The Glimpse Group, Inc. (VRAR) Earnings Call Transcript & Summary

Good evening, everybody. Welcome to this live cast discussing the recent, very recent, well, they finished like 30 minutes ago, recent announcement of a very exciting product, which quite excited to say the Apple Vision Pro. There we go. That is it. That's something we're going to be saying a lot over the next years, right? We're going to be saying on that an awful lot. Not the Reality Pro, which a lot of people had it named as. So I'm trying to get my head around, that is in my head. I don't know about the 3 of you, but it was Reality Pro the whole time. So we've got to change that. So very exciting times. We're going to be chatting for the next sort of 25 minutes or so about some of the major developments, some of the features, use cases, things that they said, things that they didn't say and we're going to have a look at that. So I am joined, I'll do the intros for the 3 of you. We will just whizz through these. So Lyron Bentovim, who is the CEO of The Glimpse Group and President. We have DJ Smith, who is our Chief Creative Officer. And we have Jake Maymar, who is our VP of Innovation, lots of very smart people, some of who have lived and breathed the rumors of this for years. It's years, right?

Many years. Many years.

Many years. But they've really peaked in the last few months -- in these last few weeks literally been insane. If they haven't announced anything, I think they have had...

Oh yes.

And now they just -- I think they've had to rename the company if they have not announced. What I'm going to do is just before we get into the conversation, and I'm sure people may or may not have seen the announcement, if they didn't see it to the end, then they wouldn't have seen the advert. So what I'm going to do is show the advert just -- which I think is very nice, as you'd expect, from Apple. It's very well filmed. Looks great. So we're going to play that, it's about 55 seconds, and then we're going to jump into the discussion. [Presentation]

So there you go. Slick little video of TV ad to finish off the presentation, which you'd expect, great music choice. I'm sure that probably took them about a year just to choose the soundtrack, right? That have had like off-site work groups for like weeks to go. But what really be the right music, which sort of questions I love.

So there you go, let's start, Jake. Let's go to you because Jake is our resident Apple fan boy without meaning that in a negative way, it's a good way. You know a lot about this. You've lived and breathed this for years, talked about it on and off for years. So Jake, how does this measure up to what you were hoping or thinking would happen?

I think it actually makes a lot of sense. I mean the thing is, we've been talking about this for a long time as you spend a lot of time on your phone. And wouldn't it be great if your phone was here. Now this is the very first version of this type of headset. So it's going to have things that are like, "Oh, this or that or this, I could change this." but -- what's exciting is it's already integrated to all the apps and the whole thing with sort of the XR world is you were basically creating an entire new ecosystem, but I use this ecosystem every day. I think we all do. And so now that ecosystem is just integrated into the headset. And that was kind of the big thing is being able to be integrated into the headset. And then the other thing about XR is, it's a very lonely place. But what's so nice about this headset is, you can still -- you can eat. You can like interact with people. You can sort of see your environment. You can choose how immersive you want it to be. And I think they got a lot of things right. I also think there's a lot of amazing things that they did that they hinted at, but they didn't actually officially talk about. And I think there's a heavy machine learning side of it which I think we're going to get very -- I think it's going to be very, very exciting at that level and just how easy it is to interact with things. And it's going to feel very seamless and very easy just like all the stuff that they do.

Sounds -- well, good, I think, yes, it's going to be hard, I guess, so ultimately disappointed by anything that comes out of this. Lyron, how about you? What's your kind of view of this initial take without diving in?

Yes. So first of all, wow, kind of, if the headset is half as good as kind of, and obviously, Apple knows how to sell, and kind of watching kind of before that kind of I was getting ready to go buy like an iMac15 and kind of also the other kind of things. So -- but it just looks taking kind of the headset space kind of like 3 steps forward, kind of it is kind of unbelievable. So that's what I liked. What I didn't like, obviously, the price point and it's early. And the other is -- it's at the end of the day, a glorified kind of in terms of how they pitched it almost all of it and Jake was right about hinting a heads-up display. It's basically Google Glass kind of [ to the end ] level. It's still -- they haven't focused too much on AR on VR. They hinted on some elements of that. Now knowing that this is the first version and knowing the capabilities, this is opening up the ability to get something like this on every head, the ability to spend kind of they hinted on this as well, kind of the whole day in it, which kind of -- I think this might actually be okay to spend a day in it versus the current headsets, which kind of you are challenge after a few hours. So it's pushing forward the industry in a way that we were all hoping for and in terms of the technology. And I assume purposefully, they've almost kept any of the immersiveness of kind of basically non-2D content to the kind of dreaming rather than putting it out there. That's kind of my first take.

