MicroVision, Inc.

Good afternoon, and welcome to the Microvision Second Quarter 2025 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 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 and one. Please note, this event is being recorded. I would now like to turn the conference over to Drew Markham. Please go ahead.

Thank you, Paul. Good afternoon. I'm here today with our Chief Executive Officer, Sumit Sharma, and our Chief Financial Officer, Anubhav Verma. Following their prepared remarks, our Chief Technology Officer, Glenn DeVos, will join us, and 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 status of commercial engagement, business, products, and go-to-market strategies, level of customer and partner engagement, cash, liquidity, and the impacts of recent financing activities, market landscape and opportunities, program volumes and timing, development projects, performance of our products and solutions, product sales and future demand, projections of future operations and cash flow, availability of funds and conditions for capital raising, 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 8K dated and submitted to the SEC today, both of which can be found on our corporate website. under the SEC Filings tab. This conference call will be available for audio replay on the Investor Relations section of our website at www.microvision.com. Now, I would like to turn the call over to Sumit Sharma, our Chief Executive Officer. Sumit.

Thank you, Drew, and hello, everyone. Welcome to our second quarter 2025 results review. I'll start by updating you on our progress with commercial agreements in the automotive and industrial markets, followed by what we expect from our military engagements, and finally refreshing everyone with our vision and mission. Since our last update, our level of engagement with automotive OEMs has increased with multiple reformulated RFQs. A new architecture, which Glenn will introduce at IAA in September in Munich, is instrumental to this. It provides OEMs with a wider operational design domain while making solutions cost competitive for larger volume adoption. For the past five years, latter companies have proposed solutions with no mass market adoption by OEMs and limited revenues. The new RFUs target form factors that can be integrated into automotive design with low power and competitive technology cost for economy of scale. Our new Movia S and Maven offer the widest field of view, delivering what we believe is the most cost-competitive performance for dynamic view LiDAR. Key features include small object detection at range, the widest system field of view, the lower system power, and cost-competitive mesh with scaled silicon technologies. To succeed in this space, our go-to-market strategy remains steadfast. We are focusing on OEMs with mass market product plans. Even with production targeted for 2028 and beyond, it is crucial for us to win in this segment with a scalable product. Cost-competitive and scalable LiDAR products developed for automotive will also empower us in industrial and defense segment with higher sensor fusion and perception software sales. We plan to elaborate on this further in September at IAA Munich. In our industrial vertical, we are in the final stages of several engagements with ongoing evaluations. This segment is also very important to us. The proposed solutions include our LiDAR hardware integrated with advanced software features like the LiDAR Collision Avoidance System, LCAS, directly from the LiDAR sensor. We have multiple opportunities with these products and with industrial customers. To advance our sales opportunities in the automated guided machines autonomous mobile robot segment, we also introduce an aftermarket product with our LiDAR and LCAS software that can be retrofitted into existing forklift fleets. This product makes adoption of our LiDAR and software far more frictionless for our potential customers. I've been on the road with our sales team for this product and have been pleased by the reception. The mass market product for this segment will be a Movia S safety sensor, which we plan to introduce in the coming years. In industrial space, 2D mechanical lidars that are safety qualified currently hold the highest volume and revenue opportunity. Though perception software developed with these sensors is extremely limited. To dominate this segment, we expect to forge future partnerships with AGV AMR companies looking to evolve past 2D LiDAR safety sensors to our 3D safety sensor with onboard perception. We are targeting our solid-state MOVIA S LiDAR for this product line. With resolutions more than 2.5 times higher than current products, a smaller form factor, and integrated LCAS and safety sensor options, I believe This will be a very successful product line and will allow us to establish reliable annual recurring revenues in this vertical. Our current focus is on finalizing commercial partnerships in this segment. The defense vertical presents a significant opportunity for us to collaborate with existing prime contractors and to serve as a primary technology provider for a comprehensive hardware and sensor fusion product. The defense market demands dual use technologies and cost effective systems for land based aerial and maritime autonomous platforms. Each of these platforms requires high performance, highly reliable LIDAR, seamlessly sensor fusion software, and a perception software layer that extracts insights from the localization mapping to enable full autonomy. These systems must be capable of operating in GPS denied environments without extensive AI training data. This is the forefront of autonomy and our products and technologies can significantly impact the segment. Developing and demonstrating our technology in the military space will further create opportunities in the future for us in automotive and industrial to bring advanced technologies built on top of our LIDAR for years to come. In the first half of next year, we plan to publicly demonstrate an autonomous swarming drone system This system will be capable of creating detailed maps of regions and communicating these maps in real time, allowing other autonomous drones to execute a wide range of missions. The core sensor fusion and atomic software we are developing will facilitate partnerships in aerial, maritime, and terrestrial domains. This drone technology demonstrator will be crucial in advancing our collaborations. Our go-to-market strategy for the defense sector will center on developing advanced LiDAR sensors and sensor fusion technology that delivers the highest level of actionable perception software. We target partnering with established prime defense contractors, and these partnerships may lead to further opportunities for joint ventures that can accelerate our revenue growth. Our company's vision is to accelerate the global adoption of autonomous technologies across all segments. Our mission is to partner and develop the most advanced LiDAR sensors integrated with edge perception software for the automotive segment, enable the industrial segment with advanced robotics software and our LiDARs, and empower the military segment with autonomous software with multi-mode sensor integration. I will keep my remarks brief today to allow time for questions from our shareholders, which I would like to prioritize. I'd like to turn the call over to Anubhav now. Anubhav?

