MicroVision, Inc. (MVIS) Earnings Call Transcript & Summary

Good day and welcome to the MicroVision Fourth Quarter and Full Year 2022 Financial Operating Results and Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Drew Markham. Please go ahead.

Thank you, MJ. I'm pleased to be joined today by our CEO, Sumit Sharma; and our CFO, Anubhav Verma. Following their prepared remarks, we will open the call to questions. Please note that some of the information you'll hear in today's discussion will include forward-looking statements, including, but not limited to, statements regarding our acquisition synergies, product development and performance, comparisons to our competitors, market opportunity, product sales and future demand, business and strategic opportunities, customer and partner engagement, projections of future operations and financial results, availability of funds as well as statements containing words like potential, 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-K and quarterly reports on Form 10-Q. These filings describe risk factors that could cause our actual results to differ materially from those implied or expressed in our forward-looking statements. All forward-looking statements are made as of the date of this call and except as required by law, we undertake no obligation to update this information. In addition, we will present certain financial measures on this call that will be considered non-GAAP under the SEC's Regulation G. For reconciliations of each non-GAAP financial measure to the most directly comparable GAAP financial measure as well as for all the financial data presented on this call, please refer to the information included in our press release and in our Form 8-K dated and submitted to the SEC today, both of which can be found on our corporate website at ir.microvision.com under the SEC Filings tab. This conference call will be available for audio replay on the Investor Relations section of our website at www.microvision.com. Now I'd like to turn the call over to our CEO, Sumit Sharma. Sumit?

