Vuzix Corporation (VUZI) Earnings Call Transcript & Summary

[Audio Gap] one interesting use case is online shopping. So folks will place an order online. We have our glasses in a number of stores where they're using it for picking. So the associate will walk around, get a pick list on the glasses. We'll tell them what location to go to. They're going around and picking orders fulfilling those that are based on online orders, which is pretty exciting. In manufacturing, thinking about work instructions, step-by-step confirmation, QA, the glasses are super valuable there. If you have a problem in the fields, you can bring up the work instruction, you can call for help. Thinking about field service, which is something we're going to do today, remote support, training, the ability to share things, hands-free over a computer with an expert is just invaluable. I mean today, there's travel restrictions out there. There's a lot going on in the world. And our solution with Brochesia here is super vital for field service to be able to transfer that knowledge from one expert to another. And there's a number of ways in which this application works and we're going to show you, which is very exciting. And then telemedicine, another area that Brochesia supports as well with their medical expertise, the same thing, taking that knowledge from a doctor and training somebody else, taking that person off the front line and having them be the expert to share information to care for patients and this is super valuable. If you look at Vuzix, so we have a number of products -- actually have a product line, we've our M-Series product line. If you go from the top left, that's our M4000, that's not shipping yet but it will be out here later this year. Then we have our M-Series, which is led by our M400, really for enterprise. Our Blade Glasses offer an optically see-through version of our glasses. This is a big interest for enterprise, really in the security first responders and also prosumer. If you like Netflix or Amazon Prime video, you can watch those on there. And then Vuzix because we're an optics company, we can actually develop solutions for your business. So if you have a business and you want to put smart technology into the product, whether it be a display, a full all-up wearable solution, a computer, we do the full design development from our office in Rochester, New York. And today, we're going to focus on the M400. This is really one of the most powerful Smart Glasses in the market available today. We have Android 8.1 running on this. It's supported by the Qualcomm XR1 chip. We have a line of accessories, which makes us very valuable. So whether you're in the rugged environment and you need a hard hat. You're indoors, we have a solution for that. Also, this is IP67, that's water industrated. I think last week, we had a webinar. And we actually dunked the M400 underwater during the call, and not only didn't drop the call, but the video quality was unaffected. It was really pretty cool to do that live. It was a lot of fun but this is a rugged device, even though it's little -- it's dropped tested to 2 meters on concrete. It's also nice to get an OLED display, which means that contrast ratio, the color quality is just -- it's beautiful. So indoors, outdoors, it doesn't matter. It's an 8-core processor, this thing is meant to stream. Yes, streaming video is not a big deal. It just -- it can handle it. It's got a 13 megapixel camera. It's image stabilized. It's got face detect, auto focus and it's super great at scanning bar codes. What's great too, it's got a standard USB type-C connection. And this is shipping now and available. So here's a line of accessories, the mounting options. You think of folks with glasses, a lot of people. So what we have is we have frameless frames. So this allows you to wear your glasses right over your existing glasses. We have hard hat support. We also support safety glasses if you're drilling or doing some work you need safety glasses work with those. We've a headband option, which is great for healthcare, telemedicine, telehealth, but it's also just a great option to wear it. It's a lightweight, it pulls that any sort of weight away from your face. And then we also have left or right eye options. Believe it or not, some people are left-handed, some are right-handed. About 30% of the population is actually left eye dominant. And some of the competitive options out there don't allow you to go left or a right eye, but with Vuzix, you do. So if you have the glass on your right eye, you move it to your left, you see the display flip over just like you see your phone from landscape to portrait. It's pretty sweet but we offer that as well. And then if you look at the different options for hats and clips, we support hats now, visor safety, bump caps. So really almost any sort of environment that you're in, we have an option. And then also, we have a -- we have different price points. So our M4000, shipping later this summer, it's $2,500. Our M400 is $1,800, shipping now. We also have our XL, which is $800. And then our Blade, which is -- has 2 price points. One is a C87.1 safety-rated version for $1,000, and the other one is the nonsafety glasses version, which is $800. And then what's important too is not only the format, the glasses, but it's also battery life. So we have our standard M400, which is IP67 rated. So again, that's the dust and waterproof. That gives you a 2-hour run time with extensive usage. This just means you have the camera running, you get the flashlight, really everything is running on that device. Then we have our extended life battery, which is another wearable option. This gives you 5 hours of run time. Then you also have the GoPlug extended life, which gives you 8 hours of run time. Now I'm going to hand it over to Christian to talk over the Brochesia, and we'll get into some demos after that followed by Q&A.

