MicroVision, Inc.

All participants are in a listen-only mode. At the end of the management's remarks, there will be a 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 a question on the phone line, please press star 1 to join the queue. As a reminder, this event is being recorded. I would now like to turn the conference call over to Drew Markham. Please go ahead.

Thank you, Jenny. Good afternoon. I'm here today with our Chief Executive Officer, Glen DeVos, and our Interim Chief Financial Officer, Steve Hrynewich. Following their prepared remarks, we will open the call to questions. Please note that some of the information you will hear in today's discussion will include forward-looking statements, including but not limited to strategic plans and execution progress, expectations regarding customer engagement and product deliveries, product applications and use cases, market opportunities, cash flow forecasts, liquidity and financing activities, availability of funds and access to capital, expected near-term and future revenue operating expenses and cash usage, 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 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 8-K, dated and submitted to the SEC today. both of which can be found on our corporate website at ir.microvision.com under the SEC Filings tab. 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 Glen DeVos, our Chief Executive Officer. Glen?

Thank you, Drew, and good afternoon, everyone. Welcome to MicroVision's second quarter 2026 earnings call. Earlier this year, we introduced LiDAR 2.0, the next chapter in MicroVision's evolution. It marked a deliberate shift from a hardware-first company proving out technology for automotive to a LiDAR-based perception company with solutions designed to offer value to customers across multiple industries and use cases. I want to share with you the tremendous progress we have made during the second quarter and how we have positioned Microvision to now accelerate our revenue growth. The shift isn't a slogan, it's operational and it's fundamentally changing how we work with customers, productize our offerings and achieve meaningful commercial momentum. And most importantly, I want to share with you that it's working. Microvision today is more vertically integrated, aligned and commercially active than at any point in our history. We are building traction simultaneously across our core markets in industrial, security and defense and automotive, as well as adjacent markets like robotics and AI. This is driven by the breadth of our product portfolio and our design to cost engineering philosophy and underpinned by our open software framework. Today's call will cover a number of areas. First, an update on our LIDAR 2.0 strategy and how it fuels our revenue forecast. Back in a walkthrough of our commercial momentum, delving into the announcements and customer milestones of the past quarter and providing more context on the launch of MicroVision Semiconductor. Third, our product portfolio and roadmap, sharing the status of our nearest-term catalysts, the Movia Air and Movia Air Plus launch, and the Movia S Industrial launch. Fourth, the strong leadership additions we've made this quarter to deepen our bench and then a bit about our financing strategy before diving into our financials. So let's get into it. So I'll start with LIDAR 2.0 and where we are with that strategy. LIDAR 2.0 encapsulates what we believe it takes to win in this market across a diversity of industries, the right performance at the right price, using software-enabled perception to lower system costs and support for multiple verticals with our industry-leading portfolio, all delivered with the operational discipline that customer requires from long-term suppliers. One of the strongest validation points from MicroVision's execution this year has been how quickly the company stabilized and commercialized the acquired Luminar business. The MicroVision acquired Luminar's LiDAR business had inherited far more than the Iris and Halo product lines. The acquisition included inventory, engineering talent, customer contracts, and active commercial programs. The real challenge was ensuring those customers continued receiving products and support without disruption. Within roughly one quarter of closing that acquisition, we had successfully integrated the Luminar engineering teams, consolidated manufacturing operations to improve efficiency, resumed shipping existing iris inventory, maintained customer relationships while pursuing new opportunities, and reduced operating expenses through streamlined operations. This has been a significant operational achievement. Perhaps the biggest accomplishment is that existing IRIS customers continue to be served with our broader product portfolio. Rather than forcing customers through a redesign or a platform migration, MicroVision preserved their investment while expanding the future roadmap. And instead of being a standalone product, IRIS now sits with our broader perception platforms, MOVIA for short range, IRIS for long range applications, Halo is the next generation evolution of long range sensing, FMCW Technology from Scantinel, and Perception Software across the entire portfolio. This allows Microvision to deliver the best sensor for each application instead of trying to fit every customer into a single product or technology. This diversified portfolio is now a key strength and a significant differentiator for Microvision. And this is why we have confidence in our revenue guide for the current year with significant growth expected in 2027. building on a solid recurring revenue foundation. We continue to see expanding customer engagements across all products and end markets with a significant increase in near-term booking opportunities. As I stated earlier, the efforts in Q1 and Q2 are delivering on MicroVision's revenue growth plans. Let's talk about momentum building and the recent announcements. So turning to our recent commercial momentum, we are making great progress, as I stated. We continue to be successful in converting Luminar customer accounts into MicroVision development agreements and purchase orders. This is exactly what we planned for with the Luminar acquisition. Additionally, we see strong increase in increased customer engagements with Muvia S as we prepare for our October launch. Let me share some examples. On April 14th, we launched our global partner and reseller program, establishing reseller integrated relationships across Japan. North America, Europe, Korea, and Singapore, targeting industrial, defense, and mobility customers. That includes a partnership with one of Japan's largest, most established technology resellers covering automotive heavy industry, mining, agricultural rail safety, and marine and offshore use cases. On June 10th, we signed a long-term development agreement with the leading construction and mining equipment OEM to integrate two IRIS LiDAR sensors The future potential to add Halo to that platform as well. On June 16th, we delivered Iris sensor shipments to Lexusion Technologies as they and Timberline Aerospace expanded collaboration on situational awareness solutions. and on June 29th, we delivered Movia sensors to a leading AI company and hyperscaler for evaluation across robotics, autonomous systems and next generation AI applications. A strong proof point that our diversification beyond automotive is real, not just aspirational. On July 1st, we