MicroVision, Inc. (MVIS) Q4 2024 Earnings Report, Transcript and Summary

Good afternoon, and welcome to the MicroVision Fourth Quarter and Full Year 2024 Financial and Operating Results Conference Call. At this time, all participants are in a listen-only mode. At the end of today's presentation, there will be an opportunity to ask questions via a chat line. Investors can submit their questions within the meeting webcast by typing them into the QA button on the left side of their viewing screen. Analysts who publish research may ask questions on the phone line. Please note this event is being recorded. I will now turn the conference over to Drew Markham. Please go ahead.

Thank you, John, and good afternoon. I am here today with our Chief Executive Officer, Sumit Sharma, and our Chief Financial Officer, Anubhav Verma. And also, I'm very happy to welcome to the call our incoming Chief Technology Officer, Glenn DeVoss. 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 business, product, and go-to-market strategies, customer and partner engagements, cash, liquidity, and the impacts of our recent financing activities. Market landscape, opportunities and program volumes and timing, development and performance of our products and solutions, product sales and future demand, projections of future operations, cash flow and financial results, availability of funds, as well as statements containing words like believe, expect, plan, and other similar expressions. These statements are not guarantees of future performance. Actual results could differ materially from the future results implied or expressed in the forward-looking statements. We encourage you to review our SEC filings including our most recently filed annual report on Form 10-Ks and quarterly reports on Forms 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 also be available for audio replay on the Investor Relations section of our website. Now, I'd like to turn the call over to our CEO, Sumit Sharma. Sumit?

Thank you, Drew, and welcome everyone to this review of our fourth quarter 2024 results. I would like to start by providing an update on our customer engagements for automotive and industrial opportunities we've been working on through 2024. Additionally, I will give an outlook on new engagements in 2025 for potential automotive, industrial, and military opportunities. Still a very exciting time for our technology. First, I would like to begin with our engagements with automotive RFQs and industrial opportunities. There are four areas which we have focused on through 2024. We focus on automotive OEM programs with seven RFQs and a few custom development proposals. In the industrial space, we focused on three areas. Automated guided vehicles, AGVs, and autonomous mobile robots, AMRs. These platforms typically operate in a geofence environment requiring low power perception software integrated solutions, embedded localization, among other features. Number two, collaborative robots. These robots share the environment with humans and operate in a semi-structured environment. With humans in charge and again require integrated perception software on the sensor. Number three, mobile autonomous vehicles. These include commercial vehicles for industrial and military applications with multimodal sensor suites. We remain engaged in seven RFQs for automotive programs and make incremental progress. Automotive OEMs are still adjusting to their new timelines for product launch. It is abundantly evident that lidar is an integral part of the sensor suite required to deliver a reliable ADAS experience. What all of us are adjusting to is our updated timelines to launch decisions for their platforms. We continue to explore opportunities for customized development with our OEM engagements. With ripples and expected future trade conditions for OEMs and their product timelines, we have remained actively close to them in their process. Their plans for future models of EV and ADAS are taking a parallel priority to their near-term goals of fielding models with traditional powertrain that launch faster and affordable price points. In the AGV and AMR space, we made progress on multiple engagements through 2024 with our MoviaL, with integrated perception application software. This gave us the confidence to enter into an agreement with our partner ZF to increase our production capacity. Basically, we are offering a sub-eight watt sensor which has our perception and application software onboard the sensor, talks directly to the customer's controllers. This is an advanced solution which is frictionless to our customers to integrate. We continue to make great progress in this space and expect these engagements will lead to commercial wins for us. There are more than twenty well-established companies for this segment that already have their products implemented and are actively looking to upgrade their platforms with MITRE implemented in industrial ADAS software. The TAM for this segment is lower than automotive, but we have much faster line of sight to significant revenues from multiyear programs from hardware and software solutions. I am very excited about our multiple engagements in this segment. In 2024, we delivered software integrated solutions to multiple potential collaborative robot partners as well. These evaluations are in flight. This is a slower moving segment, evaluation and large commercial agreements. With the current potential, we expect large scale decisions to be more fluid in 2025. We continue supporting and developing strong partnerships. In this segment, we again expect to have lower TAMs but higher margins. This is a segment we watch through 2025 to add layers of recurring. Another segment we started in 2024 was mobile autonomous robots in military and commercial vehicles with our NIDAR products. The larger opportunities in this segment is for long-term partnerships where we could enable our potential customers with our mature perception software and advance their multimodal platform development. This is an important area for partnership we expect to develop. This allows us to showcase the breadth of our technology in enabling autonomous driving and ADAS outside the traditional automotive OEMs. These partnerships will certainly come with revenue and the broader play is to show that we are already a company with parts that are more valuable than what I see reflected in our market capitalization. This year, we have already started working on expanding our partnership. The world is changing. A new era of opportunity for our advanced technology in military applications has appeared. With expansion expected in defense spending under the current administration, and lots of realignment happening, with this sector, our mature technologies and augmented reality, the space systems, as well as perceptive lidar solutions will be promoted for defense programs. I would say that it is early times, and we are actively working on pursuing all opportunities. As investors will recall, for over thirty years, MicroVision has delivered technology for various military programs. The company was founded for this segment. We have participated in programs for U.S. Army, virtual copilot program for high resolution full color helmet mounted display, two, US military General Dynamics mounted warrior program with helmet mounted display for armored vehicle use. Number three, US Army Aviation and Missile Command Program for Boeing. For binocular, helmet mounted display for Comanche helicopter. Four US Air Force four color head mounted display for Air Force eyewear, five US military battle command, battle lab for head mounted display. And most recently, we were part of the HoloLens product developed for the military. We are very strong in this area and expect to bring a military adviser that will help us partner with larger companies in space for our partnership. I expect to talk about this more as these opportunities continue to develop. I'm gonna keep my prepared remarks brief today as we received a large list of questions from our shareholders and I would like to address that as the main narrative. I would like to now turn the call to Glenn DeVoss, our new CTO. I'm excited that Glenn has joined MicroVision to advance our product solutions, and help us grow to provide more advanced software and hardware integrated solutions for automotive and industrial market segments. Glenn and I have had a chance to get to know each other over the past six months and it has been great to mutually share the excitement for MicroVision. Glenn?