Thanks, Matt. So I'm Christian Salvatori. I'm the CTO of Brochesia. And today, I will walk you through an introduction about who we are. And then we are going to see a demonstration of our remote support solution. So at Brochesia, we devise innovative software solutions by leveraging Augmented Reality for Industry 4.0 and the healthcare sector. Our goal is to make the best use of the advantages that are typical of wearable devices such as my glasses like the M400, and leveraging the miniaturization of the technology and then the ability to perform the normal daily task while keeping your hands free. So Brochesia allows companies to collaborate with our teams that can be located anywhere in the world by optimizing the cost and the time needed to needed to -- needed for performing working activities. We basically started to develop a software solution back in 2014. So now we have a set of software solutions that is very mature. It includes all the experience that we have gathered in the last 6 years. And some of our solutions include the remote support with B View. And shortly afterwards, we are going to show you a demonstration of it. Then we have B Take for the logistics sector that allows basically to handle different type of process, including, for instance, picking, feeding or inventory type of activities. Then we have B STEP step that allows you to design digital workflows and then execute these digital workflows that we have designed through the M400 with the benefit, of course, of working hands-free while following instructions step by step. Then we have B Safe for inspection and quality checks and B Med for medical assistance and finally, B Guard for private and public security. The field of application, and in particular, for basically the remote assistance type of solution, B View. So this solution can be really used in different type of activities from activities related to production line, to inspections, to, as mentioned, the healthcare sector for providing basically maintenance, support or training to people despite, of course, the distance between the people involved. Basically, it's a collaboration type of platform that allows to have people located in different parts of the world, working together and sharing their experience between each other. So specifically, for instance, in a typical scenario of the use of B View and the M400 in the industrial type of sector, you have a technician and this is also what we are going to demonstrate to you afterwards. A technician requires support, for instance, and in this case, places a call to a remote colleague that can immediately visualize in real time the point of view of the person wearing the M400. And in order to make as effective as possible the interaction with a colleague in the field can share images, send text messages, sharing files or even anchoring in the space through Augmented Reality, images, information that can be useful to the person that at that moment is in trouble and need to solve the problem. Then another important field of application is the medical or healthcare sector where our solution, along with the Vuzix Smart Glasses, has been used, for instance, in a live surgery where there is a surgeon that is operating on a patient. And on the other side, for instance, there is a class of doctor students that need to learn the techniques related to that specific surgery. And basically, you have a live interaction between the surgeon and the class of students that in real time, they can also ask a question and get answer to their question by basically the doctor on the other side. And that's just one of the field of application in the healthcare sector. Then our solution can be used also for medical consulting, where both the doctor and the patient are in different locations. In order to avoid traveling, basically they can, basically, start interacting. And in particular, the doctor can assist the patient from distance. If the Smart Glasses are combined with the thermal camera, through our software, we can also leverage the Smart Glasses and the thermal camera to basically detect the temperature of the body of a patient by maintaining the distance. So by avoiding the contact between the doctor and the patient through this combination of technology, the temperature can be detected and the distance can be maintained. And nowadays with the emergencies that we are leaving with the COVID-19, this could be a quite useful way of detecting fever in patients. So very briefly, some of the benefits of our software solution combined to the use of the M400 Smart Glasses. Cost reduction, just for avoiding to having people traveling as well as, in particular, in the use in the industrial sector, the reduction of production downtime in the production lines by, first, well, intervening quicker on the problems that may occur and fixing the problem also in a quicker way. Training. Basically, anybody can be trained, in particular, can be trained even on the job. So for junior people or people that have to change their job, their job title, they can be trained from remote. And by using this kind of solution and having 2 people working together despite distance, you can have an increase of quality in the activities that you are performing as well as a reduction of human errors. And also, in particular, for the person that sits on the remote site, he can perform multitasking activity while interacting with a colleague in the field. Then in the last 1.5 years, Brochesia has been successfully trialed the new mobile cellular 5G communication technology, whereby our solution and then specifically also the remote support, remote assistance solution has been used to prove the goodness of this new technology and in particular, to prove the benefits of lower latency and high, basically, bandwidth that the 5G technology can provide. So Brochesia has been working with major telco operators in Italy by trialing successfully this new technology. And finally, just a quick view about our customers, some of our customers, in this case. And really, our customers span across different types of sectors from basically the telco to energy sector to the automotive to oil and gas sector, construction, of course, the healthcare, we already mentioned that. So all the customers that have adopted Brochesia solution are getting the benefit of leveraging the combination of our software and the smart glasses devices. So we have been -- basically, they have been using our solution in different kind of use cases. And now let's move on to a demonstration. A demonstration of our solution. So I'm going now to share my -- basically, the web portal that is -- that provides a view of basically all the different devices that have been bound into the portal. As you can see, the portal is web-based. So you simply need to log in via a browser and then, in this case, the remote expert will be able to start interacting with a colleague in the field. We support multi-language. So different type of languages, as you can see here in this side bar. And I have basically Sam that is having a problem right now. So basically, I will act as a remote expert in order to support Sam in solving this problem. So the way for the remote operator to interact with the person wearing the Smart Glasses can be in 2 ways: either the remote operator call the colleague wearing the M400, or the site technician, site engineer, calls the remote operator to get his or her support. So right now, we can see that we have one device that is online. And basically, I can start by calling the device. And basically, I have now Sam connected with me. And then Sam, so you're having -- I understand some issue with these devices that you have in front of you. Is that correct. Yes. Okay. Okay. All right. So let me help you out in configuring this device, okay? So what we need to do is basically to connect -- yes, the cables that you have in front of you?

