MicroVision Business Update Conference Call - MICROVISION INC

Welcome to the MicroVision Business Update webcast. At this time, all participants are in a listen-only mode. The audience can submit questions during the live session, which will be addressed on the company's third quarter 2026 earnings call. I would now like to turn the call over to Jeff Gadway. Please go ahead. Welcome, everyone, and thanks for joining us for today's conversation with the Microvision Senior Leadership Team. Joining me today, we've got Glenn DeVos, Microvision CEO, James Bion, Chief Commercial Officer, and Christine Chambers, Chief Financial Officer. Thanks for being here. Two quick housekeeping notes before we dive into today's discussion. First, today's session is going to be a little bit more of a talk show, but I'm going to Today's discussion will include forward-looking statements, which are not guarantees of performance and actual results could be different. Next, we've got quite a bit to cover off today, so we won't have time to take questions, but we are collecting questions for the earnings call, so please feel free to submit them using the online portal. Now, speaking of earnings, I know Q3 earnings are just around the corner next month, so with the three of you here today, I want to get your perspectives on a few topics that I know are on people's minds. First off, your thoughts on the business transformation. Second, an update on commercial traction and growth. And third, understanding the pathway to positive cash flow. So Glenn, I think it's best to start with you to kick this off. And I'd love to get your impressions and reflections on the quarter and how it fits into the broader context of the transformation that kicked off earlier this year. Glenn, what do you think? Yeah, thanks, Jeff. And first of all, great to be with you. Great to be with everybody online and really excited about the material that we'll cover today. You know, to your question specifically about the transformation, you know, about a year ago or late last year, we walked through the strategic elements that we were going to implement as part of MicroVision's transformation. We kind of put it under the umbrella of LiDAR 2.0. And as a refresher, you knows, the first key piece of that was transformation of the portfolio, expanding the portfolio so that it gave Microvision the ability to bring the right solutions into the marketplace and really expand our product offerings. The second element was really just a relentless focus on cost. How do we drive the cost of LIDAR down so that we can achieve mass adoption scale? The third piece was then the end markets that we're serving. You know, a year ago, we were very focused on automotive. I mean, and I think true statement for a lot of the lighter companies in our industry was automotive was seen as, hey, this is the market where we're going to really see the growth. Automotive is still a really important segment to us, but we knew automotive will take time. So we have to expand the market segments into industrial, security and defense. And as we've seen here recently, data and communications around data centers and photonic interconnects. So expansion of our end markets and our access to end markets. And then the final element was really building out the team. How do we execute this, build a team out that really is capable of implementing those strategic elements? And so as we see here today, three quarters into 2026, you know, we've seen just tremendous progress on all fronts, all four of those elements. Earlier this year, expansion of the portfolio with Scantonell and with the Luminar acquisitions. You know, you think about cost. That's just been an ever-present part of what we're doing in terms of driving costs and the price points down for LIDAR to enable our customers to be able to adopt LIDAr as a solution. And markets, well, we talked about it in earlier calls where the growing percentage of our revenue is really coming from non-automotive segments out of industrial security and defense, in part due to those acquisitions, but also bringing the right solutions to those end markets. And so strong growth in markets that can deliver near-term revenue and have good CAGRs on their own. We're just seeing great adoption of LIDAR in both of those markets and we think soon in data comms. And then finally, the team, you see it here today with James joining us and with Christine joining us, really building out the leadership team, along with Greg and Hellman from earlier in the year, to really be able to drive the business and drive it in the right direction. So we've announced a lot of things over the last quarter. When we talk about Q3 a little bit, a lot's happened. You know, it's everything from talking about microvision semiconductor range to customer announcements that James will get into to developments of the technology. This is the month where we're launching Muvia S. A lot happening, and we've talked a lot about it. But what we wanted to do today with the team is kind of bring that together. What does that mean for our business? And how do all these developments, these discrete developments, how do they combine to drive microvision? Not so much Q3 or in the near term or just in the new term, but rather, how does that work as we think about 27 and beyond? How are we shaping the business model and really how are we taking customer success, which we're really excited about, and customer value, and how do we translate that to shareholder value? And so today, James will walk us through kind of the top line piece of it and what we're doing on the customer front and how he has shaped his team, how they're driving commercial traction and driving that top line growth. And then Christine will take us through, well, what does that mean for our business model? How are we managing that revenue? How are we then aligning our investments and our operating models with where those revenue streams are coming from and those customers we can serve? And so, you know, you'll get the top line and then the bottom line. And