MicroVision, Inc.

Good afternoon and welcome to the Microvision fourth quarter and full year 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 QA button on the left side of their viewing screen. Analysts who publish research may ask questions on the phone line. For analysts to ask a question on the phone line, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. Please note, this event is being recorded. I will now turn the conference over to Drew Markham. Please go ahead.

Thank you, John. Good afternoon. I am here today with our Chief Executive Officer, Sumit Sharma, and our Chief Financial Officer, Anubhav Verma. And also, I'm very happy to welcome to the call our incoming Chief Technology Officer, Glenn DeVos. Following their prepared remarks, we will open the call to questions. Please note that some of the information you'll hear in today's discussion will include forward-looking statements, including, but not limited to, statements regarding our business, product, and go-to-market strategies, customer and partner engagements, cash, liquidity, and the impacts of our recent financing activities, market landscape, opportunities, and program volumes and timing, development and performance of our products and solutions, product sales and future demand, projections of future operations, cash flow, and financial results, availability of funds, as well as statements containing words like believe, expect, plan, and other similar expressions. These statements are not guarantees of future performance. Actual results could differ materially from the future results implied or expressed in the forward-looking statements. We encourage you to review our SEC filings, including our most recently filed annual report on Form 10-K and quarterly reports on Form 10-Q. These filings describe risk factors that could cause our actual results to differ materially from those implied or expressed in our forward-looking statements. All forward-looking statements are made as of the date of this call and, except as required by law, we undertake no obligation to update this information. In addition, we will present certain financial measures on this call that will be considered non-GAAP under the SEC's Regulation G. For reconciliations of each non-GAAP financial measure to the most directly comparable GAAP financial measure, as well as for all the financial data presented on this call, please refer to the information included in our press release and in our Form 10K, sorry, Form 8K, dated and submitted to the SEC today, both of which can be found on our corporate website at ir.microvision.com under the SEC Filings tab. This conference call will also 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 fourth quarter 2024 results. I would like to start by providing an update on our customer engagements for automotive and industrial opportunities we've been working on through 2024. Additionally, I will give an outlook on new engagements in 2025 for potential automotive, industrial and military opportunities. Still a very exciting time for our technology. First, I would like to begin with our engagements with automotive RFQs and industrial opportunities. There are four areas that our technology engagement has focused on through 2024. We focus on automotive OEM programs with seven RFQs and a few custom development proposals. In the industrial space, we focused on three areas, automated guided vehicles, AGVs, and autonomous mobile robots, AMRs. These platforms typically operate in a geofence environment, require low power perception software, integrated solutions, embedded localization, among other features. And number two, collaborative robots. These robots share the environment with humans and operate in a semi-structured environment with humans in charge, and again, require integrated perception software on the sensor. Number three, mobile autonomous vehicles. These include commercial vehicles for industrial and military applications with multimodal sensor suites. We remain engaged in seven RFQs for automotive programs and make incremental progress. Automotive OEMs are still adjusting to their new timelines for product launch. It is abundantly evident that LiDAR is an integral part of the sensor suite required to deliver a reliable ADAS experience. What all of us are adjusting to is their updated timelines to launch decisions for their platforms. We continue to explore opportunities for customized development with our OEM engagements. With Ripple's unexpected future trading conditions for OEMs and their product timelines, we have remained actively close to them in their process. Their plans for future models of EV and ADAS are taking a parallel priority to their near-term goals of fielding models with traditional powertrains that launch faster and in affordable price points. In the AGV and AMR space, we made progress on multiple engagements through 2024 with Amovia L with integrated perception and application software. This gave us the confidence to enter into an agreement with our partner, ZF, to increase our production capacity. Basically, we are offering a sub-8-watt sensor, which has our perception and application software onboard the sensor and talks directly to the customer's controllers. This is an advanced solution which is frictionless to our customers to integrate.

We continue to make great progress in this space and expect these engagements will lead to commercial wins for us.

There are more than 20 well-established companies for this segment that already have their products implemented and are actively looking to upgrade their platforms with LiDAR implemented in industrial ADAS software. The TAM for this segment is lower than automotive, but we have much faster line of sight to significant revenues for multi-year programs from hardware and software solutions. I am very excited about our multiple engagements in this segment. In 2024, we deliver software integrated solutions to multiple potential collaborative robot partners as well. These evaluations are in flight. This is a slower moving segment for evaluation and large commercial agreements. With the current potential ripples international trade, we expect large scale decisions to be more fluid in 2025. We continue supporting and developing strong partnerships. In this segment, we again expect to have lower TAMs but higher margins. This is a segment we watched through 2025 to add layers of recurring revenues. Another segment we started engagement in 2024 was mobile autonomous robots in military and commercial vehicles with our LiDAR products. The larger opportunities in this segment is for long-term partnerships where we could enable our potential customers with our mature perception software and advance their multimodal platform development. This is an important area for partnerships we expect to develop. This allows us to showcase the breadth of our technology in enabling autonomous driving and ADAS outside the traditional automotive OEMs. These partnerships will certainly come with revenue, and the broader play is to show that we are already a company with parts that are more valuable than what I see reflected in our market capitalization.

This year, we have already started working on expanding our partnership opportunities.

