- Get link
- X
- Other Apps
Original: MVIS Financial and Operating Results Q3 2018Conference Call Prepared Remarks
Seeking Alpha: MicroVision, Inc. (MVIS) CEO Perry Mulligan on Q3 2018 Results - Earnings Call Transcript
Audio Replay: Full Audio Replay Including Q&A
[Editor's Note: My interpretation of this call:
Perry Mulligan Thank you, Lindsey. Good afternoon, everyone.
What a difference a year makes! [Editor's Note: Great intro]
As I approach my first anniversary in this role, I am excited to share with you the progress we have made. We started off by telling you that we were targeting Tier 1 technology companies in five vertical markets. We said that by implementing Machine Intelligence in our sensors, we could provide edge computing capabilities on our devices, making it easier for our Tier 1 OEM customers to adopt our products into their large artificial intelligence platforms. Now as we near completing the first year of that journey, I am pleased to say the work we have done and the thought leadership we have shown has earned us the right to engage with leading OEMs in each one of these verticals. We remain committed to executing on this business plan focusing on these five vertical markets, namely, augmented or mixed reality, interactive display, Consumer LiDAR, Automotive LiDAR, and display-only products through our license partner.
I am proud of the achievements that we have made in both our core technology as well as the products we are targeting for customers. As previously shared, we are in the process of overhauling basically every component in our core technology, including our Digital, Analog and Time of Flight ASICs, our MEMS components and firmware, while developing our Machine Intelligence capabilities. These activities have allowed our products to evolve and enabled the ongoing discussions we are having with leading technology companies. Based on this successful volume of work, we believe we are positioned to potentially support the launch of three product families during the second half of 2019 which could position us to achieve profitability in late 2019. To support these product launches we are now working with our module manufacturing partner to be ready for our 2019 sales opportunities and to minimize the associated working capital requirements. [Editor's Note: This statement suggests to me that they are working with the Display Only Licensee on the Interactive Display and Consumer LIDAR verticals, which makes sense. Licenses to sell modules into these verticals would still need to be acquired by the partner.]
In short, we remain on track with our business plan to transform MicroVision from being a R&D company into a solutions provider - a solutions provider with innovative technology that could unlock significant value for Tier 1 technology customers and ultimately reward our shareholders.
Now, let me provide a little more color to the progress we have made in Q3. We achieved a profit in the quarter, albeit a small profit. In Q3 we successfully transferred the required technology to our display-only licensee under the agreement that we announced in May. The second $5 million payment was received in early October as expected, bringing the total payments received under this License agreement to $10 million, the entirety of which we recorded as revenue in Q3. [Editor's Note: Doing what they said they would do.] We said earlier this year that we expected to perform some NRE or non-recurring engineering activity work for our Licensee to customize the display engines for the Licensee’s customers. The good news is that so far, no customizations have been required. This implies that our references designs are closely aligned to what the OEM customers are looking for. If any NRE will be required for these products, we expect it to take place in the first half of 2019. [Editor's Note: So, no NRE for new module package designs. But what they've already built is confirmed to be good for use! So, we'll take it.]
We continue to make progress on the $24 million contract we were awarded in April 2017. In Q3 we booked another $1.5 million in revenue from this program. [Editor's Note: I am pretty sure they said they received a check for $2.5M from this customer in July when they did the Q2 call. Not sure what happened there?] We believe that most of the challenging technical issues are behind us. We expect to invoice our customer twice in Q1 2019 for a total of $5 million with the first $2.5 million invoiced in the first part of Q1 and a final $2.5 million toward the end of the first quarter. As I mentioned during our last call, our Tier 1 customer advised us they plan to bring to market a product using our technology sometime in 2019. This is still the plan. The specifics regarding the size and timing of their 2019 product launch are still being finalized.
While we did not recognize revenue from Ragentek in the quarter, we did reach an agreement with this smartphone manufacturer on how to proceed with the inventory we built for them. Steve will provide more commentary on that matter, as well as our Q3 results and outlook for the final quarter. [Editor's Note: It's all about the module manufacturing partner now. This agreement with Ragentek will clear out the legacy module inventory.]
In September, we posted on our website a video that that demonstrates how a smart speaker, equipped with our interactive display technology, could be used. The video clearly captured how fast and natural it is to custom order an item with many different options using our interactive display solution in conjunction with an Artificial Intelligence or AI assistant. We plan to post an additional video demonstration of this technology during the quarter.
