.
Non-GAAP net loss in Q1, 'twenty, one was $50 6 million a significant improvement from $66 1 million loss in Q1 of 20 and $58 4 million losses in Q4 for 'twenty.
Adjusted EBITDA loss of 37.8 million improved by $17 3 million or <unk> 31 per cent compared to a year prior and improved for $5 million or 11% sequentially.
Current share count for the company is 217 million shares. Please refer to our S. One filing on April seven for the for the breakdown our share count.
Now turning to the rest of 2020, one given the strong results and Q1 and increasing market adoption of our product we are confident and our outlook for 2020, one and expect to achieve our annual financial plan of 70 to 80 million and revenue with a midpoint of $75 million.
As Rob mentioned earlier, we are ramping and operations in response to anticipated sequential growth throughout the year.
And we will continue to improve our factory metrics I'll be scale and drive lower costs from increased volumes throughout the year.
And we will maintain our cost discipline and degrees of Cogs as we scale our top line our cost reduction roadmap focuses on three components of Cogs.
Fixed cost of our factory comprising of labor depreciation and audit expenses.
Cost of a base product, including document and also producing and AGU and control systems and electronics and cost of our new products, which are entirely variable, giving me procure outsource their manufacturing.
As demonstrated by our cost reduction cost reduction trajectory and a year over year and quarter over quarter results.
We are on track to improving our gross margin and.
Profile with average and she is and all key cost components.
These are efficiencies are driven by better absorption of fixed costs over a larger volumes automation and lower usage of raw materials with improved tackling metrics, such as price reductions and improvements and material design specifications.
No other than beyond 2021 we expect to achieve gross margin positive out of quarterly run rate of $40 million to $50 million or $200 million on a non related business.
Today, we have invested 410 million and Capex, primarily and our factory. We currently operate and one production line at our factory second plasma system has already been purchased and installed which was the longest lead time item.
And to invest and additional capital equipment, and 2021, Omega second plasma system and ready for operations.
We will continue to build the infrastructure required to support the growth opportunities ahead, including investing in R&D and our next generation products as well as adding to our sales and marketing efforts in summary, we are maintaining the momentum and our revenue growth reducing costs and investing in R&D investing in marketing and sales and investing and.
Gobbled equipment to scale our operations.
With that I'll turn the call back to Samuel.
Thank you for at all and we will begin the Q&A portion of today's call with some consistent questions. We've heard from investors.
For reference you can submit questions by email and view Investor Relations App.
And I are at view dotcom.
Right and I'll start with you.
Commercial real estate and has been challenged with the impact of COVID-19, what are you seen in the marketplace today and how is this impacting this business.
Yes, you've just heard from the little more forecasting in 2021 more than doubling of our business from 2020.
And then our own journey is more aided by adoption and a massive industry than the macro factors of that massive industry.
Having said that we're seeing plenty of new buildings and renovations happening throughout the pandemic.
One of the bright spots and the office sector has been the area of life Sciences, So biotech and pharma companies continued to add capacity and for good reason.
Health care continues to be a resilient sector, so hospitals and medical office buildings that industry is continuing to transform and they're building better and better facilities to serve patients better.
We see corporate campuses being built like we saw with Walmart and others and corporations committing to net zero goals at very aggressive pace.
We see potential for massive infrastructure spend coming up and the stimulus and creating jobs and the United States and in and around the world. So there's plenty of sectors that continue to be bright spots and specific to the office sector, which is something everybody thinks about when they think about real estate.
In a while people might spend less time and the office going forward, meaning maybe more time at home than net work.
Clearly the density than the office sector experienced density gains and the last 30 years will reverse initially with very low density.
But there is a belief that it will unlike it'll be unlikely to get back to the pre pandemic levels are very high density office spaces with people elbow to elbow.
So you know we're here to support our customers our customers are figuring out their plants for reentry and we were quite busy helping commission buildings and get them back to work, but beyond that.
