MicroVision, Inc.

Good afternoon and welcome to the Microvision First Quarter 2024 Financial and Operating Results Conference call. At this time, all participants are in a listen-only mode. At the end of today's presentation, there will be an opportunity to ask questions via a chat line. Investors can submit their questions within the meeting webcast by typing them into the Q&A button on the left side of your viewing screen. Analysts who publish research may ask questions on the phone lines. For analysts to ask a question on the phone line, please press the star key followed by 1. Please note, this event is being recorded. I would now like to turn the conference over to Ms. Drew Markham. Please go ahead.

Thank you. I'm pleased to be here today with 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 today will include forward-looking statements, including but not limited to statements regarding our customer and partner engagement, market landscape, opportunity, and program volume, product development and performance, comparisons to our competitors, product sales and future demand, business and strategic opportunities, projections of future operations and financial results, availability of funds, as well as statements containing words like intends, believe, expect, plan, and other similar expressions. These statements are not guarantees of future performance. Actual results could differ materially from the 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 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. The conference call will be available for audio replay on the investor relations section of our website. 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 first quarter 2024 results. Let me start off by updating you on our progress on multiple RFQs in flight. which remain our primary focus to get automotive partnerships in place while adjusting to the OEM realities. Finally, I will provide an update on the broader view we are working on for partnerships and licensing. We believe that the best long-term opportunity for our technology in our company lies with automotive OEMs focusing on ADAS features in passenger vehicles. This segment will have the highest demand in millions of units and is spread across several OEMs in North America and Germany. As I shared last time, to win and dominate in this space, a company needs, first, LIDAR cost to scale in the low hundreds of dollars, second, smallest sensor size, third, highest resolution and range with lowest power, fourth, sensor integrated perception software, and finally, a company operates as a financially stable tier one LIDAR supplier. I believe with conviction that our technology offering with Maven, Movia, and Perception Software are aligned with OEM needs for existing RFQs and newly expected RFQs in 2024 that we are starting early engagement on. I understand the frustration and anxiety of our shareholders on the speed with which we can provide OEM validation of our technology. Context is important. There's a big demand opportunity in this segment, but a wide range of challenges to meet OEM commercial requirements for successful passenger vehicle nomination. All OEMs evaluate our technology and how it fits into their individual specifications. In all cases, we need to exceed their technical requirements. Our team's experience and effectiveness is also a strength that OEM often compliment us on. They find our cost structures compelling, given that we talk about wafer technology instead of rotating prisms and mechanical galvo steering. In each RFQ, OEMs require significant customization of hardware, firmware, and perception software. Their timelines for customization and qualification are long and would require several hundred engineers for several years. Commercially, we would want them to cover the cost of this customization but they expect these large costs to be amortized over a large volume of units to be shipped over five to seven years and be borne by our investors and the risk of final volumes not being realized while flat volume pricing is provided year after year. Any potential project we could take on would limit our ability to part of any other potential feature nominations. Some OEMs want to see our manufacturing strategy proposals to commit to factories in Asia and North America for volumes that would not justify two factory locations. Some OEMs explicitly want a factory in the U.S. To be clear, they would not accept a NAFTA country but only a U.S. contract manufacturing factory while expecting cost structures that are only possible from Asia. Others will only review proposals from Asia while a small group wants to see a diversified operation strategy with multiple continents. Again, the expectation is that we will fund this with our investors. All OEMs want varying levels of perception features, some running within the LIDAR, some running in their ECU, some claiming they need no perception but want our source code. Some OEMs want the LIDAR in roofline, Others want them integrated in headlamp, and some others are only looking at behind windshield integration. They want our core LIDAR to be flexible enough to fit into all their locations. They are aware of the tradeoffs in each location, but will require updates to the core hardware. Some OEMs only want to work with us as a LIDAR Tier 1 with contract manufacturing agreements in place. Others prefer a traditional Tier 1 with a diversified product portfolio and profitability. with us in a partnership with them, and a smaller group wants to see our Tier 2 strategy, even if the volumes do not justify any licensing model. OEMs do work very closely with us and are willing to compromise their needs, but in general, there's a wide area we need to navigate on each RFQ. In addition, we often see OEMs that have nominated other LiDAR companies in previous years actively working to evaluate us as an alternative even though other projects have not gone into production. Additionally, other LiDAR companies that may have been awarded nominations for 30 to 50,000 sensors and instead represented they were fleet-wide adoptions in their public comments on order books complicate market communication. But that is out of our control and I expect public markets to take care of that. I believe this is context for our shareholders to understand why providing certainty on timing on any deal is hard to predict from micro vision. With OEM startup production timelines moving out later in this decade and aligning to regulations that will be rolling out while the global product strategies are changing by region and power trains, there are just too many variables that we face as we work with them to secure nominations. But let's not forget that these are the biggest opportunities in automotive technology space. with multiple OEMs and multiple regions with millions of units expected in the future. This is the best alignment to our technology and products. Getting through this complicated set of variables is first. To find our first partnerships remains our primary focus and I believe represents the best way possible to build shareholder value. Based on vast experiences with April 2017 OEM, we know that we must only agree to contract terms to support the long-term health of the company as well as the interest of our shareholders.