Our Consumer LiDAR solutions deliver a significantly higher resolution than available today in a comparable form factor, and when combined with Machine Intelligence capabilities, represent another major step forward in the category’s evolution. We expect our dev kits for this product to be available at the end of Q4 as planned. [Editor's Note: No mention of Interactive Display dev kits. Perhaps they feel there is no need to build and promote Interactive Display dev kits as they are already in "advanced discussions" as described in September with one or more of these AI platform providers.]
We expect the adoption of Consumer LiDAR technology to be very disruptive in the market and
as such, the integration of our powerful solutions will likely take more time before being
adopted than our display-only or interactive display solutions. To support market adoption, we
plan to make explorer kits available to our customers’ application engineers and software
developers in the first half of 2019.
As I mentioned during the last call, we believe our Automotive LiDAR technology can provide a smaller form factor, higher-line count resolution, and a more cost-effective solution than those in the market today. Within the 30-meter space, our LiDAR solution would have the highest density available with 20 million bits per second as a part of our point cloud output.
Additionally, we believe the latency advantage that our system should have through the deployment of Machine Intelligence at the sensor will provide a feature that will be especially important as we look to adapt this solution to collision avoidance applications. We remain on track to demonstrate the proof of concept for our automotive solutions in 2019. Given the extensive testing and long sales cycle in the automotive industry, we would expect to see limited initial revenue from evaluation units in 2020, with the opportunity for sales more likely in late 2020 and 2021.
Based on the technical progress we’ve made over the last year and our ongoing discussions with leading AI platform owners and our supply chain partners, we believe as I mentioned earlier, that we are positioned to potentially support the launch of three product families during the second half of 2019 which could position us to achieve profitability in late 2019. [Editor's Note: I interpret this statement to mean that the company is positioned to have embedded phone and tablet projectors (Display Only), AI smart speakers with touch projection (Interactive Display), and Augmented/Mixed Reality headset products from Tier 1s containing MVIS technology all on the market at the same time in 2019. That would be truly something special.]
Let me conclude my opening remarks by saying we remain on track with our business plan and are convinced that the display-only products, provided through our licensee, along with our interactive display and Consumer LiDAR products can provide AI platforms with Input/Output capabilities that are unavailable today. By enabling users to interact through voice, image, gesture and spatial awareness, it should be easier for them to interact with an AI platform, making it easier for the user to transact, increasing the monetization opportunities for our customers.
I look forward to updating you on future conference calls of our progress transforming MicroVision from being a R&D company into a solutions provider - a solutions provider with innovative technology that could unlock significant value for Tier 1 technology customers and ultimately reward our shareholders.
I'll now turn the call over to Steve, our CFO, who will discuss our financial performance in the third quarter and offer some commentary of how we see the full-year of 2018 shaping up.
Steve Holt
Thank you, Perry. Good afternoon, everyone.
Third quarter revenue was $11.6 million which included $10 million related to the display-only license agreement we announced in May and $1.5 million associated with the $24 million contract we announced in April 2017. For comparison purposes, revenue in the prior quarter was $2 million, and revenue in the third quarter a year ago was $5.4 million.
The Q3 2017 numbers have been adjusted for the new Revenue Standard, ASC 606, which we adopted on January 1st of this year, using the full retrospective approach.
In the quarter we with Ragentek, the Chinese smartphone maker, and reached an agreement regarding the inventory we built for them. Based on our new agreement in the fourth quarter we expect to ship Ragentek about half of the inventory we built for them at a reduced price. We expect to ship the remaining units in 2019. As a result of lowering the price, we wrote down the value of the inventory by $1.1 million dollars. This write-down is reflected in the cost of revenue section of the income statement. The result is that in the fourth quarter we expect to ship $1.5 to $2 million worth of the inventory we built for Ragentek.
Gross profit for the third quarter was $8.9 million compared with $333 thousand in the prior quarter and a negative $278 thousand in the same quarter a year ago. The improvement over the prior quarter was primarily due to the gross profit on the display-only license.
Third quarter operating expenses were $8.6 million, $145 thousand lower than the prior quarter’s $8.8 million. In comparison, operating expenses were $5.5 million in the same quarter a year ago.