Thanks, Sumit. From a financial perspective, the first half of this year, especially the second quarter, witnessed increased trading activity and institutional trading, not just in microvision, but across the board in our peers as well. This sustained momentum and elevated interest in LIDAR and auto tech names pedals an exciting time for us. a lot of blue-chip institutions also seem to be turning their focus back onto auto tech, especially LIDAR sector, primarily due to two factors. Number one, the progress that's being made towards commercialization across automotive and robotics and defense tech. Number two, a global portfolio rebalancing that seems to be at play for large financial institutions. as a result of which small to mid-cap companies are expected to continue to benefit from this trend. Expanding on Sumit's comments, we made significant progress with NVIDIA by achieving full integration with their Drive AGX platform. This is a big step forward for us to become a fully qualified solution provider, particularly as we engage in several RSQs with automotive OEMs for our integrated, long-range, and short-range LiDAR solution. We're looking forward to IAA in Munich next month to demonstrate our new integrated solution for the OEMs. We believe that price will continue to be the single most important fact for OEM decisions to drive higher LiDAR adoption. The automotive vertical will always be the primary driver for high-volume recurring business that gets us to scale. We're driving momentum in the industrial AGV AMR market to drive near-term revenue opportunities, leveraging our perception software and Movia hardware to solve complex business problems for our customers at attractive price points that lower their system costs and increase their internal productivity and efficiency. We believe that our production commitment with ZF in France drives our ability to meet the anticipated high volume demand from customers in the space for our Movia L product. We believe the ability to mass-produce automotive-grade products ensures continuous and uninterrupted supply at a pricing advantage to our customers given our minimal exposure to China-based manufacturing. While the situation continues to be dynamic and evolving regarding global tariffs, We believe Microvision remains well-positioned with our manufacturing partner in France. We continue to press ahead with our pursuit of revenue opportunities in the defense vertical. We recently added Scott Goldstein to our advisory board to help find near-term partnerships. Our go-to-market strategy in the sector will be focused on mission-specific projects in three key areas, maritime, airborne, and terrestrial. In short order, we plan to demonstrate a complete solution with multimodal sensors and our full stack software capable of enabling unmanned drones to complete specific missions. We recently bolstered our sales and business development teams by attracting experienced, talented individuals from some of our key competitors. Microvision remains well positioned in the marketplace with diversified near-term revenue opportunities in the industrial and defense sectors. The expanded TAMs, streamlined cost structure, and recent financings have solidified our position. Now let's review our second quarter financial results. Revenue. For the second quarter, we reported revenues of 0.15 million. This quarter's revenue was driven by our sales in the industrial verticals. Expenses. Our second quarter 2025 R&D and SG&A expenses were 14.1 million, including 1.9 million of non-cash charges related to stock-based compensation and 1.5 million non-cash charges related to DNA. Backing out these non-cash charges, our R&D and SG&A cash expenses were only $11 million in the quarter. On a year-over-year basis, we have reduced our expenses by 44%. We expect the current spending level to be sustained through the rest of the year. We believe our existing workforce and level of expenses allow us to execute on the current business strategy. We believe our current engineering teams can support continued engagement with automotive OEMs and simultaneously scale faster with industrial and defense opportunities in the near term. Q4 CapEx was 0.2 million in line with our expectations. So let's talk about our balance sheet. We finished this quarter with 91.4 million in cash and cash equivalents. In addition, the company has availability of $76.5 million under our current ATM facility and 30 million of undrawn capital under the convertible node facility. As I mentioned earlier, The LIDAR sector and broadly the auto sector saw elevated trading volumes in the first half of 2025 due to increased interest from institutions trading in these securities. Given the favorable market volumes, we raised about 35 million next from the ATM during the second quarter and bolstered our balance sheet. While we will continue to be opportunistic in raising capital, We believe that with the recent raises and our current ongoing operating cost structure, we have extended our runway into 2027. The extended runway makes Microvision an attractive investment opportunity for new large financial institutions. On the convertible note, we have approximately 33 million outstanding that converts at a fixed price of $1.60. With 91.4 million cash at hand, we're now adequately capitalized to make these debt payments starting September 1 in cash, with the cash on hand, or through stock if the holders choose to exercise their option due to favorable market conditions. The 30 million second tranche remains undrawn and available for future drawdowns. We're pleased to have found a strategic financial partner whose confidence in Microvision's future has motivated an alignment of economic interest in step with our management team, employees, and other shareholders. Microvision's average trading volumes have significantly increased, which in part is due to the investment commitment of over $90 million from one single investor. As I have noted before, this is the first in the company's history, and I am quite pleased with the recent uptake in our trading activity. our average daily trading volume has more than doubled. Over 5.2 million shares traded on an average on a daily basis during the entire second quarter in 2025. The equivalent number was 2.6 million in the corresponding period in 2024. While a solid foundational retail base is very core to Microvision, We are pleased to report that the recent $90 million investment commitment has unlocked a sharp increase in trading and inbound interest from several large financial institutions. This has significantly elevated visibility of the company across the broader institutional investor universe. We remain relentlessly focused on our execution and continue to have excellent engagement with industrial customers on their technology roadmaps. To summarize, we're really excited about positioning Microvision as one of the frontrunners of the autonomy enablers for the three end markets. We continue to drive forward with significantly higher TAMs, including defense and industrial, expansive and broadening solution advancements, a solid balance sheet with superior trading metrics, and a well-experienced team to execute the strategy. Operator, I would now like to open the line for questions.