Thank you, Drew, and welcome everyone to this review of our 2022 fourth quarter and full year results. 2022 was an exciting and eventful year for MicroVision and I expect 2023 to be an even more pivotal year in our journey. I would like to update you on 3 areas: first, our product portfolio; second, our momentum for partnerships and revenue; and third, our competitive outlook. First, let's dive into our product portfolio for 2023. 2022 was the most important year in MicroVision's history. With relentless execution, our team matured our MAVIN product to align to automotive OEM expectations for high volume RFQs happening in 2023. We also executed on our strategy to become a full spectrum ADAS solutions company by joining forces with Ibeo Automotive and acquiring assets. The combination of MAVIN and our balance sheet puts the combined company in the best position to help realize the true potential of the Ibeo team. Let me start with MAVIN update. For long-range lidar, MAVIN meets and exceeds OEM expectations for seamless roofline integration for high speed highway pilot. Nobody is offering a mature product with the size, performance or cost to challenge MAVIN best-in-class status. Let's just put any speculation to rest. Roofline integration is the dominant requirement across RFQ for long-range lidar for 2023. While our competition is starting to redesign cycles to deliver on size, cost and performance; we are ready with the product now that goes to production over the next several years. Programs announced by competitors years ago are still not shipping either from their own factories or their Tier-1 partners in any meaningful volumes. As I look at the RFQ inflight across Europe, North America and Asia; we are engaged in multiple RFI, RFQ opportunities with outlook for more than 20 million long and short-range lidars by the end of this decade. These opportunities while massive represent less than 10% of the entire fleet expected to ship globally by the end of decade with a lidar. OEMs are publicly embracing lidar as the future of ADAS. Automotive OEMs in Europe, North America and Asia are looking for a long-range lidar that is ready for roofline integration as well as a cost competitive solution for short-range lidar. MicroVision is the only company that will offer both. The current cycle is significantly higher in volume than the early small volume partnerships announced to-date by all OEMs combined. None of the current partnerships are exclusive as evident in the multiple solutions being announced yearly by OEMs. This current high volume opportunity is just the level of big price we have developed our sensor for. With billions of dollars of revenue potential, the review of technology and partnerships takes a long time; but I'm confident that things will start converging in 2023 for a 2026 production readiness for long-range lidar and 2025 for short-range lidar. We have the right products and experienced team in U.S. and Germany to deliver not only the technology, but also strong industrialization know-how with Tier-1 manufacturing partners. As we look forward to 2023, here are the key objectives we expect to achieve: full year revenue in the range of $10 million to $15 million for our expanded product line portfolio, a design win for lidar product with automotive OEM, start of non-automotive sales with sequential flash lidar, partnership with automotive OEM for the sale of auto-annotation software and customization, demonstrate a scalable drive by wire solution for high speed L3 and L4 safety in November 2023. With our teams now working as a single company, I believe 1 plus 1 equals 5. MicroVision is the only company to offer multiple lidar technology nodes with software for automotive and non-automotive markets. I want to repeat that. MicroVision is the only company that will offer both long-range lidar that is ready for roofline integration as well as a cost competitive short-range lidar. I expect us to generate revenues from 5 sources moving forward. First source of revenue, long-range lidar with MAVIN. In MAVIN and the mature perception software as a 1-box solution, we have the ideal product for high speed highway pilot. This product is in review for multiple RFI, RFQ currently inflight. Immediately after we acquired Ibeo assets in January, we updated our technology demos to highlight the significant advantage that 1-box solution represents with detection ranges of 300 meters for MAVIN. This is the most important opportunity for recurring revenue and we believe that we are clearly ahead of our competition technology. I expect 2023 to be an exciting year of partnerships for this product. In the current RFQ cycle, recurring revenues for this product is likely to start arriving in 2026, 2027 based on several OEM programs. I can't emphasize enough how well we are positioned with MAVIN with current RFQ. Second source of revenue would be from flash lidar industrial sales. Our acquisition of Ibeo assets included their sequential flash-based sensor developed for automotive standards. We expect to bring to market an industrial product based on this lidar to address various channels with a more cost competitive industrial solution. We believe this is a substantial near-term market that can start revenue cycles faster and allow us to offer a competitive performance and price for the industrial market. This flash sensor has a fully developed custom ASIC, which makes this cost competitive and ready for scale. We expect non-automotive sales to start in 2023 and grow significantly from there. Third source of revenue, automotive short-range lidar. With the current ASIC development for flash sensor, we expect to offer a 180-degree field of view short-range lidar sensor in a compact format for RFQ for multiple automotive OEMs in 2023. Long term this product would have higher volume than MAVIN at a lower ASP. I expect this product to run an existing manufacturing line with some customization. Several OEMs on multiple continents have RFQ opportunities in 2023 for this product. I'm very excited about this lidar product and the revenue opportunities made possible with our asset acquisition. With these 2 technology nodes, we cover the full spectrum of sensors in RFQs we're currently seeing. We are truly a 1-stop shop for OEM's lidar sensor needs. We can provide them the right sensor for each problem with an experienced team that has a history of delivering with manufacturing partners that OEMs prefer. Fourth source of revenue comes from validation software suite acquired as part of the asset purchase. OEMs and Tier-1s spend