Q3 2022 MicroVision Inc Earnings Call
Good day and welcome to the Microvision third quarter, 2022 financial and operating results conference call.
At this time all participants are in listen only mode should you need assistance. Please signal accomplished specialists by Christian Starkey.
Zero.
At the end of todays presentation, there will be an opportunity to ask questions via chat line.
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I would now like to turn the conference over to drew Markham. Please go ahead.
Thank you operator.
I am pleased to be joined today by our CEO Sumit Sharma and our CFO on about Burma. Following their prepared remarks, we will open the call to questions.
Please note that some of the information you'll hear today will include forward looking statements, including but not limited to statements regarding our product development and performance.
Harrison to our competitors' market opportunity.
Product sales and future demand business and strategic opportunities customer and partner engagement projections of future operations and financial results availability of fun as well as statements containing words like potential believe expect plan and other similar expressions. These.
<unk> 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 review our SEC filings, including our most recently filed annual report on Form 10-K, and quarterly report on Form 10-Q. These filings describe risk factors that could cause our actual 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.
In addition, we will present certain financial measures on this call that will be considered non-GAAP under the SEC's regulation G for reconciliations of each non-GAAP financial measure to the most directly comparable GAAP financial measure as well as for all of the financial data presented on this call. Please refer to the information include.
In our press release and in our form 8-K dated and submitted to the SEC today, both of which can be found on our corporate website at IR Dot Microvision dotcom.
Under the SEC filings tab.
This conference call will be available for audio replay on the Investor Relations section of our website at Www Dot Microvision Dot com now I'd like to turn the call over to our CEO Sumit Sharma Sumit.
Thank you drew.
Good afternoon, everyone and thank you for joining us today.
Q3 represents another quarter of tremendous progress at Microvision.
This includes delivering on a number of critical milestones on our go to market strategy.
As we approach the end of calendar 2022, Microvision is better positioned than ever and offers a complete hardware and software solution that exceed the expectations and requirements of Oems for their planned are accused in 2023 and beyond.
I will cover this topic in more detail later in the call.
I would like to start by highlighting three important accomplishments in this quarter that have put us in a leadership position heading into 2023.
First.
We delivered on our commitment by achieving classroom compliance and beginning to sell samples from Oems and tier ones.
Last one compliance is a critical milestone.
The importance of which cannot be overstated.
Microvision has more than 20 years of experience and expertise in developing products based on laser beam scanning. So the class one compliance process is not new to us.
It takes an incredible amount of engineering and technology to develop a solution that meets lost one safety criteria. While also meeting the performance standards set up set out by Oems.
We view our patented automatic emissions control system as one of the numerous key differentiators that make the Microvision solutions superior by combining safety and performance.
Thanks, Lauren experience and our innovative approach to safety to our patented AAC system.
We are proud to be the first slide our product to achieve classroom compliance at a unit level offering pixel by pixel safety.
This news was well received by Oems.
It shows our commitment to safety and how it will further enhance the functional safety Oems can offer to their Adas system in a cost effective 905 nanometer laser lidar.
The only laser technology nodes that are shipped in volume to automotive standards.
Our technology unlocks all the benefits of 95 nanometer lasers without the high cost and high power structures or $15 50 nanometer products.
Achieving class one paved the way for a second key Q3 milestones.
Delivering samples to Oems and tier one customers.
Let's start our sample sales for the first deliveries made within the quarter is a major achievement for the company.
I am proud of our teams and Redmond and Nurenberg for achieving this important milestone.
This is a very big step toward potentially being selected by automakers as a partner to power their next generation safety programs.
These samples will allow Oems to continue to evaluate our solution in their own test environments.
They look towards RFP is expected in the first half of 2023.
I will elaborate on this later in the call.
Let's start with sample sales also means that we can begin developing our non automotive channels.
We expect new sources of revenue from these initiatives starting next year.
On the public covered this potential opportunity during his prepared remarks.
Finally.
One of our big accomplishments to date has been traveling nearly 7000 kilometers to promote our technology to Oems across Europe .
These relationships have allowed us to gather meaningful feedback and to align our program milestones would their upcoming rfps in 2023.