The type of office debt type of work done at office will be different I think the two things depend on make in a post pandemic world will be different is people will go to the office.
More for collaboration more for culture culture more for Onboarding.
And there'll be some mix of video and in person happening and the office. So the way offices are built will need to adjust and evolve relative to that and that bodes very well for our products and especially on new products.
With respect to help there's actually a much greater awareness of <unk>.
People and how the space they consume impacts to help and specifically to do with the quality of are they bringing but once you initiated that conversation there is a conversation happening between and employee and the employer about the quality of space, they're consuming as it instructs the help I think that is a great conversation and that bodes very well.
And for US finally, multifamily and residential and general has been a very strong sector throughout the pandemic and.
Secondary cities are continuing to grow and the movement and the churn is great for the industry as well so again coming back to the beginning of what I said.
And the macro has a lot of dynamic factors happening that bode well for change, but we're focused heavily on adoption, where we want to move away from the old windows that are consuming.
Consuming a lot of energy that are not serving people well and we want to create a more tech enabled sustainable and human centric set of buildings and we're very excited about that.
Great and we've received a lot of questions on the new products, rather can you provide some more details about the new products and the customer reception, so far and yeah. So as we discussed our new products can be really categorized into three areas. One our network, which we call view that it's a 20 <unk> century and digital network that is highly secure it Ron.
On the big cloud platforms of the big cloud providers.
It has access to all of the ml and AI engines that are available on those networks, but it importantly has power and connectivity and which a number of additional applications and third party systems can sit so we've been very thoughtful about building. This for the last several years and we're seeing that pay off and we're quite excited about that.
View sentence, which is a very unique and environmental sensor that will provide insights around space and around held for humans.
And that's gaining a lot of interest and where we're doing incredible work with our customers and that area and then the view immersive experiences, which is a high definition display that's installed right into the window. As you know we just deployed all three into the extension of term Ob and DFW and that area and really <unk>.
Went through a soft opening this week and will be open for I know, sometimes shortly here. We're very very excited about unveiling these products, having them work and real world environment and look forward to growing and these in these from this year going forward.
Great. Thank you Ralph and we do have a question for you and this is a business that requires upfront capital investment can you detailed views cost reduction roadmap and the impact ramping volumes have on Cogs.
Sure Charles we expect to follow but steep pads two cost reduction that is not too different from what other process manufacturing industries are already done solar and flat panel displays would be an example.
As I mentioned before there's a fixed component to our cost and the variable component, which also includes new products out.
And to provide more context last year fixed costs represented over 75 per cent of our Cogs and we had no mix from new products and it.
Our competitive moat is a process technology and that requires upfront investment and fixed costs to put capacity in place.
This is equipment labor and factory overhead for every step function increase and capacity fixed costs only go up incrementally at the margin and dish.
Depreciation for incremental Capex or additional head count, but they hit but the overhead is almost the same.
We get good economies of scale and believe at full capacity fixed cost and the factory will be closer to 50 per cent of the total mix and with the new products, all being variable fixed cost will be lifted and $50 and not total company Cogs and the long term.
Now there are a few key levers to drive down variable costs as well and process manufacturing.
Improved factory yield means less scrappage less scrappage means we are reducing materials costs.
And as we drive industry adoption of our product, we are winning bigger and bigger buildings bigger buildings, typically mean larger window sizes and more standard sizes as a percentage of and given order and this has positive implications for our carrier utilization and and factory throughput metrics net.
And there are purchasing efficiencies as well that can be larger volumes. Our procurement team is actively managing to get lower cost for factory raw materials and control systems and electronics and finally, an engineering team is focused on Murillo design specifications, both for factory raw materials and control systems, and electronics and new products. These days.
And changes will also yield significant reductions and materials costs.
And this gives us confidence towards our target gross margins of about 50 per cent.
Great. Thank you for it all.
We will now open the call to questions operator, we'd be happy to take any questions that there may be.
Thank you.
And at this time, we'll be conducting a question and answer session.
