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Edited Transcript of MVIS earnings conference call or presentation 25-Oct-18 9:00pm GMT

Q3 2018 MicroVision Inc Earnings Call

REDMOND Oct 26, 2018 (Thomson StreetEvents) -- Edited Transcript of MicroVision Inc earnings conference call or presentation Thursday, October 25, 2018 at 9:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Lindsey Stibbard

* Perry M. Mulligan

MicroVision, Inc. - CEO & Director

* Stephen P. Holt

MicroVision, Inc. - CFO & CAO

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Conference Call Participants

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* Glenn George Mattson

Ladenburg Thalmann & Co. Inc., Research Division - VP of Equity Research

* Jeffrey M. K. Bernstein

Cowen Inc. - VP

* Kevin Darryl Dede

H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Technology Analyst

* Michael James Latimore

Northland Capital Markets, Research Division - MD & Senior Research Analyst

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Presentation

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Operator [1]

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Good afternoon, and welcome to the MicroVision Third Quarter Financial and Operating Results Conference Call. (Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference over to Lindsey Stibbard. Please go ahead.

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Lindsey Stibbard, [2]

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Thank you. Good afternoon, and welcome, everyone, to MicroVision's Third Quarter 2018 Financial and Operating Results Conference Call. Joining me on today's call are Perry Mulligan, Chief Executive Officer; and Steve Holt, Chief Financial Officer.

The information in today's conference call includes forward-looking statements, including statements regarding benefits under existing contracts and license agreements and the negotiation of future agreements, our competitive advantages, progress with prospective customers, business execution, projections of future operations and financial results, product development, applications and benefits, availability and supply of products and key components, commercialization of our technology, market opportunities and growth in demand, plans to manage cash used in operations as well as statements containing words like believe, goals, path, expects, plans, will, evolve, ensure, could, would, anticipate, transforming 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 various SEC filings, including our annual report on Form 10-K filed on February 23, 2018, Form 10-Q filed on August 1, 2018 and other SEC filings made from time to time, in which we discuss risk factors associated with investing in MicroVision. These risk factors could cause results to differ 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.

The financial numbers presented on the call today are included in our press release and in the 8-K filed today, both are available from the Investor Relations section of our website. This conference call will also be available for audio replay in the Investor Relations section of MicroVision's website at www.microvision.com. We have also posted a slide deck that provides an overview of MicroVision on the Investor Relations section of our website.

MicroVision plans to participate in 2 conferences this quarter: The Craig-Hallum Alpha Select Conference in New York City and the 11th Annual LD Micro Main Event in Los Angeles. Information about these events will be posted on the Investor Relations section of our website.

And now, I'd like to turn the call over to Perry Mulligan. Perry?

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Perry M. Mulligan, MicroVision, Inc. - CEO & Director [3]

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Thank you, Lindsay, and good afternoon, everyone.

What a difference a year makes. As I approach my first anniversary in this role, I am excited to share with you the progress that we have made. We started off by telling you that we are targeting Tier 1 technology companies in fiber eco markets. We said that by implementing machine intelligence in our sensors, we could provide edge computing capabilities on our devices, making it easier for our Tier 1 OEM customers to adopt our products into their large artificial intelligence platforms.

Now as we near completing the first year of that journey, I am pleased to say the work that we have done and the thought leadership we have shown has earned us the right to engage with leading OEMs in each one of these verticals. We remain committed to executing on this business plan, focusing on the five vertical markets, namely augmented or mixed reality and interactive display, consumer LiDAR, automated LiDAR and display-only products through our licensed partner.

I am proud of the achievements that we have made in both our core technology as well as our products we are targeting for customers. As previously shared, we're in the process of overhauling, basically, every component in our core technology, including our digital, analog and Time-of-Flight ASICS, our MEMS components and firmware while developing our machine intelligence capabilities. These activities have allowed our products to evolve and enable the ongoing discussions we're having with leading technology companies.

Based on this successful volume of work, we believe we are positioned to potentially support the launch of 3 product families during the second half of 2019, which could position us to achieve profitability in late 2019.