We are on track with our samples and development to participate in these rfps.
We introduced <unk>, our low profile high resolution and dynamic range cost competitive sensor.
And we continue to receive validation that its performance side and future costs are the best that Oems have reviewed to date in any a sample.
This positions us well for the next phase of OEM argues requiring lidar.
To put it simply.
Our current hardware meets or exceeds all requirements and puts us in a leadership position to compete in the 2023 Rfps.
I would now like to move our focus to talking about the key features Oems are looking for in 2023 and beyond and better technology and help Microvision is positioned as best in class.
First.
We understand that Oems are looking for a low profile sensor with low power requirement for roofline mounting without ugly sheet metal bump outs.
Low profile is of utmost importance because it offers more flexibility in terms of where and how it can be effectively mounted and strictly integrated into the car's design.
Only microvision Slim design allows for the desired flexibility.
Plus our planned <unk> will provide an object level interest rates from the lidar.
The result of these two attributes together in a small footprint combined for the lowest power system solution.
<unk> is designed with a low profile.
In EMEA 18 millimeter called aperture window. There is no competition in the market with a sample ready now that offers such a low profile sensor.
This is incredibly thin.
In particular design hardware is arriving at the perfect time and this is what Oems are looking for future models.
Next.
Volume's expect extremely high resolution that makes it possible detect small objects and road surfaces at longer ranges at high speeds.
This translates to 200 plus meter range 0.04 degree vertical ambler resolution streaming at 30 heart with object level software interface in line.
These are our core features.
The quality of the microbial point cloud is unmatched.
Our resolution and range are second to none.
The raw unaltered Lidar point cloud, we have shared through the late summer and fall are Testament to this.
With our proprietary pixel by pixel classroom solution, we're able to achieve long range and resolution Oem's desire.
No other current solution in production or promise by any competitor comes close.
While other competitors may be sharing data it uses low framerates super resolution or other sensor fusion techniques to augment gaps in their raw lidar data.
The provision videos are pure.
100% Lidar.
We offer the clearest most actionable pictures of the road ahead.
Oems appreciate this authenticity during live demos.
Next.
Oems have reiterated the importance of hardware with an established supply chain and known costs.
Megan has built with.
With material already in OEM supply chain today.
This means our solution is scalable source of bolt and supports a lower cost structure and with no exotic materials it guards against supply chain challenges.
Finally.
Object level perception software running on a custom asics will be another important criteria for Oems in their 2023 RF skus.
This capability gives them an efficient and scalable approach.
Two building, new and differentiated safety features in a timely way.
Only microvision solution is built from the ground up with this approach in mind.
Our fully pipeline LIBOR means that control of the entire system is happening in the customer in real time.
This unlocks massive opportunities for lower cost solutions.
That's reliable secure and delivers high performance, allowing all the system to operate in parallel.
I'm more confident than ever.
I've ever been that Microvision is positioned for success in 2023 and beyond.
As I look ahead to 2023.
We have several focus areas for customer acquisition, and continuing to advance our technology and manufacturing capabilities.
From a customer acquisition standpoint, we are focused on several OEM RF skus targeted for first half 2023.
This is based on their timeline.
Yeah.
As I've outlined outlined on today's call I'm confident that the majority of our technology OEM focused business model and track record for partnering and delivering solutions positions us well for success.
In 2023, we expect to achieve a number of new technology milestones.
Including our analog and digital ASIC launching as well as establishing new automated manufacturing lines that will prepare us to scale up production closer to our OEM customers.
Our hardware is already breathtaking with them today.
Near 18 millimeter after window with less than 45 millimeter sensor height.
To put this in context, the face of a Apple watch is just 44 millimeters.
The pack the optics power management and digital systems into this design is truly a feat of engineering.
I applaud our team for achieving this.
With the introduction of our AC we will be able to reduce the overall footprint of the hardware even further by making maybe even more compact than it already is today.
Before handing the call over to <unk> I'd like to sum up these key thoughts.
We continue to offer the best in class sensor ready for OEM RFP is expected in 2023.