Currently, we remain engaged in seven RFQs for our Maven product.

Since Q1 update, we have disengaged on two RFQs. In one RFQ for a passenger vehicle of our Movia S product, the OEM moved the decision point beyond 2024 as they look to realign their model year strategy. This decision has nothing to do with our technology, but rather their product strategy. In another RFQ for our Movia L sensor for a global trucking OEM, we were not able to reach commercial agreement. We were told that our sensor and software proposal was the most mature and top offering. Our manufacturing strategy was the highest level of maturity and went through the qualification reported to us as in the top 10th percentile of their suppliers. Our commercial proposal was also accepted. Their preference was for a partner with a more diversified product and revenue portfolio. Microvision cannot accept an agreement limited to B sample only, since we would have to take on significant financial risk for a full program with only B sample phase agreement. Ultimately, we could not reach a mutually beneficial agreement. As I said earlier, with the wisdom that comes from experience, we know how important it is for us to avoid any partnership that gives outsized benefit to the significantly larger OEM while putting the long-term health of the company in jeopardy. We continue making progress on seven RFQs for our Maven products. Timelines for decision from OEMs continue to shift, given that there are multiple configurations, mounting locations, integration, and model year needs. OEM teams acknowledge that a lot of internal decisions are in flight to reduce configurations, and they remain engaged with us. On our Maven product development front, our ASIC development and B-sample design and pilot plan continue to move forward. We chose to fund these ahead of any nomination since demonstrating mature hardware is a requirement for all OEM. We have not funded any new development for Movia L or Movia S up to this point. Movia L hardware is in production now and is a great demonstration point for OEM to value partnerships from. The outcome of the mobile RFQ that I described was not what we wanted, but this was a great engagement for our company. We remain able and willing to support the OEM. From my perspective, their vision for autonomous trucking is uniquely positioned and I believe is the most viable one I have seen. Ultimately, we understand their needs for the business and we express our needs as a supplier. As a company, we have lived through the lingering challenges resulting from a one-sided contract and we have to make the right long-term choice. We stand ready to support them on future programs. Given this landscape and OEM timeline to decisions shifting for SOP in 2028, we're exploring other opportunities for partnerships and licensing in smaller industrial markets that would allow us to bring in non-diluted capital into the company for the technology assets we have. We will talk more about this as we make progress, but this is what we are also giving attention to. generate revenue from industrial sales and partnerships, and collaborate on potential licensing opportunities for Movia and Mosaic. We are fortunate that we have a wider portfolio of distinct products that address automotive and industrial needs. Given the market environment, I believe we are taking prudent steps to reach a sustainable path. I personally remain profoundly committed to the company and the vision. I would like to now turn the call over to Anupam to talk about our financials. Hanifaz?