This one?

Yes, correct. Those ones. So let me use the laser pointer. Basically, you will have to use these cables and connect them properly to basically the port on these 2 routers. So I'm going to show you what we are going to do now. Basically, we need to tell Sam to make this kind of connection with the blue cable. So Sam, could you please pick up -- yes, the blue cable. Yes, that's right. And basically, we need to connect this port here...

In number 3?

Yes. With this other port here -- correct. That's right. Perfect. Great. So if you can just stay still for 1 second. Now just want to basically -- make, basically, 2 drawings here just to confirm what you have done. And also, I make another drawing now basically by leveraging Augmented Reality. So that these drawing will be basically anchored in that position. Perfect. Very well. Thank you, Sam. So that was the first one. So now you should have a QR code close by to the routers.

You mean, this one?

Yes. That one. Exactly. So I'm going to enable the reading of the QR code now. So if you can look at the QR code with the camera of the Smart Glasses. Perfect. We have recognized the QR code. Great. So now we are going to play a video.

Yes. I can see video start on my M400.

Perfect.

I can see the M4 -- connecting blue cable. We see this is connecting blue cable even to...

Perfect. Very well. So basically, in this case, Sam, you connected the red cable by following the instruction that were shown to you through this short mini tutorial, video tutorial, which is -- perfect. All right. So we are almost there, Sam, okay? So now we need to connect the yellow cable, exactly. And -- exactly. And in order to do this, I'm going to share with you the instruction that I'm visualizing on my computer, okay? So I'm going to share in this specific case, the instruction that I have. So if you could please follow the instruction that you see on your display of the M400, okay?

So I can see your presentation slides on my M400 and the instruction you want to print in. Yes. The last -- lights just turned on. That's cool.

Great. So we have completed the configuration of the router. So all lights are on. And now I think you can use both the routers for your network in there. Okay. Thank you very much, Sam. So these were some of the features that we have leveraged basically to provide instruction support to Sam in this specific case. And just -- we walk you through some other features that we have available on our solution like, for instance, sending to Sam a text message, okay? Like this. So Sam basically is seeing the text message. For instance, Sam, it's not the case right now, but in my work in a very noisy environment, he might have difficulties in understanding what I'm telling to Sam. And also we could take, for instance, a screenshot of what Sam is looking at. So I was looking at the router. We could basically draw. We can add text to this drawing. We can save it. And then we can send basically the image to Sam, and Sam now visualize it on the display. Correct, Sam?

Yes. I can see a transparent image overlay on top of my M400 and got it circled under the red cable. That's cool.

Perfect. And then the images -- this appears automatically for Sam. So no need for Sam to interact with the devices. And Sam, I can see there that you have a small motherboard. Is that correct?

Yes.