We have visibility into multiple customer programs for low profile and low power sensors are required to allow mounting along the roofline.
We continue to offer greater than 10 billion points per second at 30 Hertz.
This enabled key features like small object detection and will expand object level interface.
Again, we are the only lidar company that can offer this.
And with a strong balance sheet and disciplined operational expenses, we remain in a strong position to execute.
While I expect the latter space will experience consolidation in the months ahead.
The provision is strongly positioned and prepared to deliver to customers.
Our <unk> samples are shipping to customers now.
And with our pedigree for delivering on development agreement Microvision is in an unmatched position to become a trusted partner who are top tier Oems.
The Adas market with Lidar enabled safety has real demand from multiple Oems instead of being captive to ebbs and flow of a single customer demand.
This is a real demand for multiple years of programs from OEM that pioneer automotive safety.
Some realignment in this sector will happen in the coming quarters, but with our strong balance sheet and opportunity ahead, I expect us to remain a strong contender.
I have never been more concentrated microvision future than I am today.
I'd now like to hand, the call over to anabolic will discuss financial performance and above.
Thanks, Amit.
I am pleased to report that as of this date, we have achieved all of the milestones we had laid out earlier this year.
To remind investors, we would attract testing of our highway pilot feature for our integrated Lidar solution with perception software in both the U S and Germany for complex highway driving scenarios.
As I described earlier, we achieved pixel by pixel class one compliance, which we believe is a first in the industry and positions, our maven product well to be adopted by Oems for their safety standards.
These two achievement further helped us begin sample sales to Oems and tier ones in the fourth quarter.
The continued engagement with Oems highlighting the capability of roofline integration because our product has one of the most streamlined form factors on the market along with a low latency highway pilot solution positions us well to compete in the upcoming RF Skus.
Now, let's discuss our Q3 financial performance.
Revenue.
Our current customer Microsoft communicated to us that there were no units delivered in the third quarter.
As we have stated previously our revenue recognition is directly tied to the number of units delivered by Microsoft Hence no revenue was recognized in Q3.
As a reminder, this revenue is attributable to the contract executed in April 2017.
With Microsoft for using our technology in their display product holo lens too.
As of September 30, we haven't applied $4 6 million balance left on this contract liability.
We gave revenue guidance last quarter based on the information provided to us by our customer. However at the end of the third quarter, the customer revise that statement and communicated to us that there is no forecast available.
Our agreement with Microsoft continues to be an effect with an expiration date of December 2023.
Please note that no cash has been received for this royalty revenue in the past several quarters as we had received an upfront payment of $10 million at the contract signing in 2017.
And apply recognize revenue against that prepayment.
Expenses.
In terms of expenses. This was one of our most efficient quarters with our cash burn being only 9 million for the quarter.
This was in line with our expectations as I had provided in our prior call.
R&D expenses totaled $7 5 million compared to $5 8 million last year.
The increase was primarily driven by higher salary and benefit noncash stock based compensation and higher non direct labor expenses.
SG&A expense totaled $5 5 million in the third quarter of this year as compared to $5 million last year.
The increase was primarily due to higher noncash stock based compensation and higher salary and benefits.
We continue to invest to accelerate our business development efforts and marketing efforts.
The increased noncash stock based compensation is an important component as we invest in our talent pipeline and motivate our employees to share the upside of the growth of the company.
I am very pleased with a 9 million cash used in operating activities for the third quarter.
As I've described in previous quarters. This burn number was down sequentially in line with our guidance.
This demonstrates our strong financial discipline.
In these times of uncertainty and weaker macroeconomic conditions.
Microvision has stood out and beat all other competitors in terms of maintaining a healthy burn rate and head count with a strong balance sheet.
We have been prudently investing and not following the spend aggressively model as most of our competition, who now have two announced a right sizing the head count initiatives.
We believe our financial discipline positions us well to now gradually scale as we march towards establishing a sustainable business model.
Capex in the third quarter of 2022 was <unk> 9 million, which was driven by build outs and tenant improvements in the new facility that we're moving into at the end of this year.