The higher revenue and lower expenses in Q3 relative to Q2, resulted in a slight profit in the quarter of $289 thousand, which comes to zero cents per share. This compares with a net loss of $8.5 million or 10 cents per share in prior quarter and a net loss of $ 5.8 million or 8 cents per share in the same quarter a year ago.
We ended the quarter with total cash and cash equivalents of $13.2 million, compared to $21 million at the end of the prior quarter, and $25.3 million at the end of the same quarter a year ago. The $13.2 million on September 30 does not include the $5 million dollars we received on October 1st from our display only licensee.
On our last earnings call I recapped the potential sources for 2018 revenue, and I will update that now. Through the first nine months of 2018, we have recorded revenue of $15.8 million compared with $7.3 million a year ago. In Q4, we expect to recognize revenue of $1.3 to $2 million under the $24 million contract we announced in April 2017. As I mentioned, we revised our agreement with Regantek, and expect now to record between $1.5 and $2 million in product revenue in the fourth quarter. As Perry indicated on the call, our display-only licensee has not needed to make customizations to the designs they licensed from MicroVision. As a result, we are backing out the NRE we expected for this work from our 2018 forecast. The result of these updates is that we now expect our full-year 2018 revenue to range between $18.6 to $19.8 million, compared to $9.6 million last year when adjusted for the new revenue standard.
I'll now turn the call back over to Perry for some comments before opening the call to questions.
Perry Mulligan Thank you, Steve.
I believe that the progress we have made is tremendous. We are committed to the value proposition that we believe we can provide, targeting leading Tier 1 technology leaders who have the capabilities to bring our innovative solutions to market.
In the second quarter we took the necessary steps to shore up our cash position and are now working with our supply chain partners to support the potential launch of three product families in 2019 with our sights on achieving profitability in late 2019. With that, we will now open the call for questions.
Perry Mulligan
Thank you, operator. In closing, I want to thank our employees, business partners and our investors for their support and look forward to reporting our progress over the next several quarters. Operator The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Seeking Alpha: MicroVision, Inc. (MVIS) CEO Perry Mulligan on Q3 2018 Results - Earnings Call Transcript
Audio Replay: Full Audio Replay Including Q&A
[Editor's Note: My interpretation of this call:
- There appears to be a steady march of progress towards multiple product launches next year. All the needed components have been developed and are good to go, which is a great accomplishment.
- They did what they said they would do with regard to recognizing the $10M Display Only license fee, and made a small profit for the quarter.
- They are working with the still-unnamed Display Only licensee on preparations for launches of "three vertical families". It stands to reason there's an opportunity to additionally license the Interactive Display and Consumer LIDAR verticals to the same partner. (If they were to do this, additional potential license fees for these verticals could offset operating costs before MVIS fulfills their high volume component orders.)
- The licensee accepting the layout and form factor of the existing module designs suggests to me there may be an opportunity to reduce time-to-market for Display Only products, although it is not described in these terms on the call.
- Expect the first volume orders for MVIS components to support the multiple product launches to come in Q1 19 at the latest as described in the Q&A.
- $1M of a $2.5M check from their $24M NRE partner seems to have gone into the couch cushions...?
- Deal with Ragentek to take MVIS legacy module inventory finally puts a close on the chapter of non-Tier 1 OEM relationships.
- Additional commentary inline in RED.]
Perry Mulligan Thank you, Lindsey. Good afternoon, everyone.
What a difference a year makes! [Editor's Note: Great intro]
As I approach my first anniversary in this role, I am excited to share with you the progress we have made. We started off by telling you that we were targeting Tier 1 technology companies in five vertical markets. We said that by implementing Machine Intelligence in our sensors, we could provide edge computing capabilities on our devices, making it easier for our Tier 1 OEM customers to adopt our products into their large artificial intelligence platforms. Now as we near completing the first year of that journey, I am pleased to say the work we have done and the thought leadership we have shown has earned us the right to engage with leading OEMs in each one of these verticals. We remain committed to executing on this business plan focusing on these five vertical markets, namely, augmented or mixed reality, interactive display, Consumer LiDAR, Automotive LiDAR, and display-only products through our license partner.