Thanks, Amit. The challenges for the auto mobility and ADAS industries continue to persist amidst the current market conditions. Auto OEMs, tier ones, and ADAS companies, and in particular LIDAR companies, continue to experience market pressure. Particularly the auto OEMs in US and Germany that remain our primary customer demographic are experiencing stronger pressure mainly due to two factors. Number one is stiff competition from the Chinese OEMs in terms of both prices and features of SDVs, or software-defined vehicles. These software-defined vehicles are being run on centralized computers with domain controller with 10 to 12 cameras, 1 to 5 lidars, and several radars. while the U.S. and German OEMs are still showcasing vehicles with ADAS features enabled only by cameras and radars. The pressure to produce vehicles with advanced ADAS features continues to increase for U.S. and the German OEMs to stay competitive. The second is the cost focus. OEMs here are also under pressure to realize returns on huge investments made for their transition from ICE or internal combustion engines to EV products. as EV adoption is lagging in the North American markets. Coupled with this, the recent UAW actions in North America are further driving OEMs to be laser-focused on cost to roll out the new models. Recently, one of the major OEMs pushed out their decision on LIDAR beyond 2024 as they internally aligned their Asia strategy. This RFQ was for high-volume passenger cars that we were competing for. We believe that this could be in response to the growing competition from the Chinese OEMs to realign their global strategy and expand the LiDAR RFQ scope in order to compete on a global basis to offer these advanced ADAS features. In addition to this, the high interest rate environment further directly impacts the cost of capital available for both OEMs and Tier 1s to take on new sensor programs like LiDAR to enable advancement towards higher levels of autonomy in their vehicles. As we mentioned last time, quite a few Tier 1s have publicly announced their intentions to shift their focus away from LiDAR. Also in the recent past, we have seen many publicly announced delays and financial losses caused by immature LiDAR products and their expensive industrialization process. This has driven the OEMs to be more careful in selecting the LiDAR suppliers and caused longer selection timelines and more stringent evaluation criteria. Simply put, with only a handful of Tier 1s interested in LiDAR, the business objective for OEMs is to find a high-fidelity LiDAR sensor provider acting as a Tier 1 themselves to enable the L2 plus L3 features for ADAS at the lowest price. Given the publicly announced delays and losses sustained in the LiDAR programs so far, OEMs are taking longer to identify LiDAR suppliers who will be able to fund their own business and sustain on smaller projects, lower volumes, especially in the initial years, and scale accordingly when the volumes ramp up in the second half of this decade. On the supply side of the equation, the objective of the LIDAR players is to navigate these initial low production volume years to measure rate with their cash burn and be well positioned to scale up and become profitable when the volumes ramp up later in the decade. This is primarily the reason why LIDAR companies are under pressure from investors and markets. especially lidar companies that have announced nomination wins or serial production awards from oems all lidar companies that have announced significant serial production awards with sizable commitments are under more pressure because of three reasons number one the ramp of revenue from such perceived wins has been much slower than the pace initially communicated to the market second The volumes, even with the start of production, are nowhere near the publicly announced targets. And number three, higher cash cost to industrialized products and unexpected financial losses to their individual cash burns as they have to front a higher cost for lower volume projects. The markets are penalizing these companies for producing results that are not even the right zip code of the aggressive targets set by them at the onset. Most of these companies are trading at significantly lower values post-announcement of serial wins. The depressed market valuations are clearly indicating that all these LiDAR companies will need several hundreds of millions of dollars of funding given their pursuit of smaller volume projects. We saw this in play in one of the RSUs we were competing with from a global commercial trucking OEM, as Sumit described. As we progress through multiple rounds of evaluation of technological and commercial of our MOVIA-L proposal spanning over six months, they were very impressed with our central proposal and our manufacturing strategy as it had the highest level of maturity. Our commercial proposal was also accepted. However, they preferred a more traditional partner with more diversified revenue portfolio as their volumes were lower. They offered us to do a B-sample development only instead of a full nomination. We could not reach a mutual agreement since Microvision would be required to take on significant financial risks up front for the full program with only the B-sample phase agreement. We would need to commit significant resources for a lower volume project that would have kept us from competing with the other bigger volume passenger car RFQs. If I can summarize all this, there is a huge demand for LIDAR in the second half of this decade, which is being driven by the global competition and marketplace. The current business challenge, however, is low volume and projects and low revenue from the auto in the near term and the ability to sustain these initial years to emerge as one of the few standing LIDAR companies. Now, what does this mean for Microvision and our shareholders? And how do we plan to be successful in navigating this period of low volume? We have to adapt from what the financial markets are indicating to us and do the following three things. Number one, we focus our efforts only on big volume passenger car projects from OEMs. Making the right selection is very important for us. We want to commit resources only for large volume OEM projects as that will be the best use of our capital. In the meanwhile, bring in revenue stream from non-automotive verticals and accelerate their growth. Pursue diversification of revenue streams of non-automotive industrial channels with shorter sales cycles to reduce the dependence on low volumes in the short to medium term. This is very essential as all serial production revenue will be material only with economies of scale, which won't happen until later this decade. Number two, Maintain our long-standing capital life business model with a low cash burn to stay ahead of the curve compared to all other LiDAR players. Our products are mature, and we do not need to invest in the next generation of Maven or Mobia, unlike our competition. Most of our competition that has announced sealer production wins will need significant capital in the next 12 to 18 months, including refinancing of over $600 million of convertible securities. This is a very clear differentiation for Microvision as our capital needs are not as intensive as others. With our 150 million ATM program, we can be very opportunistic in raising capital and in no rush to pressure the stock like other industry players have done. Microvision has always demonstrated prudent management of expenses with a strong balance sheet that is scalable. We believe that our mature product portfolio successfully meets all the RFQ requirements. We would start investing in the next generation products when the auto revenue stream is stronger and the time is right. Number three, bring in non-dilutive cash into the business by pursuing meaningful licensing and partnership opportunities for Movia products and their applications in specialized sub-verticals under the industrial markets including forklifts, warehouse automation, et cetera. This will further help in demonstrating to the markets our financial prudence and intention to build long-term value in this company. Now let's dive into Q1 numbers. For the first quarter, we recorded 1 million in revenue, which is slightly ahead of our expectations. Revenue in Q1 was primarily attributable to the sale of Movia devices to a global commercial trucking OEM as part of their RFQ evaluation process. We also sold out sensors to a leading agricultural equipment company for industrial applications. From a gross margins profile standpoint, on an adjusted basis, after adding back the amortization of the acquired intangibles and adjusting for one-time licensees, the gross margins were approximately 25%. We continue to differentiate ourselves significantly from our peers who have either upside-down negative growth margins or near-zero margins in both industrial and automotive articles. To support momentum in direct sales last fall in 2023, we also placed an order to build a new Movia inventory with ZF Auto Cruise to help satisfy demand from non-automotive customers. We're beginning to see medium- to long-term partnerships with significant multi-year revenue opportunities in the industrial sector, especially in forklifts and warehouse automation applications. Expenses. In terms of expenses, we had approximately 26.4 million of R&D and SG&A in Q1. This is 2.4 million higher than last quarter, because in Q1, we rationalized our workforce and eliminated positions related to the sensor fusion development work primarily in Germany. The higher Cuban expenses are driven by the one-time restructuring charges associated with these actions. These actions were taken in line with our business strategy to focus on revenue generating opportunities in the near term. The expenses also include 3.7 million of non-cash stock-based compensation and 1.8 million of depreciation and amortization. For the first quarter, 20.8 million cash was used in operating activities, which is lined with our communicated expectations. To remind our investors, we continue to show financial discipline with our cash burn being within our expectation and on a healthy trajectory. As expected, Cuban capex was 0.1 million in line with our expectations as well. So let's talk about our balance sheet. As of March 31, the 3 million euro payment was released from the escrow related to the IBO acquisition. This was earmarked as a restricted cash asset on our books. This asset was released in the last quarter. The final payment for the IBO acquisition will be paid out in Q2 roughly in line with the remaining accrued liability on the balance sheet of $3 million as of March 31, 2024. Our liquidity was $201.3 million as of March 31, including $73 million of cash and cash equivalents and investment securities and 128 million availability under the current ATM facility, we believe we have sufficient cash and cash equivalents along with our ATM facility to have an adequate runway. We have one of the cleanest capital structures amongst our peers. Microvision continues to stand out and beat competition in terms of maintaining one of the lowest cash points in the industry with a highly talented pool of engineers in both US and Germany. We sold 10.4 million shares for a net proceeds of 20.6 million under the current ATM in the last quarter. The ability to strategically and opportunistically raise money via ATM's position microvision very favorably as compared to our peers. Some of which would have to resort to structured finance transactions to raise capital at significant discounts. We believe that with our current cash, and our ATM facility, we are well situated to deliver. So let's talk about 2024 outlook. We're expecting at least between $8 to $10 million in the revenue from the following streams. As of December, we have already a backlog of $3.1 million. The revenue is expected to come from the sales of LiDAR sensors to both automotive and non-automotive customers as the volume ramps up Number two, direct channel sales, which includes sale of our hardware to non-automotive customers and software to our customers that include forklifts, warehouse automation robots, agricultural and mining equipment companies. From a cash flow standpoint, we expect the cash flow for 2024 to be similar to 2023 between 65 to 70 million. We believe we have all the necessary engineering resources to deliver on our customer projects. To summarize, we're really excited about 2024 and beyond.