While our Capex is expected to go up in Q4 2022, the move to new facilities with larger labs and manufacturing capabilities will mostly be cash neutral as we are financing this move would incentives to leave our existing premises.
Again in line with continuing our discipline and rigor we do not expect this move to be a significant cash burden on the company.
We finished the quarter with a liquidity of $83 million, including investment securities.
As interest rates have ticked up in the year to date period.
We have added short dated one year treasury bills to capture some yield from the market and hence our investment securities have gone up from 33 million at the end of December to 61 million at the end of September .
Okay.
Looking ahead.
At this point in time, we do not have visibility into future revenue from Microsoft, but we'll provide an update if and when we do.
Now regarding our core area of focus revenues from automotive Lidar sales.
We expect to recognize some revenue from the direct sale of samples to Oems and tier ones in the fourth quarter at the moment, we do not expect significant revenue from the direct sale of these lidar sensors. However, as our continued engagement with Oems move further along we expect to provide some color.
On 2023 revenues as part of our fourth quarter fiscal year 2022 results in February next year.
Our 2023 revenue expectations will comprise.
A combination of revenue streams, including our lidar solution hardware and software.
Sales and non Rec nonrecurring engineering projects with Oems and tier ones.
In terms of expenses.
Our reaffirming our guidance of $18 million to $20 million of operating expenses cash burn for the second half of 2022, Hence we expect cash used in operating activities for the fourth quarter of 2022 to be in line with the third quarter.
Before we open the line to questions I want to close by reiterating a few key teams further.
Our strong financial discipline, and the rigor of mature public company makes microvision stand apart from our peers as we deliver on our commitments and execute our strategy to create a truly scalable business.
Second our impressive financial metrics, including having the lowest cash burn in the industry and a strong balance sheet have positioned us as one of the leaders in the automotive Lidar category.
We believe our peers that have maintained aggressive spending practices will struggle in the current macroeconomic environment.
Third the business model, we have committed to remain strong and the market opportunity lucrative.
We believe we can build a business where the cumulative revenue opportunity through 2030 for microvision could be between $2 4 billion.
This corresponds to a cumulative EBITDA profile of one to 2 billion. Once we are able to secure the series production partnerships with tier ones that Oems for our sensor units to be included in their fleets.
All of these assumptions are based on assumptions of an estimated $500 ASP for our lidar solution with a market share of microvision going from 15% to 40% depending on the number of depending on the adoption by the number of Oems.
And finally, our company DNA prioritizes being disciplined about using cash to execute our strategic objectives.
Based on our annual burn rate and current liquidity, we are well positioned to scale the business as we get more momentum in our engagement with Oems.
Another metric we internally track is price to cash which is the ratio of market cap to the latest reported cash balance.
Using this metric we are one of the most valuable lidar companies on the market and well positioned to become one of the industry consolidate Taurus as some of the other lidar companies with significantly higher cash burn two to five times as ours and higher head count continue to struggle and falter.
To put it simply not only is microvision well positioned to win OEM RF queues from the standpoint of offering the best technology and the most mature solution Azimut discussed, but thanks to our disciplined approach our business is in a position of financial strength and stability poised to.
Execute on our strategy.
With this I would now like to open the line for questions.
Thank you Ana Bob at this time, we are conducting a question and answer session investors can submit your questions within the meeting webcast by typing them into the Q&A button on the right side of your viewing screen.
Analysts, who publish research you may ask questions on the phone line for analysts to ask questions on the phone line. Please press Star then one.
At this time, we will pause momentarily to assemble the roster.
And the first question will be from Andres Sheppard with Cantor Fitzgerald. Please go ahead.
He ended up.
Great to hear you congrats again on the quarter and all the milestones.
I guess first question I'm wondering is in terms of revenue that now I know you don't you don't.
Guide Q4, but can you give us a sense of kind of how we should be thinking about Q4, particularly given that the sample sales have begun should we expect a.
A larger ramp up in Q4.
Thank you.
Thanks, Andreas let me take that question. So in Q4 I want to break the question into two parts.
The first is revenue from our new novel products.
So we have made some sample sales. So we expect to recognize revenue in this quarter. However, as I mentioned this wont be.