I am proud of the achievements that we have made in both our core technology as well as the products we are targeting for customers. As previously shared, we are in the process of overhauling basically every component in our core technology, including our Digital, Analog and Time of Flight ASICs, our MEMS components and firmware, while developing our Machine Intelligence capabilities. These activities have allowed our products to evolve and enabled the ongoing discussions we are having with leading technology companies. Based on this successful volume of work, we believe we are positioned to potentially support the launch of three product families during the second half of 2019 which could position us to achieve profitability in late 2019. To support these product launches we are now working with our module manufacturing partner to be ready for our 2019 sales opportunities and to minimize the associated working capital requirements. [Editor's Note: This statement suggests to me that they are working with the Display Only Licensee on the Interactive Display and Consumer LIDAR verticals, which makes sense. Licenses to sell modules into these verticals would still need to be acquired by the partner.]
In short, we remain on track with our business plan to transform MicroVision from being a R&D company into a solutions provider - a solutions provider with innovative technology that could unlock significant value for Tier 1 technology customers and ultimately reward our shareholders.
Now, let me provide a little more color to the progress we have made in Q3. We achieved a profit in the quarter, albeit a small profit. In Q3 we successfully transferred the required technology to our display-only licensee under the agreement that we announced in May. The second $5 million payment was received in early October as expected, bringing the total payments received under this License agreement to $10 million, the entirety of which we recorded as revenue in Q3. [Editor's Note: Doing what they said they would do.] We said earlier this year that we expected to perform some NRE or non-recurring engineering activity work for our Licensee to customize the display engines for the Licensee’s customers. The good news is that so far, no customizations have been required. This implies that our references designs are closely aligned to what the OEM customers are looking for. If any NRE will be required for these products, we expect it to take place in the first half of 2019. [Editor's Note: So, no NRE for new module package designs. But what they've already built is confirmed to be good for use! So, we'll take it.]
We continue to make progress on the $24 million contract we were awarded in April 2017. In Q3 we booked another $1.5 million in revenue from this program. [Editor's Note: I am pretty sure they said they received a check for $2.5M from this customer in July when they did the Q2 call. Not sure what happened there?] We believe that most of the challenging technical issues are behind us. We expect to invoice our customer twice in Q1 2019 for a total of $5 million with the first $2.5 million invoiced in the first part of Q1 and a final $2.5 million toward the end of the first quarter. As I mentioned during our last call, our Tier 1 customer advised us they plan to bring to market a product using our technology sometime in 2019. This is still the plan. The specifics regarding the size and timing of their 2019 product launch are still being finalized.
While we did not recognize revenue from Ragentek in the quarter, we did reach an agreement with this smartphone manufacturer on how to proceed with the inventory we built for them. Steve will provide more commentary on that matter, as well as our Q3 results and outlook for the final quarter. [Editor's Note: It's all about the module manufacturing partner now. This agreement with Ragentek will clear out the legacy module inventory.]
In September, we posted on our website a video that that demonstrates how a smart speaker, equipped with our interactive display technology, could be used. The video clearly captured how fast and natural it is to custom order an item with many different options using our interactive display solution in conjunction with an Artificial Intelligence or AI assistant. We plan to post an additional video demonstration of this technology during the quarter.
Our Consumer LiDAR solutions deliver a significantly higher resolution than available today in a comparable form factor, and when combined with Machine Intelligence capabilities, represent another major step forward in the category’s evolution. We expect our dev kits for this product to be available at the end of Q4 as planned. [Editor's Note: No mention of Interactive Display dev kits. Perhaps they feel there is no need to build and promote Interactive Display dev kits as they are already in "advanced discussions" as described in September with one or more of these AI platform providers.]
As I mentioned during the last call, we believe our Automotive LiDAR technology can provide a smaller form factor, higher-line count resolution, and a more cost-effective solution than those in the market today. Within the 30-meter space, our LiDAR solution would have the highest density available with 20 million bits per second as a part of our point cloud output.
Additionally, we believe the latency advantage that our system should have through the deployment of Machine Intelligence at the sensor will provide a feature that will be especially important as we look to adapt this solution to collision avoidance applications. We remain on track to demonstrate the proof of concept for our automotive solutions in 2019. Given the extensive testing and long sales cycle in the automotive industry, we would expect to see limited initial revenue from evaluation units in 2020, with the opportunity for sales more likely in late 2020 and 2021.