To support these product launches, we are now working with our module manufacturing partner to be ready for 2019 sales opportunities and to minimize the associated working capital requirements. In short, we remain on track with our business plan to transform MicroVision from an R&D company into a solutions provider - solutions provider with innovative technology that could unlock significant value for our Tier 1 technology customers and ultimately reward our shareholders.

Now let me provide a little bit more color to the progress we have made in Q3. We achieved a profit in the quarter, albeit a small profit. In Q3, we successfully transferred the required technology to our display-only licensee under the agreement we announced in May. The second $5 million payment was received in early October, as expected, bringing the total payments received under this license agreement to $10 million. The entirety of which, we recorded as revenue in Q3.

We said earlier this year that we expected to perform some NRE or nonrecurring engineering activity for our licensee to customize the display engine for the licensees' customers. The good news is that so far, no customization has been required. This implies that our reference designs are closely aligned to what the OEM customers are looking for. If any NREs will be required for these products, we expect it to take place in the first half of 2019.

We continue to make progress on the $24 million contract we were awarded in April of 2017. In Q3, we booked another $1.5 million in revenue from this program. We believe most of these challenging technical issues are behind us. We expect to invoice our customers twice in Q1 2019, for a total of $5 million. With the first $2.5 million invoice in the first part of Q1 and the final $2.5 million towards the end of the first quarter.

As I mentioned during our last call, our Tier 1 customer advised us they plan to bring to market a product using our technology some time in 2019. This is still the plan. The specifics regarding the size and timing of their 2019 product launch are still being finalized.

While we did not recognized revenue from Ragentek in the quarter, we did reach an agreement with the smartphone manufacturer on how to proceed with the inventory we built for them. Steve will provide more commentary on that matter as well as our Q3 results and outlook for the final quarter.

In September, we posted our website a video that demonstrates how a smart speaker, equipped with our interactive display technology, could be used. The video clearly captured how fast and natural it is to custom order item with many different options using our interactive display solutions in conjunction with an artificial intelligence or AI assistant. We plan to post an additional video demonstration of this technology during the quarter.

Our consumer LiDAR solutions deliver a significantly higher resolution than available today in comparable form factor and when combined with machine intelligence capabilities, represent another major step forward in the category's evolution. We expect our dev chips for this product to be available at the end of Q4 as planned.

We expect the adoption of consumer LiDAR technology to be very disruptive in the market and as such, the integration of our powerful solutions will likely take more time before being adopted in our display-only or interactive display solutions. To support market adoption, we plan to make explorer kits available to our customers' application engineers and software developers in the first half of 2019.

As I mentioned during the last call, we believe our automotive LiDAR technology can provide a smaller form factor, higher line count resolution and more cost-effective solution than those in the market today. Within the 30-meter space, our LiDAR solution would have the highest density available with 20 million bits per second as part of our point cloud output. Additionally, we believe the latency advantage that our systems should have through the deployment of machine intelligence at the sensor will provide a feature that is especially important as we look to adopt this solution to collision-avoidance application.

We remain on track to demonstrate the proof of concept for our automotive solution in 2019. Given the extensive testing and long sales cycles in the automotive industry, we would expect to see limited initial revenue from the evaluation units in 2020, with the opportunity for sales more likely in late 2020 and 2021.

Based on the technical progress we have made over the last year and our ongoing discussions with leading AI platform owners and our supply chain partners, we believe, as I mentioned earlier, that we are positioned to potentially support the launch of 3 product families during the second half of 2019, which could position us to achieve profitability in late 2019.

Let me conclude my opening remarks by saying, we remain on track with our business plan and are convinced that the display-only products provided to our licensee, along with our interactive display and consumer LiDAR products, can provide AI platforms with input/output capabilities that are unavailable today. By enabling users to interact with voice, image, gesture and spacial awareness, it should be easier for them to interact with the AI platform, making it easier for the user to transact, increasing the monetization opportunities for our customers.

I look forward to updating you on future conference calls of our progress, transforming MicroVision from being an R&D company into solutions provider, a solution provider with innovative technology that could unlock significant value for our Tier 1 technology customers and ultimately, reward our shareholders.