The world is changing. A new era of opportunity for our advanced technology is military applications has appeared. With expansion expected in defense spending under the current administration and lots of realignment happening with this sector, our mature technologies and augmented reality display systems as well as perceptive LiDAR solutions will be promoted for defense programs. I would say that it is early times and we are actively working on pursuing all opportunities. As investors will recall, for over 30 years, Microvision has delivered technology for various military programs. The company was founded for this segment. We have participated in programs for U.S. Army virtual co-pilot program for high resolution, full color helmet monitor display, two U.S. Military General Dynamics Mounted Warrior Program with helmet-mounted display for armored vehicle use. Number three, U.S. Army Aviation and Missile Command Program for Boeing for binocular helmet-mounted display for Comanche helicopter. Four, U.S. Air Force full-color head-mounted display for Air Force eyewear. Five, U.S. Military Battle Command Battle Lab for head-mounted display. And most recently, we were part of the HoloLens product developed for the military. We are very strong in this area and expect to bring a military advisor that will help us partner with larger companies in space for a partnership. I expect to talk about this more as these opportunities continue to develop. I'm going to keep my prepared remarks brief today as we received a large list of questions from our shareholders, and I would like to address that as the main narrative. I would like to now turn the call to Glenn DeVos, our new CTO. I'm excited that Glenn has joined Microvision to advance our product solutions and help us grow to provide more advanced software and hardware integrated solutions for automotive and industrial market segments. Glenn and I have had a chance to get to know each other over the past six months, and it has been great to mutually share the excitement for Microvision.

Glenn? Thank you, Sumit.

I appreciate the introduction. I'd like to start by saying how excited I am to be with you today. and to be joining the Microvision leadership team as their CTO. Over the course of my career at GE, Delphi, and then Aptiv, I've had the opportunity to both lead significant global technology development, as well as to manage high-growth automotive business units. As Aptiv's CTO, I led the development of smart vehicle architecture and our advanced autonomous mobility technology, which incorporated radar, vision, and LIDAR as part of our advanced perception system which powered the 2015 launch of the Las Vegas robo-taxi fleet during CES that year, as well as our cross-country autonomous drive that occurred in April of 2015. As president of the Advanced Safety and User Experience business unit, I managed the introduction of global large-scale ADAS programs for our leading OEM customers, resulting in the accelerated growth of that business unit into a multi-billion dollar business with annual bookings, in excess of five billion. I understand what it takes to identify, industrialize, and then successfully commercialize these disruptive technologies. And this is exactly why I'm joining the Microvision team. Building on Microvision's proven technology portfolio, I believe that we are perfectly positioned to not only successfully commercialize our current LiDAR products within the automotive market, but also able to extend and deliver the complete perception system as well as a rich set of features suitable for the industrial, defense, and commercial vehicle markets. Now, to successfully capitalize on these opportunities, we have an important year ahead where we will be showcasing the complete Microvision Industrial Autonomous and Advanced Driver Safety Platform, which will utilize multimodal perception with a scalable software-defined set of advanced features. Now, while these adjacent markets represent important near-term opportunities, We remain committed to the autonomous ADAS and the autonomous applications within the automotive space. MicroVision's technology will be a key enabler to unlocking additional L2 Plus and L3 features for our OEM customers. Maven, Muvia S, and Mosaic are the right products at the right time for the automotive market. As I mentioned earlier, I couldn't be more excited about joining the MicroVision team and being part of this journey. Thank you, and I'll now turn it over to Anubhav to talk about our financials. Anubhav?