Based on the technical progress we’ve made over the last year and our ongoing discussions with leading AI platform owners and our supply chain partners, we believe as I mentioned earlier, that we are positioned to potentially support the launch of three product families during the second half of 2019 which could position us to achieve profitability in late 2019. [Editor's Note: I interpret this statement to mean that the company is positioned to have embedded phone and tablet projectors (Display Only), AI smart speakers with touch projection (Interactive Display), and Augmented/Mixed Reality headset products from Tier 1s containing MVIS technology all on the market at the same time in 2019. That would be truly something special.]
Let me conclude my opening remarks by saying we remain on track with our business plan and are convinced that the display-only products, provided through our licensee, along with our interactive display and Consumer LiDAR products can provide AI platforms with Input/Output capabilities that are unavailable today. By enabling users to interact through voice, image, gesture and spatial awareness, it should be easier for them to interact with an AI platform, making it easier for the user to transact, increasing the monetization opportunities for our customers.
I look forward to updating you on future conference calls of our progress transforming MicroVision from being a R&D company into a solutions provider - a solutions provider with innovative technology that could unlock significant value for Tier 1 technology customers and ultimately reward our shareholders.
I'll now turn the call over to Steve, our CFO, who will discuss our financial performance in the third quarter and offer some commentary of how we see the full-year of 2018 shaping up.
Steve Holt
Thank you, Perry. Good afternoon, everyone.
Third quarter revenue was $11.6 million which included $10 million related to the display-only license agreement we announced in May and $1.5 million associated with the $24 million contract we announced in April 2017. For comparison purposes, revenue in the prior quarter was $2 million, and revenue in the third quarter a year ago was $5.4 million.
The Q3 2017 numbers have been adjusted for the new Revenue Standard, ASC 606, which we adopted on January 1st of this year, using the full retrospective approach.
In the quarter we with Ragentek, the Chinese smartphone maker, and reached an agreement regarding the inventory we built for them. Based on our new agreement in the fourth quarter we expect to ship Ragentek about half of the inventory we built for them at a reduced price. We expect to ship the remaining units in 2019. As a result of lowering the price, we wrote down the value of the inventory by $1.1 million dollars. This write-down is reflected in the cost of revenue section of the income statement. The result is that in the fourth quarter we expect to ship $1.5 to $2 million worth of the inventory we built for Ragentek.
Gross profit for the third quarter was $8.9 million compared with $333 thousand in the prior quarter and a negative $278 thousand in the same quarter a year ago. The improvement over the prior quarter was primarily due to the gross profit on the display-only license.
Third quarter operating expenses were $8.6 million, $145 thousand lower than the prior quarter’s $8.8 million. In comparison, operating expenses were $5.5 million in the same quarter a year ago.
The higher revenue and lower expenses in Q3 relative to Q2, resulted in a slight profit in the quarter of $289 thousand, which comes to zero cents per share. This compares with a net loss of $8.5 million or 10 cents per share in prior quarter and a net loss of $ 5.8 million or 8 cents per share in the same quarter a year ago.
We ended the quarter with total cash and cash equivalents of $13.2 million, compared to $21 million at the end of the prior quarter, and $25.3 million at the end of the same quarter a year ago. The $13.2 million on September 30 does not include the $5 million dollars we received on October 1st from our display only licensee.
On our last earnings call I recapped the potential sources for 2018 revenue, and I will update that now. Through the first nine months of 2018, we have recorded revenue of $15.8 million compared with $7.3 million a year ago. In Q4, we expect to recognize revenue of $1.3 to $2 million under the $24 million contract we announced in April 2017. As I mentioned, we revised our agreement with Regantek, and expect now to record between $1.5 and $2 million in product revenue in the fourth quarter. As Perry indicated on the call, our display-only licensee has not needed to make customizations to the designs they licensed from MicroVision. As a result, we are backing out the NRE we expected for this work from our 2018 forecast. The result of these updates is that we now expect our full-year 2018 revenue to range between $18.6 to $19.8 million, compared to $9.6 million last year when adjusted for the new revenue standard.
I'll now turn the call back over to Perry for some comments before opening the call to questions.
Perry Mulligan Thank you, Steve.
I believe that the progress we have made is tremendous. We are committed to the value proposition that we believe we can provide, targeting leading Tier 1 technology leaders who have the capabilities to bring our innovative solutions to market.
In the second quarter we took the necessary steps to shore up our cash position and are now working with our supply chain partners to support the potential launch of three product families in 2019 with our sights on achieving profitability in late 2019. With that, we will now open the call for questions.