Thank you, Sumit. I appreciate the introduction. I'd like to start by saying how excited I am to be with you today and to be joining the MicroVision leadership team as their CTO. Over the course of my career at GE, Delphi, and Inaptive, I've had the opportunity to both lead significant global technology development as well as to manage high growth automotive business units. As Aptiv's CTO, I led the development of smart vehicle architecture and our advanced autonomous mobility technology, which incorporated radar, vision, and lidar as part of our advanced perception system which powered the 2015 launch of the Las Vegas robo taxi fleet during CES, that year as well as our cross country autonomous drive that occurred in April of 2015. As president of the Advanced Safety and User Experience Business Unit, I managed the introduction of global large scale ADAS programs for our leading OEM customers. Resulting in the accelerated growth of that business unit into a multibillion dollar business. With annual bookings in excess of five billion. I understand what it takes to identify and industrialize, and then successfully commercialize these disruptive technologies. And this is exactly why I'm joining the MicroVision team. Building on MicroVision's proven technology portfolio, I believe that we are perfectly positioned to not only successfully commercialize our current lidar products within the automotive market, but also able to extend and deliver the complete perception system as well as a rich set of features suitable for the industrial, defense, and commercial vehicle markets. Now to successfully capitalize on these opportunities, we have an important year ahead where we'll be showcasing the complete MicroVision industrial autonomous and advanced driver safety platform which will utilize multimodal perception, with a scalable software defined set of advanced features. Now while these adjacent markets represent important near term opportunities, we remain committed to the autonomous ADAS and the autonomous applications within the automotive space. MicroVision's technology will be a key enabler to unlocking additional L2 plus and L3 features for our OEM customers. Maven, Movia S, and Mosaic are the right products at the right time for the automotive market. As I mentioned earlier, I couldn't be more excited about joining the MicroVision team and being part of this journey. Thank you, and I'll now turn it over to Anubav to talk about our financials. Anubav?