Thanks, Glenn. We took many transformational steps in 2024 to adapt to the dynamic nature of the industry, including the macroeconomic conditions and geopolitical factors. The three notable achievements of the company are, number one, expanded near-term revenue opportunities in the industrial and defense sectors as timelines continue to evolve in the automotive industry. Fierce automotive OEM competition from China, both in terms of price and features, continue to drive U.S. and European automotive OEMs to quickly find a way to progress their ADAS and EV initiatives. While this means revenues at scale from this industry are delayed, the certainty of LiDAR adoption, especially given its success in China, has never been higher. To adapt to the changing landscape, we successfully positioned the company to focus on near-term revenue from industrial verticals with a focus on AMR, AGV in the warehouse and factory automation space, and also co-bots or collaborative robots. The revenue potential is immediate and significant given the need to reduce the cost in this industry. In addition, we're now actively pursuing opportunities in the defense vertical, especially given the focus of the Trump administration to prioritize defense spending on cutting-edge technologies by leveraging our existing technologies and products in the AR and the VR space. Number two, disciplined cost management and added a world-class leadership team. We adjusted the workforce last year to focus on resources on near-term revenue opportunities. While the entire market executed several rounds of restructuring to conserve cash, our cash burn continues to be one of the lowest in the marketplace. Also in line with our focus on operational excellence, we are thrilled that Glenn has joined us. His experience, energy, and perspective will help usher in transformational advancements in our solutions and go-to-market as we prioritize the expansion of our end markets, including industrial and defense. Number three, strengthened our balance sheet with two rounds of investments from a strategic financial partner. With the raised capital and a further streamlined cash burn, we extended our cash runway into 2026. With near-term revenue opportunities and our expansion in the industrial and defense sectors, we believe we have improved our timelines to achieve cash flow break-even. This is the first time in the history of the company that one single investor has committed to invest an aggregate of over $90 million of capital. This $90 million includes a $75 million convertible facility entered into in October 2024, and then a subsequent $17 million common equity transaction executed in February 2025. We believe these back-to-back financing transactions signal a strong boat of confidence. This has also been reflected in the microvision trading volumes that are significantly higher, three, four times of the historical levels, driven by both institutional and retail. If I can summarize this, Securing an institutional financial partner to make an over $90 million commitment signals a strong vote of confidence in Microvision's future. Last fall, we ran a competitive process to select institutions for a capital raise and received term sheets from multiple quality institutional investors that reinforced the market perception of Microvision's technology. As a result of this, we have achieved a strong market cap bypassing several of our peers. We remain one of the highest valued U.S.-based LiDAR companies with high average daily trading volume with elevated levels of institutional trading. These are all reflective of Microvision's market position and strong staying power with low cash burn and high revenue potential from automotive, industrial and defense sectors. Now let's review our Q4 financial performance. For the fourth quarter revenue, we reported $1.7 million. After backing out the one-time Microsoft revenue in Q4 last year, the revenue grew from half a million dollars to $1.7 million year over year, primarily driven by customers in the industrial vertical. While We did see momentum in industrial verticals. The Q4 revenue came short of our expectations as one customer delayed its decision to 2025, though we remained significantly engaged. On the expenses side, our fourth quarter 2024 expenses were in line with our expectations. For Q4, we had $14.7 million of R&D and SG&A expenses. These include $2 million of non-cash charges related to stock-based compensation expense and $1.7 million in non-cash charges related to DNA. Backing out these non-cash charges, our R&D and SG&A expenses were only $11 million in the quarter. In line with our expectations, our expenses have trended down sequentially since the first quarter of 2024, primarily due to the reductions in force we implemented to focus the company on Maven and Movia products and away from Mosaic and SensorFusion in response to the automotive projects being pushed to the right. We believe our workforce and expenses are well positioned to execute on the current business strategy. The current engineering talent pool is sufficient to remain engaged with the automotive OEMs and simultaneously scaled faster with industrial and defense revenue opportunities in near term. We believe that the go-forward annual run rate of our R&D and SG&A expenses will be $48 to $50 million for 2025. Q4 CapEx was $0.1 million in line with our expectations. So let's talk about our balance sheet. We finished the year with $75 million in cash and cash equivalents. We're pleased with how our relationship with Hytrail has developed over the last six months. In February this year, we raised another round of equity investment from them. Subsequent to these financings, the company now has access to a total of $235 million as of December 31, 2024, with the following four components. Number one, the cash-in-cash equivalence of $75 million. Number two, $114 million availability under our current ATM facility. Number three, $30 million of undrawn capital under the convertible note facility. And lastly, the $70 million of new equity capital from Hytrail. In addition to the equity capital raised in February, Hytrail also converted over 20% of their note into common stock. In addition, the June through August redemption payments on those notes were deferred. We're pleased to have found a strategic partner whose confidence in Microvision's future has motivated an alignment of economic interests in step with our management team, employees, and other shareholders. This makes the overall cost of capital for the convertible quite attractive. We believe that the benefits to the company spurred by the investment significantly outweigh the cost. We sold about $9 million worth of common stock under the current ATM in the fourth quarter. We have $114 million available. On the convertible note, we have approximately $33 million outstanding that converts at a fixed price of $1.59. The 30 million second tranche remains undrawn and available for future drawdowns subject to certain limitations. Now let's talk about 2025 targets. We have already secured production commitments from our manufacturing partner at ZF to fulfill the anticipated demand from the customer projects we remain deeply engaged in. We expect this demand to be in the $30 to $50 million range, just from this vertical only over the next 12 to 18 months. As we expand our TAM into defense and other related areas and work together with Glenn to expand our solutions and accelerate our go-to-market strategy, we will provide more color on financial and business milestones for 2025 and 2026 in the upcoming events. To summarize, we're really excited about 2025 and beyond as Microvision drives forward with A, significantly higher camps, including defense and industrial. B, expansive and broadening solution advancements. C, a solid balance sheet with superior trading metrics. And lastly, a well-experienced team to execute the strategy. With that, John, I would now like to open the line for questions.

Thank you. At this time, we will be conducting a question and answer session. Investors can submit their questions within the meeting webcast by typing them into the QA button on the left side of their viewing screen. Analysts who publish research may ask questions on the phone line. For analysts to ask questions on the phone line, please press star 1 on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question is from Casey Ryan of West Park Capital.

Good afternoon, everybody. Thank you for the exciting update. I was curious if we could start with the discussion of the $1.7 million in revenue in the quarter. How much of that would we characterize as sort of commercial shipments versus, say, NREs or some sort of R&D work done in conjunction with partners?

Hi, Casey. Thank you for your question. This is Anubhav here. The $1.7 million in the fourth quarter was primarily the revenue derived from the sale of sensors to our customers. There is very minimal NRE in this. The NRE that we were expecting to get in Q4, we expect that to be pushed out in 2025 because of the customer decision.