appointed IDI Laser as our premier partner for industrial, defense and security markets across Southeast Asia, extending our reseller footprint beyond the initial five-country base we had announced in April. On July 6th, we engaged with J.A. Green and Company to accelerate our U.S. defense market strategy and strategic partnerships, a deliberate investment in the defense and security channel specifically. And on July 14th, we formalized Microvision Semiconductor, Inc. It's another key unlock in this strategy and Microvision Semiconductor, which we introduced to the market last month and which I'll cover in more detail in a moment. It's owning that custom basic and mixed signal design. It brings it in-house rather than outsourcing it. And it's how we protect both the cost curve and the integration advantage that LIDAR 2.0 depends on. On July 15th, James Byam joined us as Microvision's first chief commercial officer. which I'll also cover in more detail shortly. And another example of the acceleration of our traction, just last week, we received an order from a prime contractor supplying autonomous UGVs, or unmanned ground vehicles, to the military, highlighting the importance of IRIS's 1550 nanometer technology, which is invisible to night vision goggles, as the customer phases out the use of 905 nanometer sensors. We also received an order for iris sensors from a key defense and aerospace contractor for use in unmanned aircraft applications. And earlier this week, we unveiled Muvia Air and Muvia Air+. Autonomous aerial systems represent one of the fastest growing opportunities for perception technology. As drones evolve from remote controlled platforms to fully autonomous systems, They need more than imagery. They need the ability to understand and react to the world around them in real time. And this is exactly what Muvia Air delivers with its ability to combine lighter and camera sensing to build and transmit high definition 3D maps in real time to UGBs, command centers, or to other airborne assets. More importantly, it demonstrates the scalability of our business model. The same core technologies we developed for automotive and industrial applications can now be deployed across aerospace, defense, logistics, and security. Every new vertical expands our opportunity to monetize the investments we've already made in our LIDAR and perception platform. Well, the error is more than just a new product launch. It is another proof point that our technology platform scales across industries, applications, and autonomy use cases, and that's exactly what our LIDAR 2.0 strategy is designed to achieve. were also encouraged by the early market response. Before the official launch, we've delivered units and are in active development with a major industrial drone delivery company and a provider of advanced resource exploration. And the Movia air product family is being evaluated by an additional nine prelaunch partners across industrial defense and autonomous aerial applications. These programs reinforce what we've been hearing from customers that the market is increasingly looking beyond just simply raw sensor performance and towards complete perception solutions that can enable real-time decision-making in demanding environments. Next week, we'll publicly demonstrate Muvia Air Plus at GIFX. That's the Joint Interagency Field Experimentation Research Program run by the Naval Postgraduate School. This is where the Navy tests new defense and security technologies customers will see live perception and autonomous navigation capabilities, obstacle avoidance, and real-time 3D mapping operating in realistic field conditions. We're incredibly excited about this and happy to be working with some outstanding partners in making that happen. We also plan to host our third product webinar later in August to provide our customers and partners with a deeper technical look at the platform and discuss how we're extending our perception capabilities into the rapidly growing aerial autonomy market. Here's what I want you to take away. We now have simultaneous traction across industrial off-highway, defense and security, drone and helicopter, robotics and AI, and automotive. That breadth is what de-risks this story relative to a single end market bet. If one vertical sales cycle flips, we are not dependent or affected by that. And just as importantly, we're seeing repeat orders and expanded scope with existing customers. That's the more durable signal. Anyone can announce a pilot or pre-development activities. What matters is whether that pilot turns into a second order and a bigger one or a long-term supply agreement. And if some of you have questions about why we can't name customer wins, then I would just reiterate my previous comments. When we're able to announce a customer name, we will. When they request that we do not, for purposes of confidentiality or competition, We always respect that and name the industry or category only. Now let me talk briefly about product portfolio and roadmap. Our industry-leading product portfolio encompassing short, long, and ultra-long range coverage across multiple architectures and wavelength approaches is the key to supporting multiple use cases across our end markets, industrial, defense, automotive, and beyond. Let me walk you through where we are with each product and where it stands and how they fit together and how they will continue to evolve over time. For short-range sensing, Muvia L offers a power-efficient solid-state design with sensing and perception running on board. It's easy to deploy, making Muvia L ideal for use cases like warehouses, mining vehicles, and agriculture. In October, we will launch Muvia S, our next-generation short-range sensor platform. Movia S is smaller, more cost-effective, more energy efficient, delivering high-performance perception in an ultra-compact design. We already have more than 25 active customer engagements and evaluations ongoing. And to be clear, this is where customers have our samples, we're in active quoting, and in some cases doing development. Movia S will be a game-changer for the industry with applications across all segments as we see strong interest from The Robotaxi, the Industrial, and the Defense OEMs. For long-range sensing, IRIS offers high-performance sensing engineered to enable advanced safety at high speeds up to 280 meters. IRIS is a robust and proven sensor that we're shipping to active commercial customers today in industrial, defense, and automotive. Halo represents MicroVision's next generation of long-range sensors. They will provide longer range sensing with greater precision in a design that is roughly one-third the size of IRIS. Stated in another way, HALA was 68% smaller by volume than IRIS. Bringing this level of performance into such a compact form factor will unlock new use cases not possible today. But, and this is really important, TataList system design is fully compatible so existing IRIS customers can transition seamlessly to the next generation product without needing to go through a massive reengineering or recertification or revalidation of their solution. It's truly a seamless transition. For aerial applications, Movia Air and Movia Air Plus are specially designed for drones and other lightweight use cases. for size, weight, cost, and power required to make drone-based ISR missions viable. And finally, for ultra-long-range sensing of 500 to 1,500 meters, our FMCW LiDAR on-chip solutions will