hundreds of millions of dollars annually validating various sensors in their vehicles. Real life driving data is required to validate each product. Our validation software suite, which includes auto-annotation, helps reduce OEMs' development costs versus using manual annotation. There are 2 important strategic advantages for this product. First, it lets us connect with OEM on their need for validation in customizing the software, which informs us of perception features that will be required well in advance of our competition. Second, we generate revenue through sale of software and our direct contact with OEM teams on upcoming programs. This is an important product line and we expect to generate meaningful revenue for us annually. This source of potential revenue will be our drive by wire software and silicon product in the future. MAVIN also unlocks huge potential for the drive by wire sensor fusion software developed in Hamburg. I expect us to demonstrate a scalable solution for L3 and L4 in November 2023. This is beyond the rudimentary low speed demonstrations being made by our competition. The advantage of this solution is to offer a sensor fusion chip in the future that would fuse 2 MAVIN lidars and an array of radars to enable safety at the lowest cost. This will open opportunities with OEMs that have not heavily invested in ADAS technologies and help advance their adoption of MAVIN, another connection point with OEM that will expand our revenue from products and services while advancing MAVIN sales. With these 5 product lines, we are truly a unique company. Our expansive product portfolio and derisked revenue outlook represents a new model for the lidar industry. Our near and midterm revenue outlook is strong and growing. Now I would like to provide an update on our market momentum. The size of the opportunities I've described would be in the billions of dollars for this decade. This requires a lot of reviews of our technology, manufacturability, cost and value chain partnerships. It is a process every bidder needs to go through. Advantage we have is our technology is ready now and meets the size, performance and costs expected from such large projects. In 2023 RFQs from multiple OEMs around the globe for both long- and short-range lidar are underway. To successfully execute on these opportunities, we plan to partner with an automotive Tier-1 manufacturing suitable for such projects. We inherited the Ibeo partnership with a flash-based sensor. We continue to explore potential partnership with our MAVIN product to consolidate and share economies of scale and other advantages. Finally, I would like to update you on our competitive outlook. There's a wide range of questions or concerns we get from investors that I would like to set the record straight. To understand the landscape, we need common context. Our main competitors have announced early deals with OEMs. This is true, but they haven't delivered any real volume to market even after nearly 5 years of industrialization. Many went public through a de-SPAC process that is not as rigorous or scrutinized as a conventional IPO. These companies use unconventional communication tactics to the market including terms like order book and backlog and other non-GAAP metrics without appropriate 8-K filings or required reconciliations. The reality is that they take small projects for [ crocking ] and other development/testing projects with OEM and spin them as a broad agreement. All this while their ASP is in the $1,000 range and experienced Tier-1s are not able to scale their technology. Regulatory bodies like the SEC have already begun to scrutinize and have recently demanded explanation to these communications and disclosures to 1 such competitor. In response, the competitor admitted to the SEC that their technology has not shown viability yet and contracts are not guaranteed. These communications with SEC are public and can be easily obtained from the filings. They cause a lot of market confusion with extensive marketing events and press releases without filing related contracts with the SEC that are material and valuable. I expect right before IA in Munich this September, there will be a similar push with announcements but again no 8-K filings. Their strategy is to fake it till you make it. These companies are well capitalized compared to us, but have not secured any big contracts that would align with the financial models they have stated publicly. Another sign that these so-called announced design wins, which seem to have material value for the marketing events, did not include any associated contracts filed with the SEC in the form of 8-Ks. These young companies raise huge amounts of capital from the market and have really set a bad precedent by immediately turning around and use the cash to launch stock buybacks without positive cash flow as well as buying $80 million mansions in Pacific Palisades. All of us have seen this game of fake it till you make it before. However, these are the rules of our free market and it is important context to have. In contrast, MicroVision is a more disciplined company. Our advantage is in the decades of experience innovating and maturing our technology and our strength is the clarity we endeavor to provide to the market. I am confident about our path forward and the success our technology should generate. I'm humbled by our investors and their confidence in our company and the tools they have provided us to achieve success. We are up against companies that are capitalized well, but they do not have our technology or our path to success. Operating as a disciplined company in our execution and expenses is the ultimate act of defiance against immature companies that are well capitalized, but are in significantly weaker position than MicroVision with OEM. I want to conclude my prepared remarks by reiterating a few key points. First, 2022 was a very important and productive year for MicroVision delivering on our strategy, groundbreaking technology and relentless execution while providing clarity to investors. Second, we are gearing up for a pivotal year where we transition the business from technology development to partnerships and revenue focus. And finally, as a disciplined company that executes and delivers to what we communicate to the market, we expect 2023 to be an epic year in MicroVision's history. I want to conclude by saying how proud I am of our global team in allowing us to be well positioned for an incredible 2023 and beyond. I would like now to turn the call over to Anubhav to talk about our financials. Anubhav?