I would now like to open the line for questions.

Thank you. At this time, we are conducting our question and answer session. Investors can submit their questions within the meeting webcast by typing them into the question and answer button on the left side of your screen and hitting Submit. Analysts who publish research may ask questions on the phone line For analysts to ask questions on the phone line, please press the star key followed by the number one. Thank you. Our first question is coming from Andre Shepard with Cantor Fitzgerald. Your line is live.

Hi, everyone. Good afternoon, and thanks for taking our questions. Can you hear me okay?

Yes, Andre, speak in.

Okay, wonderful. Thank you. You know, Sumit, I want to maybe start with OEMs. You know, last quarter you had mentioned, I think you expected to announce an OEM contract win by March 31st. So, I guess, can you help us understand, you know, what happened with this particular contract? Was the contract award lost to a competitor or was the timeline kind of delayed further? Just, I guess, trying to understand what might have happened there. Thank you.

Yeah, I think there's other announcements in public from somebody else, so I'll let people sort of ferret that out. To be honest with you, we were on the call. We were talking about timelines to RFQ completion and nomination, talking about MOUs, talking about all the things that go during the contract right the day after the earnings call. I mean, our confidence was that high. We were that engaged in it. But ultimately, you cannot reach an agreement when, as I mentioned in my prepared remarks, there's a huge asymmetry. And of course, we have this previous experience that if you have a contract that's so asymmetric, all our people will be dedicated to it. We have a great relationship with them. They acknowledge that the volume is not big enough, but they're concerned about that. And we're concerned also that if a nomination like that happens, do we have the talent to actually go after something bigger that would actually right the ship for us? you know, like anything else, right? You're discussing, you're confident, you have to, you know, earnings call happen when they happen, right? You have to give the most realistic, you get the most realistic view to our investors into the market of where we were. And then, you know, our expectations were clearly stated and we just could not reach an initial agreement.

I see. Okay. I appreciate that. That's helpful context. You know, I guess to follow up on that, you know, by now, I think, you know, some of your competitors, have won some OEM contracts out there. You have, I think, Innovis with BMW, Luminar with Polestar, I think IEBA with Dambler, you know, and some of these are producing material revenues for the year. You know, Ouster is on pace for $116 million in revenue this year with 30% gross margin. Innovis on pace for, I think, about $40 million in revenue for the year. So I guess what is the, you know, can you give us maybe a firm timeline as to when you might expect an announcement win from an OEM. Is this something now we can target for Q3, for Q4, or is this maybe a 2025 story?