provide advanced optical sensing that measures both distance and instantaneous velocity simultaneously. Now, all of these sensors are underpinned by our open software framework, which enables our customers to fully use our advanced perception and software features and development tool chain in a seamless fashion with their development environment. Now, while we are excited about our current products and upcoming launches, MicroVision, Semiconductor, Inc., and Scantinel are preparing for our next generation of products where we leverage our in-house semiconductor and photonics capability to deliver lighter on a chip. We talked about how silicon up-integration and chip-scale packaging are keys to further cost-reduce LiDAR while increasing performance. And this is exactly what Scantonella and MSI are developing for us with our next-day sample to be available by Q2 of 2027. Now, we'll be showcasing more about Scantonella at IAA in Hanover next month. And while that will focus on commercial vehicle and industrial markets, The underlying photonics technology has applications across multiple end markets, including high-speed data transmission, serving global communication networks, cloud infrastructure, and data centers. These efforts demonstrate our continued expansion of the product portfolio and reflect a clear roadmap for sustained growth, with additional capabilities planned to address evolving customer needs across all of the end markets that we serve. Now I've talked about the product portfolio, but I also want to address the reverse stock split directly, along with our broader capital markets activity. It goes without saying that our NASDAQ listing is an important asset, and it is vital that we maintain and protect the continued listing of our stock. With our stock price now in a stronger position and delisting really no longer casting a shadow on our work, we can focus on continuing to intensify our engagement with customers, and accelerate commercial momentum across our target markets. Our post split stock price and the increase in authorized shares puts us in a much better position to ensure that our operations and business objectives are sufficiently financed and that we have flexible options to address the company's capital requirements. The key point is we need the capital structure, financial capacity and fiscal discipline that support our strategic plan and enable us to focus on delivering commercial wins. Now, finally, let me talk about the team. For LiDAR 2.0, we have talked about the right product portfolio with the right price and with the right people to make our vision a reality. Building out the commercial and technical leadership to match this strategy has been a priority, and we made some key appointments this past quarter. On July 20, James Bion joined us as Microvision's Chief Commercial Officer. a newly created role leading our global commercial organization. James brings more than 20 years of experience scaling commercial organizations in automotive, mobility, and technology with previous roles as managing director of global business development at AVA, as chief commercial officer at Innovusion, at Greystone as executive vice president and president of the global automotive group, and in the senior automotive relationship roles at SiriusXM. Having a dedicated commercial leader at this level who has successfully run similar playbook and prior roles reflects how seriously we're taking the commercially driven feature of LiDAR 2.0. I'm also pleased to welcome Cara Clare as our new head of marketing and communications. Cara brings nearly two decades of experience leading marketing, communications, brand strategy across the automotive technology, retail, manufacturing, and healthcare industries. At Microvision, Kara will lead our integrated marketing communication strategy. Her experience helping organizations communicate through periods of growth and transformation will be instrumental as we sharpen the Microvision narrative, bringing new products and capabilities to market and communicate the continued evolution of our growth and business. And I'm also very pleased to note that we are making very good progress on our CFO search and expect to provide an update very soon. In addition to these leadership appointments, during this quarter, we formed a dedicated semiconductor organization, MicroVision Semiconductor. We welcome this team, formerly known as Black Forest Engineering, which we acquired from Luminar. The team brings more than 30 years of semiconductor expertise and track record over 300 custom mixed signal IC designs across automotive, industrial, defense, aerospace, and scientific markets. and it expands our capability into custom ASIC development, next signal ICs, batonic sensing and advanced imaging, including manufacturing relationships with founding partners like Tower Semiconductor, TSMC and XFAB. MicroVision Semiconductor is the mechanism by which MicroVision now owns chip level design rather than depending on outside suppliers for it. that is direct structural support for the cost of integration goals at the center of LiDAR 2.0. But this isn't just about supporting the Microvision roadmap. The team is available for commercial engagement and customization for external customers as well and has a strong track record in delivering that. So how should investors grade us this quarter? Well, before I hand it over to Steve, I want to be explicit about what we think you should hold us accountable to. Rather than leave that to interpretation, here's the list we're grading ourselves against. The first, commercial traction, growth in our customers and prospect pipeline. Beyond the 100 we cited across three verticals in our Q1 call, in conversation and conversion and evaluation into repeat orders, an expanded scope with existing customers. Again, number one, commercial traction and growth. The second is the program build-up, participation in our reseller and partner programs and geographic expansion beyond our initial footprint in Japan, North America, Europe, Korea, and Singapore. These programs are vitally important as they provide an outstanding channel for our products to reach a broad market. The third is product execution, staying on track for introducing Movie Air to the market and for the Movie S industrial launch set for October 26th. These launches and these deliverables are key to making sure our products are right at the timing of the market. Cost and margin discipline. For example, raising our guidance to 40 to 45% for the year. This reflects the excellent work done by the team to manage our product costs and pricing and is a top focus for us. Balance sheet strength, stabilizing our compliance profile and strengthening market position evaluated against the financing flexibility goal I laid out earlier to ensure we have the capital resources and liquidity needed to support our strategic plan. Organizational build, proving that the addition of our new chief commercial officer and Microvision semiconductor team show up in visible commercial and product outcomes, not just simply headcount. And then finally, transparency. sharing what we can with you as soon as we can so that you can be aware of how hard a team is working to demonstrate the progress against our vision and our outcomes. That's the scorecard. I'd ask you to hold this to it. I'm now going to hand it over to Steve to share our second quarter results and where our full year guidance stands today.