that is how we ultimately drive the customer and shareholder value. Now, as I mentioned, you now, a lot of elements that were part of that strategy. Again, two of the key, one of the most important is the team. So really excited to have James and Christine with us. What I'll do now is turn it over to James to talk about the top line. And then we'll come back to Christine to talk About the business model and the bottom line. Thank you, Glenn. It's great to be here. We've been focused on delivering revenue over the past few months. I saw that commitment right through the final day of the quarter, shipping sensors until the last day of the quarter to maximize revenue. That's the mindset we're building. Take ownership, follow through, and deliver on our commitments. The commercial traction that we discussed earlier this year is now materializing, and we'll share some of the financial results during our Q3 earnings call. We've also signed multiple long-term agreements with customers in the United States and Europe across industrial, security, and defense applications. This relationship leads to recurring sensor sales as customers deploy and expand their programs. And that's an important step towards building a more repeatable business. Those agreements, together with purchase orders already in hand, also improve our visibility into customer demand. And that visibility matters beyond just a commercial team. It helps supply chain plan component purchases. helps manufacturing team prepare capacity, and it gives the entire organization a clear focus. Glenn and Christine will discuss the revenue outlook later. From my perspective, the commercial foundation supporting that outlook is becoming stronger as we secure agreements and convert pipelines into orders. With all those orders in hand, the immediate focus is execution. we need to deliver quality sensors on time and support customers as they put those sensors into operation. At the same time, we are focused on generating revenue beyond the current quarter, and our team is working on three things. Execute additional long-term commercial agreements, build a qualified pipeline, and convert those pipeline into revenue. Now, I'll just spend some time on talking about new microvision. From a commercial standpoint, the biggest change that we see now versus last year is a range of customer problems that we can now address. Our sensor portfolio gives us more ways to serve customers across industrial automation, security, defense, and robotics. Iris is a good example. We're seeing demand from customer that needs long distance detection in challenging environments. That includes autonomous ground systems and defense applications. The 1550 nanometer wavelength, which is invisible to night vision goggles, does matter to customer operating in combat environments. Now, looking ahead, our new Halo product gives us a path to offer next generation long range sensing in a smaller, lighter form factor. The design focused on low product cost. Now we are working with multiple customers on how their roadmap can support their future programs. I'm also very excited about our Movia S product. Its compact, solid state design, wide field of view, and the focus on cost efficiency make it compelling for short-range perception in robotics and industrial applications. Also, the recent FCC update affecting foreign-produced advanced robotic components may increase the importance of made-in-USA sensors. Movia Air gives us another option for ground-based applications, while Movia Air extends our reach into aerial systems. Movia air combines lightweight sensing with embedded capabilities, while Air Plus adds onboard compute processing for broader perception applications. We announced our collaboration with Robinson Unmanned yesterday, and we look forward to showing more of our MOVIA air capabilities at AUSA in Washington, DC next week. Beyond sensing, like I mentioned, our scantinal photonics technology also opens doors in AI data center connectivity. Many of these industrial security and defense opportunities also have a shorter deployment cycle traditional automotive programs and that gives us more ways to generate near-term revenue while we are building relationships that can grow over time with automotive OEMs, commercial vehicles, and robot taxi customers. The next step is to turn that broader opportunity into repeatable commercial results. I'm very encouraged by the progress the team has been making and we are seeing customer demand translate into agreements, orders, and shipments. Now we're just working on making the execution consistent quarter after quarter. Over to you, Glenn. Yeah, thanks, James. And I think, you know, just to kind of highlight, as I was listening to you talk about the activities and what your team is delivering, I was just reflecting on how, So, you know, a year ago or even early in the year, what we were talking about is our strategy and our plan. And here's what we're trying to do. We sit here today and we're talking about here's where we're building. Here's what re-executing. Here's where shipping. And here is how we're making the numbers for the quarter. And I think that is just singularly representative of the change and the transformation, the progress that we've made. It's really it's exciting to see. I'm sitting in Orlando today. just down from the manufacturing floor, where I can see the products being flashed, being boxed, being shipped. And it's, you know, it's evidence and it just shows we're successfully executing that plan. We're delivering to customers and they're great products. As you think about, as you mentioned, Iris with 1550 perception, it is winning in the marketplace, in particular around industrial off-road and defense applications. And so it's just, it's great to see that progress being made. And from my perspective, couldn't be more excited about what James and his team that he's building are doing for us. So with that, we'll kind of shift from the top line and we'll go to the bottom line and introduce Christine Chambers. As I mentioned, she joined