Thank you, sir. At this time, we will conduct the question and answer session. Investors can submit their questions within the meeting webcast by typing them into the Q&A 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 Questions on the phone line, please press star 1. Once again, to ask questions on the phone line, please press star 1. And our first question comes from Jesse Sobelson of DeBorough Capital.

Hey, everyone. Thanks for taking my questions here. It really sounds like there's a lot of exciting developments both on the military side here with the autonomous drones you mentioned in these remarks as well as just, you know, across the board with some of the end markets that we've discussed previously. I wanted to ask just on the industrial pipeline visibility, you mentioned growing momentum in the industrial verticals. Can you expand on specific use cases or customer types showing any traction, and when do you expect this to material impact revenue?

Yeah, I think we updated this in the investor day. I think everything we've said publicly so far stays in play. In the industrial space, primarily AGV AMRs is the target. Imagine, you know, in the logistics space, there's a bunch of requirements for autonomy that people think about, but there's a bigger unmet need of higher levels of safety. Our product with our concurrent Movia L integrated with a outcast system with a displays sort of equivalent to a retrofittable, like a bolt-on solution that goes on all existing installs. So you're not waiting for a forklift OEM to integrate into their next generation product, which, you know, their cycles are longer and slower. We are in some of those RFQs, right? And I think we're trying to successfully close on some of them. But I think the bigger opportunity is the install business already exists. And there is quite a lot of sales organizations out there that retrofit that have access to these customers that have huge install bases, and they're looking for a plug-in ADAS solution, more like a warning system, to get it going faster than the 450 units would. So from that standpoint, there's a market for that. There's certainly higher ASPs there. They get time to market is faster because we give a fully integrated product. Beyond that, there's also other opportunities where a LIDAR with customized software with multiple customers can be integrated to enable their LCAS system or other kinds of automation, and our team is working actively on that. Our engineering teams and our sales team are working actively on that.

And, Jesse, from a timing standpoint, we expect these revenues in the second half of this year and then continue in 2026, as we mentioned before.

Great. That's wonderful to hear. I really appreciate the detail there. You know, then just a quick touch upon the defense sector, and then I'll let the line open up for some other questions. But, you know, the drone, the autonomous drone solutions that you guys are discussing sound very intriguing. Are there any specific programs or agencies that you're aiming to engage with in this defense protocol? And are there any prototype, what would be the timing of expecting, you know, any prototypes to be announced or any potential pilots, you know, beginning with these targeted agencies?

Thank you. We're working actively in this space, right? I think as partnerships happen, we will announce them. I think in this case, you know, something, we have certain blocks of technology that we've already built out, specifically the sensor fusion, the perception in our LiDAR products. Beyond that, you know, we are integrating other sensors into it. So, again, as Anupam mentioned, very mission-specific, so we're not making a general product. But instead of waiting for a partnership to be announced and then start working on a development, We've seen enough interest in it that it was easy to demonstrate something by the early first half of next year with the drone technology, which is completely, you know, puts us in a completely different category than any other LiDAR company. So if you think about this thing, it's a demonstrator, it's a public demonstrator. We're funding it based on input that we've received from a lot of different places of something that was a crucial block that we should be demonstrating for partners to, you know, evaluate our level expertise. Glenn, perhaps you want to get some color?

Yeah, that's exactly right, Simit. As you mentioned, we really have a multiple phase project launched for airborne drones where we can show not just here's how a LIDAR sensor works, but rather here's how LIDAR vision, ultimately radar, all work together. to provide a couple different things. One is pure autonomous navigation for that drone. So, in RF and GPS-denied environments, very common, and particularly in areas of conflict, you are able to navigate that drone with precision without having to rely on any external communications. We can also create the maps real-time and then share those maps with other drones Sumit mentioned. you know, swarming in multiple drone operations, well, you can enable that through that communication of real-time maps from one drone to another. And so we'll be showcasing how that actually works and how our technology develops that. And the great thing is we don't – if you think about the drone somewhat agnostically, you know, it's a vehicle platform that we'll control – Microvision has all of the constituent technologies required to make that happen. We have the sensors. We have the ability to process and fuse the different sensing modalities. We have the map making and basically the perception software so we can build the environmental model for the vehicle or for the drone. And then we have the actual autonomous stack that sits on top. This is back from the IP that we acquired with Ibeo. So we're able to integrate those existing assets into this new package. And that's why, for us, it's important to be able to just showcase that, use that as a platform to attract and work with and identify and work with the right partners in that space. And the initial focus is on defense, but when you think about what we just talked about, It really applies very broadly to commercial markets, logistics, and many other different markets, so that technology can easily be transferred over to other end markets, but the initial focus is really what we can do in defense.

Great. Thanks a lot, guys.

Thanks, Jesse. Thank you. And our next question comes from Casey Ryan of West Park Capital.

Hey, good afternoon, gentlemen. Thank you for the update. Talking about end markets and TAMs, do we need to break industrial down to be broader than what we've talked about historically, just that, you know, distribution and warehousing is one, but are we starting to see a more expansive definition of industrial or sort of non-automotive? It would be great to hear about that.