Thanks, Sumit. 2022 has indeed been a transformational year for us. Not only did we take a giant leap forward with the launch of MAVIN for our customers last year, but we also announced the combination with Ibeo. This deal further positions us well to become 1 of the most experienced lidar hardware and software companies in the market. I'm pleased to report that we achieved all the milestones we had laid out in 2022. Also, we continue to show tremendous financial discipline as a mature public company with Q4 2022 net cash used in operating activities of only $8.4 million. This equates to an annualized net cash used in operating activities of under $34 million on a run rate basis, which is slightly better than our guidance of $40 million. As a mature public company, we will continue to differentiate ourselves from our competitors through financial discipline, transparency and guiding to metrics that we believe are realistic and achievable. Before we talk about full year '22 financial results in a bit more detail, I would like to discuss how the Ibeo acquisition significantly accelerates our trajectory and transforms our roadmap into the future with new products and access to new customers. Based on our current suite of products and visibility, we will be providing our financial outlook for 1 year out that is 2023. Additionally, I will be providing several details and inputs to help investors quantify the impact of the Ibeo acquisition and model the business through the end of this decade. The Ibeo acquisition is indeed an inflection point for MicroVision. Our teams worked round the clock to close the acquisition much sooner than our expectations. We are very pleased and excited about the 250 employees in Hamburg and Detroit who became a part of our 100-plus team based in Redmond and Nurnberg on January 31, 2023. Operationally, our teams have already demonstrated that seamless integration of MAVIN with Ibeo's perception software paving the path to future integration in our custom ASIC. We now have strengthened our position as a formidable lidar hardware and software company with 350 employees, a very strong talent pool of hardware and software engineers spread across 4 offices in the U.S. and Germany. This acquisition now positions us as the only lidar company in the market able to offer such an extensive product portfolio to a broad range of industries. Number one, our biggest market focus continues to be in ADAS. With the addition of perception software, we are better positioned than ever to compete for design wins this year. Number 2, our anticipated revenue stream is now expanded with revenue-ready products like the short-range flash-based sensor for non-automotive customers in a large market comprising industrial, smart infrastructure and robotic applications. And third, high margin revenue from auto-annotation software providing validation of sensors for OEMs and Tier-1s. Our IP portfolio is strong and deep and now consists of an impressive 735 patents, more than any of our peers. We also now have over 50 years of combined experience developing technologies that our current lidar solutions are built on, which is far more than our very young lidar peers in the market. I'm very pleased to continue demonstrating our financial rigor and discipline, strategically deploying capital to execute this opportunistic transaction to acquire Ibeo for a purchase price of EUR 15 million. This investment brought us an experienced and highly talented team of engineers, targeted customer relationships and a broad product portfolio. In fact we're now benefiting from the past R&D investments done by Ibeo of over EUR 200 million deployed over several years. This considerably reduces our go to market timeline and allows us to leverage these products to generate high margin revenue for the go-forward company. Our updated investor presentation on the MicroVision website includes helpful information about us and our markets. Now let us talk about how the size of the market we compete in now has significantly increased due to this transformational deal. Let's talk about the biggest market, which is the ADAS market. We're now seeing that OEMs may be looking for a comprehensive lidar sensor panel with vendors providing both long range for high speed highway pilot and multiple short range for 360-degree view. L2+ is expected to require 1 long-range lidar and 2 short-range lidars per vehicle while L3+ is expected to require 2 long-range lidars and 4 short-range lidars per vehicle. While we continue to hear ASPs from our peers at around $1,000, our design in ASIC enables us to price our lidar at $500 depending on volumes greater than 10 million units. We believe short-range lidars will have an ASP of about $200 and we believe it will have larger volumes than long-range lidars. If we simply use this ASP estimates applied to the projected number of vehicles expected to come out of production, we estimate that the total lidar market will generate at least $82 billion of cumulative potential revenue through 2030 for the entire market. We have seen our competitors talk about a TAM of $150 billion by 2030. While we believe that a big market may be possible, our estimates are based on a more rational and a mathematical model. Please note that we have not even considered any revenue coming from the L4 and L5 capabilities, which we plan to access or tap into with our sensor fusion chip that would fuse 2 MAVIN lidars and an array of radars to enable safety at lowest cost to enable L3, L4 features down the road. In the near term, we are highly focused on the monetization of the L2, L3 opportunities with strategic investments in the technology to enable L4 features towards the later half of the decade. The non-automotive market: while we have seen a variety of estimates from our peers and reputable business consulting firms, we have estimated on a similar basis the cumulative revenue potential through 2030 to size the total non-automotive market. For industrials, we expect this market to be at $2.5 billion in 2025, expected to grow at an estimated 20% CAGR. If we sum up the total by every year through 2030, we estimate that the total sales in the industrial market will be a cumulative $32 billion by 2030 for the entire market. Extending the same math to non-automotive smart infrastructure subsegment, we expect this market to be at $2.8 billion in 2025 and grow at 30% CAGR. If we sum up the total by every year through 2030, we estimate the total sales in this market will be a cumulative of $46 billion by 2030. And lastly for robotics, we expect this market to be at $1.8 billion in 2025 and grow at a 50% CAGR and if we sum up, the total sales in this will be cumulative $37 billion by 2030. Now adding all these 3 subverticals within the non-automotive market, we expect the total cumulative revenue potential or size of the market to be at $115 billion. Let's talk about the third market, which is the validation and auto-annotation software. Let me spend the time talking about what this is. This is a specialized market with not a lot of players competing. As a reminder, this software provides ground truth data generation to reference against the sensors OEMs are trying to validate. The key advantage of our validation software platform is that it enables sensor suite including MicroVision lidars and third-party lidar to process and detect surrounding 360 degrees. A modular approach to enable different sensor setups and enable any use case setup. And lastly, parallel processing due to cloud-based architecture. While