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Our first question comes from Mark Delaney with Goldman Sachs. Please state your question.
Yes, good afternoon, and thanks very much for taking the questions and I was hoping to start with the announcement of the the win at Walmart, maybe you could talk about what enabled the company to get that that way and with the with the company and and without sort of the size of the.
Other program and and I realize there's only so much detail you're going to be able to share for and individual customer, but and any sort of changes that we needed and we may need to think about in terms of revenue or more.
And relative to your prior forecast as you think about and.
And that that program friendship.
Yeah Mark.
And so clearly workplaces and important segment of our for our customer base as you know we've disclosed.
Other years by press releases and on our website, you'll see a number of our existing customers.
We do have significant repeat business from them.
With respect to Walmart, they're building and new campus and Bentonville.
And there definitely moving into the 20 <unk> century as a as a firm that's been around for a long time and a day to day name in America.
Clearly they are very cost focused as you know by way of what they do and how they do and the culture. So it was a very important consideration and deciding view.
Some of our other customers and the past people would be dismissive and saying Oh, there are very wealthy tech company. They can of course afford to be wasteful and.
This particular case and if you look at what we do we are highly sustainable because we block the heat and provide comfort without having to have a big penalty and air conditioning and lighting. So clearly if you're building a comfortable space.
It consumes less energy.
We are a healthier amenity and that we bring natural light and provide comfort and.
Create views and it has clear impact and they obviously were aware of the research and the work we've done.
We reduce peak load and that has and direct cost savings by itself, but and this particular case they went through and analysis of the space usability within buildings and what they've concluded is that use of view smart glass increases the amount of usable space, which means you can effectively put more P.
People into a space right you can utilize and space all the way to the edge of the building.
And that incremental use of space and the cost of real estate and per employee itself was a determinant for them to be able to afford it and be able to underwrite it right at the get go from a capital point of view.
Of course its tech enabled so you the buildings are more future proof because I think as with any company and Theres not a company you can find out that doesn't want to be tech enabled and digital and the future. They did have an eye towards what's the future of work look like but all of those who are additional factors for me the Walmart campus and represents.
Kind of a mainstream adoption of our product what it also represents is the scale of this campus at $2 5 million feet. Their main campus in Bentonville and it does signal to the world that this product is not a niche product, it's going to be used at scale and.
Big spaces.
Okay.
Yeah that's helpful. Thanks.
Backlog was about 250 million and 28 and I think it was about 400 million or maybe a little bit higher in 2019 and that that debt.
Comparative revenue.
Last year, I think was a little over $30 million.
Talk a little bit about the historical backlog conversion and it was there anything and the company had been experiencing in terms of projects pushing out or maybe backlog and in fact, it will be longer than.
One for two years, and and and that's what they will need to be mindful of it but more importantly, just trying to better understand how to think about how backlog will convert into revenue going forward.
Yeah. So as you know we provided our design win and backlog of over $500 million at the end of last year that backlog represents about 250 projects for which view smart windows are the basis of design and the design win and backlog has been and useful indicator for the internal capacity planning and especially with long lead time pieces of.
However, given the long sales cycles of our industry design win and backlog is not an important indicator of the next 12 months revenue. So we are not providing a quarterly update on our backlog with that being said in Q1, we continued to grow our backlog as is evidenced by the big Walmart win and other wins that we've announced and.
And as you've heard from the Dol, we recognized revenue of $11 8 million and the design wins, we had were substantially in excess of that.
But as we're now looking at more of a quarterly and annual view of the company and as we're communicating with the public markets. It's only a subsection of that that's really a factor for us and that's more near term and that's not just the full design win and backlog.
That's helpful. And then just lastly for me and thank you for all the commentary around.
Sure.
Our margins and variable versus fixed costs and I think it's helpful for people to think through and Cody and I see that the.
The margin trajectory for the company.
One of the things you've talked about was improvements on cost structure with the Gen four per.