Thanks, Glenn. We took many transformational steps in 2024 to adapt to the dynamic nature of the industry including the macroeconomic conditions, and geopolitical factors. The three notable achievements of the company are number one, expanded near term revenue opportunities in the industrial and defense sectors as timelines continue to evolve in the automotive industry. Sears automotive OEM competition from China both in terms of price and features, continue to drive US and European automotive OEMs to quickly find a way to progress their ADAS and EV initiatives. While this means revenues at scale from this industry are delayed the certainty of lidar adoption especially given its success in China, has never been higher. To adapt to the changing landscape, we successfully positioned the company to focus on near term revenue from industrial verticals with a focus on AMR, AGV in the warehouse and factory automation space. And also cobots or collaborative robots. The revenue potential is immediate and significant given the need to reduce the cost in this industry. In addition, we're now actively pursuing opportunities in the defense vertical. Especially given the focus of the Trump administration to prioritize defense spending on cutting edge technologies by leveraging our existing technologies and products in the AR and the VR space. Number two, disciplined cost management and added a world class leadership team We adjusted the workforce last year to focus on resources on near term revenue opportunities. While the entire market executed several rounds of restructuring to conserve cash, our cash burn continues to be one of the lowest in the marketplace. Also in line with our focus on operational excellence we are thrilled that Glenn has joined us. His experience, energy, and perspective will help usher in transformational advancements in our solutions and go to market as we prioritize the expansion of our end markets including industrial and defense. Number three, strengthen our balance sheet with two rounds of investments from a strategic financial partner. With the raised capital, and a further streamlined cash burn, we extended our cash runway into 2026. With near term revenue opportunities, and our expansion in the industrial and defense sectors, we believe we have improved our timelines to achieve cash flow breakeven. This is the first time in the history of the company that one single investor has committed to invest an aggregate of over ninety million dollars of capital. This ninety million dollar includes a seventy five million dollar convertible facility entered into in October 2024. And then a subsequent seventeen million dollar common equity transaction executed in February 2025. We believe these back to back financing transactions signal a strong vote of confidence This has also been reflected in the MicroVision trading volumes. That are significantly higher three, four times of the historical levels driven by both institutional and retail. If I can summarize this, securing an institutional financial partner to make an over ninety million dollar commitment signals a strong vote of confidence in MicroVision's future. Last fall, we ran a competitive process to select institutions for a capital raise and received term sheets from multiple quality institutional investors that reinforce the market perception of MicroVision's technology. As a result of this, we have achieved a strong market cap bypassing several of our peers. We remain one of the highest valued US based lidar companies with high average daily trading volume, with elevated levels of institutional trading. These are all reflective of MicroVision's market position and strong staying power with low cash burn and high revenue potential from automotive, industrial, and defense sectors. Now let's review our Q4 financial performance. For the fourth quarter revenue, we reported $1.7 million. After backing out the one-time Microsoft revenue in Q4 last year, the revenue grew from $0.5 million to $1.7 million year over year. Primarily driven by customers in the industrial vertical. While we did see momentum in industrial verticals, the Q4 revenue came short of our expectations as one customer delayed its decision to 2025 though we remain significantly engaged. On the expenses side, our fourth quarter 2024 expenses were in line with our expectations. For Q4, we had $14.7 million of R&D and SG&A expenses. These include $2 million of noncash charges related to stock-based compensation expense, and $1.7 million in noncash charges related to DNA. Backing out these noncash charges or R&D and SG&A expenses were only $11 million in the quarter. In line with our expectations, our expenses have trended down sequentially since the first quarter 2024 primarily due to the reductions in force we implemented to focus the company on Maven and MoBIA products and away from Mosaic and SensorFusion, in response to the automotive projects being pushed to the right. We believe our workforce and expenses are well positioned to execute on the current business strategy. The current engineering talent pool is sufficient to remain engaged with the automotive OEMs and simultaneously scale faster with industrial and defense revenue opportunities in near term. We believe that the go forward annual run rate of our R&D and SG&A expenses will be $48 to $50 million for 2025. Four CapEx was $0.1 million in line with our expectations. So let's talk about our balance sheet. We finished the year with $75 million in cash and cash equivalents, we we're pleased with how our relationship with Hightower has developed over the last six months. In February this year, we raised another round of equity investment from them. Subsequent to these financings, the company now has access to a total of $235 million as of December 31, 2024, with the following four components. Number one, the cash and cash equivalents of $75 million. Number two, $114 million availability under our current ATM facility. Number three, $30 million of undrawn capital under the convertible notes facility. And lastly, the $17 million of new equity capital from Hidrok. In addition to that, equity capital raise in February, High Trail also converted over 20% of their note into common stock. In addition, the June to August redemption payments on those note were deferred. We're pleased to have found a strategic partner whose confidence in MicroVision's future has motivated an alignment of economic interest in step with our management team employees, and other shareholders. This makes the overall cost of capital for the convertible quite attractive. We believe that the benefits to the company spurred by the investments significantly outweigh the cost. We sold about $9 million worth of common stock under the current ATM in the fourth quarter. We have $114 million available. On the convertible note, we have approximately $33 million outstanding that could converge at a fixed price of $1.59. The $30 million second tranche remains undrawn and available for future drawdowns subject to certain limitations. Now let's talk about 2025 targets. We have already secured production commitments from our manufacturing partner at ZS to fulfill the anticipated demand from the customer projects we remain deeply engaged in. We expect this demand to be in the $30 to $50 million range just from this vertical only over the next twelve to eighteen months. So as we expand our TAM into defense, and other related areas and work together with Glenn to expand our solutions and accelerate our go-to-market strategy we will provide more color on financial and business milestones for 2025 and 2026 in the upcoming events. To summarize, we're really excited about 2025 and beyond as MicroVision drives forward with a, significantly higher TAMs including defense and industrial. B, expansive and broadening solutions advancements. C, a solid balance sheet with superior trading metrics. And lastly, a well-experienced team to execute the strategy. With this, John, I would now like to open the line for questions.

Thank you. At this time, we will be conducting a question and Investors can submit their questions within the meeting webcast by typing them into QA button on the left side of their viewing screen. Analysts who publish research may ask questions on the phone line. For analysts to ask questions on the phone line, please press star one on your telephone keypad. You may press star two if you'd like to remove your question from the queue. One moment please. Our first question is from Casey Ryan of Westpark Capital. Good afternoon, everybody. Thank you for the exciting update. I was curious if we could start with the how much of that would we characterize as sort of commercial shipments versus say an or some sort of R&D work done in conjunction with partners?

Hi, Casey. Thank you for your question. This is Anubhav here. The $1.7 million in the fourth quarter was primarily the revenue derived from the sale of sensors to our customers. There is very minimal NRE in this. The NRE that we were expecting to get in Q4 we expect that to be pushed out in 2025. Because of the customer decision.

Okay. Terrific. And would you describe the $1.7 million, whatever portion was sort of commercial, was that sorted to a single customer or or maybe potentially to multiple customers? Because that would be exciting if it were.

Correct. So it was, to multiple customers. Not just one, because I think here, I would like to differentiate, however, the number of customers that comprise this $1.7 million is less than ten because our strategy has always been to pursue high volume industrial customers because that significantly drives a higher ROI because we have to we can get those revenue without inflating our SG&A expenses. And that has been the model of the company to go after industrial customers with significantly higher volume estimates to either retrofit their existing robots or for new robots that are gonna be deployed in the future.