it is hard to estimate the TAM for this software, we estimate that we may be able to conservatively generate $200 million to $300 million in revenue through 2030. We believe the demand for this software will increase in the upcoming quarters as OEMs strive to validate more and more sensors. Now let's distill down to what it means for us as a company and our business outlook. Our 2023 financial objectives, we expect revenue of $10 million to $15 million. As described, this revenue will include MAVIN sales to OEMs, flash-based sensor sales to non-automotive customers and reference software sales to OEMs and Tier-1 validation partners. We expect a high gross margin as a large portion of this revenue relates to software solutions. From an expense standpoint, we expect the net cash used in operations to be between USD 50 million and USD 55 million, which is the net effect of the cash coming from incoming revenue and our increased cash OpEx due to the acquisition. While there may be some cost synergies available between the 2 companies, including IT and some consolidation opportunities, our focus is on accelerating revenue for 2023. While we do not provide long-term guidance, the following measures of success can help investors build a model for MicroVision. We are increasing our internal target to $3.5 billion to $5 billion cumulative revenue potential through 2030, up from the $2 billion to $4 billion, primarily due to the increased opportunities and the markets I described earlier. For automotive, we expect to sell more short-range flash-based sensors at $200 per piece. This brings incremental revenue stream on top of the MAVIN. For non-automotive, we expect that we will be able to capture 1% to 2% of the total market size of $115 billion translating into $1 billion or $2 billion in revenue for us. For the validation business, as we described, we expect to capture $200 million to $300 million revenue through 2030. Adding these incremental revenues on top of our core product, we expect on the conservative side an addition of $1.5 billion more revenue compared to our prior estimates of market opportunity. This higher revenue should correspondingly translate into incremental EBITDA potential as well. I'm very pleased that an investment of [ 15 million ] as a purchase price for Ibeo assets can potentially yield $1.5 billion entire revenue opportunity through 2030. Now let's discuss Q4 and FY '22 results. For the fourth quarter, Microsoft communicated to us that there were no units delivered in that quarter. As we have stated previously, our revenue recognition is directly tied to the number of units delivered by Microsoft hence no revenue was recognized in Q4. As a reminder, this revenue is attributable to the contract executed in April 2017 with Microsoft for using our technology in their AR display products HoloLens 2. As of December 30, we have an unapplied $4.6 million balance left on this contract liability. Our agreement with Microsoft continues to be in effect with an expiration date of December 2023. Please note that no cash has been received for this royalty revenue in the last several quarters as we received an upfront cash payment of $10 million at the contract signing in 2017 and apply recognized revenue against that prepayment. We had shipped some lidar samples to customers in Q4 2022 as we previously announced. We did not bill or recognize revenue for these shipments as we shifted our focus to the acquisition of the Ibeo assets, which would allow us to ship an integrated product with perception software as part of it. Please note that these sample sales are intended to be sold to the OEMs with the clear objective to demonstrate our capabilities so that we put our best foot forward for the upcoming RFIs and RFQs. Hence, we decided to pause the sample sales for the fourth quarter to instead wait and supply OEM customers with an integrated solution with Ibeo perception software. The shipped samples in Q4 were thus deemed to be a part of our test and evaluation program. Expenses: in terms of expenses, this was 1 of our most efficient quarters with our cash burn being only $8.4 million per quarter. This was in line with our expectations as I had provided in our prior call. Q4 R&D expenses totaled $7.6 million compared to $6.5 million last year. The increase was primarily driven by higher salary benefits, noncash stock-based compensation and higher nondirect labor expenses. SG&A expense totaled $6.4 million in the fourth quarter this year as compared to $6.6 million last year. The decrease was primarily due to higher noncash stock-based compensation, higher salary and benefits offset by higher marketing and consulting expenses last year. For the full year, I'm very pleased that the $38 million cash used in operating activities was well in line with our guidance. The annualized fourth quarter net cash used in operating activities came in just under $34 million. This demonstrates our strong financial discipline. In these times of uncertainty and weaker macroeconomic conditions, MicroVision stood out and beat competitors in terms of maintaining a healthy burn rate and head count with a strong balance sheet. We have been prudently investing and not following the spend aggressively modeled as most of our peers who now have to announce some head count initiatives. As expected, CapEx in the fourth quarter of 2022 was $2.3 million, which was driven by build outs and tenant improvements in the new facility that we moved into at the beginning of this year. We expect to recover this investment through the contractual incentive payment agreed to be paid to us by the incoming tenant in our previous building. Going forward in 2023, we expect CapEx to settle back to its original levels. Now let's talk about our cash position. As discussed during our Ibeo acquisition call in December last year, we took advantage of the ATM facility to finance the Ibeo acquisition. In 2022, we utilized our ATM program for net proceeds of $14 million as presented in our cash flow statement. In January 2023 we raised an additional $12.5 million under this program. Hence, we raised a total of $26.5 million from the beginning of 2022 to today. With this, we now have approximately $42 million, $43 million currently available under this ATM program. As of January 31, 2023 we have already made a payment of EUR 10 million towards the purchase price of EUR 15 million per the asset purchase agreement. After making those payments, we had approximately $78 million in liquidity including investment securities at the end of January 31, 2023. We plan to make the remaining payment on the acquisition of EUR 5 million less the deduction in purchase price in the second quarter this year. Based on our current operating plan for 2023 and beyond, we anticipate that we have sufficient cash and liquidity to fund our operations. Now looking ahead, we're excited about 2023 as we march forward on our path to $10 million to $15 million in revenue this year from the streams we described. Our core areas of focus; revenue from automotive customers including MAVIN with perception software, lidar sales with non-recurring engineering revenues from OEMs, sales of flash-based lidar for non-automotive customers and sale of auto-annotation software for automotive OEM validation work. To summarize, we're really excited about 2023 and beyond. With our milestones and key focus on winning RFQs, we will be proving to the market our value proposition as a unique well-positioned lidar company. I would now like to open the line for questions.