Yes. Again, it's a good point. DJ?

Yes. I think my biggest kind of takeaway is that we've been selling this future of immersive technology and what it could do and the fact that the mobile phone industry is kind of hitting a wall with where they can go with their development, right? There's only so much that you can get out of the screen in this size and back in 2016, as we're talking to friends, families and investors, we like you realize that phones are going to go away and we are going to interact with digital content in a spatial manner. And competitors in the space, they don't own a whole ecosystem, right? So they can create a platform and show a game on it. But any time they try to actually create a virtual desktop layer or whatever, it kind of fell apart because the connection points weren't quite there. Apple is a unique vehicle, right? They kind of own that whole ecosystem. And I think they put all of their resources and all of their interest in really imagining what is on our phones, what's on our iPads and what's on our Macs but now in a spatial way. And I think all of the rest of the XR stuff will follow. But this is their first step. And I think it's really important that they take that first step solid and they focus on it and they make sure that it's damn convincing and damn comfortable. And I'm just super excited to try it.

How long do you think anyone can answer. How long do you think they've been planning this. Yes. And when I say how long do you think they've really been, okay, we're going to do this, but let's get it right, how long?

No. They've been doing this for decades. They've -- there's like all these little radios that were just turned on to be able to have all the devices connect to each other. That would have to be planned in the -- like when the circuitry was made when they actually put together the processors and everything, they'd have to basically -- I mean, there's so many things like the phones and the laptops and the tablets, those chips were actually turned off until just now. So that's really, really exciting. Like there's so many capabilities that really only Apple can do. Because they own the hardware, because they own the operating system, because they own the ecosystem. Now I mean, I think we just got a taste of what this thing can do. And right now, it was primarily sort of a 2D display. But if you think about it, we spend a lot of time explaining to people and onboarding people into XR. And you would think it'd be very intuitive, like, okay, you're going to do this, you're going to do this. Well, with Apple, it's just your hands. Now we don't quite know exactly how intuitive that's going to be. I'm thinking it's probably we think very intuitive. But if something is just like you're interacting with it, how you would interact with it, and there's no learning curve, that's pretty amazing.

Yes. I'd love to learn more about what they're doing with the eye contact because I think that's going to be a key element of this kind of -- and there, again, hinting, this whole thing was about hint. I probably need to watch it like 5 more times to kind of figure out all the things that are kind of missing in it. But they are going to...

This is the eye contract you're talking about, right?

Well, no, I'm talking about kind of -- watch -- kind of use your eye to look at certain things, and make it happen. So for example, right now, as I'm watching the screen, I have a button at the top right says leave event, which I'm not doing anytime soon. But if I kind of looked at it and stared at it, I assume with that device, I will just kind of leave the event without me doing anything else. I would obviously can use my hand and point on it, I can say leave event, but I think kind of it will just be natural and kind of all those things, I think, will come into play behind the scenes. But back to your question, James, kind of, they've clearly been working on it from 2016 on and kind of integrating pieces. But I think for the last year, they knew that this is the event that they were targeting, and they were hoping and scrambling to actually get there kind of based on everything that we've been monitoring on our end, and kind of all the things we've been hearing from people kind of around and inside the company, that's the direction that we're seeing.

I think it's amazing to think of, this has been really thought about worked on for 7-odd years in its sort of real entirety versus the discussions before it's incredible. So what I want to touch on now because we're not going to have a ton of time. But quickly, I want to start with form factor, okay? So I'm just going to drop in, what do we feel -- let me just find -- what do you feel about the initial thoughts around the form factor?

Yes. Yes. I'm surprised that it is physically pressed to somebody's face because we are seeing a little bit more of a trend for kind of a crown system where it's actually not touching the skin. So it has to be comfortable if that is the case. And the fact that the battery is not in there means it's going to be light. So maybe that's okay. But I am a little bit surprised that it is actually pressed against the personal space.

It has to be comfortable kind of the thought of getting this paying $3,500 for it, tuning in on, trying to watch a movie, which is one of the use cases they were throwing out there and not being comfortable for the 2 hours of watching the movie, kind of -- that would die so quickly, kind of -- I kind of -- I'm sure that they've done a lot of people spending tens of hours in this thing and are comfortable. So kind of -- I have no doubt this will be a very comfortable experience, totally different than anything we've experienced to date putting on kind of a variety of VR and AR headsets.