Product compare to Gen three and I don't know if you can be more specific around cost savings specifically with the new products and maybe the year over year reduction and you just reported is a good illustration of what we can expect with the gen four product, but any more details on how to think about the quantitative benefits of this new.
This new product would be helpful. Thank you.
That's a good question Martin so.
Here's a way to think about it and.
Going forward there'll be a much much higher mix of Gen, four and 2020, one and beyond and there'll be very little of Gen. Three product, so that mix helps us and and the other way. It helps US is that we are not changing and there is no change and the manufacturing lines for ship between Gen. Three and Gen. Four and so that helps you with one of our key metrics, which is a which is equivalent.
Uptime.
But more importantly.
For a metric that we call tack time and that basically is how much time does it.
Does the Rockies surplus spin and the plasma quarter as it's getting.
And it's getting the one micrometer thickness that Ron mentioned and that time is much much faster with our gen four product than it was with the Gen. Three product. So basically for the same Oh, you know factory footprint, you'll get more glass traveling for the quarter faster and that improves our throughput as well Rachel driven bye bye.
Equipment, uptime, and driven by a better tack time, and we have much better capacity utilization and lower cost driven by a gen four product to mark if I could add some context to all three factors that we mentioned.
And you should expect us to be thinking this way going forward as well.
Early on for the company. It was about how do we build a minimum viable product how do we get it out into the market, but the last for five years, we've been thinking about not only how do we serve the user better how do we ship on time, how do we make our customers the real estate owners the construction folks do it.
And without a lot of hassle, how do we make the product easy to install et cetera, but one of the things I mean, jenn for we've been working on for five years.
Post R&D to implement into production and we've been very thoughtful about every aspect of it including cost. So our cost as you know is impacted by how are we utilizing our factory, which is both tack time as well as uptime and then what's the yield of the product coming out we had more time and energy put into gen for and how we introduce.
It into production and ramped it up and that's what's resulting in lower costs fundamentally the product is much superior and it's not unlike as you know the things we went through and the semiconductor industry, where and regeneration, we get better at making the same thing.
Yeah.
Yeah.
Thank you.
Yes.
Our next question comes from Joshua Cohen with Cantor Fitzgerald. Please state your question.
Hey, good morning, everyone and congrats on the strong quarter and thanks for taking my questions. So you mentioned, you're currently hiring for new product development. So just would be interested from from euro.
Would you be able to give us a preview for kind of what you're excited about here I know you've mentioned.
And do you connect and <unk> and Wi Fi and book, So just curious to see like where where are your imagination is going and where what you're excited about and the new product development front.
Yeah, Josh and happy to so if you think about the big macro and for serving right, where we're trying to create a better user experience inside buildings.
If you look at the new automobiles right and they have screens and they have sensors. They have a number of processors doing different types of processing their storage. This connectivity people spent five per cent of their time inside a car they spend 90% of their time and a building and you're mostly bring technology and your pocket and anybody.
Cash and it's not infused and the building.
We our network goes in you know very early and the building cycle as you know the way of building goes up as you prepare the land you pour the foundation typically the steel structure goes up and the next thing to go on it as the glass and that comes in the form of Unitize Windows systems. Our wires go in and right then and so were there long before anybody is thinking about network and some.
And even the tenant is not even known so we have the ability to install the network that has all of the key elements of power and connectivity already and it that provide for the building to be and future proof their future ready. So that you can add additional applications on it so with that as the backdrop and the platform we see.
Broadly three areas of opportunity.
For building owners and people inside buildings and ultimately the user of the building.
The first day as an area around collaboration you know you have this surface of the building and that's the skin of the building from the inside that used to be a net surface and you covered it up with blinds and Neulasta views now you not only have the views, but it's an active surface every square inch of the entire skin of the building is now digital.
So with that and how you put a transparent display that's infused into the window well, it's a window when you want it to be where you don't need to have any display, but when you would like it it turns into a high definition display you can do video conferencing on it for example, and the reentry into office a lot of our customers are saying they don't have enough wall space on which they can hang TV.