us in late August. Decades of experience with companies like Microvision, deep understanding of the capital markets, but also the business models that are successful. And so with that, I'll turn it over to Christine. Thank you, Glenn. And I'm going to lean into some of the comments that James and Glenn mentioned, focusing on the top line first. Just to reiterate, what we're hearing is that Microvision has really pivoted to a multi-solution, multi-use case, you know, solutions and product company. And this is an important transformation because from a financial standpoint, it improves the quality of our revenue model. Firstly, it's shortening those sales cycles. The strong mix of commercial and industrial use cases really shortens the time to market compared to the automotive buying cycles, which we now have much longer time to market. It also enables us to pivot the sensor technology to different use cases, which really means that there's less operating risk. As we look at the inventory we have, rework it and ship those products to different customers very quickly. And this broad mix really reduces the dependency on any single program or vertical and creates a much more resilient revenue base. With that in mind, we're focused on building a business where the ongoing commercial success increasingly fuels growth on the top line. And with that, we are confident in our ability to meet the full year guidance in the range of 10 to 15 million in 2026. And again, as we mentioned, we'll have more information on that as we in the next few weeks as we come up to our Q3 earnings call. And then as we look ahead to 2027, we expect revenue to double in 2027. Supported by not just the inventory that we have on hand, but also our strong commercial pipeline in the industrial and defense and security sectors. Thanks, Christine. Appreciate you kind of walking through the top line and the traction and the growth. I want to change gears a little bit and shift into talking about what the pathway to positive cash flow looks like for Microvision. This is kind of for all of you, I guess, particularly for Glenn and Christine. How is the leadership team and the Microvision team thinking about this important topic around driving the pathway to positive Cashflow? Yeah, I'll start and then turn it over to Christine. I think, well, it starts with the top line. and what's critical is that you're we're picking the right markets with the right customers the right products that can deliver not just revenue but gross margin so that it can fund the business and that's what i'm particularly excited about because as james walked through where we're getting commercial traction where we'RE shipping products today where our success is and the revenue streams that we're gonna we're going to be growing this is where we want to be. This is where we will create great gross margin to fund our business. That's where it starts. Now, really what the leadership team is focused on now is, okay, how do you then align resources and then how do You optimize your organizational structure in your business model so that you're operating as lean and efficiently as possible? That's what I'll turn it over to Christine to talk about some of the things that we're doing there. Yeah, thanks, Glenn. That's exactly right. As we've talked about, the path to revenue is clear and that commercial organization and James's leadership is aligning and aligned around our plan. We're taking steps to ensure that the capital allocation discipline is aligned to this commercial strategy and to our overall operating plan as we go into 2027. what I bring is sort of a history in managing and integrating acquisitions through a very systematic approach to aligning around that core product and commercial strategy. This ensures that every dollar spent is measured and mapped to top line demand and growth strategy. I think simply said, this means distinguishing between spending that advances commercialization and spending that doesn't. We will look to strengthen operations and sales and marketing under, like I said, James's leadership, with the objective being to invest behind the opportunities that can produce commercial returns, while we'll really continue to look at discipline everywhere else. This will mean prioritizing investments around product costs, improving product costs and supporting customer delivery and accelerating adoption. Now, if I take a step back for a moment, the first step in integrating Luminar to Microvision from the West Coast office to a consolidated manufacturing facility located in Orlando, as Glenn said, that part is largely complete. But in reducing to operating expenses, this US-based operations manufacturing facility combined with existing inventory puts us in a position to achieve the 2027 revenue goals we've outlined without having to spend a lot of new capex. And most importantly, I think with the clarity around the end market priorities that we've talked about today, we're entering into this second phase of consolidation and efficiencies. Streamlining and further consolidation across our organization will result in significant net cost reductions. And this in turn will result in a significant reduction in the cash burn in 2027 compared to where we landed in 2026. Yeah, just maybe to add a comment. I think what you're hearing is it's really, you know, it's both. You have to have that top line revenue growth. And where we are today, we have clarity around where that is coming from and which products and services will deliver that. That means you align and are able to align the organization and really optimize your organization behind those revenue streams and then address costs so that we're getting to positive cash flow and to our business metrics as quickly as possible. and what's great is we have the we now have that pathway from the revenue standpoint now we can take the next step in that consolidation in that optimization of the organization to bring it right behind those revenue streams for to accelerate our growth but also accelerate our time to positive