[Operator Instructions] Our first question today comes from Andres Sheppard of Cantor Fitzgerald.

Congrats on the quarter. Anubhav, maybe you can just remind us again on your capital needs for the future. With the $83 million in liquidity currently, when do you anticipate needing additional capital?

So based on our current operating forecast, we think that we are well funded through the middle of next year. Obviously as you can imagine, the cash burn expected this year is $52 million to $55 million in 2023 and we are expecting incoming revenue of $10 million to $15 million. So that puts us in a very good position. And 1 thing I would like to say is obviously our cash burn per employee metric continues to remain 1 of the best in the industry. So we feel our financial discipline positions us well from a balance sheet strength standpoint.

Got it. That's very helpful. And maybe just walk us through your plans to ramp up in 2024. Is that still the case and do you see kind of those revenues gradually improving over time or just any visibility there would be helpful?

Yes. So 2024, we're actually very excited about it because we expect the growth from the auto-annotation software which, as I talked about, is going to be a high margin or high contribution margin revenue stream that we expect to improve in 2024 primarily because as OEMs need or try out more sensors, they need the software to validate the ground truth data against those sensors. So we expect 2024 to be even higher growth in terms of the revenue mix coming from this auto-annotation software. Now the second stream which I talked about was the sale of the sensors to the non-automotive market, which we seem to be picking up steam from as well in 2023 and 2024 as the market expands because that just gives us another revenue stream in 2024. Obviously this stream is not going to be the recurring revenue because this is spot sales or direct sales, which is similar to some of the non-automotive lidar business models that I think we all are familiar with. But this will certainly add more momentum and add more cash flow to the company between this year and next year as we ramp up that production. Now the other thing to note there is we already have a production line so that obviously helps us to ramp faster as the demand for some of these products grow in this year and next from that standpoint. The last stream of revenue, which I think Sumit also described, for this year and next year is going to be from the MAVIN sample sales and the 1-box solution, which we expect to happen in 2023 and 2024 coupled with some NRE revenue from the OEMs as well. So these are the 3 streams to think about between 2023 and 2024, which we expect to be even a stronger year than 2023 based on where things stand today.

Got it. And maybe just 1 last question maybe for Sumit. Can you give us an update on potential partnerships with OEMs? Any updates there when do you expect you might have a partnership materialize?

I think as I iterated through the entire call, right, 2023 is the year of convergence. I think they're all settled in, most of them have settled in and all the products that are going to need as the RFQ cycles are ongoing. Where do we end up to converge? I think it'd be pretty hard to say like we're going to sign by this date, that would be impossible like I'll give an example. There was something specific like nothing big with an OEM for the auto-annotation software that we were expecting to close for this call and for reasons because of some of the bureaucracy within the company, that delayed. That's something that I feel confident sharing that is going to happen, but you can't nail down the time. They control the momentum, let's be honest. But I feel very, very confident that for them to get -- if you look at the schedules, the multiple schedules I've looked at, they have a launch schedule and you work backwards from them. The launch schedules are set all the way out they need industrialization by this day, so on and so forth. Those decisions have to get made in 2023 and these are big decisions with big volume so they look as extensive. But I feel very, very confident that 2023 is going to be a convergent path and the fortunate thing is we have a lidar that's ready. We showed it at IAA in Munich 2 years ago. The product, the housings have changed, but pretty much have stayed consistent with the hardware ready. For a while, evaluations have happened. They've seen the software running, they've seen things -- pretty much everything has gone through the technology checklist and now comes the commercialization part of it. So I feel pretty confident where our competitors are just starting off doing design and showing CAD images, we have products that they've had, that they've reviewed multiple times and so I feel pretty confident in 2023, Andres.