Thank you, Glen. As Glen just shared, We have made significant strides in the second quarter with substantial commercial momentum across our core markets, expansion of our product portfolio with a clear roadmap for sustained growth, increased bench strength with key leadership appointments, and with the completion of the 1 for 15 reverse stock split, more flexible options to raise capital to support our operating needs. Our focus remains on strategic commercial execution and disciplined financial management of the company. Now let me talk about our financial results. Revenue for the second quarter was $1.5 million, a $1.3 million increase versus the same period last year. The primary driver of our second quarter revenue was product sales, with the predominant portion accounted for by our long-range iris sensor and a smaller portion from our short-range Moviatt L sensor and approximately 15% from engineering services related to our semiconductor business. of our three target sectors, industrial and security and defense, were the primary drivers of our second quarter revenue. For the first six months of this year, revenue totaled $2.4 million, a $1.7 million increase as compared with the first six months of 2025. Approximately 75% of our first half 2026 revenue was driven by the expansion of our product portfolio that resulted from our strategic acquisitions earlier this year. In addition, the majority of our first half revenue came from the industrial and security and defense sectors. These revenue drivers and sector allocations support our confidence that our lighter 2.0 strategy and focus on diversification for multiple verticals remain the key to winning in this market and growing our top line. Turning to gross margin, second quarter performance was 44%, a significant increase from a gross margin loss in the second quarter of last year. On a year-to-date basis, gross margin sits at 42% as compared with a gross margin loss in the same period last year. The expansion of our gross margin reflects favorable product mix driven by sales from the IRIS inventory that we acquired in the first quarter this year, and deficiencies within our supply chain. Turning to cash usage, our cash used in operations plus capital expenditures was $19.5 million for the second quarter and $36 million for the first six months of this year. Adjusting out acquisition related costs and restructuring charges, our cash usage was $17.4 million in the second quarter and $33.8 million for the first half of the year. Cash usage increased sequentially from the first quarter to the second quarter this year, in large part due to non-recurring cash payments related to the post acquisition consolidation of our engineering and operations organizations, including a significant workforce reduction in our Redmond location. When compared sequentially to the prior year, After adjusting for acquisition-related costs and restructuring charges, cash usage for the second quarter increased $4.5 million and for the first half of the year increased by $6.7 million. The main contributors to these increases are the operating expenses and product development activities related to the acquisitions of our aerial systems team in the fourth quarter last year and Scantonelle and Luminar Technologies, in the first quarter this year. Having completed most of the integration of our recent acquisitions and actions to consolidate operations and teams by the end of the second quarter this year, coupled with anticipated second half 2026 revenue growth, we expect to see a declining cash flow from operations through the remainder of this year. At the end of the quarter, our balance sheet reflected $27.2 million in cash, cash equivalents, and investment securities. In addition, we have access to approximately $41.2 million available under the current ATM facility, subject to market conditions and applicable limitations. Our existing convertible notes certainly required us to maintain minimum cash liquidity of the lesser of $17.5 million or 100%, 10% of the outstanding balance of the notes. Turning now to our 2026 full year guides. For revenue, we are reiterating our guidance of $10 to $15 million with the bulk of expected revenue coming in the second half of the year driven by our expanding commercial traction, existing inventories of long and short range sensors, and plan production launch of our short-range MOVI-S sensor for industrial applications in October. For gross margin, as Glen mentioned, we are raising our guidance from 35 to 40 percent to 40 to 45 percent driven by our improvements achieved in our supply arrangements and stronger mix of product sales. For cash burn from operations plus capital expenditures, We are maintaining our guidance of approximately $60 million this year with second half improvements expected to come from revenue growth, favorable supply agreements as previously mentioned, and reduced operating expenses as a result of the consolidation actions we took in the first half of this year. As we progress into the second half of the year, our focus from a financial perspective is clear. Expand and convert our commercial pipeline to enduring revenue. build a healthy and sustainable gross margin profile, efficiently manage cash with discipline while funding the programs that are most closely aligned with customer demanding commercialization, and astutely raise capital to support our business needs as we continue to execute our LIDAR 2.0 strategy. Let me now pass it back to Glen for closing remarks.