Thank you. Well, I think you've matched a few things there. So the OEM wins are the first. Alistair does not have any automotive OEM wins, so let's just separate that. Let's be clear, okay? Anything they've announced for BMW, right, I will let them defend it. What was the first and the last order that was received? I think you probably know more than that because you're an analyst there. And on top of that, as the other companies you mentioned, Their burn rate versus revenue. I mean, we would want to be in that position. Yeah. If it was a big enough, but it's clear the ones that anybody signed is between 30 to 50,000. And they had this thing called the order book that actually complicates our conversation with the OEM of what they, we would expect for an announcement. So I think like, it's great to say numbers out there, but it'd be wonderful to see what revenues actually come from BMW. Right. And, you know, we look forward to hearing from that, you know, in the coming months. But when you think about these RFPs that we're talking about right now, they're in it. I'm pretty sure they're in it. And these are substantial volumes that were not offered before. So whatever communication was done in the past is not accurate. But I think the market has to figure that out, you know, to those companies. It's not our place to, you know, clear that up. But as far as I'm concerned, if I knew something, I think our investors know me for a while, I'd be the first one out there, okay? But you can't sign agreements that's going to just, you know, handicap the company. It's clear, you know, from those guys, you need hundreds and more people to have one OEM and then there is no guarantee you're going to get any kind of revenue towards the back end of it. Right? So all of us are in the same mashup here and we're trying to find a way possible, you know, way through it possible. So it's not so simple to say that, you know, it's going to be 20 to $70 million of revenue by the end of the year and blah, blah, blah, blah, blah. And you know, it's NRE only from something that has not launched, but the stuff that are already launched, there's no revenue coming from startup production. So I think we just have to wait and see, but clearly, you know, I don't sleep much because, you know, I would love to have one of those contracts, but a contract that would choke the company out long-term, you got to be careful for given the fact that OEMs are clearly stating they're moving things out. They're clearly stating that. Out of the gate, they tell you, you're going to have to be able to sustain yourself for those years because our project timing could shift. So I think like with all that information, right, we tend to, you know, share, you know, share everything that we have with them and try to, you know, come up with a path that will be sustainable.

Yeah, but I guess that's helpful. The last part of the question is, is there maybe some sort of timeline that you might be able to give us as you might expect a contract win? Is that something in the second half of this year? Is that something next year? Obviously, none of us have a crystal ball, but just, yeah, go ahead.

Well, I'm cautious about this, Andreas, because if I just go by what I'm being told, OEMs are saying that, ah, you know, we expect to make a decision in Q2 and Q3, but I did not say that in my prepared remarks, because again, we're discounting the fact that we've been told those things before and they keep moving it out because they don't move to the timelines that we have to report to the market. That's an anomaly for us. To them, they deal with tier ones that never have to do this, right? The traditional tier ones have huge business. This is just part of like ongoing business. So I'm being cautious here. It's like, you know, when we know something for certain, you know, we're going to go out there, but yeah, of course, you know, the expectations still are, that sometime in 2024, some key decisions will be made. But personally, when I look at it, the expectation is when OEM says, yeah, I'm going to make a decision, yet they have multiple configurations they're looking at in multiple models for multiple brands within their group. And it's clear that they are not all in agreement within the OEM, right? We just have to kind of be cautious that what they're telling us, you know, within even their company, you know, their people tell us that, you know, they're not so certain how they're going to come to those decision points fast enough, right? So I can't give anything, but, yeah, you know, the most current one that we have is that sometime in 2024, they expect to start making these decisions with these big, large volumes. So they'll have four years to start a production. And, you know, we're going to, you know, focus on what information that we're given.

Got it. No, I appreciate that. That's helpful. Maybe one last one for Anubhav. You know, so assuming an OEM contract win is announced maybe this year at some point, Can you just maybe remind us, you know, how do you foresee the revenue recognition from that contract, like, taking place? Like, I guess, like, how would that contract ramp up in terms of revenues and kind of what would be the timeframe for that? Thank you. Right. Thanks, Andres.

The way I think about this is I think the passenger, because I think, Andres, maybe let me sort of go back to your prior question as well, because Clearly, I think the markets are discounting whatever the other competition is saying, which partly comes from, I think, what Sumit described as the complications within the OEM ecosystem, right? Because there's a lot that needs to be done from industrialization of the product and then ramping up the volume. So obviously, any logical OEM contract will have NRE revenues first, and then gradually going into the ramp up of the volumes as the cars come out with the sensors across multiple locations. So the cadence of the revenue would be, again, NRE in the beginning, then coming out with the volumes, the revenue volumes that are expected to hit the markets. And what the RFQ that we have been Um, uh, part of it again, like I said, the OEMs have been burned in the past. So they are making sure that this time that the volumes there's enough time between now and the volume ramp up. So most of the programs that we're talking about are 20, 28.29. Uh, when the major volume really kicks in. And I think that's, that's, that's a very important point to highlight because. You may have trickle revenue here and there, but the cash burn is just not enough to cover that revenue, right? And I think that's the business problem that I stated in my remarks as well, that all of us, not just Microvision, but all LIDAR companies have to navigate this period when the revenues would be disproportionate to the cash burn. And I think we all have to navigate these years successfully because a bunch of LIDAR companies will fall off the map for signing up for the wrong deals, as Sumit mentioned. So long answer, but I'm hoping that puts context of why this is not a very simple answer, and maybe that's why you're also seeing this across LIDAR companies, that most of the LIDAR companies are also stopping short of giving guidance beyond 2025, 2026 onward, which again is a direct result of the business problem that both OEMs as well as us are facing.

Got it. Thanks, Anubhav. That's super detailed and helpful. I appreciate that. Okay, that's it for me. Thank you so much. Congrats on the quarter. I'll pass it on.