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

So as we look through the questions. So I think the first question is Sumit, can you please provide a succinct definition of drive by wire? Why is a drive by wire demo important to prospective OEMs and is the drive by wire demo relevant to the 2023 RFQ process?

The drive by wire demo, let's just talk about the terminology, okay? So if you want to think about -- you need a special license, you can't do these demos on an open road. That's number one. So if you do them in a closed track because you're demonstrating something and all the safety requirements have to be taken care of within a closed track. But there's some specific scenarios that are very heavily action prone for humans like a unprotected left turn or small object detection like a biker has fallen on the road at night time. These kind of scenarios are pretty well known and they're very, very difficult to test an autonomous ADAS Level 3 kind of phase. So forget about it as like autonomous driving. Think more about it as in can the car actually detect that obstacle, know what it is and avoid it. We use terms like not drivable, but it has to make a decision what to do. Now try to do that at 130 kilometers per hour about little over 80 miles an hour. So drive by wire what you do is you still have a driver in the seat, but the control of the vehicle is given to the computer and the scenario is put in front of it and different variations of scenario will have to be done and then you have to avoid it. You can't just like drive through 15 and 14 times you hit it and 1 time you don't make it and show the world that video. If you're really going to do it, it's got to work and that's really what it is, right? The word drive by wire really implies that you're sitting there, the driver is -- there's a train driver sitting in the seat, but the control of the vehicle is given to the computer in a closed environment as a test to demonstrate that it can actually negotiate these kind of very complicated scenarios. That's it. And drive by wire sometimes gets confused for autonomous driving. What I've described here is a precursor to that someday, but that's not what our focus is. That's always said safe mobility at the speed of life, we focus on the big prize, the Level 2, the Level 3 and demonstrating feature that can go to Level 4 because our technology can grow and OEMs would like to sell these products and then have 15-year lifecycle on these products. They want to do an OTA, over-the-air update, and effectively offer better features in the future. So having these kind of test platforms and demonstrating this gives an advantage. The other advantage that you could think about is some OEMs like if investors are watching all the news that goes out, some OEMs investing heavily in engineering and validation and announcing deals, video in Qualcomm and so on and so forth. They're doing all these things so they're heavily invested. But other OEMs that are not so heavily invested or their teams are not further along, these kind of demos are kind of very instrumental in letting them show the avenue you would take to get the solution. Ultimately we want to sell software, we want to sell silicon, we want to sell our lidar. But a demonstration like this enables them to show that a structure within which it could be made to work. And we're very, very fortunate we have -- I met them. I have a really great team here in Hamburg and they've done quite a lot of work in this space. I think with MAVIN, it unlocks other possibilities. So I'm kind of excited about showing off this feature with the team later on this year.

`The next question is what are the steps forward with Ibeo specific customers and their contracts?

Okay. I guess I'll take that. I think when the insolvency was announced last year, of course as you can imagine, has a very dramatic effect on the entire group of people that were engaged. I think it was a surprise to employees, but I'm actually certainly it was also a surprise to the market because of the partners that were there. So once we have announced, of course we've got to do everything to stabilize the core team, try to give assurances to everybody, right. But our intention of course is to try to pick up as much of that as possible. I think if you're alluding towards some of the contracts they signed in the past, of course we are in the process or already engaged with talking to those folks to try to resurrect it as the new company. And that's why I think Anubhav speaks with confidence about our growth path from the revenues we're talking about this year. As part of the asset sale after purchase, of course all those things are part of like what we have acquired. So I think they had great connection with OEMs. I think we had started off without connection with OEMs in 2019 and I think combining the 2 things together and of course putting an experienced team together and expanding it further, I think we're going to have great connections with global OEMs.