I now turn the call over to Steve, our CFO, who will discuss our financial performance in the third quarter and offer some commentary on how we see the full year of 2018 shaping up.

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Stephen P. Holt, MicroVision, Inc. - CFO & CAO [4]

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Thank you, Perry. Good afternoon, everyone.

Third quarter revenue was $11.6 million, which included $10 million related to the display-only license agreement we announced in May. And $1.5 million associated with the $24 million contract we announced in April of 2017. For comparison purposes, revenue in the prior quarter was $2 million, and the revenue in the third quarter a year ago was $5.4 million.

The Q3 2017 numbers have been adjusted for the new revenue standard ASC 606, which we adopted on January 1, of this year, using the full retrospective approach.

In the quarter, we met with Ragentek, the Chinese smartphone manufacturer, and reached an agreement regarding the inventory we built for them. Based on our new agreement, in the fourth quarter, we expect to ship Ragentek about half of the inventory we built for them at a reduced price. We expect to ship the remaining units in 2019. As a result of lowering the price, we wrote down the value of the inventory by $1.1 million. This write-down is reflected in the cost of revenues section of the income statement. The result is that in the fourth quarter, we expect to ship between 1.5 million and 2 million worth of the inventory we built for Ragentek.

Gross profit for the third quarter was $8.9 million compared with $333,000 in the prior quarter and a negative $278,000 in the same quarter a year ago. The improvement over the prior quarter was primarily due to the gross profit on the display-only license.

Third quarter operating expenses were $8.6 million, $145,000 lower than the prior quarter's $8.8 million. In comparison, operating expenses were $5.5 million in the same quarter a year ago. The higher revenue and lower expenses in Q3 relative to Q2, resulted in a slight profit in the quarter of $289,000, which comes to $0.00 per share. This compares with a net loss of $8.5 million or $0.10 per share in the prior quarter and a net loss of $5.8 million or $0.08 per share in the same quarter a year ago.

We ended the quarter with cash and cash equivalents of $13.2 million compared to $21 million at the end of the prior quarter and $25.3 million at the end of the same quarter a year ago. The $13.2 million on September 30 does not include the $5 million we received on October 1 from our display-only licensee.

On our last earnings call, I recapped the potential sources for 2018 revenue, and I will update that now. Through the first 9 months in 2018, we recorded revenue of $15.8 million compared with $7.3 million a year ago. In Q4, we expect to recognize revenue of $1.3 million to $2 million under the $24 million contract we announced in April. As I mentioned, we revised our agreement with Ragentek and expect now to record between $1.5 million and $2 million in product revenue in the fourth quarter. As Perry indicated on the call, our display-only licensee has not needed to make customizations to the designs they licensed from MicroVision. And as a result, we are backing out the NRE we expected for this work from our 2018 forecast. The result of these updates is that we now expect our full year 2018 revenue to range between $18.6 million and $19.8 million compared to $9.6 million last year when adjusted for the new revenue standard.

I'll now turn the call back over to Perry for some comments before opening the call to questions.

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Perry M. Mulligan, MicroVision, Inc. - CEO & Director [5]

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Thank you, Steve. I believe the progress that we have made is tremendous. We are committed to the value proposition that we believe we can provide, targeting leading Tier 1 technology leaders, who have the capability to bring our innovative solutions to market.

In the second quarter, we took the necessary steps to share shore up our cash position and are now working with our supply chain partners to support the potential launch of 3 product families in 2019. With our sights on achieving profitability in late 2019.

With that, we will now open the call for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question will come from Mike Latimore with Northland Capital Markets.

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Michael James Latimore, Northland Capital Markets, Research Division - MD & Senior Research Analyst [2]

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So I guess, Perry, just a couple of questions on your comments around being able to support -- or potentially being able to support 3 product families. Is that 3 product families from 3 separate companies? And is it sort of inclusive of the April '17 contract in the display-only customer? Can you just explain a little bit where those 3 product families might come from?

