Good day, everyone, and welcome to the MicroVision Fourth Quarter and Full Year 2021 Financial and Operating Results Conference Call. [Operator Instructions]. At this time, I'd like to turn the conference over to Drew Markham. Please go ahead.

Thank you, Jamie. I am pleased to be joined today by our CEO, Sumit Sharma; and our CFO, Anubhav Verma. Following their prepared remarks, we will open the call to questions. Please note that some of the information you'll hear in today's discussion will include forward-looking statements, including, but not limited to, statements regarding our product development, testing and performance, comparisons to our competitors, market opportunity, potential product sales and future demand, business and strategic opportunities, customer and partner engagement, projections of future operations and financial results, availability of funds as well as statements containing words like potential, believe, expects, plans and other similar expressions. These statements are not guarantees of future performance. Actual results could differ materially from the future results implied or expressed in these forward-looking statements. We encourage you to review our SEC filings, including our most recently filed annual report on Form 10-K and quarterly reports 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 the financial data presented on this call, please refer to the information included 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.microvision.com under the SEC Filings tab. This conference call will be available for audio replay on the Investor Relations section of our website at www.microvision.com. Now I would like to turn the call over to Sumit Sharma.

Thank you, Drew, and welcome, everyone, to this review of our 2021 fourth quarter and full year results. 2021 was an incredible year in MicroVision's history. Our team completed our best-in-class A sample, which is the foundation of our 4 products we announced in September in Munich. With that announcement, we solidified our OEM and Tier 1 engagements and started aligning to their program timelines for 2025 and beyond. . We enjoy a continued validation of our core technology and revenue with a major OEM as we disclosed last August, focused on AR market for commercial and military applications. MicroVision has real-world evidence that showcases our significant advancements over the competition, while being cost competitive at the same time, truly a win-win for the industry. We also ended the year with the strongest balance sheet in our company's history. I expect 2022 to be another incredible year in our journey and I would like to update you on 3 topics. First, our technology platform; second, our go-to-market momentum; and third, our competitive outlook. We continue advancing our technology platform with the introduction of our edge perception software on a dynamic new LiDAR product. This is a very important extension of our intellectual property that we believe will give our ADAS solution an advantage over every other solution. By creating algorithms that would output obstacle versus free space clusters with associated velocities, we expect our solution to enable OEMs to significantly simplify their overall system architecture and reduce costs. This year, in Q2, we expect to deploy LiDAR test vehicles in U.S. and Germany for track testing, high-speed highway pilot test scenarios. In Q3, we expect to complete Class 1 certification with external test facilities of our dynamic new LiDAR. In Q4, we expect to start strategic sample sales of this…

Thanks, Sumit. Based on the continued interest from the OEMs, it is clear that the automotive LiDAR market is a very attractive space. We're confident that MicroVision will play a critical role with OEMs, and that we have a sound business model. Today, I'm going to be spending time focusing on 2 key topics. Topic number one, our business model and the resulting financial profile. Topic number two, our 2021 financial results and 2022 outlook. Let's start with topic number one, our business model and the resulting financial profile. My goal here is to help our investors model MicroVision and build the framework of our financial profile once the company signs up a few agreements. Let's start with Slide 5. The chart on Slide 5 represents the number of projected cars to be manufactured between now and 2030 that will include L2+ and L3 capabilities. If we assume that L2+ vehicles will require at least 1 LiDAR sensor and L3 vehicles to have at least 2, using this assumption and an average ASP or average selling price of $800, which was the median of ASP estimates obtained after polling several industry experts, we estimate that the cumulative revenue opportunity for LiDAR sensors through 2030 is $80 billion. Let's turn to Slide 6. This slide summarizes our cumulative revenue could be between $2 billion to $4 billion through 2030, with a corresponding cumulative EBITDA profile of $1 billion to $2 billion once we're able to secure the partnership with the OEMs for our sensor units, to be included in their fleets. Both these numbers are potentially conservative and arrived at by assuming the ASP to be 500 instead of 800 for every LiDAR sensor unit for these estimates. We estimate that the market share of MicroVision can start from 15% and…

[Operator Instructions]. Our first question is from Andres Sheppard from Cantor Fitzgerald.