And yes, that's right, Sumit. And obviously what I would like to add to that is obviously with Ibeo's operations in the Detroit area also gives us more strength and momentum in both OEMs across both sides of the Atlantic. So we're very excited about the future. The next question is so you have just added more engineers and is this going to have an impact on the cash burn? I'll take that question. So yes, so this will be adding cash burn to our run rate of stand-alone MicroVision, which I just described was $8.4 million per quarter on a run rate basis. Now if you carefully observe the 2023 estimate, what it tells you is the net cash burn is expected to be $50 million to $55 million which is the net cash out the door, which includes the cash that's going to be coming in from the revenue stream. So if you truly observe, the total cash burn has not gone up as significantly as some of our other peers which are again burning $200 million a year as an example. Our cash burn per employee still remains 1 of the best in the industry and obviously that's why we feel very comfortable that we're well funded into the middle of next year. And any OEM programs or the customization that Sumit described, obviously we would be looking for the OEMs from the revenue streams, et cetera, to fund those development programs. Hence that's why I feel very comfortable with our balance sheet position and the new cost structure of the company, which in my mind is very scalable because obviously to have a 350-engineer team or 350 employees across U.S. and Germany gives us a very good chance to even scale up in the event of RFQ wins and design wins and which obviously we can always build from on top of here. And unlike our peers where the cash burn is significantly at a much higher level where it stands today. The next question is actually regarding Luminar's recent announcements. Do you have any views around the new product launch from Luminar today and what does a 300-meter ranging facility best in the planet even mean?

Look, to be honest, right, I have not looked at it in depth. I just had a little bit before this call. Here's my impression. First of all like the 300-meter I think our teams working together demonstrated that 300 meters was our lidar without any changes, but that in addition to software improvements was able to do. An indoor facility, I think that's just money. When you drive it out in the real life, there's lots of things, lots of connotations that happen. So it could allude to anything. I think this is a question better for them like why this is such a big thing that has to be. You file a K for this, but not for anything else and that's kind of interesting to me personally. But it's just a test facility, right? I mean we can create 1 of those, but there's no need for that because when you get to those kind of distances; you want to be driving, you want to be moving around, you want to see the noise, you want to see how many multiple times you have to drive on the same scene and they need validation software, right? We sell validation software. We drive around and we create validation data and we really understand what's happening in every scene and what could be improved. So I'm not really sure I take that, that there's any huge benefit 1 company has over the other. That's for them to explain. The brief thing that I saw about them, I think great the announcement they made and partnership that they have. Congratulate them. Look forward to some real filing with the SEC so everybody can know what it is. The product, I think a lot of people have asked me the question already like about the product that they have announced today. And again brief review that I did of it and all I saw was CAD. We've been showing products with the cover off for a while and supply chain reviews and we launched wafers and we were much further along. So I'm not really sure that -- more data is needed and I think it's for them to describe to the market and to their investors and analysts. And I think it'd be inappropriate for me to comment beyond just as an engineer saying cool, that's really cool CAD.

The next question is also related to that. How does Luminar's AI engine compare to MicroVision and what's the competition there?

I've gotten this question before several times. I don't know what that product is, I don't know any details about it. But I can describe to you what our strategy is, what makes sense and what I believe is ultimately going to win. If you could actually put these perception algorithms, and these are classical algorithms not AI-based algorithms, into the ASIC running on DSP, running without huge amounts of GPU power; the chip would be cheaper and it would actually have all the KPIs that the OEMs are looking for. One of the main reasons why I was so charmed by when I met the Ibeo team is because they had done the same exact work with the same premise and they have arrived at the same point. They are demonstrating KPIs to the OEM levels that the OEMs are also -- pretty much to the limit what the OEMs want. So effectively, their software for the Ibeo sensor was already optimized to the level that was pretty phenomenal. You add MAVIN to it, it of course now goes to much longer range, it's going to have the KPIs. So as it sits, all those features that you talked about for perception, they have the highest KPIs with the combination of 2 companies. But the real magic happens when you can put that perception feature into the ASIC, it's the cheapest version is going to be there. If customer A -- if 1 OEM says you know what, I just want the lidar and my team wants to produce -- we want to own the perception software. No problem, Chip A, 1 version of chip they can get and they can go on their way, that's perfectly fine. But there's definitely OEMs that always want their perception development teams perhaps are not that further along, then of course we can offer them software and the lidar from a different variant on the same chip. That's actually really powerful because from the lidar now you're getting object level and you're getting perception. This is really, really incredibly important and the only way you do that is because they've already found the classical algorithms that can go inside the chip. This is really, really powerful. Once this adoption happens, imagine for 15 years you're making the same exact product because nobody's going to ever switch because once that's qualified, it's going to just keep turning the crank. So this is incredibly powerful. You would not require a significant amount of software every year for every model year for qualification. So the long-term trajectory of expenses for OEMs would go down and this is something that they are developing. This was 1 of the primary reasons that I felt that the team in Hamburg is somebody that we had to join forces with.

We're now out of time. We really appreciate your participation in our fourth quarter earnings calls and your continued support of MicroVision. Thank you.

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