Yes. I must say I was intrigued by the woven element to it. So the strap -- they specifically called out the woven cable, that material thing. And it's just, to me, as a wow, material, gosh. And then in sleep got -- I thought, yes, interesting, then I got really boring, practical and went hygiene.

Yes. How do you wash this?

Instantly destroyed the beauty of it, that's like, oh that's lovely. Yes, that's going to get really dirty. It was interesting.

I don't think it's a shareable device either. I think it's going to be pretty personalized to a specific user. It's going to have their whole phone information on it. So it really is, I think, a single user type of application.

Would you kind of given the price point kind of -- you have a family of 4 kind of I don't know if you want to get 4 of these and just getting one for yourself, kind of put you kind of out kind of family votes favorite. It's just -- it's interesting because the price kind of, and it should be kind of very interesting to see how kind of -- who gets it and kind of what they're using it. That's the thing I've been playing around with because kind of -- I can't imagine getting one and sitting and using it at home and tell my wife, no, you're not getting one and mine doesn't work for you. So just kind of watch me and join the movie. You can watch them the TV on the side.

Yes. I think that's a fair point. I mean you just get a sense at the moment, they're not looking for that sort of purchase. That's not that they've asked those developers, they are off those high end. They're off those innovators, visionaries, all these people.

I'm trying to kind of really understand the market kind of it's like kind of I see high-end designers, architects, kind of people like that, that might kind of get into, especially if they're kind of operating within the Apple environment. But kind of -- obviously, this is the first step. There will be the newer versions that will be better and cheaper over time. And that will drive and I'm kind of [indiscernible] with kind of all the different things they put in there that we've been looking to have in headsets for a while. But -- as I'm looking at the initial success of this, I'm kind of skeptical on that, kind of trying to figure out kind of how many units can they really sell at this price. This is a significant price. So kind of what is the target audience? It's clearly not corporations buying on mass, and it's not individuals kind of buying kind of -- this is not something kind of a middle-class person can easily afford to buy just to have more fun kind of doing things they're already doing today. So that will be very interesting to see kind of who finds kind of real value in terms of ROI and using this.

Jake, maybe this one for you, that price, $3,499. Wow. Everyone thought $3,000, which have tipped out would be high, but I thought they might come in at like $2,999 because it sounds cheaper, but they've gone -- they flipped the other side. How much of that do you think is related to the actual headset itself versus the aspiration of where it sits in the market? Like are they still losing money on it? Are they decided to deliberately pricing it higher? What do you think it reflects?

I know it sounds kind of crazy, but it's probably double what it costs to manufacture it just because it is -- it's essentially like it's the one-off. I wouldn't say it's a prototype, but it's a very early-stage device. So I would think to manufacture it would be probably half that cost, just a guess. But that's what I would think just because that way, you'd have enough wiggle room. So if there is innovation, you can have enough sort of find a balance between the costs later on where it becomes more affordable and you've already kind of made the money in the beginning. And then you also kind of see sort of the early adopters kind of how excited they are about it. It is kind of interesting though, because it's more of like a television replacement than like an XR device. Because even though you're eating and you're able to go to the fridge and you're able to like interact with others, they didn't show you going outside. They didn't show you -- like they didn't show too much. They showed some of the Disney stuff.

They have some elements, like they have you in the plane and kind of other places. But kind of -- so as I kind of -- I was thinking about that, so 2 points, and I'd love to hear DJ and Jake, your thoughts on that kind of as well. So one of them is, okay, so I'm putting this screen in front of me. I'm sitting there watching a movie and suddenly I feel like getting a popcorn, I get up, the screen is moving with me. I'm walking around the house. The screen assuming is actually tethered to my eyes rather than tethered to the wall, which is one of the things kind of that I was shocked they have in touching though they have a LiDAR scanner and they show that kind of upfront. They are not really interacting with your room. They're not placing this thing on the screen or putting it in a way that you're designing your room, they're kind of almost having it in space in front of you so you can watch the kind of whatever you're watching, whether it's a movie or your slide show or kind of call and then you're getting up and you're moving around and kind of what the screen walking with you, kind of...

No, no, it's stays. So it exists if it exists in the real world. So that...

I'm going to the kitchen kind of -- obviously, you can need to either pause the movie or...

I think it's going to just paused it. I think there's a lot of this intuitive stuff that they didn't really sort of reveal too much, but I'm guessing that there's -- you get up to go do something and it just automatically pauses, and then it resumes.