Okay. Terrific. That's helpful. Color, I think. It feels new. The mention of defense opportunities for the company, which, you know, I agree is exciting. I have two questions around that, I guess. Is it fair for us to think that those opportunities are related to say, ground-based or movable objects or are they also aerial objects? I guess I'm trying to understand maybe how big the opportunity is if it's sort of you know, multi-theater essentially.

Let me take that one. Think the focus is if you think about our core products, the core product we've been working on five years since I've been CEO is the lidar product with the perception and expanding that into platforms and automotive. And, certainly, you know, with the team here in Hamburg, combined, you know, we have something we can offer to people developing vehicles that are non-automotive. And happens to be that in the military space, there are multiple programs on this. So we engaged on that last year. So primarily, that's, you know, the product we're working on. But, of course, the pedigree of the company twenty-five years plus before that, is, of course, display systems. And, you know, given the current environment, you know, as opportunities arise, wanna make sure that all the assets of the companies are made available for potential revenue. Okay. Perfect. Nothing not nothing missile related. Right? Just it's ground-based and, of course, directly related to our soldiers.

Okay. So not to harp too much on it, but it's it is exciting. Are you sort of aligned with a sort of partner as you, you know, you know, sort of work to sort of penetrate the defense space? Or are you able to go direct because of your past history and past relationships?

We've actually never gone direct. I think if you think about the size of the company, we are. We build one part of the subsystem of something larger. So we tend to work with partners that can be part of the bigger program. As I mentioned earlier, right, you know, we intend to bring on some military advisers to help us through the process.

Okay. Alright. Terrific. And then circling back, last question is sort of know, less than ten but more than one sort of commercial customers in Q4 is pretty exciting. For all those opportunities, are you finding that you're competing against a lot of the names that we would think about or are you finding that that it's really maybe one MicroVision is being sought out for its unique capabilities or what's the competitive nature of these sort of wins essentially in terms of building relationships?

And the customers are, you know, all the customers know who the parties are? I'm not gonna comment, like, you know, who's in the mix. That's not appropriate for our also. That's their confidential information. But one thing that, you know, that's just my general view of talking to other people. With you know, with the potential of some trade barriers that may come up in the future, working with, you know, Chinese based larger companies, you know, that it has ups and downs. They navigate. Most recently, somebody said that, yeah, having a company that is you know, here at home you know, gives that definitely gives us a warm and a fuzzy. Right? So that restrict that limits not restricts, but, you know, that narrows down the number of companies you compete against. But to them, make a LiDAR. Somebody else makes a different LiDAR. You have software. Somebody has software. How well can you integrate? You know, how well does your application how well does the application software solve our problems? In a real-time low power? They want choices. Right? They would they don't wanna lock themselves in because some of the decisions that people make are seven years you know, program lifetimes. They may be smaller volume compared to automotive, but they're pretty big decision. So typically, there is more than one company involved. And they tried just like every situation we walk into in the automotive, they try to understand the uniqueness, but also what's really something they can count on on your technology. So in our case, you know, offering twenty-five thousand hours worth of life low power, software integrated onboard, not requiring, you know, ECUs. Those are the kind of value proposition and, you know, unique selling points that we promote. So we remain competitive. And others will have a different unique point. But they are lighter companies with software, but a narrower subset of companies competing.

Terrific. Thank you for all that color, and I think you're painting a very positive outlook for 2025. So thank you. I'll drop off the line now.

Our next question is from Jesse Solbinson of DeBoral Capital. Please proceed. Hey, everyone. Thanks for the update here. Thanks for taking our questions. The first I was just wondering on is this a Zapp contract you mentioned thirty to fifty million over twelve to eighteen months. Could you provide a little bit more clarity on on exactly what the deal is, potentially what kind of product you expect to deliver, and if this is an ongoing and consistent delivery contract or some type of, you know, lump sum agreement please?

Yes. Go ahead, David. No. No. Go ahead. Okay. Jesse, so I just wanted to clarify a few things. So this thirty to fifty million dollars is what we expect as the demand from our customers in the next twelve to eighteen months? So to fulfill that demand, we have already secured production commitments from ZF. Who is our manufacturing partner, to ensure that we have an uninterrupted supply to our customers. Because I think as Sumit described, one of the important reasons for some of these commercial discussions with industrial customers that we're engaged in it's a priority for them to make sure a company like ours can deliver solution at scale and unpredictable volume and predictable schedules And hence, that's why to for the certainty of fulfilling that demand, we ensured that we have a locked in production commitment from ZF so that when the demand comes and arrives, we're able to fulfill that sufficiently well.

Great. Thanks for the explanation. There. I'm sorry for the mistake, but I appreciate the clarification. It's good to hear. You've that you've been able to secure this type of production capacity for potential demand. You know, looking to one piece of the puzzle here that's been consistent with the business is the automotive RFQs. You know, you mentioned some continued engagement several OEMs, and there have been delays. It is just across the board, but could you just give us an idea on maybe some potential update on realistic timelines for these RFQ converting into revenue generating contracts could potentially be.

Samantha, you wanna talk about that? You broke up there for a second. Could you just repeat that for a second, please? I you broke up for me.

On RFQs, I'm just curious for in the automotive segment of the business. I'm you know, the industry is experienced delays was just curious for some potential update on when we could expect that business to be generated.