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Perry M. Mulligan, MicroVision, Inc. - CEO & Director [3]

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Thanks, Mike. So, the 3 product families we're referencing are the interactive display products, the display-only license product and the contract from April of 2017 products. So those are the 3 launches that we are preparing to support, potentially, in 2019.

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Michael James Latimore, Northland Capital Markets, Research Division - MD & Senior Research Analyst [4]

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Okay. Got it. And when you say product families, does that mean there is -- can you just elaborate on what you mean by families, is that through multiple products? Or is that separate versions of one type of products? Or can you just explain family a little bit more there?

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Perry M. Mulligan, MicroVision, Inc. - CEO & Director [5]

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So as we address the verticals that we are targeting, we see that there could be potential for derivatives of these product offerings within each one of the verticals. So, said differently and to try to be more specific, Mike, if you think about our interactive display product, there could be several different formats of that product launched in the market at any given time, as different OEMs customize that solution for their unique requirements.

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Michael James Latimore, Northland Capital Markets, Research Division - MD & Senior Research Analyst [6]

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Yes. Okay, great. And then when you talk about potentially seeing business from these 3 product families in the latter half of '19, do you mean that that's when they would launch these products? Or that mean that's when you would see orders from these customers?

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Perry M. Mulligan, MicroVision, Inc. - CEO & Director [7]

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So again, I'm not sure what your question is if you're trying to discern the timing of when the 2 would occur, but we would expect to see products launch from our customers in the second half of 2019, if that answers your question.

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Michael James Latimore, Northland Capital Markets, Research Division - MD & Senior Research Analyst [8]

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Right. Okay. So, then you will likely see kind of orders and revenue, what, 8 or 4 months before that?

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Perry M. Mulligan, MicroVision, Inc. - CEO & Director [9]

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Yes, there would be an offset for our module availability and during the orders to make.

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Michael James Latimore, Northland Capital Markets, Research Division - MD & Senior Research Analyst [10]

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Okay. And then just last question, I assume the latter half of '19 ties into timing around the U.S. holidays, primarily?

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Perry M. Mulligan, MicroVision, Inc. - CEO & Director [11]

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Not quite sure that I can comment effectively on the go-to-market strategy for all of our potential customers. So, we'll leave it at that, I think.

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Operator [12]

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The next question will come from Glenn Mattson with Ladenburg Thalmann.

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Glenn George Mattson, Ladenburg Thalmann & Co. Inc., Research Division - VP of Equity Research [13]

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A lot going on in the space, obviously, during the quarter. I'm really curious about, Perry, your thoughts on the Facebook Portal device. I mean -- I guess, it's obviously clear, I would assume, that you're not in it because it's shipping soon, like this year. So -- but I guess, the question is a lot of things they talked about, a lot of things you've been talking about, maybe it signals that you guys are kind of in the right direction. But I'm curious, if you can understand how they went about doing this. I mean, they talked about with that portal device, that they'll going to be able to follow users around the room. Even when there are multiple users, they said they're going to be using computer vision and AI, and the AI is going to be located -- is going to be local on the device, not back on the central hub anywhere. So curious about your thoughts about that device and how it kinds of ties into your consumer LiDAR and the direction you're going with that and thoughts on that?

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Perry M. Mulligan, MicroVision, Inc. - CEO & Director [14]

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Thank so much for the question. It really does -- I appreciate the fact that you recognize this, is in many ways, affirmation of the direction that we've been talking about and the direction of the space. You clearly point out and, again, I'm not a subject matter expert on the Portal itself, on that particular product, but I agree with your assessment of how they're achieving the performance they're looking for. I suspect that using CMOS technology as a way that they could accomplish, which we described. And as we've commented previously, when we compare our LiDAR technologies and the capabilities, we think, we have versus trying to do this with a CMOS solution, we believe we will offer a considerable advantage from a compute power platform requirement. It will be easier and simpler to do it with our device. That's it. We're still on track to bring our consumer LiDAR products out next year and expect to be shipping the explorer -- the dev kits before the end of this quarter and look forward to shipping the developer kits in 2019.