Let me just get some context on that. So to think about the industrial, I think the way to approach the problem is what are the channels that you have to go in, that you have to develop to get your product into the market? Actually, you know, we know how to make product. We know how to solve problems. But I think it's really come from you got this, you know, awesome technology you're sitting with, but how are you going to actually develop a channel to dominate? So if you can take the industrial space, the way to break it down is, you know, geofence, you know, mixed use, ADAS. But also, you know, there are certain parts that are kind of automated in the sense that if somebody needs a safety sensor right now, They know exactly who the three to four suppliers are. They know who's number one that's got more than 80% market share in there. They go get a quote, and they just keep replacing or the new equipment keep adding. So over a long period of time, there is a recurring revenue in that space that is agnostic of the three segments that I described. When they develop any kind of AGVMR, any other safety sensor, they always go to a standard product. So if you think about the channel, I have to create a channel for that market where we have a standardized safety sensor product then you need a higher workforce, of course, when that moment comes in, because the way you would actually go to sales is different than the small thing we have right now that goes after individual high volume projects. You have to really be a mass market product and, you know, deploy across different distribution channels. So the real answer is that how do you segment this market? Well, there's multiple ways. Right now, given how we're targeting, we have to pick the cherry products that have high volume. Recently, we were, you know, discussing with somebody on an RFQ and the volume was only 1500 and they're like, oh, we're only 1500 units. And I met them and I said, no, no, that's pretty good for us, right? Because, you know, that's how the momentum starts. Of course, we'll build trust from there and we'll go and, you know, take years to build it into that pipeline. So I don't think you have to dissect the segment more, but dominantly, factory automation and warehouse, this is the two big places where this sensor and any sensor that we come up with safety sensor is going to be dominant. So I think we can keep it at those segments is how we attack those segments and how we go after and developing those channels is probably a better way to discuss because of course feature expensively related to that. Right now what we can do with our current workforce, our sales team is focused on some things. And once we get the real understanding of how those channels are developing, we can invest heavier to go higher. But when we go to the safety sensor, you definitely need a bigger sales team to go global across multiple distribution channels.

Mr. Ryan, did you have a follow-up?

Okay, let's move to the next thing.

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

Thank you, Paul. All right, the first question, what is the status of the industrial OEM evaluating our technology? Can you explain what is causing the order delay? What is the status of other industrial companies evaluating our technology?

Yeah, I'll take this. I don't think there is any delay in making a decision. I think, you know, we have a sensor. We provide software. They have their own software to integrate into their AGV AMRs. You know, like some of the ones that we visited are as few as 1,500 units. Some of them are higher than that. I think they're all in different levels of evaluation of how they will integrate into their systems. Of course, we sell a solution, but the bigger thing that every partner has to figure out is if they are making a new product, how is that going to plug into the supply chain, has to go to their factory, get installed, the integration part of it. If you have a customer that's potentially looking at to go more aggressively and retrofit it, they have to figure all those things out. Like once the product gets installed, how would you upgrade a firmware bug that could be found? So there's lots of steps involved to get that integration part done. So I would just qualify it as more than that it is in deep evaluation. I think in all cases, we have not really submitted any big changes. I think we're done. We just support them in the various things that all these customers are finding just to upgrade, you know, our offering. But our input at this point is minimal, and, you know, we are actively supporting their integration efforts to make sure everything is exactly the way they would want. These customers are different than automotive customers. Automotive customers have multiple years to figure this out. Industrial customers, on the other hand, they can take as little as 12 months, as much as 24 months. So typically, they want to make sure whatever they're buying is going to smoothly integrate. So that's where we are in these engagements.

Anupam, I think you're on mute. Next question. Recently, most of the other LiDAR companies have announced sensors for the industrial sectors. How do you plan to compete with them, especially existing players like Alster and SICK that have a stronger revenue and a customer base?

Len, you want to tackle this?

Yeah, I think really on a couple different levels. especially when we look at the existing, when we kind of look at the existing portfolios of those parts, they're largely electromechanical, electromechanical assemblies, quite large, large towers. So really, there's a few dimensions that we compete on. The first is really on technology. And what I mean by that is when you look at the products we're offering for industrial, which are all silicon-based, so their flashlight are all silicon-based, they just have a fundamental cost advantage for the technology itself in terms of how you assemble the sensor, how you operate the sensor, and the benefit that scale brings in terms of the production of that sensor. So there's a significant cost-flow advantage for us. The second is, as we package ours, it's for harsh environments. And so, you know, whether you're spraying it with a wand to clean the vehicle or it's wiping it down with an older cloth, our lenses, our Gorilla Glass, the product is sealed, has high-integrity sealing, so that it's very, very compatible with harsh environment. Not just shock and vibe, but really the elements that you see in these industrial environments. And then the third is just size and power. They're much compact. They consume less power, which is very critical for battery-operated AGVs and MRs. The next dimension that we think, well, we have a competitive advantage is in that We're not just providing a catalog sensor that can, you know, deliver a point cloud. We have, in fact, that full software stack that goes with that sensor. So, we can provide perception. We can provide driver assistance or LCAS features on top of that perception. We can deliver a wide range of functional content in that sensor. So, we can really tailor that to the particular OEM's needs, and I think it's really critical that we're not just, you know, it's not a one-size-fits-all type of solution or a catalog sale. It really is where these OEMs that we're working with, we can tailor the solution to their vehicles, their needs in terms of their end-use applications. And that, what we're seeing with customers is that's a significant difference maker for that customer. They're not trying to They don't have to adapt their system to our sensor. We can integrate it with their architecture. And then finally, I would highlight, as Suma mentioned earlier, the whole idea of the bolt-on system. Because we have that complete offering, hardware, software, construction features on top, LCAS functionality, we're able to actually offer those customers a bolt-on system for existing vehicles and for existing fleets or for fleets that are just going out that don't have any driver assistance or safety-related features with them. And as a result, we're able to basically just power that up, easily add it to the system, provide that vehicle with an additional level of safety performance, very quickly, we offer the entire software stack that enables that. And so that's as simple as mentioned earlier, we're seeing a really strong pull for that. Because there's there really aren't driver assistance systems like that or safety systems out there today. This enables our customers to be able to adopt deploy very rapidly and then start getting the benefits both in terms of safety, as well as increased productivity from the adoption of those systems. So It's really on a couple different dimensions that we think we're in a very good competitive position to really kind of disrupt the status quo of electromechanical kind of old-school style sensors and really bring in much more modern, much more cost-effective, and much higher-performing systems.