In order to create that part of the team being at home and part of the team being in the office. So day as an example of the future of the office, where there may be a huddle area around the edge of the building where a few engineers get together and they are interacting with other engineers that are working from home that day.
We're clearly seeing an opportunity and public spaces for example, and airports, where you know people check and they go right out the gate for a long time.
And.
Their experiences and dead window wall with a small TV and the corner playing news well now you have the entire fabric of the of the glass wall, which is two to three stories high and you've got the ability to turn it into a digital fabric you can of course entertain you can provide messaging.
And you can do contextual advertising, so clearly our customers and airports are super excited about the user experience as well as the ability to generate revenue.
About a hospital room and our patient experience you know, they're on a bed and they havent bedside controls and a T V. Upon the wall and a corner instead that patient can now be facing nature of all the time and a big window and the room and then the display will appear when they want it and the doctor can come in through the window or they can have a video conferencing and their families. So clearly.
We see huge opportunity for our display product and in order for the display to work and the window you need that dynamic tinting of the glass because you need the contrast, and we need to protect that OLED from UV. So for both those reasons, we're quite excited about the opportunities in front of us.
And in view net it's basically the basic platform.
On view sense.
A complete ground up built environmental sensor that has a number of sub sensors built in it and.
And those are there to provide context and insights for people that are managing buildings, but also importantly, as a user if you want to know the space around you is healthy if you want to know what the density is if you want to know where you've been indoor way finding indoor GPS theres a ton of applications that can be built on that platform.
Finally to your point about connect as you know five G or basically even for G. LTE almost dies and the skin of the building and <unk> does not enter a building through the glass by way of the higher wavelengths and the fact that that signal doesn't travel very long and we're going to pick up the signal either on the roof are through the fiber and in the basement.
And we're gonna connected back into a big network and you can enjoy five G connectivity coming right out of our product to.
To give you a context on where we are we just started shipping these products and DFW will be the first kind of more public visible display of this of all three products.
But we have several other customers tech companies and other segments, where we are now shipping and we will be announcing these throughout the year and beyond.
Okay.
Okay. That's great and then just curious whether you have any updates on your partnership with Newmark and I definitely appreciate that partnerships of this neither do take time to get up and running but just curious whether there is anything incremental you can share since the announcement.
Yeah.
Thank you so newmark as you know he was one of the major commercial real estate brokerage companies and the country, what do commercial real estate brokers do they help landlords owners of buildings Sellable.
Sell real estate finance real estate lease real estate. So they are a trusted partner to the owner of the building so in that context, when we partner with them. What we get is access to the owners have the ability to get introduced and have a seat at the table and also because they help lease buildings and create value for the owner, they're also able to tell the view story.
And from a value creation point of view way better.
And so for all those reasons, we're very excited about that partnership that partnership has been put into operation. We have great sponsorship from Barry goes and the CEO is on down and all other regional heads are working with the regional folks within Newmark and addition to that we're also doing what's called a co broke and concept which.
And if it's not new Mark on the building and it happens to be CBRE jail, adlers, cushman or someone else newmark and theyre going to partner with them and share the economics of that so it's not meant to be where it only nu mark. So we're very excited about that and it helps us get access to owners, we didn't know and it helps us close business and a very.
And unique way that we wouldn't have been able to otherwise and we are at very early stages of this industry transformation and so having them as a partner is being very very helpful.
Okay.
Okay, great. Thanks for taking my questions.
Thank you.
Our next question comes from Pavel <unk> with Raymond James Please state your question.
Thanks for taking the question.
A lot of conversations recently, a crop the technology sector about.
Commodity input inflation and of course, you're purchasing glass among other.
Components.
What sources of input cost pressure are you seeing.
And how are you managing around this issue.
Yeah Pavel Thanks for the question, we're obviously watching most importantly for availability of things and we feel very good about our supply chain and all of the areas, including semiconductors I know, there's been a lot of excitement lately I come from that industry and we feel good about our ability to manage our supply.