Thanks, Steve. As we close today's call, I'll leave you with these overarching thoughts. Six months ago, we introduced Ladder 2.0, the framework for where we believe this company needed to go. Today, you're seeing what that strategy looks like in execution. We've integrated major acquisitions while continuing to support customers without disruption. We've expanded our portfolio from automotive into industrial security and defense and robotics, AI, and now Autonomous Aerial Systems. We strengthened our commercial organization, brought semiconductor expertise in-house, improved our cost structure, and continued to build a broader and more resilient pipeline. Perhaps most importantly, we're seeing customers respond to that strategy. They're increasingly looking for complete perception solutions, not simply sensors, and that's exactly where MicroVision is poised to lead. Our ability to pair purpose-built hardware with perception software, custom silicon, and an open architecture gives customers the flexibility they need while allowing us to participate in significantly larger market opportunities. Now we know there is still work ahead. Commercial programs take time to mature. Evaluations need to become production programs. Purchase orders need to become recurring revenue. Our job is now straightforward. Execute, convert opportunities into customers, expand those relationships, drive revenue growth, and continue delivering against the scorecard we've shared with you today. I believe that MicroVision is a fundamentally different company than it was even a year ago. We have a broader technology portfolio. We have stronger commercial capabilities. We have a healthier operating model and many more opportunities than at any point in our history. The foundation we've built gives us confidence in where we're headed, and we're excited about delivering in the second half of 26 as we prepare for growth of 27 and beyond. I'd like to thank our employees around the world for their commitment and execution through an incredibly busy first half of the year. I'd also like to thank our customers, partners, and shareholders for your continued confidence and support. We're looking forward to updating you again next quarter as we continue executing our strategies. Operator, we'll now open the line for questions.