Yeah. I think I think in general, you know, the RFQs the timeline for their start-up production, is moving out. The technical evaluation goes on, And to be honest, right, even on the OEM side, there's a churn know, as you can you know, we all read the news. They have churned, their tier ones have churned. But the programs by themselves, right, are seeing some, you know, elongation in their timelines. So as our fuse go in, you know, technically, lots of lots is known. New items come out always, like, you know, how about this, how about that? But the decision is not clear when it's gonna get made. Right? They're not driving towards decision as fast as they were in previous years. And that's at least our experience. Right? And I know, like, you know, we we feel there are a lot of questions from our investors that are your best in class. How is it that you know, you're not winning? Part of it is, you know, there's a process that you're part of and, you have to go through it. To get to the commercial side of it. Right? So technical reviews go in, you know, you you wanna get to the green part. Technically green, but then you have the commercial side of it. It'll be very hard for me or anybody else to predict when those timelines are. And if those programs are actually in the go fruition. One could get an award that doesn't mean it goes to SOP. So lots of variables. Right? So, you know, I I guess, like, everybody wants to win. Do the press release, stock goes up, and it's great. But nobody can actually talk about, you know, is that actually gonna go into production or not and where that program is. And I would I would argue that, you know, a lot of our competition has announced wins, but it's really hard for them to say, you know, where they will be. In the long term, you know, that those programs are gonna actually be maintained. So we're in a different stage. You know, we made a bigger bet which is to reduce everything in size and go for passenger vehicles early on. We started incorporating the perception software, you know, by bringing on the team here in Hamburg. And you know, bigger contracts would take longer in my opinion.

Sure. Understood. It's a it's a it's a developing know, developing process with these guys, and and I think it's just across the industry. I guess, you know, lastly, I'm just kind of curious Last bit in some discussion here. If I Sure. Go on. If I can drop. Right?

We have a new CTO who comes from this space. He's probably got far more experience than I do. So perhaps, Glenn, you can give a little color of what your you know, we talked about this a lot. So I think we should be candid about what we think. Right?

Yeah. Yeah. I mean, that's a good question, and and I think what you're seeing now is a period where there's a lot of reformulation within the OEM community about exactly what their, you know, what their higher content ADAS and, you know, level two plus and level three systems are gonna be. I think we've seen a couple of consistencies in in that in that lighter is clearly a part of that. So as you talk about level two plus plus or level three, and then later is part of the perception system. Which is which is great for us. But it's very clear, you know, after that kind of first generation of level three systems came out and really underperformed in the market, many were not you know, were just simply not were not adopted to the extent that the OEMs wanted. Is been somewhat of a like I said, a reformulation of what are those strategies. But and that's and that's the process they're going through now. And so know, there's some exploratory work that they're doing as well as you know, trying to figure out what's the right formula, what's the right value prop for their customer. And But it's clearly coming. I don't think there's any there's any debate about that. Or where those systems have seen success. You know, with some of the OEMs, it's it's been good. I think you're gonna you're going to see that developing, that certainly gonna happen. LiDAR will be a part of that. Solution. And so we're supporting them and staying very engaged with that process. And able to hopefully, able to accelerate their their adoption.

Great. Thanks for the detail there. You know what? One last one for me and I can jump back in the queue. You know, it it sounds as if MicroVision does have some something of a focus on potentially expanding its perception solutions would you say, are there any strategic opportunities to accelerate growth through acquisition and potential potentially in complementary technologies, either with sensor fusions or or some type of software. And then just to follow-up, you know, are you actively evaluating potential M and A opportunities in how would you go about doing so?

Let me let me let me start with that. Just to establish you know, what we've done already. With our acquisition of the IBIO team, several years ago, I believe and I think it's, you know, part of the reason why, like, Glenn has actually come to look at it and he wanted to join. The perception core probably pretty mature. It is actually very, very mature. It was developed for Audi years ago in in very close con you know, collaboration with them. They're a very high level of maturity. And on top of that, we're very, you know, very quickly, we're able to build out different application software support different customers. But it was for lidar specific. I think what Glenn mentioned just just now, and I think, you know, I don't want the subtlety to be lost, a whole space of multimodal. Those just words, but it's like radar, camera, lidar. There's a group of sensors in combination and software that will get to the high level. So I think your question about m and a, I'm just giving you context that we have quite a lot of things built out. The best thing would be cheap, and efficiently if we can build more out internally. But like any company in this space. Right? Yeah. If there's an opportunity, I mean, our focus right now is to get revenue, to get partnerships, to get those paths where, you know, everybody feels that it's somewhat sustainable. And growth comes different ways. So certainly we wanna homegrown everything, you know, cheaper and be faster. But if the right opportunity comes along, I think, you know, everybody would wanna become a stronger company. Especially if that allows you to get customer support. You know, if you can actually get a program done faster, of course, you would work on that. Right? So I think, you know, everything is up on the table always, but generally, you know, we have something very valuable built out already. And I think, Jesse, if I could just add recapping what Sumit was describing. The strategy of the company is to truly become the ADAS solution provider for the industrial commercial vehicle space as well. So I think the idea is to build a full solution to be offered to these customers, and that's what we're looking to to get to either organically or inorganically.

Great. I appreciate the Eric. Thanks for taking my questions, and thanks for the time.

Thank you.

I will now turn this call back over to Anubav Verma to read questions submitted through the webcast. Thank you.