A significant number as we ramp up in 2023, our engagements we would have meaningful streams of revenue coming from the sale of samples.
Second stream would be non recurring engineering projects with Oems, where we would the Oems we would be working on would have customization or whatever they need for the product to be included in their feeds and obviously direct sample sales that we would be accelerating as our main product is.
Plasma and certified and we can expand the streams into research labs universities or whoever is interested in buying our product. So this would be the three streams of revenue from the automotive Lidar that we expect in Q4 and next year now obviously.
I think I touched base on this in my prepared remarks.
Microsoft revenue.
It's an autopilot mode.
They send us volumes of our Mems models shipped at the factory and we simply report and reduce our contract liability. They had given a volume forecast earlier and then at the end of quarter as late as last week. They came back to us and reported zero shipment.
At this point, we do not have a forecast from Microsoft for Q4 and beyond for this stream of revenue, but obviously as and when we get the forecast we will convey that to the market and that could also be added to the revenue forecast of next year.
So hopefully that covers your.
Yes, no. It does strengthen about it and I guess, maybe just a quick follow up on that so I think in the previous call. You had mentioned something about closer to that $1 5 million in revenues for the year.
Obviously revenues for this quarter were not.
What you were expecting given the Microsoft So should we still look at that.
One 5 million is a framework or just given the reduction in this quarter should we maybe foresees a little bit less than that.
So I think at this point, what Microsoft has told us that they do not have a forecast for Q4, so and like I said.
We are on autopilot, so we simply get volume data from them and we report the units are we report that data back as revenue. So at this point, we do not have any visibility into what the Q4 volume will be.
And hence the one the $1 5 million I think you were referring to was based on the forecast we had received last time.
And hence that's why the number has changed given the latest communication.
Got it okay. That's helpful. Thanks for clarifying.
In terms of milestones right. So obviously, congratulations on achieving class one compliance and on completing the track testing of the highway pilot can you just remind us.
As folks on the call what are the next mile.
Milestones what should we be focusing on both for the remainder of the year and also for next year.
I think I'll take that one.
I think for the remainder of the year I think you know, we're just building out samples for our.
A sample sales that we've talked about but as I mentioned, they're limited their targeted primarily towards folks that are going to be evaluating for RFU.
Which Oems have their own timeline and then all the Rfps are in first half 2020.
Timeframe.
It's not solid right, but now they have a process that can start with so our priority of course is getting those samples ready and you know I think that doesn't have access to them.
It makes it much easier now because we can make handful of samples here in Redmond.
The balance of course, as we scale, we're going to talk about that a little bit.
In a few seconds here.
As far as next year, our primary focus is of course.
These are acute and.
Achieving them, but as you can imagine right theres not theres not a milestone that I can discuss matson will be.
If theres an award.
After the market so we.
We will update on the earnings call how things are going as it goes along right. If we are allowed to and if we can actually give any clarity on the process, but as you can imagine right. It's a long drawn out process you have to become very comfortable with the company ecology.
Road map right no.
Manufacture ability.
Just have to go through the process.
Pretty confident that we're going to get through it.
As far as other milestones that that <unk>.
Market can actually crack.
As we mentioned early on as I mentioned early on.
Our analog and digital ASIC programs would have to start going so they are sort of in parallel.
Any kind of volume is going to get delivered and several.
Several years down the line. These asics I'll have to get started so as we get more clarity and more visibility into whats happening to our Q, we intend to.
I'll advise the market definitely know what those milestones for those Asics are so right now our development is continuing.
On the ASIC, we intend to probably launched the analog ASIC first that's always.
Costco path individually staffed for that.
The reason for that offset is.
Okay.
In case, a potential customer and OEM wants to have some custom feature put inside our ASIC just for them.
We're certainly open to that and we've actually made them aware of that.
We've done that before and that's part of our.
Wheelhouse, so we're happy to do that.
So theres going be some lag between that.
The other big milestone of course says we're going to transfer our automated line that we have shown pictures off and we've talked about previously we can establish a manufacturing footprint.
For the pilot line.