cash and so that is the focus of of this team yeah thanks glenn i want to um give each of you an opportunity to to really highlight you know what really matters here and i think this is important because over the last number of quarters there have been a lot of announcements from microvision you know a lot of commercial announcements product announcements uh updates on the strategy and so i'd really like to hear from each of what you think the most important maybe three or so points that people should walk away with understanding about Microvision through the lenses of strategy, finance, commercial? What is most important that people take with them today? James, maybe we'll start with you from a commercial standpoint. Yeah, thanks, Jeff. I would encourage investors to watch the progression from customer interest to sustained commercial activities. First, are the POCs and evaluations becoming commercial programs that means signed agreements and purchase orders with a clear path to deployment second are we delivering orders need to become product shipments and revenue and third is a revenue base becoming more diversified we want to see growth across industrial security defense and many other applications winning the first order matters and earning their confidence through the product performance matters. Delivery and support helps us build lasting customer relationships. The customer satisfaction supports repeat orders, broader deployments, and future growth. So at Microvision, we're working on two timelines. We're executing against the current commitment and we're building the pipeline that supports the future growth, where customer permits us to disclose their names and programs. we look forward to sharing more about our commercial traction like Robinson announcement yesterday. In the meantime, the measurements are pretty straightforward. Long-term agreements, orders, shipments, repeat business, and most importantly, revenue. That's all I have to refer for today. And we look toward to sharing our progress in the quarters ahead. Maybe over to you, Christine. Yeah, I think that's a good place to go next. Christine, you know, from the CFO chair, what are the most important things people should take away? Yeah, thanks, Jeff. I think the key things to take away today is that we're confident in our ability to drive revenue growth in 2026, exiting 2026 and then doubling in 2027. We are focused on sort of cleaning up the balance sheet as we continue to look at debt, our debt structure and lease obligations, non-core assets, for example, that we could monetize. And then, as I mentioned, we are diligently focused on this second phase of efficiencies and synergies, which will help us align capital to support and fuel that commercial growth strategy and significantly reduce our cash burns. So those are the things I would take away of key things from my perspective from today. And Glenn, how would you sort of put a bow on this and tie the pieces together from your seat? You know, as you mentioned, it's just over a year since you've taken on the role and a lot has changed. So we'd love to kind of hear how you're thinking about kind of putting it together here. Yeah, I think the first thing I would say is incredibly happy with the progress we've made on the team. And you see Christine and James here, but also, like I said, Helman and Drew and The Balance. We have a very strong and very unified leadership team that allows us to move quickly, make decisions, and allocate capital very efficiently into those important revenue streams and those important investments that we want to make. And so it's great to have this caliber of a team in place to guide the business. The second thing I would talk about is just that acceleration of revenue. As we were, you know, like you said, a year ago when I took over, that was still strategizing on where our revenue streams would be. As we sit here today, I mean, it's a night and day difference. When we look today, we know where those revenue streams are. We're shipping products. We get to see our products on the websites of our customers now. You're seeing it happen. And the key part about shipping Iris and shipping Muvia L is that these are the pathways to our next generation products. Halo, Muvria, et cetera, that we're in the process of developing or launching. And that is exciting because, you know, as an engineer, this is what you live for. seeing products developed, validated, brought to the market with customers buying and getting excited about using this. So that's really the second part. And as I think about the transformation of Microvision, you know, a lot has happened. We've shared a lot along the way. A tremendous amount has happened, and when we think about those four elements of the strategy that we talked about, the right products, the right price, the right end markets. That's what's happening today. So we've gone from that planning into an execution mode. And what that means is we now have the ability to not just drive top line, but then to really manage the OPEX, manage our investments. So, we're driving bottom line, which ultimately, that's how you create shareholder value, which is what everybody on this team is focused on. So very excited about the progress we've made. We'll talk more in Q3 earnings. And as we wrap up the year, we'll share more about what we're doing, but really excited about the progress. And hopefully today, we've been able to give people a little bit of perspective on how this is all coming together and what it means for us as we kind of wrap up 26, our very transformative year, and head into 27. great well thank you so much for the discussion it's it's clear we've come a long way since those early conversations about lidar 2.0 earlier this year glenn um thanks everyone for joining us glenn christine james thank you uh as well for your time we look forward to hearing more in the q3 earnings call next month that's it for today thanks for joining thank you thank you this concludes today's call all parties may disconnect and have a great day Thank you.