Thanks, John. Right. So the first question we have is Sumit, what are the factors that delayed the signing of this industrial deal?

If you think about industrial customers, they really don't get much attention and much love from a lot of the bigger companies. You know, you can go to another lighter company, buy what's off the shelf, got integrated. We work through all that. So it gets You know, to a certain level, which means you'd have to have a software team. to certain level of adoption. Yes. You can do that. What we did was we had a very unique thing. So our team has the perception, not running on a big Nvidia platform. We actually have this high level perception running inside our sensor on our SoC. And this is actually a very, very big advantage because for that small power, it's not just the lidar. It's the lidar with the perception running. When you have that much software you're providing, you know, all interfaces are provided, you know, you have to collaborate with the customer. It's their application, you know you know, can they sell more product and their platform can go faster much more adoption with their customers? With with this. New technology. So there's a period of time they wanna qualify. They wanna make sure that, you know, we're bringing hardware, which to be frank with you, some of them don't even understand. How do we do this, how does the sensor model work, where does the noise go, why does that point cloud look so clean. They they understand how to test LiDAR, but they don't understand how it really works. And then on top of that, the software is doing things that everybody acknowledges that, oh, that looks great. I mean, I got everything on board here. You can do ground plane. You can do this. You can do this. All those things are ready to go now. The application layer. So just a their own qualification part of it takes longer. And I think that is the bigger one. That the qualification timeline that we were tracking to, that they were tracking to saying, hey. This is how long it's gonna take us. They have far exceeded that. Right? You just get deeper and deeper into it because the decisions are bigger. These are not, like, small projects for hundreds of units. You know, whenever you do thousands of units. Right? Mean, think about automotive is like hundreds of thousands units. So you go through a huge amount of qualification step. So orders are manufactured less, but again, they're getting features that were available in the automotive space, in the industrial space. So they're finally seeing some love from different companies, and we're bringing mature technology that runs for twenty-five thousand dollars worth of life. Imagine, you know, in industrial space, you're making something that was really designed robustly. And software that can know, essentially, they would never have to develop any software so they have to rely upon us. So that's what takes the most time is the full-blown qualification part of it. Thanks, Amit. The next question is, can you comment on the recent deal announcements by several other LiDAR companies with global OEMs? If MicroVision had the best sensor with the lowest price point, why did the company not win these RFQs? Is it too late? For MicroVision? How does MicroVision plan to differentiate itself from competing effectively against these competitors including the Chinese LiDAR players.

K. I'm gonna I'm gonna answer one part of it, which is to give context, and then I'm gonna actually have Glenn add more to it. He's gonna give a broader more broader perspective. I think, like, you know, the question always comes up. You have this best in class. Like, people have asked me, I think it was at the investor event a couple of years ago. What's best in class? And I think it's still not clear to everybody what's really awesome about our technology. People ask the question about FMCW versus time of flight. At a base level, it's gonna be in a car. It has to be low powered. It has to be small. It has to have lots and lots of features. They need to see small object detection at a hundred and fifty meters or higher or you know, all the different attributes in AQC, and you have to go create data. This is, you know, things that I've already shared in the past. And on top of that, they wanna make sure that the industrialization is to a level where fully automated. You can deliver it. And, you know, the features are, you know, kinda set And on top of that is financial health of the company, how many years do you have runway, So I think from a technical standpoint, we get to the green very quickly. And when it comes to the, you know, the health of the company and the strength, you know, why does an above work so hard to find great investors that, you know, show them that, yeah, we can actually support ourselves and that is a lower risk. You have to try to get through that. So best in class in technology as an engineer. Of course, you wanna be excited about that your has the best technology. But a decision is beyond just technical part of it. It is made a lot of the commercial and vesselization part of it over a long period of time. Others are announcing it, so I think I'm gonna turn it over to Glenn because we recently had a very interesting conversation about some announcements. We're not gonna talk about anybody specific. That's their confidential data. We're just gonna talk about, in general, how you know, we don't get nervous, why this is still early times. For this technology. Glenn?

Yeah. Thanks, Sumit. I think to build on Sumit's comment, I mean, you as I said earlier, you are seeing this continued commitment to using lighter for these advanced systems. So level two plus plus, level three systems and which is which is great. I think you're seeing some announcements as people kind of solidify maybe part of what they're trying to do across their portfolio. Not uncommon, but you're you're really not staying yet concrete plants have brought adoption. And so you know, over the last, well, probably ten years, we, you know, we've seen this this occur on a regular basis. So for us, it's a matter of, you know, making sure that we're focused on the right customers, the right opportunities within those customers that really will bring volume and not just know, chasing engagement or announcements. So as soon as I had you know, at this point, not really concerned with what's been announced so far. It's it it again, a lot a lot yet to play out there And I think when we look at what we have with Maven, what we look at what we have with Movia, and Movie s coming, These are gonna be the right products that as the OEMs really solidify their broader plans. I can't I think that we're we're coming in at just the right time. That's early. And, really, when they're ready to start moving on larger programs. And I think you you know, you'll see more of this, but announcements in the coming months, I'm sure, But it's really not gonna take us off our focus. So at this point, not really overly concerned with it.

