Microvision Inc. (NASDAQ:MVIS) Q2 2019 Earnings Conference Call - Final Transcript

Jul 18, 2019 • 05:00 pm ET

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Microvision Inc. (NASDAQ:MVIS) Q2 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Perry M. Mulligan

facing. It is our belief that enabling Class 1 laser products for our customers could provide MicroVision an opportunity to sell well in excess 10 million units to multiple customers, with perhaps 1 million to 3 million units shipping during the first 12 to 24 months of production.

The move to Class 1 products resulted in decision delays of about a quarter. Consequently, we now expect display-only and interactive display products could launch in mid-2020, with first revenue to us likely to start in Q2 2020, and the potential for profitability, depending on volumes and product mix considerations, one quarter later.

Let me now discuss our April 2017 contract. We completed the development work required under the contract and have invoiced all of the amounts owed. We received the final $2.5 million payment this month, bringing the total cash received under the development portion of contract to $15 million. We have shifted to a new phase of our relationship with this customer, and this month will begin shipping production parts. We expect product shipments to this customer will generate between $3 million to $5 million in sales through the balance of 2019. As our customer launches their product into the market, we expect to gain further insight and will provide guidance on what revenue we could expect to see in 2020. This program represents a high-water mark in MicroVision's ability to execute a major program with a Tier 1 global technology leader, meeting the quality, performance, cost and schedule expectations of our customer.

I also want to make you aware that as the development portion of our April 2017 contract came to a close, it became clear that we were over staffed for the work we had ahead of us. During the latter part of the second quarter, we completed a reduction in headcount of approximately 25%. The engineering teams saw the majority of the reductions, but areas in SG&A were also affected. As a result of these reductions, and other expense reductions, we expect our operating expense to decrease below $7 million in Q4 from the $8.4 million incurred in Q2.

Now, moving to our Consumer LiDAR platform opportunities, we continue to engage with our customers who are using the explorer kits we have shipped. There is strong customer interest and we are looking for the lead customer that could drive the volume needed to achieve a cost-effective and successful product launch.

Finally, as we look at our automotive LiDAR vertical, we continue to have positive meetings with customers, partners and suppliers in this space. The team is continuing to develop intellectual property and file patents in this area. We continue to look for a lead partner to help us with the investment required to bring products to market.

Let me wrap up my introductory comments by re-iterating that we set out nearly two years ago to transform MicroVision. We believe we are now very close to design wins that could enable products that would be shipped all over