Okay, terrific. would you describe the 1.7 whatever portion was sort of commercial? Was that sort of to a single customer or maybe potentially to multiple customers? Because that would be exciting if it were.

Correct. So it was to multiple customers, not just one, because I think here I would like to differentiate, however, the number of customers that comprise this 1.7 million is less than 10 because our strategy has always been to pursue high volume industrial customers because that significantly drives the higher ROI because we can get those revenue without inflating our SG&A expenses. And that has been the motto of the company to go after industrial customers with significantly higher volume estimates to either retrofit their existing robots or for new robots that are going to be deployed in the future.

Okay, terrific. That's helpful color, I think. It feels new, the mention of defense opportunities for the company, which I agree is exciting. I have two questions around that, I guess. Is it fair for us to think that those opportunities are related to, say, ground-based or movable objects, or are they also aerial objects? I guess I'm trying to understand maybe how big the opportunity is if it's sort of, you know, multi-theater essentially.

What, let me take that one. I think the focus is, if you think about our core products, the core product we've been working on five years since I've been CEO is the LiDAR product with the perception and expanding that into platforms in automotive. And certainly, you know, with the team here in Hamburg combined, you know, we have something we can offer to people developing vehicles that are non-automotive. And it happens to be that in the military space, there are multiple programs on this. So we engaged on that last year. So primarily, that's the product we're working on. But of course, the pedigree of the company, 25 years plus before that, is, of course, display systems. And given the current environment, as opportunities arise, we want to make sure that all the assets of the companies are made available for potential revenue. So nothing missile-related, right? It's just ground-based and, of course,

directly related to our soldiers okay um so not to harp too much on it but it's it is exciting are you sort of aligned with a a sort of partner as you you know you know sort of work to sort of penetrate via defense space or are you able to go directly because of your past history and past relationships we've actually never gone direct i think if you think about the size of the company we are we

build one part of the subsystem of something larger so we tend to work uh you know with partners that can be part of the bigger program as i mentioned on earlier right you know we intend to bring on some uh military advisors uh to help us uh through the process okay all right terrific and then um circling back last question is sort of

you know, less than 10, but more than one sort of commercial customers in 4Q is pretty exciting. For all those opportunities, are you finding that you're competing against a lot of the names that we would think about? Or are you finding that it's really maybe what Microvision is being sought out for its unique capabilities? Or what's the competitive nature of these sort of wins, essentially, in terms of building relationships with these customers?

And the customers are, you know, all the customers know who the parties are. I'm not going to comment, like, you know, who's in the mix. That's not appropriate for also their confidential information. But one thing that, you know, that's just my general view of talking to other people with, you know, with the potential of some trade barriers that may come up in the future, working with, you know, Chinese-based ladder companies, you know, It has ups and downs. They navigate. Most recently, somebody said that, yeah, having a company that is, you know, here at home, you know, definitely gives us a warm and a fuzzy, right? So that restricts, that limits, not restricts, but, you know, that narrows down the number of companies you compete against. But to them, you make a LIDAR, somebody else makes a different LIDAR, you have software, somebody has software. How well can you integrate? You know, how well does your application, how well does the application software solve our problems? You know, real time, low power. they want choices right they don't want to lock themselves in because like some of the decisions that people make are seven years you know programmed lifetimes they may be a smaller volume compared to automotive but they're pretty big decisions so typically there is more than one company involved and they try to just like every situation we walk into in the automotive to try to understand the uniqueness but also what's really something that can count on on your technology so In our case, you know, offering 25,000 hours worth of life, low power, software integrated onboard, not requiring, you know, ECUs. Those are the kind of value proposition and, you know, unique selling points that we promote. So we remain competitive. And others will have a different unique point. But there are lighter companies with software, but a narrower subset of companies competing.

Terrific. Thank you for all that color. And I think... You're painting a very positive outlook for 2025. So, thank you. I'll drop off the line now.

Our next question is from Jesse Sobelson of D Borough Capital. Please proceed.

Hey, everyone. Thanks for the update here. Thanks for taking our questions. The first I was just wondering on is this ZAP contract. You know, you mentioned 30 to 50 million over 12 to 18 months. Could you provide a little bit more clarity on exactly what the deal is, potentially what kind of product you expect to deliver, and if this is an ongoing and consistent delivery contract or some type of lump sum agreement? Yes. Go ahead.

No, no, go ahead. Okay. Okay. Jesse, I just wanted to clarify a few things. So this $30 to $50 million is what we expect as the demand from our customers in the next 12 to 18 months. So to fulfill that demand, we have already secured production commitments from ZF, who is our manufacturing partner, to ensure that we have an uninterrupted supply to our customers. Because I think as Sumit described, One of the important reasons for some of these commercial discussions with industrial customers that we're engaged in, it's a priority for them to make sure a company like ours can deliver solution at scale and unpredictable volume and predictable schedules. And hence, that's why for the certainty of fulfilling that demand, we ensured that we have a locked-in production commitment from ZF so that when the demand comes and arrives, we're able to fulfill that sufficiently well.

Great. Thanks for the explanation there, and sorry for the mistake, but I appreciate the clarification. It's good to hear that you've been able to secure this type of production capacity for potential demand. Looking to one piece of the puzzle here that's been consistent with the business of the automotive RFQs. You know, you mentioned some continued engagement with several OEMs, and there have been delays. It is just across the board, but could you just give us an idea on maybe some potential update on realistic timelines for these RFQs converting into revenue-generating contracts could potentially be?