Question-and-Answer Session
Operator
Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question will come from Mike Latimore with Northland Capital Markets. Please go ahead.
Mike Latimore
So, I guess Perry just a couple of questions on your comments around being able to support or potentially being able to support three product families. Is that three product families from three separate companies? And is it inclusive of the April '17 contract in the display-only? Can you just explain a little bit where those three product families may come from?
Perry Mulligan
So, the three product families we're referring are the interactive display products, the display-only license product and the contract from April of 2017 products. So, those are the three launches that we are preparing to support potentially in 2019.
Mike Latimore
And when you say product families, does that mean there is -- can you just elaborate on what do you mean by families? Is that multiple products? Or is that separate versions of one type of product? Or can you just explain families a little bit more there?
Perry Mulligan
So, as we address the verticals that we are targeting, we see that there could be potential for derivatives of these the offerings within each one of the verticals. So, said differently and to try to be more specific Mike, if you think of our interactive display product, there could be several different formats of that product launched in the market at any given time, at different OEMs customized by solutions for their unique requirement.
Mike Latimore
And then, when you talk about potentially seeing business from these three product families in the latter half of '19. Do you mean that that’s when they would launch these products? Or is that mean that’s when you would see orders from these customers?
Perry Mulligan
So, again, I'm not sure what your question is, if you are trying to discern the timing of when the two would occur, but we would expect to see product launched from our customers in the second half of 2019, if that answers your questions.
Mike Latimore
So, then you would likely see kind of orders and revenue what 8 or 4 months before that?
Perry Mulligan
Yes, there will be an offset for our module availability and during the right orders of magnitude.
Mike Latimore
And then just last question, I assume those are latter half of ‘19 ties into kind of timing around the U.S. holidays really?
Perry Mulligan
Not quite sure that I can comment effectively on the go-to-market strategy for all of our potential customers. So, we’ll leave it at that, Mike.
Operator
The next question will come from Glenn Mattson with Landeburg Thalmann. Please go ahead.
Glenn Mattson
A lot going on in the space obviously during the quarter, I am really curious about Perry your thoughts on the Facebook Portal device. I mean, I guess it's obviously clear I would assume that you're not in it because I think it's shipping soon like this year. So, but I guess the question is that a lot of things they talk about, a lot of things you have been talking about, maybe a signal that you guys are kind of in that right direction, but I'm curious if you can understand how they went about doing this. I mean they talked about with that form of device that we're going to be able to follow users around the room even when there are multiple users. They said, they’re going to be using computer vision and AI and the AI is going to be located -- is going to be local on the device not back on the -- in the central hub anywhere. So, curious about your thoughts about that device and how it kind of ties into your consumer LiDAR and the direction you're going with that and thoughts on that?
Perry Mulligan
I appreciate the fact that you recognized this in many ways affirmation of the direction that we’ve been talking about and the direction of the space. You clearly point out and again I am not a subject matter expert on the Portal itself on that product, but I agree with your assessment of how they’re achieving the performance they’re looking for. I suspect that using CMOS technology is a way that they could accomplish which we described.
And as we’ve commented previously when we compare our LiDAR technologies and the capabilities we think we have versus trying to do this with a CMOS solution, we believe we will offer a considerable advantage from a compute power platform requirement. It will be easier and simpler to do it with our device. That said, we’re still on track to bring our consumer LiDAR products out next year and expect to be shipping the explorer dev kits before the end of this quarter and look forward to shipping the developer kits in 2019.
Glenn Mattson
And I am curious about the display-only partner. At this point, are they -- now that they have, they’ve accepted all the stuff they needed that you need to do to qualify to recognize the revenue. Have they started marketing this? I think they probably have been working on marketing a little bit before, but are they more aggressive now? And I guess I am curious about why there still unnamed? I wonder I mean, if they're trying to make a splash at this marketing get the word out that they’re offering this to their OEMs or whatever their customers. Why there is some much secrecy involved now at this point? [Editor's Note: I guess they intend to spring it on people but the level of effort going into the secrecy seems low.]
Perry Mulligan
I wouldn’t be in a position to comment on why company decides to take a position they have relative to their go to market strategy. We’ve articulated in previous calls that we continue to support the engagements with AI platform orders that we are co-marketing too, and all those conversations continue to progress, how they are doing with their other go-to-market engagement I can't comment. And why they remain unnamed is not for me to say.