Thank you, Glenn. Next question. Microvision is entering the military tech space. Today, you mentioned drones. aerial and marine applications in the defense tech space? Are we pivoting away from LIDAR because we have limited success, or do we have something valuable to offer? And how much dilution should shareholders expect from this?

I'll take that. I think I'll answer the first half of it, and then Anwar probably can come and help with the dilution part of it. All right, so let's – first of all, I think, like, you know, we're expanding what we have. So as I think I've already mentioned, right, we don't expect big increases in our optics. And we're still promising that in the first half next year, we're going to have this very sophisticated drone demonstrator. So I think like, you know, I want all of us to think about all of the shareholders to think about it as, you know, we're doing more with the same set of resources, but we're optimizing what the market needs. So Lidar still is a foundational sensor. It is why we're going to keep having an advantage. So, let me give an example, right, and I've been thinking about this over the weekend. So, so far, you know, we do Lidar, and, you know, you always think about autonomous vehicles, you know, on roads. We mentioned drones, and we'll talk about why we have advanced drones, but we also mentioned maritime. So, we're going where the market is going in the military tech space if there is huge investments to automate, you know, you know, watercrafts in maritime, of course, we have to see, do we fit? And do we offer anything new? So if you think about like, you know, any of us, let's say we had, you know, enough experience on our team that, you know, says, you know, enough, maybe X, maybe seals, and that would say, you know what, let's make this product, they would always start and they would need what they would need some sort of like GNSS, you know, I think about like, you know, some GPS, There could be IMU. There could be, you know, they need like vehicle automation systems, you know, camera sensors, radar sensors, LIDAR sensors, microphones. They would have maps, you know, for like inland maps, right, that they have to navigate around, and all sorts of data archives. So these are the fundamental building blocks that any company in that space providing a prime, providing an autonomous boat to a DOD contract would need. All of them would take those inputs and put it into, let's call it a black box, like a sensor fusion black box, which is what we have. We provide the LIDAR that accelerates our path to take that construct and create a seamless database for them where our perception very quickly identifies key topics or key items in the field of view, which could be, obviously in this case, it could be all the way around the boat, under the water as well, all combined. and allows them to have faster insights. So the same fundamentals we've been talking about that enable ADAS and autonomy with different sensors can be deployed in a completely different area. But the fundamental building blocks the company has, but there are other fundamental building blocks, like, for example, we've never integrated anything with a sonar or, like, you know, a microphone, right, or any kind of other – those kind of sensors. So we could build that. So we want to go find partnerships to demonstrate with our own technology what we have demonstrated, and say, like, you know, our construct, our real product is the software and hardware package that accelerates your adoption path. I can bring autonomy to you faster instead of you having to invent all of this. I have blocks already built out. So I would say that we're expanding with the bits that we have. We don't see the optics going up, and we're going to demonstrate it publicly. So I would not say it's pivoting. It's expanding the product lines that we have. in the military effect. But what we have applies to all three areas. Of course, terrestrial, everybody on this call knows a lot about it. You know, we've been talking a lot about it. Drone is something that's interesting. The nice thing about drones are they are up in the air, but there's not that much traffic, but there's also not that many roads, so the rules are different. So you can apply autonomy at a faster pace and demonstrate something. And the thing that Glenn's talked about in developing these real-time maps, this is actually a really important thing. Remember, if any of us were dropped into someplace we don't know, The first thing you need is a map, and your map could be old because things could have changed after a rainstorm or something. But being able to, in a very cheap manner, create your own high-resolution map is the very first step before any mission can be deployed. So that's what we're going to demonstrate in multiple drones working together. And, of course, expand it further to maritime. But, Anubhav, you want to handle the dilution question?

Yeah, no, I think that's right, Sumit. So I think in terms of dilution, I think I want to make sure our shareholders understand the model here. I don't think the model is to become a full solution provider where, you know, you're trying to become the Auroras or, you know, a fully autonomous systems provider. What we are essentially have heard the word partnerships here, right? We are partnering with the right company for the right mission. And I think that's what the key to this message is, because what we're trying to come up with, the right pieces that they are missing, because we have already built them out as individual blocks, and how do we collaborate slash partner with them to deliver these specific missions. As an example, we're not looking to become a drone company, but we're looking to partner with a drone company where we can enable the drones for a specific mission, like mapping. And that, from an expensive standpoint, yeah, it will add a few millions of dollars of expenses. But again, this is not pivoting away to become and own a full autonomous solution that will have to develop from scratch. I think that's not the business model that we're going into because that model, while it is actually very juicy, but as you can imagine, it requires billions of dollars of capital and really a lot of patients which we have seen in some of the big companies which are chasing this dream. So I think that's why I want to be very clear that here we're trying to partner with some of the other companies where we can provide a solution that together becomes a comprehensive package for delivering a particular mission. All right, next question. What happened to the seven RFQs? the number was taken away from the Q2 press release. What is going on with these RFQs?