Congrats on the quarter. My question is, I'm wondering, can you give us a little more color on highway pilot feature track testing and the Class 1 certification. What are some things that we can look for that will be meaningful and to determine whether it's going well or it's not going well?

I think I'll start with the second part first. I think Class 1 is something that's part of our core technology. We've been at this for more than 20 years. As we develop our systems, Class 1 is one of the foundational pieces our team works on. To enable that in the automotive space using a 905-nanometer laser, we actually happen to have some very significant IP and patents filed for it. What we're expecting to do is to execute that in the product in the dynamic view LiDAR and actually go to an external party, not just a self-certification process, but go to an external third-party test site, get the full product qualification done in preparation for strategic sales -- to support strategic sales to OEMs and Tier 1s, as Anubhav and I have mentioned. So Class 1 is just an episodic thing where we're going to go through the process, the self-certification happens. And of course, as we go outside to a third-party lab, we're going to keep everybody in the market updated through Q3 when the certification is complete. The first part of your question, I think about the track testing. So track testing is -- there is no finish to wait. There's a long period of time that you have to keep testing to whatever the OEMs and Tier 1s most critical scenarios are. We've done a lot of work to gather data from them and our team is focused on a set of scenarios that are incredibly challenging to be solved at 130 kilometers per hour to make a Level 3 system. For a truly highway pilot, high-speed highway pilot system. So they have that focus, and we continue to plan for starting that testing. And by June, a tranche of work is going to be done that they are expecting. But what I actually expect is beyond that, as a matter of fact, 5 a.m. this morning, that the work will be ongoing because there's interesting things that they always want to know. But we have a foundation of work that they feel is the most important to really differentiate our solution, LiDAR software hardware -- software solution from what they're seeing for highway pilot. So I hope that answers your question.

Yes, it does. That's very helpful. Maybe one quick follow-up, if I may. Regarding your go-to-market strategy. In the past, you've alluded to the 3 pillars. And today, you've kind of explained a little bit more about maybe the main one, which is the direct relationships with the OEMs. But I'm wondering, can you maybe expand and give us a little more color on the other 2, the Tier 1 partnerships and the silicon partnerships? What are -- specifically, what are some things that you're going to be doing to pursue those partnerships? And what do you ultimately think will lead you to securing a lot of those partnerships?

Okay. So again, I'll answer the second part first. Ultimately, the Tier 1s is who we're going to partner with. They are the ones that are going to peep at the product and provide it directly to the OEMs, integrated in whatever form that's needed. The silicon partnerships are important because that enables us, whatever domain controller and OEM picks that a Tier 1 is implementing, our sensor would have to plug in and effectively play with it. All the software stacks would have to be figured out and where you -- how your software goes to the stack would have to be established. So silicon partnerships are important, absolutely important that anybody that's making a Level 3 domain controller, that your system plays nice with it and it's all implemented and it's a fluid system. . Partnering and promoting directly to the OEM is actually very important. And I can personally tell you that it's a step that they want to see. The Tier 1s necessarily do not have the technology because they do not have internal R&D to go bring the best solutions to the OEM. So therefore, OEMs want to see the best solutions out there to enable their technology path. So the direct -- the go-to-market strategy we're doing directly marketing to the OEMs bears fruit when they actually start seeing what is it -- what's the best technology and how they could actually benefit from that and create a differentiated product for themselves compared to everybody else. But ultimately, as we've always said, they will essentially -- there will be a directed buy agreement or some sort of way to go towards where we are going to partner with the Tier 1 with the solution we're providing that the OEM wants. And the silicon domain partnerships, of course, OEMs and Tier 1s identify that as a parallel path for themselves for domain controller, but we want to secure to make sure when that decision happens in parallel, our solution will play nice with it.

And ladies and gentlemen, I'll now turn the call back over to Anubhav Verma to read questions submitted through the webcast.