So, Matt, do you want to talk about that?

Yeah, you broke up there for a second. Could you just repeat that for a second, please? You broke up for me.

On RFQs, I'm just curious for in the automotive segment of the business, you know, the industry's experienced delays, but I was just curious for some potential update on when we could expect that business to be generated.

Yeah, I think in general, you know, the RFQs, the timeline for their startup production is moving out. So the technical evaluation goes on. And to be honest, right, even on the OEM side, there's a churn. You know, as you can, you know, we all read the news. They have churn. Their tier ones have churn. But the programs by themselves, right, are seeing some, you know, elongation in their timelines. So as RFQs go in, you know, technically lots is known. New items come out always, like, you know, how about this, how about that. But the decision is not clear when it's going to get made, right? They're not driving towards a decision as fast as they were in previous years. And that's at least our experience, right? And I know, like, you know, we feel that a lot of questions from our investors, you know, you're best in class. How is it that, you know, you're not winning? Part of it is, you know, there's a process that you're part of and you have to go through it to get to the commercial side of it, right? So technical reviews go in, you know, you want to get to the green part, technically green, but then you have the commercial side of it. It would be very hard for me or anybody else to predict when those timelines are and if those programs are actually going to go to fruition. One could get an award. But that does not mean it goes to SOP. So lots of variables, right? So, you know, I guess like everybody wants to win, do the press release, stock goes up, and it's great. But nobody can actually talk about, you know, is that actually going to go into production or not and where that program is. And I would argue that, you know, a lot of our competition has announced wins, but it's really hard for them to say, you know, where they will be in the long term, you know, that those programs are going to actually be maintained. So, we're in a different stage, you know, we made a bigger bet, which is to reduce everything in size and go for passenger vehicles early on. We started incorporating the perception software by bringing on the team here in Hamburg and, you know, bigger contracts would take longer in my opinion.

Sure, understood.

It's a developing process with these guys, and I think it's just across the industry. I guess, you know, lastly, I'm just kind of curious. There's been some discussion here. Sure, go on.

If I can interrupt, right? We have a new CTO who comes from this space. He's probably got far more experience than I do. So perhaps, Glenn, you can give a little color of what you're, you know, we talk about this a lot. So I think we should be candid about what we think, right?

Yeah. Yeah, I mean, it's a good question. And I think what you're seeing now is a period where there's a lot of reformulation within the OEM community about exactly what their, you know, what their higher content ADAS and, you know, level two plus and level three systems are going to be. I think we've seen a couple of consistencies in that, in that LIDAR is clearly a part of that. So, as you talk about level two plus plus to level three, you know, LIDAR is part of the perception system. which is great for us. But it's very clear, you know, after that kind of first generation of level three systems came out and really underperformed in the market, many were not, you know, were just simply not adopted to the extent that the OEMs wanted. There's been somewhat of a, like I said, a reformulation of what are those strategies. And that's the process they're going through now. And so, you know, there's some exploratory work that they're doing as well as, trying to figure out what's the right formula, what's the right value prop for their customers. But it's clearly coming. I don't think there's any debate about that. Where those systems have seen success with some of the OEMs, it's been good. So I think you're going to see that developing. That's certainly going to happen. LIDAR will be a part of that solution. And so we're supporting them and staying very engaged with that process and hopefully able to accelerate their adoption.

Great. Thanks for the detail there.

You know, one last one for me, and I can jump back in the queue. You know, it sounds as if Microvision does have something of a focus on potentially expanding its perception solutions. So, would you say are there any strategic opportunities to accelerate growth through acquisition, potentially in complementary technologies, either with sensor fusions or some type of software? And then just to follow up, you know, are you actively evaluating potential M&A opportunities and how would you go about doing so?

I think let me start with that just to establish, you know, what we've done already. With our acquisition of the IBAO team several years ago, I believe, and I think it's, you know, part of the reason why, like, Glenn has actually taken a big look at it and he wanted to join, The perception core is probably pretty mature. It is actually very, very mature. It was developed for Audi years ago in very close collaboration with them. It's at a very high level of maturity. And on top of that, we're very quickly able to build out different application software to support different customers. But it was for LiDAR specific. I think what Glenn mentioned just now, and I think I don't want the subtlety to be lost, There's a whole space of multimodal. Those are just words, but it's like radar, camera, lidar. There's a group of sensors in combination and software that will get to the high level. So I think your question is about M&A. I'm just giving you context that we have quite a lot of things built out. The best thing would be for cheap and efficiently if we can build more out internally. But like any company in this space, right? Yeah. If there's an opportunity, I mean, our focus right now is to get revenue, to get partnerships, to get those paths where, you know, everybody feels that it's somewhat sustainable and growth comes different ways. So certainly we want to home grow everything, you know, it'll be cheaper and be faster. But if the right opportunity comes along, I think, you know, everybody would want to become a stronger company, especially if that allows you to get customer support. You know, if you can actually get a program done faster, of course you would work on that, right? So I think everything is up on the table always, but generally, we have something very valuable built out already. And I think, Jesse, if I could just add, recapping what Sumit was describing, the strategy of the company is to truly become the ADAS solution provider for the industrial commercial vehicle space as well. So I think the idea is to build a full solution to be offered to these customers. And that's what we're looking to get to either organically or inorganically.