Thank you. At this time, we are conducting a 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 published research may ask questions on the phone line. For analysts to ask questions on the phone line, please press star 1 on your phone keypad now. We ask that while you're posing your question, you please pick up your handset if you're listening on a speakerphone to provide optimum sound quality. Please wait a moment whilst we poll for the questions. Thank you. Our first question is coming from Casey Ryan of Alarex. Casey, your line is live.

Thanks, everybody. Glen, Steve, thanks for the terrific update today. I wanted to focus in on the upgrade on the gross margin guidance. That's pretty rapid from what was a good gross margin number last quarter. Tell me how much room you think there is sort of structurally in sort of a long-term steady state. You know, I think obviously 40-45 is very good. And, you know, as you work through that, but it's 45-pound ceiling or do you see some sort of like long-term range being somewhat higher? and that current guidance.

Sure. Hey, Casey, great to hear from you. And I'll start and see if you can add. Long-term, I would expect this to be really between that 40% and 50% gross margin and depending a little bit on the product in the end market. If it's a product where there's more software content, so you're talking about products that would be delivered with not just the point cloud, but perceptions and features on top, or products more into the security and defense area, specifically defense, you're going to see that gross margin kind of move to the upper end of the range. If it's more of a circular sensor that's delivering a point cloud or histograms and we don't have that added value or added content, in particular added non-hardware specific content, Then you're going to see it, I think, drift, you know, to the closer to the lower end of that range. But for us, you know, we think with these products and with the software content we have, you know, kind of that upper boundary is probably around 50, the bottom boundary around 40.

Okay. Yeah, terrific.

Casey, I was just going to add to that. Casey, I think one of the things that you've heard with regards to our strategies about design to cost, Within our product development space, we continue to look at cost reductions, get our BOM costs down as low as we can. Over the last little while, we've had some good negotiations with our supply base to get our cost base down, as just mentioned. That's why we elevated our guidance. So I expect we will continue to see this as we progress into the future to get to those margins that Glenn just mentioned.

Yeah. Okay. Terrific. Terrific. So sort of the second question is, Sort of on the OpEx line, and like I suspect there are some non-cash items here in sort of the SG&A and R&D lines you put out, but sort of this $24 to $25 million range compares to kind of about maybe say $13, $12, $13 million last year. Do you guys expect OpEx to be steady state around this mid-20s? Is that sort of something to expect? Or do you think now that you've gone through all this integration work in Q2 – That OPEX line might start to bend lower or trend lower going forward.

Yeah, let me just add to that, Casey. So yeah, we clearly see our OPEX deteriorating over the next six months. It's very clear. All the consolidation actions that we took, as I mentioned, with regards to our Redmond consolidation, we will start to see that cost reduction come down as we progress throughout this year. We had a number of restructuring costs related to the acquisitions. A lot of that cost took place, you know, in the first half of the year. There will be a little bit come in Q3 as we kind of finish a couple of things. But, you know, we will not see that stuff happening in the future on a run rate basis. Okay. All right.

Just to be clear, Steve, when he says OPEC's deteriorating, that's a good thing. Right. Yeah. Yeah.

Absolutely. It's like kind of like losing weight. I would love to be also deteriorating a little bit. Hey, so Glen, you talked a lot at the top about aerial opportunities. And one of the things we see across the industry is there's a lot of sort of detection and defense of sort of aerial things. But it sounds like your opportunities can include being on board and It might be, you know, tied to some of the advantages of the product in terms of weight and functionality, but I wanted to see if you could expand and say, yeah, a lot of it, you know, or, you know, tell us if it's primarily for defense and detection, you know, or if it is actually sort of on board with things that are airborne, basically. Okay.

Yeah, yeah. So for defense, there's three areas that we look at. One is detection, so longer-range detection, and certainly that's where scant and all plays a role. So that's on the detection side. But nearer term, really, the big opportunities appear to be both onboard the drones. So if you think about drones in the different categories, Group 1 and 2 being kind of the sub-55-pound drones, letterweight drones, typically copters. and then above that the Group 3 drones which tend to be fixed wing. The onboard perception and payloads on those drones is where we see the immediate opportunity both in terms of defense but also in commercial applications like for everything from power line inspection to wind turbine blade inspection to you know, terrain mapping and other types of kind of reconnaissance activities and commercial. But in defense, though, it's very clear that onboard applications, and that's what we're going to be demonstrating at GIFX next week, that's where the immediate pull is and across those segments. In parallel to that is the ground base that we talked about, autonomous vehicles on the ground that need that want LiDAR sensors on those vehicles as well. But for the aerial, it's onboard the airframe.

Yeah, that's pretty exciting because I feel like you're the only one talking about being onboard really that I've listened to so far.

Hey, one of the things I'd add is this is where for us as a U.S. and a German company that can make short-range, wide-field-of-view, lightweight LiDAR. lightweight and low-power LiDAR that has a wide field of view, can see a tremendous amount from 30 or 50 feet off the ground. We can do that. And as a U.S. and German company, we're uniquely positioned to do that. And that's a big pull. That is really a strong pull for the movie air products.

Right. Okay. Super. Thanks for that clarification. And then, last question. I feel like we get early sort of across the industry this feels like we're trending towards I guess selling sensors together or working together you know lidar and camera makers lidar and radar and are you seeing sort of an ecosystem or potential to partner with other sensor you know categories to sort of provide I guess a fuller solution to certain people or is that something customers are asking for or people still focused solely on just when they talk to you, only the LiDAR sensor piece of that.