Thank you, Jamie. So we've got a list of questions. So let me just run through them. The first question is, can you give us a sense as to what level of cash you feel is necessary to support the business? And why continue to keep the ATM open? So let me answer that question. As I described in my remarks earlier, our cash spent in operating activities was $29.4 million and CapEx $2.5 million in 2021. For 2022, we expect this cash basis -- R&D cash basis to be higher than $18 million for 2022. And for 2020, the SG&A expense to be $12 million plus some additional investment to pursue business development and marketing efforts. Now with a cash balance of $115 million, we have always sought to be very disciplined than our competitors. We view the ATM program is very strategic and focused on creating shareholder value. We raised ATM in first half of 2021 when the stock prices were high for the broader LiDAR market. We have not used the program since then. However, the availability of ATM gives us the required flexibility when we see active and interesting growth opportunities come our way. The next question is, do you have sort of a target revenue level in mind? Or when you expect to reach maybe breakeven on the operating income line or EBITDA level? And is there a target revenue threshold that you're expecting or a time frame you're expecting to reach breakeven? I'll take this question as well. As I walked through earlier in my remarks, how to build a framework for the revenue of $2 billion to $4 billion and the $1 billion to $2 billion EBITDA cumulatively through 2030, once the production commences, our business model will then resemble a software company, and hence as soon as production commences, revenue will quickly translate into EBITDA for MicroVision. In the meanwhile, we expect to pursue single and doubles through strategic sales of sensor samples to OEMs and pursuing core development deals. What can we expect from the company's track testing by June 2022? Sumit, would you like to take that?

I think as I just previously mentioned, I think what to expect in the track testing is we have some test scenarios that the team is going to -- is working on, actually validating on a test track. Additional testing as that comes along from OEMs and other parties, we will do that in Germany and in the U.S. So we can create a body of work, so they can have some ground proof testing data, front track testing, and then, of course, follow that up with additional testing at their preferred test tracks. But it's really targeted -- it's not open ended, but it's targeted towards specific test scenarios that will demonstrate why we are able to achieve Level 3 or we can support potentially Level 3 highway pilot features from our hardware directly.

Sumit, next question is for you as well. How are OEMs thinking about the ADAS market?

So I was actually pretty fortunate to be actually present in a lot of the OEM meetings with our business development team. I mean clearly said they're very engaged. Their teams are very active. All the teams are very responsive and engaged with us in the broader market as well, I'm pretty sure. But I think the best way to describe it is they see this as a very monumental, once-in-a-generation kind of opportunity to redefine mobility. And they recognize that as we start looking towards more EV vehicles coming out, the value proposition for them is shifting. And therefore, ADAS safety is going to be a big selling point in the future for vehicles. . If all the vehicles have the same level of performance, than the powertrain is not that important. A company that has diesel or any kind of internal combustion engine technology, as you can see publicly is being stated that they are going down, right? They're seeing the sunset timeline for their technologies and battery vehicles are coming up. ADAS starts becoming a sort of a main tent pole that they have to rally around. And it is clear, just sitting there and talking and looking at the activity and looking at the interest that they are very, very active and they're very focused on understanding what's the best way to bring an ADAS solution to the vehicle. That's why the terms like cost competitive are actually ahead of your technology because the seriousness of it is not that prototype vehicle that's going to be done from marketing. This is production vehicle they're looking for in the next wave. So the current wave is just more trying out and understanding the market, but the next wave of decisions, I believe, are focused on true production vehicles on multiple product lines.

The next question is also for you. Please share where are you in recent discussions with OEMs and Tier 1s? And do you have any RFIs, RFQs? Can you quantify in terms of top 10 OEMs and Tier 1s that you're having conversations? And where those are in terms of stage of advancement?

Okay. So specifically, I don't think I'm going to name a name, but I think like as we've said, our focus is in Germany and in U.S. right now. The top OEMs in the European Union, Germany specifically and the U.S. That's a pretty big, pretty strong universe, a company that you're focused on, that we're focused on. As far as where we are, I think what I mentioned in our previous call was if you can look at it that the actual decision in RFQs and the hardcore work starts in early 2023, Q1, I suppose, I think I said that. And in the meantime, what we're doing right now in 2022 is they're evaluating solutions. So track testing data, what we can do for a product, what's uniqueness about it, are we going to be cost competitive, what the strategy is going to be from manufacturing, who's our silicon partner, all those kind of evaluations sort of like the homework before you actually start going towards the decision is what we are in the middle of. And so I'm just going to say that in general, but I think as far things are concerned, I think we rather not mention names at this call, but you can imagine our expansion plans in Germany to be closer to the OEMs that are there. And of course, in the U.S., we've said that publicly. So that's the universe.