Great. I appreciate the details there. Thanks for taking our questions and thanks for the time. Thank you.

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

Thanks, John. Right, so the first question we have is, Simit, what are the factors that delayed the signing of this industrial deal? If you think about industrial customers, they really don't get much attention and much love from a lot of the bigger companies. You know, you can go to another lighter company, buy what's off the shelf, try to integrate it. You work through all that. you know, to a certain level, which means you'd have to have a software team. So it gets to a certain level of adoption. Yes, you could do that. What we did was we had a very unique thing. So our team has the perception not running on a big NVIDIA platform. We actually have this high level perception running inside our sensor on our SOC. And this is actually a very, very big advantage because But that small power is not just the LiDAR, it's the LiDAR with the perception running. So when you have that much software you're providing, you know, all the interfaces are provided, you know, you have to collaborate with the customer. It's their application, you know, can they sell more product and their platform can go faster, much more adoption with their customers with this new technology. So there's a period of time they want to qualify. They want to make sure that, you know, we're bringing hardware, which to be frank with you, some of them don't even understand How do we do this? How does the sensor model work? Where does the noise go? Why does the point cloud look so clean? They understand how to test LiDAR, but they don't understand how it really works. And then on top of that, the software is doing things that everybody acknowledges that, oh, that looks great. I mean, you got everything on board here. You can do ground plane. You can do this. You can do this. All the things are ready to go now and the application layer. So just their own qualification part of it takes longer. And I think that is the bigger one, that the qualification timeline that we were tracking to, that they were tracking to saying, hey, this is how long it's going to take us, they have far exceeded that, right? Because you just get deeper and deeper into it because the decisions are bigger. These are not like small projects for hundreds of units. You know, whenever you do thousands of units, right? I mean, think about automotive is like hundreds of thousands of units. So you go through a huge amount of qualification step. So orders of magnitude less, but again, they're getting features that were available in the automotive space, in the industrial space. So they're finally seeing some love from different companies and we're bringing mature technology that runs for 25,000 hours worth of life. Imagine, you know, in industrial space, you're making something that was really designed robustly and software that can, you know, essentially they would never have to develop any software. So they have to rely upon us. So that's what takes the most time is the full blown qualification part of it. Thanks, Amit. The next question is, Can you comment on the recent deal announcements by several other LiDAR companies with global OEMs? If Microvision had the best sensor with the lowest price point, why did the company not win these RFQs? Is it too late for Microvision? How does Microvision plan to differentiate itself from competing effectively against these competitors, including the Chinese LiDAR players? I'm going to answer one part of it, which is to give context, and then I'm going to actually have Glenn add more to it. He's going to give a broader perspective. I think the question always comes up, you have this best in class. People have asked me, I think it was at the investor event a couple of years ago, what's best in class? And I think it's still not clear to everybody what's really awesome about our technology. People ask the question about FMCW versus time of flight. At a base level, It's going to be in a car. It has to be low power. It has to be small. It has to have lots and lots of features. They need to see small object detection at 150 meters or higher or, you know, all the different attributes they need to see, and you have to go create data. So this is, you know, things that I've already shared in the past. And on top of that, they want to make sure that the industrialization is to a level where it's fully automated, you can deliver it, and, you know, the features are, you know, kind of set. Then on top of that is financial health of the company, how many years of runway. So I think from a technical standpoint, we get to the green very quickly. And when it comes to the, you know, the health of the company and the strength, you know, why doesn't above work so hard to find great investors that, you know, show them that, yeah, we can actually support ourselves and that is a lower risk. So you have to try to get through that. So best in class and technology as an engineer, of course, you want to be excited about that. Your company has the best technology, but a decision is beyond just technical part of it. It is a lot of the commercial industrialization part of it over long period of time. Uh, Others are announcing it, so I think I'm going to turn it over to Glenn because we recently had a very interesting conversation about some announcements. You know, we're not going to talk about anybody specific. That's their confidential data. We're just going to talk about, in general, how, you know, we don't get nervous, why this is still early times for this technology. Glenn?

Yeah, thanks, Sumit. I think to build on Sumit's comments, I mean, you know, As I said earlier, you are seeing this continued commitment to using LiDAR for these advanced systems, so Level 2++, Level 3 systems, which is great. I think you're seeing some announcements as people kind of solidify maybe part of what they're trying to do across their portfolio. Not uncommon, but you're really not seeing yet concrete plans for broad adoption. And so, you know, over the last, probably, 10 years, we've seen this occur on a regular basis. So for us, it's a matter of making sure that we're focused on the right customers, the right opportunities within those customers that really will bring volume, and not just chasing engagement or announcements. So as Susan said, at this point, not really concerned with what's been announced so far. It's, again, a lot yet to play out there. And I think when we look at what we have with Maven, what we look at what we have with Movia and Movia S coming, these are going to be the right products that as the OEMs really solidify their broader plans, I think we're coming in at just the right time, not too early, and really when they're ready to start moving on larger programs. And I think you'll see more of this, but announcements in the coming months, I'm sure, but it's really not going to take us off our focus. So at this point, not really overly concerned with it.