Increase their comfort level with Empire technology powered scale, but still maintaining control of the hardware sales because ultimately that's how we're going to monetize that technology does that answer your question Andre.
Yes, no absolutely that's very thorough and insightful. Thanks, so much appreciate it.
Maybe a quick follow up there is.
You are you are reaffirming.
<unk> guidance.
Accumulative guidance, which includes securing more than two partnerships with Oems by 2030. So I guess my question is.
Do you think whats the earliest that we could see.
And the OEM partnership announcements.
I think thats really based on the process will be hard for me to comment, but I can give you a general idea if I had a specific time.
No more specific but I think we.
Sometimes the process to start and.
Based on their timeline their comfort level is that they will make a design win solutia.
Nomination sometime in the summer.
So I think that's the best I can give you right now without divulging too much.
Got it okay. Thank you maybe my last question if I may.
In terms of your capital needs right. So obviously, you have that $70 million ATM facility.
Although I'm wondering at these levels issuing shares might not be preferable as that will dilute shareholders.
And so I guess my question is do you foresee going into the market to pursue any other sort of capital raising opportunities, perhaps a perhaps a pure debt offering.
In the future.
Yes, So let me take that question so.
I think as I pointed out our cash burn is $9 million and our balance sheet has 83 million. So obviously.
More than nine quarters of runway from that standpoint, so obviously.
We have historically stated that we will be using the ATM program as a strategic tool.
To raise capital as and when needed.
So obviously that's that that strategy still remains now regarding that obviously, that's something that I think lidar industry as a whole would be looking to do so because obviously.
We would like this industry to move towards a cheaper cost of capital from that standpoint, so adamant opportunities present themselves, we would be tapping into our looking into these alternatives as well because at the end of the day, we want to create shareholder value and have the lowest cost of capital for the company.
Wonderful Thanks, guys Thats all my questions really appreciate it congrats again on the quarter and I'll pass it on thanks again.
Thank you. Thank you.
Thank you I will now turn the call back over to on a ball Verma.
Burma to read questions submitted through the webcast.
Thank you.
Thanks, Chad.
Alright, So I think the first question we have is.
What does the company have to say about the carry ads group's recent announcement for selecting a partner for some of their brands and similar leased Atlanta for selection.
Microvision too late.
Alright, I will take the time to take.
Yes, I'll take that.
That's a great question I think I'll get this quite often.
Most recently in Seattle Airport, So I think.
You've kind of answered this before but let me just highlight this and you'll get a little bit deeper today.
So if you just do a public data search where you will understand is what they've actually selected is a single software platform.
And there is no guarantee or applicable across all platforms.
As you can imagine.
That size for every vehicle are different classes of vehicle the different software platforms.
They have not unified all of their software platforms into one as you can imagine.
They have endeavored to do that but in several years I mean, CEO recently got fired from the company. So kind of just put in context that those brands of all the different brands on the big umbrella. They all have their own software platforms.
It is not so straightforward.
I think I will allow other people to say what they want us to on the earnings call and described the market.
I think.
That leaves our shareholders in a little bit about me I tend to be pretty straight about these things.
Not going to be cute about it.
These are the facts and they cannot be disputed plain and simple as public data alright.
And if you think about it the other thing you mentioned.
I'll answer that as well and of course carrier.
You think about these other sensors that are publicly announced they have like high profile when I say high profile as the front face is kind of call. There is only one location that can be mounted somewhat lower to the ground. So it can be.
Blended into the body of the vehicle.
And that presents a lot of challenges for the next generation what Theyre looking for I can clearly tell you personally I've been in the room, what they are looking for.
Hi.
Speed Highway pilot.
Flying mounting.
Range extremely high resolution at a very very low latency.
Simple and this means if you think about roofline mounting without any big ugly bump outs that make a nice looking car into like a taxi looking.
That requires a low profile. So if you think about it but anything thats been done so far.
Even Oems in mature their product and mature their needs every year. They have a new need. So when you think about RFP cycle that happens every year every so often.
There's new requirements that come in.
So we took a little bit longer to develop our product, but the benefit. We have is we've baked in a lot of the features ahead of everything so.