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Glenn George Mattson, Ladenburg Thalmann & Co. Inc., Research Division - VP of Equity Research [15]

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Okay. And I'm curious about that display-only partner. At this point, are they -- now that they have accepted all the stuff they needed -- that you needed to do to qualify the -- recognize the revenue, have they started marketing this? I think they probably have been working on marketing a little bit before, but are they more aggressive now? I guess, I'm curious about why they're still unnamed. I wonder, I mean, if they're trying to make a splash in this market and get the word out that they're offering this to their OEMs or whatever, their customers? Why there's so much secrecy involved now at this point?

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Perry M. Mulligan, MicroVision, Inc. - CEO & Director [16]

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Again, I appreciate the question. I wouldn't be in a position to comment on why a company decides to take a position they have relative to their go to market strategy. We have articulated in previous calls that we continue to support their engagements with the AI platform owners that we are co-marketing, too, and know those conversations continue to progress. How they are doing with their other go-to-market engagements, I can't comment on. And why they remain unnamed is not for me to say.

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Glenn George Mattson, Ladenburg Thalmann & Co. Inc., Research Division - VP of Equity Research [17]

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Okay. And you talked about 3 product families and you mentioned from the last question, the display-only was one of them. Would you expect that there would be 1 launch from that partner? Or would you expect them to be able to get multiple launches? Or with them -- I hope, I guess.

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Perry M. Mulligan, MicroVision, Inc. - CEO & Director [18]

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I'm sorry, I didn't hear the last part of that.

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Glenn George Mattson, Ladenburg Thalmann & Co. Inc., Research Division - VP of Equity Research [19]

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I mean, I don't mean to expect the multiple launches but I mean, would you be more hopeful that there'd be more than one or is one a number that you'll be satisfied with?

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Perry M. Mulligan, MicroVision, Inc. - CEO & Director [20]

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So again, I think there's multiple dimensions to your question. We've said repeatedly that the volumes we're dealing within each one of these segments are significant. So, would I be satisfied with a single-customer engagement in that vertical in the second half of '19? Of course. Do we expect that they would want to restrict the capabilities they have to a single customer? I would not expect that. But again, I'm not in a position to speculate on how they're going to maximize the opportunity they bring to the market.

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Glenn George Mattson, Ladenburg Thalmann & Co. Inc., Research Division - VP of Equity Research [21]

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Okay. And the -- I think when you first signed that deal, it was mentioned that it would be once they ramped and got up to speed, that there will be contract minimums of somewhere around $20 million annually, again, once they ramped. Is that still the case? And is there a time frame on when that should happen by, I guess? Anything on that?

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Perry M. Mulligan, MicroVision, Inc. - CEO & Director [22]

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Yes. So, you are correct. We have discussed that there are product minimums required or purchase minimums required for that. We would expect the volume shipments to start in 2019 for market launch that we see possible in the second half of the year. The minimum requirement does not have to be satisfied within 2019, though, on that first year minimum.

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Glenn George Mattson, Ladenburg Thalmann & Co. Inc., Research Division - VP of Equity Research [23]

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Right, right. Okay. And then I guess, just last question would be the -- in order to get these launches, they talk about the back half of '19, what do you think is the latest you can get the kind of awards by, I don't know about -- I understand that you might not be able to talk about them when you win them. But as far as internally, when would you expect to be kind of the latest that you would be able to hear in order to meet those objectives?

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Perry M. Mulligan, MicroVision, Inc. - CEO & Director [24]

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Yes. We fully expect that the latest that this could take place would be in Q1 of '19 for the necessary ramps to be supported.

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Operator [25]

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The next question will come from Jeff Bernstein with Cowen.

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Jeffrey M. K. Bernstein, Cowen Inc. - VP [26]

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Just a quick question on the cash. I guess, down from almost $21 million to $13.2 million, where did that cash go, exactly?

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Unidentified Company Representative [27]

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We have the $13.2 million, and then of course, we had a $5 million that came in the day after the quarter. We've been running in that $7 million, $7.5 million cash burn each quarter, primarily from -- the operating expense cost is the biggest driver.

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Jeffrey M. K. Bernstein, Cowen Inc. - VP [28]

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Okay. I mean, I see breakeven in the quarter. So I'm just kind of wondering, and I actually don't see where the cash went on the balance sheet. That's in my head...