Thanks, Len.

Next question. Do you think the NHTSA's requirement for the U.S. automatic emergency braking rule due by 2028 is unrealistic? When is the latest date an OEM would need to sign a series production deal to ensure their cars were meeting this requirement for 2028, and can microvision LiDAR sensors enable OEMs to meet this?

Yeah, maybe I'll start, and some of you can certainly add color to it. So the 2028-29 requirement by NISA, it is achievable, but it's going to, for each OEM, If you think about an OEM, they'll have a portfolio, a number of vehicle platforms that have different levels of capability. And really one of the key focuses on the NHTSA ruling was vulnerable road users, pedestrians. So you're able to detect pedestrians up to certain speeds and make sure that AEB is functioning and avoid the accident. So if you're an OEM, you're going to look at your fleet of vehicles and your platforms. And for some of those, it'll be relatively simple to implement these changes. It may just be software. And those will tend to be the higher end systems that have more sensors, more capability to them. For their lower end or value segment vehicles, you know, it may be vision only based AAB. It may not have that ability to discriminate pedestrians required by NHTSA. And so for those platforms, it's going to take longer. And in some cases, they may struggle, even though there was four years from the ruling. It was about a year ago that the ruling was made. They may struggle to get those platforms updated. So you're going to see, you know, I would expect to see some negotiating between litigants and the OEMs to try to, you know, stage that so they're not disrupting their vehicle platform plans. But fundamentally, the technology is there. NHTSA will continue to evolve, you know, in terms of their requirements and become more stringent. They can look at, in particular, NCAP, Euro NCAP, US NCAP. LIDAR can be a tremendous advantage to doing that because of its ability to discriminate, detect free space, and really determine where that object or that pedestrian is. But it's, you know, for each OEM, it's going to be a bit of a different type of challenge. Generally speaking, it's doable for most of the platforms. For some, they'll struggle, and I would expect them to try to negotiate with NHTSA to give them either more time on those platforms as they try to figure out what to do to comply.

Thanks, Glenn. Next question. How does Microvision plan to compete with FMCW LiDAR technology, given its increasing adoption by OEMs like Ava's recent win with the top 10 passenger OEM. Are there plans to transition or integrate FMCW technology into Microvision's product portfolio to align with the trends?

If you want to start, I can certainly add my perspective to it as well.

Yeah, I think I'll start. I think I've talked about this in the past a little bit. At The OEMs will always make the right choice, which is the lowest cost, the highest fidelity system. At the end of the day, you know, a time of flight versus FMCW, one of the big differentiator is you get velocity, right? Well, they already have, as Glenn mentioned early on, like five radar on the car. They have velocity. They are integrating into features that are pretty mature, and they're shipping right now. At the end of the day, the technology that drives the lasers in a time of flight, 905 nanometer versus FMCW, significantly different. There's cost barriers. In one case, tens of billions of dollars would have to be invested to make FMCW more affordable in very, very high volume. There is no other technology out there or any demand out there that requires them to make that investment. There is no hard disk drive industry that needs these kind of lasers or anything else, right? So therefore, I think, like, it's great, right? I think, like, you know, if there's more sensors in the market, people are feeling it, that's great. But in general, I think you have to look at it like, is it going to be cost competitive? If you're going to put a device in the cabin behind a windshield or something like that, and it consumes tens of watts, significantly higher than a time of flight, you know, imagine if you have, you know, 20, 25 watts, 15 to 25 watts in there, you're going to need cooling, and it's not going to be fans. So there's lots of variables that go into it. I think this keeps, you know, the nervousness that our investors may feel given the fact that we have not had a commercial success with an OEM. I appreciate that. I respect that. I think it's totally warranted. But at the moment, I don't think, you know, the physics does not dictate that anything has changed specifically, that all of a sudden there's a paradigm shift. You know, mounting it on top of a truck with, you know, ample airflow. Yeah, that, you know, anybody could see. Miniaturizing that for that situation. Yep, anybody could see. but starting to put into a passenger vehicle, right? I mean, they're fielding it, you know, our competitors, they're showing it at CES and other shows. I think that's totally fair. But let's see, you know, how far the adoption goes, right? But we're going to focus on ours because we know our core technology works. In the middle of a race, you don't, you know, switch shoes and say, I'm going to run a different race. Before we entered this, we had actually thought through time of flight versus FFCW. You know, we made a conscious decision to do a time of flight. Because if you recall, MicroVision's core technology was not LiDAR. Only in 2011, we started with this. So the team at Microvision at that point really thought about it as what made the most sense from an energy standpoint. Glenn?

Yeah, if you think about LiDAR as a sensing modality, it's not going to operate alone. It's going to be combined with radar and vision. So you have camera systems as well. Radar, which is a big part of my background, you get relative velocity very accurately. So I don't need LIDAR as part of a perception system to also be calculating that. And really you're looking to operate each of these systems into their sweet spots. So LIDAR with time of flight, very proven, very robust technology. As Sima said, lower power and power consumption is hugely important from a packaging standpoint and from a where do you place this in the vehicle standpoint. It means you can make it smaller. So, you know, when I think about a multimodal perception system, time of flight with LIDAR gives me exactly what I need from the LIDAR modality. Radar gives me relative velocity, gives me, you know, object detection, you know, in all weather conditions. Camera gives object classification information, you know, those types of things. So each modality operating in its sweet spot. When you think about it, you know, that's why time of flight, it works really well in that combined environment. So for us, I think TOF is still by far and away the preferred approach.