Thanks, Andres.

Thank you. Our next question is coming from Kevin Garrigan with Westpac Capital. Your line is live.

Yeah, hey guys, thanks for taking my questions. Just to start out, in the seven RFQs that you mentioned, are there other automotive trucking customers in there, or are all seven RFQs now just passenger vehicle OEMs? All seven are passenger vehicles. Okay, perfect. And then, this is kind of a two-part question, but I think you noted in addition to industrial sensor sales, Mosaic is going to be, you know, pretty important going forward. And then last quarter you had called out sales kind of were slowing there. So are you expecting kind of any revenues here from Mosaic with sensor supply agreements kind of being pushed out? And then, you know, the second part, it seems like others in the automotive industry are either, you know, kind of creating partnerships or developing their own validation software. So can you kind of give us your thoughts on why you believe the Mosaic software would have a competitive advantage against other solutions?

The thing about Mosaic software is if you think about all sensors, you know, when they're going to go into a vehicle, they require validation. In one of the RFQs that we're working on, just to give you an example, you know, this team, the OEM team, you know, had some very specific requirements and very specific KPIs. And, I mean, these were, like, really, really high level. I mean, just a contract like that would be more than $100 million. You know, we just told them that we can validate what you're saying, so it costs $100 million. Just give you an example, right? And then of course they scale it back to like, okay, we, I think we asked for too much. And this is part of what happened to the RFQ. But it's just an example that the costs associated with validating a solution, not just the sensor, a solution are that high for an OEM. So there's, you know, and a lot of it is, you know, driving, collecting data, people, you know, lots of things that go into it. What Mosaic does is of course automates a big portion of that that could be savings. So your first question was, you know, do we expect any revenues from Mosaic through the year? Yeah, the answer to that is yes. But it all depends upon, you know, who is in what cycle of validation. And, you know, any software that we would give them, software that we would give them, they'd have to commit to for several years. But, of course, we do, you know, smaller deals now where we, you know, give them access for, you know, certain portions of their validation rather than the whole suite. So, again, our team keeps working with the customers, what their needs are. You know, some of them, you know, recently about a month ago, I was in a meeting and we talked about it and, you know, they said, yeah, this, this is great. This is, you know, I wish I had known about this, but, you know, right now I have a process where we send it over to Southeast Asia and it's manually done. Nobody likes it, but it's cheap and it's kind of there, but, you know, we want to keep an eye on this thing. But again, those are slow developing relationships that, you know, at an OEM, by the way, that does not does the validation all by themselves, that they would make the choice and they would get, uh you know the partners that are supporting their validation to accept this right so i think that's how we have to think about uh you know how mosaic will be but validation is required for a system level it is not just a lidar thing it is done for radar it's done for a camera module it's done across the board on the sensor suite that goes into for adas yep got it got it okay i appreciate that color um

And then just last question, you know, we've heard from a few other LIDAR companies kind of speaking about the recent NHTSA ruling for automatic emergency braking systems. I'd love to, you know, hear you guys' thoughts on it and what you guys think it means for LIDAR.

Yeah, my personal view is automatic emergency braking has been, you know, in Europe quite a lot. Now it's starting to become regulation across the board. More and more cars will have it. some limited level of features that have been shown with camera modules and radar. And of course, think about mass adoption. You want a feature that is across the board, safe, reliable, long-term. LiDAR can play a part in it. There are tier ones and one OEM that will say, hey, we don't need LiDAR for that. We're going to do it with other technology. But all the other OEMs are clearly saying that's part of what they want to get done, right? That that has to be part of it. You know, most of LIDAR that you talk about, I mean, that's the key of the LIDAR, right? That if you had a LIDAR sensor within your car, 360 and a long-range LIDAR, all these features are kind of just part of it. You don't have to have another subsystem that provides that level of safety. You know, while you're doing active, maneuvering active safety, these features would be also part of the suite that the OEMs would just develop on this sensor stack. So as, you know, more adoption happens, right, there's more opportunity because now, The product does more than just, you know, highway, high-speed highway piloting. It has got actual safety features required by regulation that will be part of it. So it makes it more of an intimate product that's needed to meet the long-term requirements for the product capability for NCAP. So it's good news for LiDAR because it's something that it's natural to it. It's going to be very, very good at it. And as economies of scale start coming in more and more, as you can imagine, like, you know, the big volumes we talk about now, you know, are in the millions of units. And surprisingly, it's the same 2028, 2029 timeline, right about the time. So yeah, more OEMs are getting active of what are all the features that LiDAR can actually incorporate in there. And to be clear, we make the LiDAR, we do perception software in there that aids it. They develop the automatic emergency braking and those kinds of safety features, plus, you know, the high-speed highway driving features, right? So we support them, but LiDAR naturally can support them much easier than other technologies. But other technologies have been around. If they operate at lower speed and OEMs want higher speed, they're going to value those other technologies as well in LiDAR. But I very strongly believe that if you've ever really worked with a LiDAR data stream, if you've been around engineers that work with LiDAR, it is so much easier to do it with a LiDAR data stream.