Train and have good partnerships with our suppliers as we look to grow on a fairly steep growth path going forward. Obviously part of that is to make sure that we're getting good value.
For what were purchasing and many ways, we're actually getting the reduction of cost per unit with our volume growth and <unk>.
And our suppliers see debt. This is a strategic growth area for all of them. So we actually have a fairly healthy spirit of partnership from them and seeing beyond just what's happening in a given month or quarter because at this moment, we may not be as material to their own businesses, but strategically they are extremely important for their businesses.
And at least adapting as such so given that.
And we feel good about access to supply and number two we're not seeing as directly the impact of these commodity issues to our own business and.
And as you know as a value added player with a high gross margin and our gross margin profile, we're not as susceptible to supply chain cost changes because the basic material input and our Cogs is fairly small and so for all those reasons the cost impacts of our supply chain a minimal to us.
But on the same hand, we're keenly focused on making sure that we have continued access to supply as we go at this very high pace.
Alright, good to hear.
Thinking more broadly you've talked.
Before about diversifying your customer base into single family residential.
Any kind of update on that.
Maybe and <unk>.
Dissipated timetable for moving forward with that strategy.
Yeah. Good question I would say a growth area for us and residential today is multifamily and there's a ton of multifamily and as you know it's a single decision made for the whole building by a developer typically.
And they have a lot of glass.
The way we are currently organized in terms of our sales and our support infrastructure. We are well suited to do large buildings with lots of glass and single point of sale that results in a relatively large.
You know dollar item.
In the future you can anticipate this product can and should be and single family residential well we have done some single family just as really favors for friends and family. We've done a few dozen homes already fairly large contemporary homes.
We do believe we need to have some evolution in our own ability to support that as a business before we launched that as an official business for view, having said that.
That part of the reason we are not going there is we don't need to go there right and we can definitely enjoy a very high level of growth and the segments. We're already and so we're trying to be disciplined with the app with the verticals. We've already opened to make sure that we serve those verticals very very very well. So that's three there is to make sure.
Sure that we get repeat business from those customers that have huge portfolios of newbuild and renovations, but also use their networks and that localization and order to get their peers and competitors too to adapt our product. So you should anticipate that and the future we will be getting into single family.
We're not jumping into this headfirst, because we see plenty of opportunity and the segments that are already in and we'll make sure that when we do that we're doing it in a way that we can support those customers well and build a highly profitable business in that segment.
Right.
Last question kind of similar to my earlier, one but thinking about international.
You've talked about 120 billion dollar North American addressable market, but it connects that we think globally.
And of course high rise construction is particularly rapid in Asia right now.
Any and.
And thinking about starting to tap.
Prospective customers outside of North America.
Yeah, we are doing some business outside of North America.
Europe Asia Middle East.
There that business has been primarily and we have a small team pursuing that has been primarily with customers. We already have relationships here in North America, and they want to make sure their users and their global footprint, we think that's and efficient way for us to engage and to get into new markets with people, we already have relationships with and they already know who we are and.
We have existing relationships and in some ways, we're supporting their growth globally with a great amenity for themselves and their employees for their portfolios as far as I know.
Building, a big infrastructure to sell internationally that is in front of us.
We're not doing that at the moment only because we wanted to make sure that we take our north American market to a level, where we can achieve scale profitability and support our customers well iterate on our product offerings.
So you will see us growing incrementally internationally.
We're not making any big announcements at the moment, but I think and the near term you should anticipate that that will still be a small part of our business.
Got it thank you very much.
Thank you.
And there are no further questions at this time I'll turn it back to Doctor around Mopery, Chairman and CEO of view. Thanks.
Thank you everyone for attending our first quarter conference call. We are excited about the journey ahead and look forward to speaking with everyone as we provide and update on the business next quarter. Thank you.
Thank you. This concludes today's conference all parties may disconnect have a good day.