Thank you, Glenn. How does the recent announcement of cooperation between Volkswagen, Vallejo, and Mobileye impact Microvision as a three-parties? look to cooperate to enhance driver assistance by integrating hardware and software sourcing together. What does that mean?

Yeah, I can stick to this. Very familiar with all the parties involved. You know, the announcement of it was, I think, described as or branded as Surround 8S, and this is where you use A combination of six cameras, two 8-megapixel cameras, forward and back, and then four 3-megapixel cameras for the kind of the parking, the bird's-eye-view function, combined with five radar, core-corner radar, which tend to be more short-range, and one forward-looking radar, which is longer-range. And then all packaged together and public, it's running on the IQ6 high that Mobileye provides. What I would tell you is a couple things, what's interesting about the announcement. One is it kind of ends the debate relative to base-level ADAS systems. If you think about the platforms that that system will go on, the MQB platform, it's kind of a value segment vehicle. It's the Golf, it's the smaller vehicles. And so, you know, highly cost-sensitive market. It'll have... limited, you know, it's kind of level two functionality, not unlike what's provided today by a lot of the systems that have been launching. And basically, it combines radar and camera. And it, you know, kind of eliminates the debate now, you know, that, hey, can you do everything with a camera? Can you do, you know, no, you need radar and camera to have a truly robust ADAS system. Now, that sets the floor. So, if you think about it, as I mentioned, that's a level of You would call that a level two system. It has lane assist. It has some other things that goes with it. And so that now sets the floor. And what that means for the broader ADAS market is that the value segment vehicles now have level two systems. So you've moved up from level one. So content per vehicle continues to grow as it relates to the ADAS market, broadly speaking. For the OEMs, what that means is to differentiate now you need to be providing level two plus plus or level three systems that are different and differentiated versus what I would refer to as kind of the commoditized ADAS. That's essentially the commodity level. And why that's exciting for Microvision is that means you're now looking at having to pull in LIDAR and more advanced systems as part of those level three offerings, not just at the very premium levels, but really at the more mainstream level of vehicles, above value segment. And so that's where volume is. That's where you're going to get differentiation for the OEM. And that's where LiDAR will really enable the OEMs to deliver those systems. So when I step back and look at those announcements, for me it's exciting because it just raises content per vehicle. It raises the floor for ADAS systems within the automotive space, and it really pushes the OEMs to start incorporating more advanced features to be able to differentiate their higher content vehicles.

Thanks, Glenn. Next question. If Microvision were to see an increase in demand for AR products, when would the company communicate that to the market? Let me take that question. Obviously, since this is a new sector that we're looking to pursue opportunities in, any material purchase orders that come in or any significant transaction if there is an offer made to purchase our IP and other assets related to the existing technology to our AR and VR products. So that's what we're most excited about. Next question. It is publicly known that Microsoft previously had a contract with Microvision for HoloLens 2 and that the iWAS headset is based on HoloLens 2 technology. As your intellectual property was used in HoloLens 2, would other parties be interested in starting a collaboration again? Yeah, I think in this call, I think some investors have known this for a while. This question has come up over the last five years. We had not focused spending our raised capital on anything but LIDAR, but it's in our blood. Believe it or not, I've done AR longer than I've done LIDAR in my own personal career. I know a lot about this space. I think as far as partnerships are concerned, we stand ready, whatever problems may exist on an existing system. I think we have the talented people in the company that we can solve them very quickly. you know, developing potentially new technologies for, you know, anything next generation, you know, certainly we can do that. And of course we have reference ideas for what we would do. On top of that, you know, of course, what we've matured into is we're more of a systems company. So beyond just the display technology, there's other things in the headset that we can innovate on, that we can add to. If you think about some of the biggest problems that come into space, you know, is really motion sickness, right? And as you think about motion sickness, it's a hard problem to solve. But if you have the right eye tracking, if you, and of course you want the entire system to be low power, you know, you get like, you know, instead of talking about LiDAR and sensor models, you start getting talking about like eye boxes and, you know, color uniformity. So, but at the end of the day, there's a bunch of software that we believe that we have still beyond just the display that we had done in the past. We have more to offer now. and some of the perception technology that we talk about in the space of automotive. There's things that we do in there that if you were to add a very miniaturized LIDAR on top of the helmet and be mapping near the field, you could do a much better job overlaying the information from an AR to XR side, integrating that with some really, really fast and slick, low-cost head tracking, gear that goes on an existing helmet. So we can offer more than what's there just in the display technology. So therefore, I think, you know, we will collaborate and we can fix existing products. And of course, we can go on and actually add more value by making something next generation that was not visualized in the past. Thanks, Amit. I think we have gone over the hour. We again thank you to all our investors for joining us on our Q4 earnings call. We look forward to talking to you, speaking with you again very soon. Thank you so much.

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