Put the movie aside, and if I'm having multiple kind of productivity screens, my inbox, my kind of tied to my kind of my Mac kind of also the different things I'm putting on. And I'm moving around. Obviously, if they're stable where they are, that's okay, which is kind of how we use our current screen, my screens don't move with me and I can go to the kitchen, grab a coffee and get back and my screen is where it is kind of moving around with them requires some adjustments or having multiple phases were kind of, yes, I might be okay having my inbox go with me so I can track kind of any e-mails coming in while I'm making a lunch, but kind of I need to kind of basically relate that and constantly move that where it makes sense given the fact that they're moving around.

I think those are the widgets. So there's sort of 2 forms. And I'm just sort of reading from these things, this is all speculation. But the display stay there. They're static. There is if there are -- the actual objects in the room, but then let's say you go to go get a snack, you have a little widget, that widget then dictates someone calling. And so you can see someone's calling and you can choose to answer it. Maybe it shows where you're paused in your -- whatever show you're watching or whatever you're doing, whatever productive thing, maybe someone just added a comment to the PDF, you would see that. But you wouldn't see that whole screens and the way that was set up, I don't think. But I don't know.

So let's just see how many points we can cover off from this because there's so much to talk about. So some interesting other things I thought within there. The -- what do you think that digital persona representation that look quite interesting. I saw that was like, wow, that's pretty cool. What do we think about that?

Well, so the one thing that I didn't mention on that is interesting because they mentioned multiple times that they support Teams and Zoom, but it wasn't very clear that, that actually works on Teams and Zooms and kind of been doing video calls for the last whatever, 3 years now kind of, nobody is inviting me to FaceTime just yet, kind of except my wife. So kind of -- I'm not sure if they're hoping that businesses would go there or there would be some Zoom and Team solution, which is a vast majority of kind of video calls are happening on. But the thought of basically kind of -- we've been talking about it forever, that this is the future of video calls is to basically capture kind of how you're kind of hitting element of your face kind of interact and then basically add those in. So your kind of video is there. And that goes pretty cool with some of the video features that kind of they showed on kind of on the earlier part in -- and basically, those should work and basically they are mentioning those work on Zoom and Teams. So interesting how that works, but I think that's a really amazing step forward in the ability to be with a headset and yet interact with the world.

I mean it's really interesting the way that video, they showed the person holding the headset facing them to scan their face, right? I saw that, and that was like, wow, that's...

That's very clever too, because it's like, oh, okay, it tells you what this -- what these scanners can do is they can scan 3D, they have depth map. They have all these sensors. So if they can capture a face, maybe they can also capture moment capture. Maybe it is volumetric. We don't totally know what that movement capture is. But just imagine if you could actually like have a kid's birthday party or have a special event and capture wearing the headset, and it feels volumetric. It feels like it's actually a 3D spatial experience. That would be amazing.

Yes. What did you think about that detail? I guess you're talking a bit there about the spatial photos.

Yes.

Would you think it was a bit of a gimmick, do you think that is kind of a key use case.

So I think the -- I think it's actually got stereo cameras, and it's really just taking stereo pictures and stereo photos. I would, as Jake was saying, it would be super cool if it also added the LiDAR capture of the room, for example. But I think what they were really demoing in that one segment is really just video playback of stereo photography. What I'm curious is, they showed a FaceTime call and they showed how the user in headset would see but it didn't show how the other people would see that user. And do they get that animated avatar view of that person? And is it being animated in real time or not. And if it is an animated real time kind of recreation of that person, they're definitely like Uncanny Valley warning signs kind of come in to me that if they are doing it, they better be doing it really well or else it's not going to come across.

Interesting point, DJ, I was assuming that you would have your iPhone camera because they showed that in the other video element in front of you because otherwise, it's kind of -- they're totally making you up. I was assuming they're just replacing kind of the missing piece and you actually see sitting on the couch or wherever you are and kind of seeing your hand gestures and everything and just adding your eyes and nose kind of to fully capture you. But there's a lot kind of that was kind of hinted on and kind of time will tell how it will actually work.

Yes. Yes, absolutely. If we know Apple though, it's going to work well.

So that's everyone's assumption. So you see these things and you're just like, okay, they solve that because when I saw the FaceTime, I was like, okay, it's cool to see other people, but you want to interact, actually, you need to be on the other side of the call.

That's the value of a brand that is like, well, it's them, they'll make it work. It will be brilliant just that's the intangible priceless value of a brand like Apple, which is wonderful. A few other things to cover. So looking at this a bit more broader for the market as a whole and looking at it from our perspective as The Glimpse Group, Lyron, why don't we go to you? What do you think this means for The Glimpse Group?