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

Welcome to the MicroVision Business Update Webcast. [Operator Instructions]. 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 conference vision senior leadership team. Joining me today, we've got Glen DeVos, MicroVision's CEO; James Beon, 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 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 3 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?

Yes. 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. To your question specifically about the transformation, 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, the first key piece of that was transformation of the portfolio. expanding the portfolio so that 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. A year ago, we were very focused on automotive. I mean -- and I think Tristan 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 the team out that really is capable of implementing those strategic elements. And so as we sit here today, kind of 3 quarters into 2026, we've seen just tremendous progress on all fronts. All 4 of those elements. Earlier this year, expansion of the portfolio with Scantinel and with the Luminar acquisitions. When 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 3 to enable our customers to be able to adopt Lidar as a solution. end markets, well, we talked about it in earlier calls where a growing percentage of our revenue is really coming from nonautomotive 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 datacom. And then finally, the team, you'll see it here today with James joining us and 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 talked about Q3 a little bit. A lot's happened. 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 movie a lot happening. And we've talked a lot about it. But what we wanted to do today with the team just 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 in the near term or just in the near 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 we're -- 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, what does that mean for our business model? How are we managing that revenue? How are we then aligning our investments in our operating models with where those revenue streams are coming from and those customers we can serve. And so you get the kind of the top line and then the bottom line. And that is how we ultimately drive the customer and shareholder value. Now as I mentioned, a lot of elements that were part of that strategy. Again, 2 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, Glen. 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 will 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 lead to recurring sensor sales as customers deploy and expand their progress. 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 the commercial team. It helps supply chain client component purchases. It helps manufacturing team prepare capacity. And it gives the entire organization a clear focus. Glad 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 owners. With all these orders in hand, the immediate focus is execution. We need to deliver holiday 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 3 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 are seeing demand from customers that needs long-distance detection in challenging environments that includes autonomous ground systems and defense applications. The 15 5-nanometer wavelength, which is invisible to night vision goggles, does matter to customer operating and combat environments. Now looking ahead, our new Halo product gives us a path to offer next-generation long-range sensing in a smaller Lidar form factor, the design focused on low product cost. Now we are working with multiple customers on how their road map 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 a short-range perception in robotics and industrial applications. Also, the recent FCC update affecting foreign-produced advanced robotic components may increase the importance of median U.S.A. sensors. MOVIA gives us another option for ground-based applications while Movie Air extends our reach into aerial systems. MOVIA Air combines lightweight sensing with embedded capabilities while AirPlus as onboard compute processing for broader perception applications. We announced our collaboration with Robinson unmanned yesterday. And we look forward to showing more of our Movie Air capabilities at USA in Washington, D.C. next week. Beyond sensing, like what I mentioned, our Scantinel photonics technology also opened stores in AI data center connectivity. Many of these industrial security and defense opportunities also have a shorter deployment cycle and 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 global 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, Glen.

Yes. Thanks, James. I think 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 a year ago or even early in the year, what we're 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 what we're building, here's what we're executing, and here's where we're shipping and here's how we're making the numbers for the quarter. And I think that is just singularly representative of the change in the transformation and 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 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, I couldn't be more excited about what James and his team, and 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 we introduce Christine Chambers. As I mentioned, she joined us in late August, decades of experience with customers or 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 Glen mentioned, focusing on the top line first. Just to reiterate, what we're hearing is that Micro region has really pivoted to a multi-solution multiuse case 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 the 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 it to product -- shipped out of 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 million 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. And 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.

Yes. Thanks, Christine. I 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. And this is kind of for all of you, I guess, particularly for Glen and Christine, how is the leadership team and the MicroVision team thinking about this important topic around driving the pathway to positive cash flow.

Yes, 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 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, we're getting commercial traction where we're shipping products today, where our success is and the revenue streams that 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. And so 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. And that's where I'll turn it over to Christine to talk about some of the things that we're doing there.

Yes. Thanks, Glen. That's exactly right. As we've talked about, the path to revenue is clear. And that commercial organization and James' 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. And like I said, James' 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 cost, 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 Lumina 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 U.S.-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 the 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.

Just maybe to add a comment. I think what you're hearing is it's really -- 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 the organization behind those revenue streams. And then address cost so that we're getting to positive cash flow into 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 the 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 this team.