Thanks, Glenn. Next question. Do you think the NITSA's requirement for the US automatic emergency breaking rule due by 2028 is unrealistic When is the latest date an OEM would need to sign a series production deal? To ensure their cars were meeting this requirement for 2028. And can microvision LIDAR sensors enable OEMs to meet this.

Yeah. Maybe I'll maybe I'll start, and somebody you can certainly add color to it. So the 2028, 2029 requirement by Nyssa, it it's it is achievable. And and but it's gonna for each OEM, if you think about an OEM, they'll have a portfolio and, you know, a a number of number of vehicle platforms that have different levels of capability. So and and really one of the key focuses on the initial ruling was vulnerable road users. Pedestrians. So you're able to detect pedestrians, up to certain speeds and make sure that a, b is functioning and and avoid the accident. So if you're an OEM, you're gonna look at your fleet of vehicles and your platforms. And for some of those, it'll be relatively simple to implement these changes. It may just be software. And those will tend to be the higher end systems that have more sensors more capability to them, For their lower end or value segment vehicles, you know, maybe vision only based. A, b, and may not have that ability to discriminate pedestrians required by NISSA. And so for those platforms, it's gonna take longer And in some cases, they may struggle even though there were was four years from the ruling. It was about a year ago. That the ruling was made. They may struggle to get those platforms updated. So you're gonna see, you know, don't would expect to see some negotiating between LitNet and the and the OEMs to try to, you know, stage that so they're not disrupting their vehicle platform plans. But fundamentally, the technology is is there. NISO will continue to evolve, you know, in terms of their requirements and become more stringent. If you look at, in particular, NCAP, Euro NCAP, US end cap. LIDAR can be a tremendous advantage to doing that because of its ability to discriminate, detect through space, and and really determine where that object or that pedestrian is. But it's you know, for each OEM, it's gonna be a bit of a different type of challenge. Generally speaking, it's it's doable for most the platforms. For some, they'll struggle, and I was expecting to try to you know, negotiate with NetSuite to give them either more time when those platforms are as they try to figure out what to do to comply.

Thanks, Glenn. Next question. How does MicroVision plan to compete with FMCW LiDAR technology given its increasing adoption by OEMs like EVA's recent win with the top ten passenger OEMs. Are there plans to transition or integrate SMCW technology into MicroVision's product portfolio to align with the trends.

And you said if you if you wanna start, I can I can can certainly add my perspective to it as well?

Yeah. I think I'll start. I think I've talked about this in the past a little bit. At the OEMs, they'll always make the right choice, which is the lowest cost the highest fidelity, system At the end of the day, you know, a time of flight versus FMCW, one of the the big differentiator is you go velocity. Right? Well, they already have, as as Glenn mentioned earlier on, like, five radar on the car. They have velocity. They are integrating into features that are pretty mature and they're shipping right now. At the end of the day, the technology that drives the lasers in a time of flight, time of five nanometer versus the FMCW. Significantly different. There's cost barrier. You know you know, in one case is you know, tens of billions of dollars would have to be invested to make SMG w more affordable in very, very high volume. Now there is no other technology out there or any demand out there that requires them to make that investment. There is no hard disk drive industry that needs these kind of lasers or know, anything else. Right? So, therefore, I think, like, it's great. Right? I think, like, you know, if there's more sensors in the foot in the market, people are feeling it, that's great. But in general, think you have to look at it, like, is it gonna be cost competitive? If you're gonna put a device in the cabin behind a windshield or something like that, and it consumes tens of watts. Significantly higher than a time of flight. You know, imagine if you have, you know, twenty, twenty-five watts, fifty to twenty-five watts in there, you need cooling. And it's not gonna be fans. So there's a lots of variables that go into it. I think this keeps, you know, the nervousness that our investors may feel given the fact that we have not had a commercial success with an OEM I appreciate that. I respect that. Think it's totally warranted. And all of a sudden, But at the moment, I don't think you know, the physics does not dictate that anything has changed specifically. is a paradigm shift. You know, mounting it on top of a truck with, you know, ample airflow Yeah. That that that, you know, anybody could see. Miniaturizing that for that situation, yep, anybody could see. Starting to put into a passenger vehicle. Right? I mean, they're shielding it, you know, our competitors, They're showing us CES and other shows. I think that's that's totally fair. But let's see, you know, how far that adoption goes. Right? And but we're gonna focus on ours because we know our core technology works. In the middle of a race, you don't, you know, switch shoes and say I'm gonna run a different race. Before we entered this, we had actually thought through I'm a five versus FFTW, you know. We made a conscious decision to a time of flight. Because if you recall, MicroVision's core technology was not lidar. Only in 2011 we started with this. So the team at MicroVision at that point really thought about it. It's what made the most sense from a energy standpoint.

Yeah. It it if you think about LIDAR as a sensing modality it's not gonna operate alone. It's gonna be combined with radar and and vision. So you have camera systems as well. Radar, which is a big part of my background, you get relative velocity. Very accurately. So I don't need lidar as part of a perception system to also be calculating that. It's and and really you're looking to operate each of these systems into their into their sweet spots. So LIDAR with time of flight, very proven. Very robust technology. As Sima said, lower power and power power conversion power consumption is hugely important from a packaging standpoint and from a where do you place this in the vehicle standpoint. It means you can now make it smaller. So know, when I think about a multimodal perception system, time of flight with LiDAR gives me exactly what I need from the LiDAR modality. Radar gives you relative velocity. It gives me you know, object detection that I you know, in all weather condition, Camera gives object classification information you know, those types of things. So each modality operating in its sweet spot when you think about it, you know, that's why I kind of like it. It it works really well and that come environment. So for us, I think, QF is still by far and away, the preferred approach.