Okay, got it, got it. That makes sense. Okay, perfect. Thanks, guys. Thanks, Kevin.

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

Thank you. The first question is, why has there been a lack of any communication from the company since February 29th? And are there expectations of further delays in the RFQ decision-making timeline? And how is Microvision adapting to these changes? Do you expect to add to the RFQ pipeline?

Well, I'll answer the last one first. Yes, we do expect to add to the RFQ pipeline. We already have, you know, a couple of line of sites to RFQs for both Movia and Maven that we're starting to engage. Our teams are going to be flying globally to go support the OEM in the early stages as they start developing their plans. As far as what's the delay since February 29th, we had our earnings call, and as I mentioned early on when Andreas asked the question, we were engaged very actively working with them. You really have to stay silent until you know what's going on. You can imagine if you go back and read the transcript, where they are, the things that they're offering, it was a very, very confusing time, so you really wanted to make sure that you got to a point where you can get some sort of agreement or really understand what is on the table and then communicate. And as it got closer to the earnings call, you know, here we are, you know, to announce, to let you know exactly what that one RFQ is. The other one is actually was, you know, for the Movia S, I think that was, to be honest with you, it was, you know, OEM was pretty clear about it, that it's their product strategy for different regions. And that one, you know, really perhaps was, It could come up live, it could change because their own strategy is changing within, right? It's not clear. You know, they just wanted to give us like, hey, don't call me every week and ask me what this is going to be, but just give us some time to go figure that out, right? So I think it made the most sense to, you know, get on the earnings call and talk about it with the color because you can't really do this much with color in a short press release or a small comment.

Thanks, Ahmed. The next question is, last year at the Retail Investor Day, Microvision reiterated that the company is very far ahead of the competition and it would take years for them to catch up. Does this statement still hold true? And if it does, the OEMs are still keeping their bar standard high or are they lowering it to accommodate more choice in suppliers?

Yeah, it is 100% true. And I'll give you an example. These seven RFPs we're talking about, you know, that Maven is part of, we have to dumb down Maven to be in the middle of it. I mean, it's, you know, there's things that we have to do, but we can certainly do it, right? I mean, there's nothing new development. It's just, you know, new calibration, new firmware, you know, the new development for us is part of our ASIC, so it's not that big of a deal. But as you can imagine, right, as I always said, right, it is best in class so far ahead. When you get into these RFQs, you know, nothing has been thrown at us that requires us to meet it. If anything else, we're brought towards the mean. You know, we're not a you know, one end of the bell curve anymore, right? We're kind of brought towards the median, towards everybody else, saying, how would you do this? What's your cost structure? What's your size? What's your performance, right? So, yeah, you have to compete in that range because, you know, they want to make sure that, you know, the advantage of solutions are, of course, size and power, things like that. But the base specifications of, you know, range and resolution, they want to make sure that you meet and exceed it. Whereas, you know, all the requirements that we have, you know, we don't really look for exceptions. Whereas I believe, you know, what I believe is like others have to have some exceptions into some of the things that they're asking for. Um, you know, in case that there was an actual incumbent and with that, you know, that specs that we have to meet. So it's clear to us, like, you know, the, the gap that our competition has sometimes, because the spec that we see that was created for the incumbent, right. You know, when we clear that we can do that and this was your original department, we can meet that as well. So again, you have to be humble. You work with them. They are the customer. You have to, you know, whatever their strategy is, you know, if they develop a very specific software, you know, like for example, the dynamic, dynamic lighter offer something, a huge advantage, a very, very huge advantage, but it would take a period of time for people to actually, you know, realize that advantage because they would have to work on software slightly differently. But if they want us to do a static, one single static field of view, because that's how their software has been written so far and they don't want to rewrite a couple of years with the software, we can do that. We can give them the best that is ever going to be, but if they need something else that actually eases their path for integration, of course we support that. So yeah, what was said about Maven, right? I mean, that's going to stand the test of time. It's going to be a long, long, long time before we have to redesign it. You know, I think there's a question I recently got from somebody that I met about, you know, a monostatic ladder I may have mentioned long time ago. You know, are you guys developing that? And in this OEM meeting, I clearly said, What I have far exceeds what you need. I can meet your cost structures. I can meet your power structures. There's no need for that, right? So it's a futuristic product that, you know, if there was volume, then we would invest in it. But right now, we need size, performance, exceed everything that you have. So therefore, at this moment for Maven, you know, we want to finish our B sample. We want to get the industrialization done. We have the automation that's going to be placed in. We can get some samples for you, get the reliability tests started. And that's the basis from which we're going to do. We're not going to enter a new redesign for that because there's no need for it at the moment, right? And I didn't get much pushback. So, you know, I still believe the statement that's made is totally valid. I have no reservations in saying that.