Yeah, let me start off with that, and maybe, Glenn, you can come back and add some more. Think about the RFQs as OEMs reformulating, which they do quite often, every so often, where they reformulate what their really needs are. So I think like we've been at Maven for a long period of time, and as we've always said, our go-to-market strategy is to really focus on not just making announcements, increasing our OpEx and not revenues coming in, is to go work with target OEMs that actually have a real product plan where we can connect. As you can imagine, as Anupama said, I've said, Len has said, for OEMs, automotive OEMs, cost is always going to be number one. They want the highest technology, but cost is equally or even higher in the priority list, so they want to get it at the right level. So for the longest term, I would say Maven is some of the choices that have always been made of what's required for a long-range LiDAR. You want wide field of view, but you also want length. You want low power. It's just an over-constrained problem. So, yes, if you develop something, you provide it there. The cost is extremely high. The power is extremely high. The form factor is pretty high because of the optical choices you have to make. So I would say these new RFQs, you know, I think they're going to keep evolving. But I think they are starting to realize that there are other alternative ways to think about the problem that can be much more cost competitive and meet and exceed their requirements. So to perhaps to deliver dynamic with LiDAR, imposing all those requirements for one sensor and then expecting to be super cheap is a fool's errand because every OEM and every award that they've done so far, that has never worked out. So I think like I let Glenn talk about it, but I think, you know, since he has so much experience, you know, from tier ones and OEMs, he sort of guided us toward what's the right product. And maybe we can introduce it now, Glenn, before we give all the details, you know, like a little teaser. So, you know, in IA, we can give the full blow. Perhaps you can join. Yeah.

Yeah. Yeah. Yeah. Just to touch on the whole OEM, you know, quoting process and status, as we talked about in investor day, as well as the prior earnings call, The auto OEMs in general, broadly speaking, were kind of reformulating their strategies around level three, the adoption and the use of LIDAR for level three, and, you know, and how that would look. And that's been an ongoing process. It continues. And I think what we're seeing now, really two things. One is more of a rational approach around this in terms of, you know, which platforms are they really going to deploy Level 3 on, how are they going to do it, the timing associated with that. So the quality of the RFQs has improved, as well as, I think, from my perspective, our confidence at the RFQ that there's real volume at the other end of that process. So that's, you know, for me, that's a good thing. LiDAR is not, you know, at the maturity level or at the commodity level as a brake controller or a radio. and where the purchasing process for those types of components is very predictable. It's just a very well-tried and true process, and, you know, the outcomes are pretty predictable, and the timing of that is predictable. LiDAR with a level three functionality is still very much an engineered product and a tech product where the OEMs still kind of feeling their way through that, but they're making progress. The RFQs that we're involved in now, like I said, have higher quality and we're more confident in the ability for those things to really turn into real programs and revenue. So that's the exciting part of it. Now, I'm going to touch on something that is very near and dear to my heart because with my history with radar, with vision systems and other safety-related systems or just new technology in general, ultimately for broad adoption, the costs have to come down. You know, we've heard a lot of discussion around, well, Costs will come down when LiDAR volumes go up. Well, those volumes won't go up until costs come down. It's actually the other way around. And that was very true with vision systems. It's very true with radar systems when we first introduced those. In automotive 20-plus years ago, it took a long time for those cost curves to come down. But when the product cost comes down, that's when volumes come. You enable that through lower-cost solutions. And so for us and what our focus has been on since certainly over the past year and then really intensified since I joined in April has been on for auto, what's the right strategy there to drive cost down but not to sacrifice its performance? and really looking at it from a vehicle or a system architecture level, not thinking just as, hey, we provide a sensor. We provide a system architecture, a system solution. And we, you know, break the problem down into not just, you know, one super sensor, but rather how do you break that down into smaller elements. And this is what we did with radar. It's what we've done in vision where we have, you know, a different architecture and maybe not just one super sensor, but rather multiple sensors. And that's what we're going to talk about in the upcoming EAA where we believe we have a much more efficient system architecture that delivers better performance, smaller packaging, lower power consumption, and ultimately will enable the OEMs to offer these features at lower total system cost of the vehicle. So really excited about what we can do there, the technologies we have that enable this, and then as well unveiling that really at EAA or IAA in early September. So a lot more to come here. But this is, you know, we're literally redefining technology. lidar for automotive it it what's been there the process been taken prior to this i think has led to very low adoption rates very low penetration we're redefining it we're going to enable it to be much more broadly applied ultimately down to level two and standard data systems that's that's what we're trying to do all right assuming i'll turn it over to you and none of us no thanks glenn this was uh very helpful um i guess there's a follow-up question here

is do you anticipate any high-volume automotive production RFQs to be awarded in 2025, or are the timelines being pushed to at least 2026?

No, I think you're solid to answer that because, you know, predicting OEM sourcing timing can always be tricky because, you know, that's not in our control. And other factors of the OEM may influence that. We're actively engaged in quotes now. that could very well be completed yet, you know, well before the end of the year. That certainly would be our hope. And so, that's how we're behaving. What I would tell you, though, is that quote timing may shift around a little bit. It may slide out to 26 as they finalize their plans, but ultimately, it's not shifting out the launch dates or the introductory dates. And depending on the OEM, that's still, you know, as early as 28, small volumes, you know, coming more into 29, higher volumes. So, you know, we aren't really seeing the launch timing move. The sourcing timing may shift around. But like we talked about yesterday and earlier, you know, really that next generation of platforms we see still happening in that, you know, maybe as early as 28, 29 timeframe for sure. And then 30 really hitting higher volumes.

Thanks, Len. Next question. Microvision has not won any DS and other companies have since made changes to their products. Are we at risk of having outdated or inferior technology? What are we doing to remain best in class?