Quite often get this question like what what's your resolution, it's significantly higher than anybody else Thats out there. The data pipeline is so large that they are saying, yes. This is great that we can have that but it is amazing that can have anything they can always down sample that they want but they want the high resolution and it's ready to go.
And the demo car they pick the drive they can see the samples. It's all there right and not a one person has complained about the resolution for anything else.
They're kind of amazed how were doing about 30 hearts.
And of course, there's a lot of innovation that we talk about that.
I think.
To round off that question the answer to this question right. When you think about like.
Everything we're hearing is about a low profile roof, Mount roofline mounted sensor that has long range and high resolution and low power.
I think that's my kind of like a blurb, we know pretty much like the tagline written for our product.
So again and that's been announced its hard for me to say that Thats when the documents I am seeing.
The intention that I'm hearing.
Clearly state features that do not exist in anybody's products. So so I think.
I think microvision is perfect time.
For new LTE programs their high speed highway pilot and the RFP cycle, starting now in Q1 and ending in summer 2023, as I mentioned so.
I actually look forward to reporting on this but I.
I do not believe the cases as close as people have made.
<unk> made it to be.
Thanks, Amit.
Sure.
I will take this next question.
It's about revenue.
U S. Army has reportedly been accepting the first tranche of 5000 units of I've asked units valued at over $190 million from the 22 billion contract with Microsoft.
Given that I've asked is based on <unk>, two and Microvision provides a display engine can the team comment on how the acceptance of <unk> units by the army may affect microvision.
That's a great question.
Look we have the current agreement that Microsoft in effect and expect that to continue through the next year at this point. However, we cannot comment anything on Microsoft future plans regarding tolerance to or the <unk> project.
Yeah.
The next question is getting is for class one compliant. So class one compliance was achieved with patented EC methodology.
Can this be monetize via licensing or would be use it solely to maintain competitive advantage in capability and cost.
And are there other licensing possibilities microvision is exploring in lidar Adas with this unique approach.
I'll take that if you want to take that.
Yep Yep Yep that says this is a good one.
Alright so.
Our.
AUC methodology.
Technology that gives us a huge advantage in selling our sensor.
Our core business model as we've talked about multiple times is to monetize our technology towards profitability of the company with sale of our sensor and software license.
So this is a keystone that allows us to be extremely competitive and have a very nice competitive moat in the market. So thats context alright.
The other thing that people have to understand <unk> not a software feature that can be implemented everywhere else.
But instead it is a more elegant implementation of our future.
Additionally, we're the the.
<unk> module is inside the Silicon gate level. Ronald this is real time. This is unbelievable so that would be <unk>. So they would have to buy our ASIC, which of course is drive our system.
So this creates a very nice competitive moat for us as well on the hardware.
And to be fair like intellectually honest right.
Could we license.
Sure. So I think this is my thoughts on that one.
If the volumes are ever independent of millions [laughter].
And we had a substantial market share of that.
We would consider licensing it but at this point when this market is just starting and Youre looking at only a handful of million units.
The total annual volume at some point in the near future with all the OEM programs combined.
We have an advantage we want to win as many of these design wins as possible and we're going to continue focusing on that and we have something very unique and.
This took a lot of blood and FERC and ingenuity on our companies.
Our engineers part to actually develop and we expect to monetize it.
Thanks, Amit.
The next question is about.
About competition. So a competitor recently filed a shelf registration another competitor on the verge of becoming shareholder equity negative next quarter.
When conveying Microvision financial results. This quarter can you give more content on how well positioned we are versus the other spec companies.
And what will be the need for capital infusions to progress and when will the company exercise the ATM.
Let me take that I think I.
Addressed this question with Andrea So let me reiterate.
We believe my provision is very different from the specs.
Or a slew of companies that emerged out of the stack ipos.
I think the they overspent in the name of growth that investors saw some of these companies had raised a lot of capital and had projected much lower cash burn at their IPO valuations and while the actual it's turned out to be much higher than what was projected.
We on the other hand have been a mature public company and have been very financially disciplined so obviously disadvantage positions us as industry consolidate doors.
And especially based on the price to cash ratio metric that I also discussed in my prior remarks.