Glenn Mattson
And you've spoke about three product families and you have mentioned in the -- from the last question that display-only was one of them. Would you expect that there would be one launch from that partner? Or would you expect them to be able to get multiple launches? Or without them I guess?
Perry Mulligan
I'm sorry I didn’t hear the last part of your question.
Glenn Mattson
I mean I don’t mean you expect multiple launches, but I mean when you'll be more hopeful that there will be more than one or there is one number that you would be satisfy with.
Perry Mulligan
So again, I think there is multiple dimensions to your question. We have said repeatedly that. The volumes we are dealing within each one of these segments are significant. So, would I be satisfied with the single customer engagement in that vertical in the second half of '19, of course. Do we expect that they would want to restrict the capabilities they have to single customer? I would not expect that. But again, I'm not in a position to speculate on how they are going to maximize the opportunity they bring to the market.
Glenn Mattson
I think when you first signed the deal that it was mentioned that it would be once they ramp and got up to the speed there would be -- contract minimums of somewhere around $20 million annually, again once they ramp. Is that still the case? And is there a timeframe on when that should happen by I guess anything on that?
Perry Mulligan
So, you are correct. We have discussed that our product minimums required or purchasing required for that. We would expect the volume shipments to start in 2019 for market launch that we see possible in the second half of the year. The minimum requirement does not have to be satisfied within 2019 though on that first year minimum.
Glenn Mattson
And then I guess just last question would be in order to get these launches they talk about the back half of '19. What do you think the latest you can get the awards by I don’t know about I understand that you might not be able to talk about them when you win them. But as far as internally, when would you expect to be latest that you would be able to hear in order to meet those objectives?
Perry Mulligan
Yes, we fully expect that the latest of this could take place would be in Q1 of '19 for the necessary ramps to be supported. [Editor's Note: Now that will be a day long remembered.]
Operator
The next question will come from Jeff Bernstein with Cowen. Please go ahead.
Jeff Bernstein
Just a quick question on the cash, I guess it's down from almost $21 million to $13.2 million. Where did that cash go exactly?
Perry Mulligan
We have the $13.2 million and then of course we had the $5 million that came in the day after the quarter. We've been running in that $7 million, $7.5 million cash burn each quarter, primarily from the operating expense cost is the biggest driver.
Jeff Bernstein
I mean I see breakeven in the quarter. So, I'm just wondering and I actually don’t see where the cash went on the balance sheet, so I could scratch my head
Perry Mulligan
Yes, the $10 million that came in, $5 million comes in Q4, so that’ll be a cash good guide next quarter and $5 million came in Q2. So, it didn't affect Q3 much.
Operator
[Operator Instructions] The next question comes from Kevin Dede with HCW. Please go ahead.
Kevin Dede
Perry apologies, but you -- the nuance of modern technology, I kind of missed some of your formal comments and I know you reiterated them a little bit when you were answering Glenn’s question. But you said you got an explorer dev kit coming out before the end of the year or available to customers in the first quarter. Can you clarify that for me please? Again, I apologize.
Perry Mulligan
The dev kit that we’re releasing for the consumer LiDAR will be available by Q4 into the quarter. So, this quarter at the end, we’ll have the dev kit released for customers. We talked about providing in more volume explorer kit, an explorer kit is simply a preproduction unit that’s more robust, intended the use by developers and engineers outside of a lab condition to help them experiment with the device and become familiar with this as it could potentially work within their solutions. So just think of it is a slightly more hardened dev kit to be used by a broader cross section of the engineering population of the development team and that will be available next year in 2019.
Kevin Dede
Kevin Dede
And so, that’s one you’re expecting in the March quarter?
Perry Mulligan
True. Yes. I don’t think we talked of anything specific in March quarter Kevin, sorry.
Kevin Dede
The other thing that I talked was really interesting were the specs that you associated with your 30-meter auto LiDAR. Could you kind of rehash those and maybe compare them to what you're seeing some of the other sensor companies that developed and deliver to maybe not the OEMs or the auto OEMs themselves but the sensor integrators?
Perry Mulligan
So if we just look at the most macro level today one of the leading players in the space is the Company called Velodyne. They use a spinning medium solution and the lot major product announcement I heard from them was a 120 lines of revolution as an example. We discussed today on our call that our product would come out with 720 lines of resolution as a comparable.