All right, let me let me start with this. So I think if you think about industrial, our Movia L with our software is a refreshed product at a very competitive price with integrated software. I think that's, you know, our path to revenue immediately. I think it's a very fair question. I think the way you think about it, it's actually worded really perfectly. But think about, like, you know, some of the other lighter companies, what they're saying and what you're hearing from our call is there's nuance, but it is clear how we're thinking about our strategy. I think... As Glenn described, that there will be, if you're thinking about a complicated set of requirements and shoving it into one single box, it's not the right strategy. It makes sense to have multiple sensors, software, architecture. Think about the entire car, how can you simplify it, and the overall cost will come down. In that sense, we are evolving our product with Movia S, with Maven, to give them the right tool for the right problem, okay? So think about that as more of an evolution instead of like other, you know, of our competition that completely stopped the development and gone to a completely different product, right? We're still men's-based technology. We're still using 905 laser. We're still time of flight. So all that construct is the same. But instead of a dynamic new light being shoved into a single sensor with a wide field of view, think about it being broken down into some, you know, different sensors that cover it, but still bringing costs down, not going up. That's the interesting part that we'll talk about and demonstrate at IA. You know, when you think about other awards that have happened, right, I just want to give context, right? I congratulate them. It's great. You know, we choose not to do those because it increases the optics, but there is no guarantee you're going to have any follow-on volume, right? We certainly want to get some validation, but we have products that we can show that, you know, should be able to get deals done. You know, you hear other things like, you know, people are working on economy scale. They're going to put everything on a single chip, a laser on chip, and, you know, so on. So all these words are thrown out there. but none of them are amounting to guaranteed revenues from OEMs because the OEM products are far away, and most of them are really just making NREs. So I think, like, you know, I totally appreciate your question about someone has won deals, they have evolved their product. Do we have to evolve the product? I think we are, you know, they're not evolving products. They're going to the next generation. I would say we are evolving the product by breaking the problem down, keeping costs in mind, integration in mind. Glenn, did I miss anything? Do you want to add more?

Yeah, the thing I would add is a lot of times you'll hear people talk about technology, and then gently speaking, they're talking about the hardware component. And as Sumit mentioned, we have a very robust roadmap and have had a roadmap and have, you know, and looking at that for those three markets that we talked about, industrial, automotive, and defense. And so we have a very robust hardware roadmap that I think puts us into an industry-leading position. But along with that, and this is really critical, we have a very good software roadmap, including how do we incorporate the very latest software capabilities using machine learning, using AI, using Gen AI for not just the end product functionality, but also for how we develop that product. And so, and all of this to deliver best performance, but at lower total system cost. And so, you know, I always enjoy, personally, I always keep an eye very much on the competitive landscape. and like to see how LIDAR is progressing, more broadly speaking. But I feel, you know, I feel very good about the direction we're heading, the speed at which we're heading in that direction, and then the approach that we're taking and the roadmap that we have to support that.

Thanks, Glenn. Next call. Next question. From this earnings call, I gather that Microvision is transforming from just a LiDAR company into an autonomous systems company. How does the future look for LiDAR companies moving up the chain? Let me take that question because I think this is related to the dilution question earlier. Like I mentioned in my previous remarks, I don't think this requires huge amounts of investments or significantly improving or adding to the cost structure of the company. Because, like I mentioned, you are hearing the word partnerships. And, again, the idea here is the blocks that we already have, how do we fit them in the puzzle, which other providers are looking for, and then present a complete package to the other parties and customers. And that's why I mentioned that, again, we're not looking to compete with the Aurora's or full autonomous systems company where they are providing the system solution end to end because that's a very expensive and a very long process. We're not looking to become that. What we're looking to become is a company that enables some of these smaller players to deliver autonomy to the industrial customers as well as defense tech customers from the end market standpoint. And I think The future for LiDAR companies moving up the chain, what we're simply working on right now is integrating multimodal solutions, so LiDAR becomes one of the components of the sensor suite that we're going to be offering along with our full-stack software, and then it could be combined with, as Glenn mentioned, radar or cameras, and then you present that solution with that software that needs to be integrated at the customer's end. That's the future that we're shooting for, and this would not require huge upsizing of the cost structure that we have right now. It will require some investment. I think, again, we have been very clear in our communications that, again, it will require some investment because, as Sumit and Glenn mentioned, this does include or require some of our engineers to spend time customizing the solution for some of these applications. But, again, it doesn't mean that the OPEX is going to go to 3X or 4X. So that's not what we're looking to do. We're looking to keep the OPEX where it is relatively at the same level, maybe add a few expenses here and there. But that's the vision or that's the vision the company is shooting for and executing on. Next question. Has Microvision recently issued more shares? Management said that they will not need to issue shares in the near term. And maybe the next related question is, what is the plan for making payments in September for our debt with high travel capital? Do you anticipate any near term needed for additional financing or dilution? So, again, I think I want to clarify, I don't think any company, any latter company which says that they're not going to issue shares or raise more capital, I think it's very evident that statement just cannot be true because at the end of the day, all LIDAR companies are going through this evolution where they have to be cost structure efficient while choosing the path that will get them to the ultimate destination where they want to be one of the last few companies standing and have moved up, graduated the value chain having software as a very important component of their offerings. So that's that. So obviously we did sell some shares because I think one of the main reasons why what I mentioned in my call as well, that we have become an attractive investment for several large financial institutions as well because of the stability and the longer runway the company has. Because, again, you can imagine any big investor would really want to feel safe about their investment when they know the company has resources to execute the business strategy. Now, I think where the skill of the management teams at each of these companies will be judged by, how do they raise capital and how do they navigate these capital markets to make or execute the most efficient capital strategy to get to the end point here? And I think as we have demonstrated in the past history of the company, that we have been very prudent and very opportunistic in raising capital in And again, I continue to extend that strategy and vision to make sure that microvision is fully capitalized at all times to execute a business vision, while at the same time being pragmatic and practical of the dilution for the shareholders as well. The plan for making the payments in September, so like I said, we have adequate amounts of cash to start. Our first payment is going to be due on the 1st of September, and we expect to make that payment in cash. And if the stock price and the market conditions are favorable, and if the holder, Hydro, elects, because they have the option to elect to take it in stock, If that happens, then obviously we will have to put those shares. But like I said, we'll be looking to optimize the way we are putting cash on the company's balance sheet for us to be able to execute the vision. Because like I said, the skills, of this game is to how do you sort of navigate these markets by choosing the most effective, cost-effective path to raise capital until you get to the point where only a handful of players are there and the revenues have scaled and there's cash-for-break events. Next question. What military revenue opportunities are you targeting? How should shareholders think about the revenue from this industry in 2025 and 2026? And what could be the expected impact on the expenses of the company? Maybe you want to talk about this?