Again, we use ATM as an efficient tool to fund growth I think the last time, we use <unk> in June 2021, So obviously.
I also mentioned this to address that our cash burn and the runway positions us well and we would use us to strategically only when the opportunities present themselves.
The next question is.
What is the timing of OEM and tier one lidar production decisions.
Others have stated that they expect to OEM product selection designs to happen by the end of this year Q1 2023.
If microvision hearing the same.
From the Oems that they are in discussions with.
Yes.
I'll take this.
Yes, we are hearing the same thing we expect to engage our Q in Q1.
And any design win decision those are expected by summer 2023 at this point.
Thanks, Amit.
I think the next one is interesting.
Luminaire made the statement that 905 nanometer Lidar is good for traffic jam assist but is not appropriate for highway speeds.
Do you have any comments on that.
This is a good question.
I think first of all I'm going to start off saying.
Yeah.
I think I would have to be disciplined not talking about other people.
Technology and things like that but this is a direct comment about our technology. So I think I wont address it.
I think this is uneducated statement in my opinion.
I will let alumina management defend that.
I have no interest in actually the parsing it but but.
But I think it is important for me to state the facts alright. So I think it's important for since we hear all today when you got some other facts.
We've been showing our lidar running on a demo car with 200 plus meter range.
One.
The resolution at low latency specifically.
Specifically.
For <unk>.
High speed highway pilot.
And the Oems that you are talking about thinking about rfps that are going up they are for our high speed Highway pilot what the final system becomes that's unclear, but they are clearly looking for a high speed highway pilot alright.
Alright.
My personal experience being part of these meetings that not a single one.
Has been nothing but smiles because they see everything so I have no idea what theyre talking about.
And.
If you really think about like 95 nanometer laser.
I think I think they are referring to the Mercedes S class announcements that would happened like I think like about a year ago that was a traffic jam assist but that was based upon the.
The technology of course with the latest Scala, which is the the one thats been commercialized so far.
So nobody nobody was on that one because that decision was making long time ago, but in general 95 nanometer laser is embedded with our comfort level with that technology node is significantly higher.
Our Mems based Lidar also uses 95 nanometer laser takes it to the next level and offered a competitive solution that will enable high speed highway pilot. So again when I heard this comment.
What's kind of shaking my head I couldn't really understand it.
Our lidar significantly outperformed in range high resolution.
Latency.
The lowest profile of course, as I mentioned and low power.
Suitable form factor and when you think about our roofline and you can look at what other other Oems that have announced products in the past.
Where they are effectively what those products look like.
The big bump outs on top of cars.
That's not reasonable island carve out number by one of those and I think I'll, let the market decide what really happened so im not really sure what the statement as I think it's just.
It's a statement about high speed highway pilot with you on our technology that we're demonstrating to Oems that are evaluating everybody clearly they are stating that.
We're doing pretty well with our technology there so.
We can enable sleek designs and I think we feel pretty comfortable with that so.
So I am not sure what they are talking about and what the factual basis for the statement is but I will leave it to the investors and analysts to question them on that.
Okay.
Thanks, Amit.
The next one we're getting is can you comment on the recent announcement of Ford and Volkswagen shutting down our goal.
And what impact does it have on the lidar industry.
Let me take this one this is a good one so.
Look I think this further validates our strategy, we have always maintained that the path to a profitable business is really tapping into the L. Three adas applications, which are poised to be commercialized by Oems in the next few years.
As far as still the future, but we believe that the path to al four will indeed go through L. Three and it cannot be skipped.
And I think this also validates the value of being financially disciplined from the beginning and focused on building a profitable business model in the near term.
And Thats why I think it's a combination of our strategy and financial prudence, which actually positions us well and positions us well as compared to some of the overspending.
That probably would exit the market given what we're seeing with with Oracle.
With this I think we're out of time.
Thank you everybody for joining us on our Q3 call.
We hope.
Hope to see you again as we provide our full year fourth quarter.
Next year in February thank you so much.
Thank you this conference is concluded.
All parties May now disconnect and have a great day take care.
Okay.
Okay.
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