Okay. Yes. Can you pick it up? Okay. And show it to us. Perfect. Okay. So from here, for me, just to see a little bit better. But anyway, I can appreciate the very good quality of the video. I've enabled from remote the flashlight on the Smart Glasses so that we can see even better, basically, the motherboard and read all the small prints that are in there. So this is thanks to the combination of the M400 and our software. Perfect. I just -- yes, switched off the flashlight. Thanks for sharing that, Sam. And just briefly, we can also, for instance, start a recording at any time of basically what myself and Sam, we are doing. So we can, for instance, create a quick tutorial of the activity that together, we are doing and as soon as I stop the recording, as you can see, basically, a video file gets generated. And this video file gets automatically uploaded on the cloud, which is integrated within the web portal. So now by minimizing basically the video streaming, I can access the cloud in this case. And I can basically look at the video. So of course, it's a video file, and it might take just a few minutes to get uploaded, but here it is. So this is the file that has been automatically generated, created. And here also, I could basically start playing the file. So this is the recording. Very, very brief one, okay? So that's another capability of the solution. So recording the share-screen, we have seen it through the screen-share. We -- in that case, earlier, we have shared directly a PowerPoint. We can really share anything. We can share the desktop as well. And also another capability is the one that allow us to add other people to take part to this call. So right now, I don't have other users that are logged into the web portal. But if I had, for instance, another user, connected to the web portal, i.e., a remote user, I could add it into this communication between myself and Sam, and for instance, having a 3-way communication, so the 3 of us could interact. And the other thing I can show is sharing myself. So this is myself. And basically now Sam should be able to see myself. Hello, Sam.

Yes. Hi.

And also, we can basically control basically from the remote. We can control the amount of bandwidth that we currently have available. So right now, the communication is going around 250 kilobyte per second. But imagine a situation where you have a lower bandwidth, we can manage with even lower bandwidth and adjusting the quality of video based on the bandwidth that is available. And finally, I can freeze at any time the video. So right now, I've frozen the video. So for instance, I want to look at a specific object that is in front of Sam. I freeze the video and then by playing it, I go back into the live communication. So this gives, hopefully, a good overview of the capabilities of our software solution in combination to the M400 Smart Glasses. And now I'm going to close the communication with Sam. And we can go now into getting any questions from the audience. So there we go. And so we are open to questions now.

Okay. Thank you, Christian. That was an excellent presentation of the platform functionality. Two questions, currently. The first is -- can one -- more than one expert connect to the set of users? And if so, does that affect the performance of the M400?

Okay. So yes, definitely, you can add also a second remote user, basically, joining the call. In fact, I was showing during the demonstration how to do that. But since I don't have a second user online, I couldn't show it to you. So this is supported and the performance of the M400 are not affected by having, for instance, a 3-way communication.

Okay. In the same regard there, what is the maximum number of users that can be added to the call?

Yes. So right now, we have the capability of having up to 3, basically, remote expert joining a communication with a M400 Smart Glasses. However, let me say that we have also another capabilities that allows to share the point of view of the main user on the web portal with other, and basically other remote users that in that case can both see the main desktop of one of the operator interacting with the Smart Glasses. But at the same time, they can also hear basically what the other 3 remote user and the operator with the Smart Glasses are telling to each other.

Okay. Next question, can you describe licensing for users? Do you pay by usage or the platform or do you pay by user and have unlimited usage over the same time frame?

Yes. So basically, the model that we use is a SaaS model. Whereby, we provide the Solution as a Service, in this case, or Software as a Service. And basically, yes, we have a really different type of model that includes per users or unlimited, but also there might be the need of hosting our solution in the customer premises, so we can provide our software also on an on-premises basis.

Okay. Very good. Here's -- we have one more question at the moment. We have a user interested in using the M400 for remote support. And the question basically here is, why is the M400 roughly twice the price of the Blade? And is the M400 faster and better for streaming?

That's a great question. The Blade's a optically see-through option. But if you look kind of inside of it, you have -- it does have a lesser version of Android. It's -- the camera -- there's a few features that make it a little bit less powerful. So from that standpoint, the M400 does stand out. So that's why the price point is there. And if you're really focused on -- you need a high camera fidelity, you need an 8-core processor, the 400 is definitely kind of a more robust version. And that's why the price points are different. But you get Android 8 versus and Android 5 -- I mean, the Blade's great. I think it has a lot of wonderful features. But for certain applications, where you rely on a high fidelity processor image stabilized camera, 13 megapixels versus 8, you're definitely getting a premium device, and that's why it's priced accordingly.

And also on the M400, it comes with a series of accessories, which includes, like Matt mentioned, in the presentation, 30% is left-eye dominated and then M400 have the capabilities to switch left eye and right eye. And also M400 is designed for enterprise uses and usage. So it has -- battery lifetime is -- particularly can handle 5 hours to 8 hours of video streaming without changing battery.

And then also, we will have the M4000's see-through version coming later this year. And that takes care of the questions for the moment.

Thank you. Matt? Now I guess, now, yes, the session is finished. So thank you, everybody, for joining this webinar, organized by Vuzix. And feel free to reach us out to the e-mail address shown here. Thank you very much to everybody.

Yes. Thanks, everyone for joining in.

Thank you, everybody. Be safe.