The next question is also for you. My sense in the industry right now is that OEMs will soon be making decisions on LiDAR for production for the years 2024 or 2025. Is that your understanding as well?

Yes. So I think the data that we have so far, I think the next wave of production-ready vehicles that are like high volume compared to like the numbers that we have in our corporate deck to support that is 2025 and beyond. As you know, Anubhav mentioned, right, we're modeling it out to 2030. But for model years out there is what the decision timelines are right now.

I'll take the next question. This is, will MicroVision final sale be to Tier 1s? So as we discussed during our go-to-market strategy discussions, this is an important piece of our business model. We're directly marketing our solution to OEMs to secure a directed buy agreement. Once that's secured, our LiDAR solution becomes a part of the broader ADAS solution that the Tier 1 is supplying to the OEMs. We're not going to assume production risks and costs as Tier 1 has already commercialized the broader ADAS solution, where our LiDAR product will become a part of it. This is why one of the competitive advantage of our product because our product will fit in within the requirement of what the OEM is looking to do to build a world model. We're not seeking to displace the Tier 1 or the OEM's desire to control the camera module and other non-LiDAR sensor perceptions. Sumit, next question is for you. Will your software run on chip platforms like Qualcomm and NVIDIA? Or is there another appropriate architecture?

I think that's also in the corporate deck we put out. Our -- and let me be more clear about that 1 slide that's there. Our software will actually run on our custom silicon digital SoC within our system. And that will take the streaming point cloud and effectively do the obstacle versus free space clustering, velocities and other features, but it will be within our software stack. And of course, the domain controller will have the world model generation, planning and maneuvering, which the OEMs and potentially Tier 1s will own. The domain controller, of course, is the big silicon companies like NVIDIA, Qualcomm, NXP, TI, you can name it, there's [indiscernible] right? Those are Intel, of course. They're going to focus on that. But our software will run on our SoC, within our system, within our LiDAR.

I'll take the next question. Is MicroVision actively pursuing or investing in non-LiDAR technology? This is a good one. We're actively pursuing and investing in the automotive LiDAR at this time, and we feel very confident about our strategy. We believe the $80 billion revenue opportunity potential in the LiDAR space continues to be the most attractive space that will be monetizable. However, we believe there is significant value in our AR vertical as well. While AR remains to be an attractive market, at the moment, there is more focus on software than hardware. If there is an opportunity to tap into the AR market, we have products ready to go on that side and stand ready to support potential customers as and when needed. I'll take the next question as well. What can you share about your process to identify potential strategic alternatives? So being a public company with a $115 million cash balance as of 12/31 and high average daily trading volumes, we're always focused on maximizing shareholder value. We work closely with our Board to address potential transactions at appropriate valuations. Global players and OEMs are aware of our capabilities and products in other verticals and we stand ready to support their growth opportunities as and when they come along. But as we have previously disclosed, we currently have no agreements or commitments to engage in any specific strategic transaction. I'll take the next question as well. Where is the focus of your spend? And does it unlock extra capabilities? So as I discussed and highlighted in my remarks earlier as well, cash is being spent on growth. We increased our headcount to 97 people as of February 2022. This is almost double of what -- where we were in March 2021 last year. We're expanding our engineering, business development and marketing teams in Germany and U.S. to support potential customers to take us through the next phase of our growth as a company. So that's why I feel very excited about the future of MicroVision. I think it looks like we're almost out of time. So these are all the questions we could get from online and from all the investor audiences. Thank you for your time, and we look forward to speaking with you on our next quarterly update call.

Thank you. This concludes today's conference. All parties may disconnect, and have a great day. Thank you.