Yeah, I think, you know, think about the military revenue opportunities. Think about partnerships. Partnerships mean that you have to demonstrate your technology so there's some sort of co-development. And, you know, everybody has their architecture they're dealing with right now. They have sealed their products. They have contracts within the military right now with the DOD. And, you know, we are targeting specifically people that need an upgrade on their solution. And not just every sun and the light, we try to give them a more holistic product. Certainly with, you know, products that are, you know, off-road vehicles that are doing some sort of logistics or all sorts of other things in terrestrial space, you know, that's something that we can demonstrate. find the right partner that is willing to work with us to not just buy the lidar but also work with us to see what the advantage of our sensor fusion technology is when it comes to drones and when it comes to uh you know maritime products i think we may have a better opportunity there to showcase our technology and then expand from there but in all cases you start with a partnership and then after you've proven yourself and you can be a you know a trusted partner to them That is, got components that are not susceptible to or they're not sensitive to anything from China, which we are. You know, successfully, we could demonstrate that. We have a robust LIDAR product line. That will enable us to think about other next steps beyond that. I think that's the best way to think about it, you know, from a recurring revenue, you know, when their products go into market. Glenn and Anupam, you guys want to add something to this? Yeah, maybe.

This is Glenn. Go for it. I'm sorry, Anupam. Yeah, just to maybe add a little bit to what you said, because you covered it very nicely. I think ultimately, as we've talked to, in particular, the terrestrial, you know, the MAV market, they're looking for much more robust systems, you know, that are easier to package on the vehicle, that are incredibly robust, you know, not just dust, you know, resistant or temporary, you know, a light spray of water-resistant, but rather really, really aggressive and robust systems that can withstand high-pressure wash, can withstand all environmental conditions, can be sprayed and cleaned off, and will work reliably. And that's exactly what we do. And so it's been really fun to talk to some of these OEMs. about how our solution can really help them and make their solution more robust and more effective in the field. So it's a great opportunity for us, in addition to what we've talked about with drones and everything around enabling autonomy.

Thanks, Ben. And let me add a few things here. So I think I want our shareholders to think about it in two steps. Step one is... maybe sort of have a broader view on the defense tech industry, right? Because, again, clearly if you guys follow or if you start following this defense tech space, this defense tech space is having its what I call as the auto tech moment four years ago. What I mean by that is four years ago, if you recall, auto tech companies were really flying high because the demand was And the strategic importance of these companies to the future of our economy and our progress was very important and very critical. And I think that's why, if you look at the same moment as now being experienced in the defense tech industry, especially in some of these opportunities, this maritime and this airborne area that we mentioned, where there's a lot of investment going into. Why? Because it's of strategic importance. And I think in terms of revenue, while the revenue may not be big in 2025, the strategic importance of that collaboration is going to be far more bigger than the revenue quantum. And what I mean by that is because as the geopolitical world plays out on the international stage, it becomes even more important for our economy and our military might to increase significantly and protect us from any and building our defense capabilities. And that's sort of what you're seeing in this market. And hence, what some of the projects that we have described are some of projects with very high strategic value where you become a very critical player in the ecosystem delivering that capability. And that's why the value of being a very important player in that ecosystem is far more important than just a revenue quantum. So that's how I want our investors to think about this strategically. And remember, here, the volumes are never going to be millions of units as in the automotive, but like I mentioned, it's going to be fewer units. But the ability to deliver a full software solution, which, for example, the OEMs, As we mentioned, OEMs are not looking for a full software solution, while here we are enabling to deliver a full software stack for these mission-specific applications. The second part is, again, the expected impact of the expenses of the company. Like I mentioned, we're not looking to double or triple our expenses. We're simply looking to maybe add some more expenses, but these expenses would be to prove out the value of our solutions, our LiDAR and multimodal solutions sensor suite with our software stack to the specific provider, the primes, or the subprimes who are looking to deliver these mission-specific applications to the military. for the country. So that's sort of how I want our shareholders to think about both the top line and the strategic importance and the expense profile of the company going forward. I think we have gone 10 minutes overboard. So again, I again would like to thank everybody, our shareholders for jumping on this call and we are looking forward to share with you the next update very soon, and we look forward to sharing more progress at the IAA in Munich next month. Thank you again for joining us on our second quarter call.

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