It really varies a little bit by end market and then also by the specific customer. And what I mean by that is if we're talking about defense, our payloads are LiDAR and camera. And we can also integrate radar. So it is multimodal. And we do that integration in the payload. So we manage all of that, combine those, basically fuse that, and then provide three-dimensional maps with vision with camera overlays. If you're talking about automotives, you know, automotive is very much by and large a multimodal architecture where the system architects break apart those modalities and then they're responsible for centrifusion. So in that case, a robot taxi would come to us to talk about LIDAR. They already have a vision solution. They already have a radar solution. So it's a LIDAR specific solution they're looking for. So Depending on the application, you get a mix. Fortunately, we can do both, but for automotive and it's typically LiDAR pure play. For defense, it's both. In industrial, it's a complete mix. We've seen both just LiDAR only as well as combined systems.

Okay. Thank you. It's really a very good quarter and really good progress through the year so far. Thanks for the update, and we'll look forward to more to come in the second half. Thank you. All right. Thanks, Casey. Thank you, Casey.

Thank you very much. I will now turn this call back over to Steve Hrynewich for reading questions submitted by shareholders. Thank you.

Thank you, operator. The first question is, why is MicroVision confident in its 2026 revenue guidance of $10 to $15 million?

Tim, maybe why don't you start and then I can add in.

Well, I think as we progress throughout the year, as you saw our 2.4 million for this year, for the first half of the year, a lot of progress coming in the second half of the year with all of the customer engagements that we've been engaging in. We've got all of our inventory coming so we can get those sensors reworked to get those out to the customers. So I think with that long list of customers, we have that list all down by customer. We expect us to hit this range, 10 to 15 million this year.

Anything else, Glenn? Yeah, the thing I would add is if you think about how when we acquired Luminar and then we spent the first quarter really kind of restarting those relationships and reengaging in those POs. And then over the course of Q2, significantly expanded that. So we have, I think it's about half of those 30 customers now back on board that we're either shipping to or will be shipping to. And that involves kind of restarting up the supply chain for IRIS. and that supply chain had been suspended in many cases due to the bankruptcy and what had been happening before the acquisition. So the team, this is kind of behind the scenes, we don't talk a lot about it, but the team had done a really, really amazing job of restarting those relationships with those suppliers, those key suppliers for the product that we need to be able to fulfill those POs. and so as we're putting that plan together and getting those suppliers back on board, the revenue range just reflects the fact that we still have some work to do there and the timing of that isn't fully nailed down. So we'll deliver as much as we can. We're confident in the range. Where we land exactly will depend on what we're able to do with supply base and how many product we can ship. So it's more of a timing issue as opposed to a revenue issue because it'll either happen in Q3, Q4 of this year or Q1 of Q2 of next year. So it's really a matter of timing.

Okay, thanks, Len. Second question, your revenue guidance for this year is 10 to 15 million with the majority attributed to the iris sensor sales. What are your expectations for revenue growth next year with MOVIA-S in production?

If you look at this year, I think it was 70-80% of our revenue came out of those iris sensor sales, which reflects just an outstanding conversion rate. So really happy about that because, as we talked about in the last earnings call, one of the key and imperative things you know, elements of the Luminar Acquisition was reconstituting those commercial relationships. We didn't, you know, we didn't want to lose that. And we've been very successful in doing exactly that, getting those relationships back on track, getting POs and supply agreements or even development agreements back on track that we're now shipping against and working to. You know, Movia L has been kind of a great product for us in terms of supporting ongoing sales to the UGB providers in Europe. And so that's been really, I think, a great application for it. Movia S, launching here late this year, this is where we have the more than 25 different engagements and programs going now for Movia S and evaluation with customers. We're really excited about that. We launch in October, so we ramp up in October, which means there's not – A large revenue portion for 26 from Movie S. But going into 27, we expect this to be a very meaningful part of the revenue curve. And so we're capacitizing in Orlando to around 15,000 units. So that'd be on a single ship basis. So we have room to flex that and do more. but that's what we're planning for and preparing for in terms of making sure we have materials, making sure we have operators, making sure we have the ability to deliver on that. So what's happening between now and October as we provide our customers with pre-launch, pre-production final samples is converting those now, those evaluations and those discussions into purchase orders for initial production and building out that, you know, that sales book for Q4 as well as 27 and 28. And so right now we're thinking about, you know, the 15,000 unit sales for next year. Okay. Leonard, are you still there? Yeah, I had an interruption on my end of the line. But that 15,000 units is nominally where we would expect to be. We'll be talking more about that as we get closer to and move through the launch period.

Good. Okay, next question is, you have made announcements with partnerships in the security and defense sector. When will we begin to see top-line revenue growth from these collaborations?