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Stephen P. Holt, MicroVision, Inc. - CFO & CAO [29]

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Right. Right. Yes. The $10 million that came in, $5 million comes in Q4, so that will be a cash good guide next quarter and $5 million came in, in Q2. So, it didn't affect Q3 much.

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Operator [30]

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(Operator Instructions) The next question comes from Kevin Dede from HCW.

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Kevin Darryl Dede, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Technology Analyst [31]

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Kevin Dede. Perry, apologies but you -- the nuance of modern technology, I kind of missed some of the -- of your formal comments. And I know you reiterated them a little bit when you were answering Glenn's question, but you said you got an explorer dev kit coming out before the end of the year?

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Perry M. Mulligan, MicroVision, Inc. - CEO & Director [32]

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Yes.

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Kevin Darryl Dede, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Technology Analyst [33]

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Or available to customers at first quarter. Just clarify that for me, please. Again, I apologize.

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Perry M. Mulligan, MicroVision, Inc. - CEO & Director [34]

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No problem, Kevin. Thanks for the question. The dev kit that we're releasing for the consumer LiDAR will be available by Q4, end of the quarter. So, at this quarter at the end, we'll have the dev kit released for customers. We talked about providing in more volume explorer kit. An Explorer kit is simply a preproduction unit that's more robust, intended to be used by developers and engineers outside of a lab condition to help them experiment with the device and become familiar with it as it could potentially work within their solutions. So just think of it as a slightly more hardened dev kit to be used by a broader cross-section of the engineering population or the development team.

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Kevin Darryl Dede, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Technology Analyst [35]

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Okay, fair enough. So, the -- I'm sorry, go ahead.

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Perry M. Mulligan, MicroVision, Inc. - CEO & Director [36]

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That will be available next year, in 2019.

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Kevin Darryl Dede, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Technology Analyst [37]

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And so that's the one you're expecting in the March quarter?

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Perry M. Mulligan, MicroVision, Inc. - CEO & Director [38]

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Q1, yes. I don't think we've talked of anything specific in March quarter, Kevin, sorry.

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Kevin Darryl Dede, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Technology Analyst [39]

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No problem. That other thing that I thought was really interesting were the specs that you associated with your 30-meter auto LiDAR. Could you sort of rehash those? And maybe compare them to what you're seeing, some of the other sensor companies that develop and deliver to maybe not the OEMs or the auto OEMs themselves, but the sensor integrators.

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Perry M. Mulligan, MicroVision, Inc. - CEO & Director [40]

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So if we just look at the most macro level. Today, one of the leading players in the space is the company called Velodyne, they use a spinning medium solution. And the last major product announcement I heard from them was 120 lines of resolution, as an example. We discussed today on our call that our product will come out with 720 lines of resolution, as a comparable. There's other companies, a plethora of them, trying to solution solid-state LiDAR's capabilities. And we believe that in the form factor we have 20 million points per second. For our bit cloud, will be and is leading edge. It is one of the densest point cloud, Kevin. But the most important aspect of those values, I think, that you have to recognize, Kevin, is that we're coupling those with some -- our machine learning algorithms on the device. And the relevance of that is the ability to do object detection and localized to edge compute to enable the system to respond more quickly to improve latency of the system, overall. So, beyond the clarity of resolution that we expect to come from the device itself, it's really the processing capabilities at the device level that improves the latency that we think is truly significant as well.

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Kevin Darryl Dede, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Technology Analyst [41]

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Okay. The other thing that I thought was really interesting, Perry, was your discussion of an upgrade top to bottom, ASICs and MEMS. I'm kind of wondering where you are in that process? And how much of the new tech gets incorporated into some of the devices that your customers are already working within the lab? Can you touch on the timing there? And the influence that your new development might have on, whether or not, your customers decide to delay going to market?