Thank you, Glenn. How does the recent announcement of cooperation between Volkswagen, Valeo, and MobileEye impact MicroVision as a three parties look to cooperate to enhance driver assistance by integrating hardware and software sourcing together. What does that mean?

Yeah. I I can I can speak to this? Very familiar with the with all the parties involved. You know, the announcement that it was I think, described as or branded as surround eight AS, and this is where you use a combination of six cameras, two eight megapixel cameras, forward and back, and then four three megapixel cameras for kind of the parking, the bird's eye view function. Combined with five radar, core coronal radar, tend to be more short range and one forward looking radar, which is longer range. And then all packaged together and and public. It's running on the I q six high. That Mobileye provides. And what I would tell you is is a couple of things. What's interesting about the announcement. One is it kind of ends the debate. Relative to base level ADAS systems. If you think about the platforms that goes that that system will go on, the MQB platform, you know, it's got a value segment vehicle. It's golf. It's the, you know, small smaller vehicles. And so, you know, highly cost sensitive market. It'll have limited you know, it's kind of level two functionality, not unlike what's provided today by a lot of the systems that I've been launching. And, basically, it combines radar and camera. And it you know, kind of eliminates the debate now that, you know, that, hey. Can you do everything with a camera? Can you do you know, no. You need radar and camera to have a fairly robust ADAS system. Now that sets the floor. If you think about it, as I mentioned, that's the level you would call that a level two system. It has lane assist. It has some other things. That goes with it. And so that that now sets the floor. And what that means for the broader ADAS market is that the value segment vehicles now have level two systems. So you moved up from level one So content per vehicle continues to grow as it relates to the eight s market, broadly speaking. For the OEMs, what that means is to differentiate Now you need to be providing level two plus plus and level three systems that are different and differentiated versus what I would refer to as kind of the commoditized ADAS. That's essentially the commodity level. And why that's exciting for MicroVision is that means you're pulling you're now looking at having to pull in lidar and more advanced systems as part of those level three offerings not just at the very premium levels. But at the but but really at the more you know, the more mainstream level of vehicles above value segments. And so that's where volume is. That's where you're gonna get differentiation for the OEM. And that's where LiDAR will really will really enable the OEMs to deliver those systems. So when I look when I step back and look at those announcements, that's for me, it's exciting because it just it raises concept per vehicle. It raises the floor for ADAS systems within the automotive space. And it really pushes the OEMs to start incorporating more advanced features to be able to differentiate their higher spend ten vehicles.

Thanks, Len. Next question. If MicroVision were to see an increase in deep demand for AR products, when would the company communicate that to the market? Let me take that question. Obviously, since this is a new sector that we're looking to pursue opportunities in, any material purchase orders that come in, or any significant transaction if there is an offer made to purchase our IP. And other assets related to the existing technology to our AR and VR products. That's what we're most excited about. Next question. It is publicly known that Microsoft previously had a contract with MicroVision for HoloLens two. And that the eye was headset is based on HoloLens two technology. As your intellectual property was used in HoloLens two, would other parties be interested in starting a collaboration again?

Yeah. I think think in this call, I think some investors have known this for a while. Questions come up over the last five years. We had not focused, you know, spending our raise capital on anything but lidar. But it's in our blood. You know, believe it or not, I've been I've done AR longer than I've done lidar in my own personal career. I know a lot about this space. I think as far as partnerships are concerned, we stand ready whatever problems may exist on an existing system. I think we have the talented people in the company that we can solve them very quickly. You know, developing potentially new technologies, for, you know, anything next generation, you know, certainly we can do that. And, of course, we have reference ideas for what we would do. On top of that, you know, of course, what we've matured into is we're more of a systems company. So beyond just the display technology, there's other things in the headset that we can innovate on, that we can add to. If you think about some of the biggest problems that come into space, is really motion sickness. Right? And as you think about motion sickness, it's a hard problem to solve. But if you have the right eye tracking, if you and, of course, you want the entire system to be low power, You know, you get, like, you know, instead of talking about lighter sensor models, you start getting talking about, like, eyebox and you know, color uniformity. So but at the end of the day, there's a bunch of software that we believe that we have still beyond just the display that we had done in the past we have more to offer now. And the the some of the perception technology that we talk about, in the space of automotive. There's things that we do in there. That if you were to add a very miniaturized lidar on top of the helmet, and mapping near the field You could do a much better job overlaying the information from a AR to XR side. Integrating that with some really, really fast and slick, low cost head tracking. Gear. That goes on an existing helmet. So we can offer more than what's there just in the display technology. So, therefore, I think, you know, we will collaborate and we can fix existing products, and, of course, we can go on and actually add more value by making something next generation that was not visualized in the past. Thanks, Amit. I think we have gone over the hour. We, again, thank you to all our investors. For joining us on our Q4 earnings call. We look forward to talking to you speaking with you again very soon. Thank you so much.

Thank you. This concludes today's conference.