Thanks, Amit. So over a year later, since Investor Day, how does Microvision feel about its market position, given both Innoviz and Luminar have publicized new, slimmer units to fit behind the windshield? So let me give the market perspective, and maybe you can handle a technical perspective. I think what the markets, the way markets are reacting to these announcements are, I think it's evident in the stock price, right? And I think this was also in response to the question Cantor raised before, that I don't think the markets is giving any credit to anything that's being said for publicity, because at the end of the day, the numbers are speaking for themselves, right? As I described, the market cap of these LIDAR companies which have announced billion-dollar awards, they are trading lower than the market value before the awards. What that means is the market is discounting these awards and is predicting that this is destruction in value since the time they signed up for the awards. And if I can simply, you know, that's a lot of complicated financial jargon, but if I can simply break it down, you know, how the game is going to be played is about how do you navigate these years when your revenue and your costs are mismatched? So at this point, I don't think any LIDAR company can afford to spend on new developments because they have to perfect what they've got. Recently, we saw in the Cuban announcement that, you know, companies are spending more on the industrialization by depending on third parties rather than doing it in-house. So in my mind, this model becomes unsustainable, and that's sort of why it's reflective in the valuation of these companies. However, I think the question, I keep going back to the point that, yes, even while that's happening with the other players, what we have got to do is make sure, sign up for good deals, and making sure our survivability or we make sure our runway, our cost structure is palatable, which can support the scaling of the business. Because when these millions of volumes of units arrive, you want to be there to catch them all. Because you have seen a few LIDAR companies fall off the map, and this will continue to happen. You just got to be there when this happens, because as Sumit described, our product, in my mind, is still beats and meets the expectations of all the RFQs that we are in. Yeah.

And I think, uh, you know, as compared to the other side and stuff, I think, you know, everybody wants me to comment on that. Like, first of all, I would like to say, this is our earnings call for Microvision, right? I would rather talk about us. You know, I would love to come out here and talk about a partnership that has formed and what that all means. Right. I think, you know, I would welcome that day. Um, the problem we have right now is not technology. It's a business problem we're working on. Uh, as far as, so like, let me separate that and I'll get back to the business problem in a second. If you look at our technology, hands down, where it's going to win is when I walk into a room like that, I talk about a wafer that our men's comes from a wafer. And, you know, we have, you know, lasers coming from this. And these are all semiconductor technologies for Movia and Maven. Those guys are still coming in with a box, which has got a glass prism rotating and a little galvo moving. You know, what is the steering technology? So everybody talks about it, right? But can everybody talk what's under the hood? You know, some of them are still, you know, doing CAD and Photoshop. and they're talking about samples. Others have actually started with the MEMS and it was too hard, so they went away and now they're in the Galvo space in their next generation. So what you don't know is who's going to win long-term. So you have people that made announcements, they have market support, they have analyst support, like whatever they have. At the end of the day, you have to have the product to win. And the product, the simplest product, should win in the market. But the hard thing is those companies who are de-SPAC were able to raise a significant amount of money, right? We still go trickle by trickle year by year because we are an older company and we have different constraints. And to be honest with you, I'm sure you guys are sick of hearing about it. And I'm pretty sick of talking about it. I don't want to talk about anybody else. I really want to talk about what we're working on. Right. And this is a business problem now that, you know, when you deal with the audience, you know, you had lots of people in the company, lots of money to be sitting around in a bank. Then you could probably go strike a deal and then you can like, you know, plaster it up and talk about it anyway to the market. because you can't really talk about what's underneath it and you make it complicated for others. But I focus myself and my energies and the company's energies to focus on the real problem to solve, to get a real customer that is actually going to turn things around for us long-term. Right. And I'm absolutely certain of it. The technology and the work that's been done for our team in Hamburg and the team here in Redmond is going to stand the test of time. And at the end of the day, when you think about who wins, it's going to be somebody that's talking about a way for level stuff. It's not talking about like Galvo or it's as open as I am. I've talked about the technology, right? Now, all I have to do is get an OEM to agree to these things and move on with that, and that's what I want to focus on.

Thanks, Ahmed.

Can you provide more detail on cash runway, and does the company envision it will have to issue shares in 2024? Let me take that question. So let's talk some numbers here. Our cash balance at the end of March 31st is $73 million. we have 128 million available under the ATM. While I cannot share our exact plans, but I think our history indicates that we would only opportunistically raise capital when needed, because I think it's very evident that to navigate this, you have to be prudent financially. And to bring in cash, as Sumit described, we would be accelerating our industrial revenue stream from our Movia product because that's something which is short-term, which brings in cash faster than the automotive revenue. And also some of the licensing and partnership opportunities in the sub-verticals within the industrial market. So some of these opportunities is what we are going to help to resort to to monetize this asset and bring in non-dilutive cash to further support the cash flow and the sustainability of the company. And I think it is the most critical ingredient at this point. How do you survive these couple of years to emerge as one of the few last standing businesses in the LiDAR industry? Because as I mentioned earlier, the demand is huge, which is waiting at the end of this decade. And we just want to make sure that we are one of the few handful of players that will make it to the finish line. I think with that, we're coming up to our time here. Again, thanks all our investors for your support. And I think your support is truly reflective in how the market perceives our strategy and our execution. And we continue to work towards the objective that Sumit outlined, And we look forward to hearing, you know, towards our Q2 call in August for the next quarter.

Thank you so much. Thank you.

Thank you, ladies and gentlemen. This does conclude today's event. You may disconnect at this time and have a wonderful day. We thank you for your participation.