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Perry M. Mulligan, MicroVision, Inc. - CEO & Director [42]

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I really appreciate you opening that up for us. Thank you so much for the question. Anybody that's been in technology for any length of time understands that evolutions of these platforms are required to remain current to improve quality, to improve performance and to lower costs. And any one of these, with reference to analog ASICs, digital ASIC, a MEMS solution, firmware solution and machine learning. Each and every one of those are significant undertaking for us to be able to tell you, at this point in time, that they are all in flight, all landing as expected and all-ready to -- for production in 2019, is a testament to this team. You have no idea how significant and valuable the contribution that those processes and progress on those devices has been and how they have enabled us, as we've said, to still earn are the right for the conversations we're having with our Tier 1 OEMs because we're demonstrating at a level that is truly a high-performance organization. Very proud of the team of what they did there.

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Kevin Darryl Dede, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Technology Analyst [43]

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So, I guess the simple answer to that is basically, yes, I mean you -- we have got all of that stuff going into our equipment and we will be ready for customers next year just like we said?

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Perry M. Mulligan, MicroVision, Inc. - CEO & Director [44]

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Exactly. And recognize the fact that it is not a dumb question. Recognize the fact that many, many organizations stumble and trip over things like this and cause delays in the process. We're proud of the fact that we're not making those comments and that we're ready to go.

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Kevin Darryl Dede, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Technology Analyst [45]

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Okay. Next question from me is just on CES, what you hope to show there? And how you intend to wow people that come to visit you?

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Perry M. Mulligan, MicroVision, Inc. - CEO & Director [46]

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I trust that you will be, hopefully, one of those people that do come to visit us. As you know, we entertain customers in our private suite at CES, and we will be demonstrating the capabilities of our interactive display and our consumer LiDAR products. So, we're really excited about how those will be received.

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Kevin Darryl Dede, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Technology Analyst [47]

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Would you expect that second video that you discussed -- would you expect that, that will be available by that point?

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Perry M. Mulligan, MicroVision, Inc. - CEO & Director [48]

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I expect that, that second video will be available in December.

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Kevin Darryl Dede, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Technology Analyst [49]

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Okay. This is probably a tough one, but you did sort of speak to the size of contracts and the interactive display space, given that $10 million contract. But can -- is there a chance that you can provide similar reference for some of the other initiatives that you have underway?

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Perry M. Mulligan, MicroVision, Inc. - CEO & Director [50]

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Just to be clear, Kevin, the $10 million agreement that we signed in May of this year was to license, manufacture and sale exclusively of our display products only to the licensee. And the transfer of the requirements to support that agreement have occurred, and that's why we recorded it as revenue in Q3. So that was specifically to enable them to come to market and to manufacture and sell those products with the implications of us supplying components and technologies to support.

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Kevin Darryl Dede, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Technology Analyst [51]

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Okay. Now did I misunderstand the same period? There are no other, I guess, there's no other revenue associated with that agreement going forward?

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Perry M. Mulligan, MicroVision, Inc. - CEO & Director [52]

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No, we were very specific on that, Kevin. We expected that at the time we signed that agreement among, we identified that there is component sales required from us to enable them to use the technology, right? They needed the components from us to do so. And that there were minimum requirements associated with those component purchases. We also identified that there was transition period allowed for them to stabilize and move the technology into production. So those minimums didn't kick in immediately. We did articulate that the minimum order quantities, on an annual basis, would represent approximately $20 million, depending on mix of component. So that's how we've sized that ongoing relationship.

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Kevin Darryl Dede, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Technology Analyst [53]

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Well, fair enough. Okay. I understood it correctly. I was wondering if there were parameters similar to those that you could discuss around some of the other product families that you hope to contribute to revenue in the second half of next year?

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Perry M. Mulligan, MicroVision, Inc. - CEO & Director [54]

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Yes. So, we haven't identified the volume ramp and timing for the module sales that we are articulating for our interactive displays.

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Operator [55]

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Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to Perry Mulligan for any closing remarks.

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Perry M. Mulligan, MicroVision, Inc. - CEO & Director [56]

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Thank you, operator. In closing, I want to thank our employees, business partners and our investors for their support and look forward to reporting our progress over the next several quarters. Have a great day.

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Operator [57]

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Thank you, sir. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.