There’s other companies, a plethora of them, trying to solution solid state LiDARs capabilities. We believe that in the form factor 20 million points per second for our bit cloud it -- will be and is leading the edge, it is on the densest point cloud that we can. But the most important aspect of those values I think that you have to recognize Kevin is that where company knows what's been our machine learning algorithms on the device.
And the relevance of that is the ability to do object detection and localize to edge compute to enable the system to respond more quickly, to improve latency of the system overall. So, beyond the clarity of resolution that we expect to come from device itself, it's really the processing capabilities at the device level that improves the latency that we think is truly significant as well.
Kevin Dede
The other thing that was really interesting Perry was your discussion of an upgrade top to bottom ASICs and MEMS. I'm kind of wondering where you are in that process? And how much of the new tech gets incorporated into some of the devices that your customers are already working within the lab? Can you touch on the timing there and the influence that your new development might have on whether or not your customers decide to delay going to market?
Perry Mulligan
I really appreciate you opening that up for us. Thank you so much for the question. Anybody that’s been in technology for any length of time understands that evolutions of the platforms are required to remain current to improve quality, to improve performance and to lower cost. And any one of these with that we have referenced to analog ASIC, a digital ASIC or MEMS solution, firmware solution and machine learning, each and every one of those are significant undertaking.
For us to be able to tell you at this point in time that they are all in flight, all landing as expected and all ready to support production in 2019 is a testament to this team. You have no idea how significant and valuable the contributions that those processes and progress on those devices has been and how they have enabled us as we said to still earn the right for the conversations we are having with our Tier 1 OEM because we are demonstrating at a level that is truly a high performance organization. Very proud of the team of what we did there. [Editor's Note: Great stuff!]
Kevin Dede
So, I guess the simple answer to that is basically, yes, I mean you -- we have got all of that stuff going into our equipment and we will be ready for customers next year just like we said?
Perry Mulligan
Exactly, and recognize the fact that it is not a dumb question, recognize the fact that many, many organizations assemble and trip over things like this and cause delays in their process. We are proud of the fact that we are not making those promises and that we are ready to go.
Kevin Dede
Next question for me just on CES what you hope to show there? And how you intend to wow people that come to you?
Perry Mulligan
I trust that you will be hopefully one of those people that do come to visit us. As you know, we entertain customers in our private suite of CES, and we will be demonstrating the capabilities of our interactive display and our consumer LiDAR products. So, we are really excited about how those will be received.
Kevin Dede
Would you expect that second video that you discussed would you expect that that be available by that point?
Perry Mulligan
I expected that second video will be available in December.
Kevin Dede
This is probably a tough one, but you did sort of speak to the size of contracts and the interactive display space given that that $10 million contract. But can -- is there a chance that you could provide some more reference for some of the other initiatives that that you have underway?
Perry Mulligan
Just to be clear Kevin, the $10 million agreement that we signed in May of this year was to license, manufacture and sale exclusively of our display products only to the licensee and the transfer of the requirements to support that agreements have occurred, and that’s why we recorded this as revenue in Q3. So, that was specifically to enable them to come to market and to manufacture, so those products would be implications of our supplying components and technology to support. [Editor's Note: This is an important clarification in light of the statement earlier that they are working with the same partner on the launches of the other verticals as well.]
Kevin Dede
Now did I misunderstand that Perry? There are no other -- I guess there's no other revenue associated with that agreement going forward.
Perry Mulligan
No, we were very specific on that Kevin. We expected that at the time we signed the agreement we identify that there’s component sales required from us to enable them, to use the technology, right. They need the components from us to do so, and that there were minimum requirements associated with the component purchases. We also identified that there was a transition period allowed for them to stabilize and move the technology into the production. So those minimums didn’t kick in immediately. We did articulate that the minimum order quantities on an annual basis would represent approximately $20 million depending on mix of components. So that’s how we sized that ongoing relationship.
Kevin Dede
I was wondering if there were parameters similar to those that you could discuss around some of the other product families that you hope to contribute to revenue in the second half of next year.
Perry Mulligan
Yes. So, we haven’t identified the volume ramp and timing for the module sales that we’re articulating for our interactive displays.
Perry Mulligan
Thank you, operator. In closing, I want to thank our employees, business partners and our investors for their support and look forward to reporting our progress over the next several quarters. Operator The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
- Get link
- X
- Other Apps
Comments
Post a Comment