Yeah, it's happening right now. That's the short answer. If you think about Lake Fusion Technologies, we're shipping now. We're working with them today. And there are unit sales that are occurring here in Q3. When you look at JA Green and IDI Laser, Those are, you know, we're now building relationships. So for those, I would expect potentially evaluations with small unit sales as early as, you know, this year, so Q4 of this year. But certainly part of the book next year and how meaningful that revenue will depend on the nature of the specific opportunity. If it's a development agreement, that would be more NRE or funding for next year as opposed to unit sales. It was an immediate application, kind of like what we found in Europe with the UGB provider, where literally it was two months from initial engagement to development, evaluation, and now shipping units to put on the vehicle. You're going to see revenue unit sales impact in 2027.

Glenn, you there?

His line is still live.

I must have lost Glenn. I don't know. It's Jay Green and some of the distributors. Glenn, are you with us? He's still talking.

Oh, he's there. We have him back.

Yeah, I'm still here. Usually not a problem to hear me.

We can hear you. Thank you.

Very good. But, and then, you know, with the longer-term development partners, that's more in the, in development activities, more in the 28 timeframe.

Okay. Next question is, MicroVision previously discussed $500 million in booking opportunities from 2026 to 2030. Are there any updates to this projection?

Yeah, the $500 million was us looking at, you know, here are all the opportunities. It was a little over 100 different distinct or unique customer accounts that we were engaged with. As we look at it this quarter, that number has grown by about 30%, so over 130 different engagements. Now, these are, some are very large, some are smaller, but again, when we look at that Potential booking opportunity between now and 2030, that had increased to $750 million. And that's where we also discount that, so we're not looking at, well, what could it be if all the volume came through? It's our view of what do we really think this could look like? So that's increased by about $500 to $750 million by about 50%. and it really relates to a lot of the MUVIA S opportunities where it's a multiple use per vehicle or per system. So, you know, four per or two per and then also through defense as we continue to expand our engagements there. So not a big, not a major move relative to auto. Much bigger moves in industrial and bigger moves in security and defense.

Okay. Our next question says management has described software as a key part of MicroVision's strategy. How does the software help accelerate customer adoption, reduce system cost, and drive commercial success?

Yeah, really a couple ways, and I'll just talk about the two most important. The first is how we use the software inside the sensor, and both in terms of the sensor model. And this just really involves always looking at solving the signal processing challenge with the sensor in software as opposed to in hardware. not investing in more expensive detection or more expensive laser generation or more expensive processors, but looking at how do I simplify that by doing more with software? And AI is a key component of that in terms of how we process the histograms coming from the SPAD, how we look at the signal coming out of an FMCW receiver. So it's all about simplifying the sensor itself through basically AI in the software and the sensor model. And so that's a big push by the team in terms of our product roadmap and driving down the cost. That works in conjunction, by the way, of up integration and basically consolidating silicon. So reducing the number of discrete hardware components. The other way is really what we refer to as open software framework, and that's more on the development side. So how we open up the software in the sensor so that our customers are able to optimize their systems around the sensor that we provide. And it's not a black box. It's an open system. It's not open source, but it's an open system such that they can really optimize and achieve lower cost total system architectures so they can reduce the cost of the system architecture, but also simplifies their development and validation and reduces their time to market. We're trying to make it as easy as possible for our customers to adopt our product, integrate it into their architectures, validate it, deploy it, and then support it in production.

Good. I think we've got time for one more question. With the launch of Microvision Semiconductor, how is management leveraging this new segment to accelerate strategic partnerships in automotive, defense, and industrial markets?

Yeah, with Microvision Semiconductor, as we talked about in the earnings call, they serve microvision, so they're a critical part of our efforts to basically up-integrate into silicon functionality of the sensor and lower total cost. And that's hugely important because it's through that simplification of the silicon in the sensor that you're able to drive cost down and so MSI can directly help us do that, whether it's a laser driver IC, a photonics integrated chip, a new form of detector, a photo detector. That's the place they play internally for us and a critical part of reducing sensor cost. What's interesting is they also have tremendous relationships on the outside where they're doing mixed signal design, PIC design, and other design for the broader field and other customers, other sensor providers, other data processing providers, you name it. They have a complete mix of customers. This builds relationships for us in that whole semiconductor industry that you just don't have as a consumer. You're a developer, you're working with the fabs, you're working with the supply chain, the packaging houses. So it gives us a really interesting and a really unique opportunity to develop an ecosystem, you know, outside of Microvision, one that's a great business for us, but also one that's important in supporting our own growth. And so that's where, you know, MSI is such a, you know, such a great asset for us. And, you know, it was just part of that Luminar acquisition that we really are now leveraging fully.

And I'll just add one thing to that. As I mentioned in my pre-remarks, about 15% of our revenue in quarter two was from MSI. And that project that we're working on, we will see more revenue come in Q3 as we finish that project out. We are also responding to multiple RFQs, and that's for additional business for us as we progress for the rest of the year. We are now at the top of the hour. Thank you very much for your time, everybody. Thanks for your participation. And we will close the call. Thanks again for your continued support of Microvision.

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