MicroVision Announces 2014 Operating Results with Strong Momentum Heading Into 2015
Company sets goal for significant year-over-year growth in 2015 from commercialization of its patented PicoP® display technology
2014 Operating Results
2014 was a year of significant accomplishments for MicroVision . Progress was made on each of its stated goals for the year, positioning the company for growth in 2015. The goals for 2014 were to:
- Complete development with Fortune Global 100 customer, support customer with commercialization efforts and supply key components
- Build pipeline of consumer and automotive OEM opportunities for MicroVision’s go-to-market partners that are providing display engines incorporating PicoP® display technology
- Ramp supply chain for high volume production of
MicroVision components in the second half of 2014.
Below are specific accomplishments related to the 2014 goals.
Fortune Global 100
The company completed the development effort with its Fortune Global 100 customer for a display module incorporating MicroVision PicoP® display technology. This development effort was a major area of focus for MicroVision in 2014. Additionally, the Fortune Global 100 customer contracted with MicroVision in October for $1.5 million in support services to enable commercialization of the module. In the third and fourth quarters of 2014 MicroVision received orders totaling nearly $3.8 million for components to support early commercialization activities. Fulfillment of those orders began in Q4 2014 and continues into 2015.
Recently MicroVision announced it is licensing its PicoP display technology and will supply components to the Fortune Global 100 customer for that company’s display modules. The completion of this license agreement marks the culmination of two years of collaboration between the two companies and is a milestone achievement in MicroVision’s transition to its ingredient brand licensing business model.
Pipeline of Opportunities for Partners
Several successes were achieved in building a pipeline of opportunities for MicroVision’s go-to-market partners, including the market introduction at CES 2015 of two consumer products incorporating PicoP display technology. MicroVision targeted key OEMs and major retailers in the United States and Asia to introduce them to the opportunity pico projection presents in a world where consumers are progressively turning to mobile for media consumption.
To engage OEMs and retailers, MicroVision produced market development tools and executed a series of direct consumer studies to create a comprehensive design-in “tool kit” and market data that present the value proposition and demonstrate the advanced capabilities of display modules incorporating PicoP display technology. Specific market milestones included:
- Korean OEM Celluon formally launched two products at CES 2015 incorporating PicoP display technology, PicoPro and PicoAir. The company has begun selling its products, which have garnered many favorable reviews.
- Several companies
MicroVision worked with throughout 2014 on design-in of display modules were privately demonstrating products incorporating PicoP display technology at CES 2015 to their prospective customers and retail outlets. MicroVision announced in 2014 that it is collaborating with a second electronics brand on the Fortune Global 500 list on an innovative smartphone product and made significant advancements on display module development.- In the automotive segment,
MicroVision delivered prototype HUD units to a major vehicle OEM and a global Tier One supplier. Those customers are evaluating the PicoP display technology based HUD systems. MicroVision delivered custom display modules to a leading global logistics company for deployment in one of its facilities inthe United States .
Ramping of Supply Chain
The delivery of MicroVision specific components to its engine manufacturing partners is an integral part of the company’s business model and revenue stream. MicroVision made solid progress to ramp to volume production capability in the second half of 2014. The company established baseline production capacity and began shipments of components to its Fortune Global 100 customer in Q4.
2014 Financial Results
Following aggressive cash management, MicroVision reduced year-over-year operating loss by 13% with reduction seen in each quarter in 2014 compared to the same quarter the previous year. The company also began a transition from development revenue to product and license revenue with a majority of fourth quarter 2014 revenue coming from products and over two-thirds of the backlog comprised of component orders expected to be fulfilled in the first half of 2015.
- Annual revenue of
$3.5 million in 2014, compared to$5.9 million in 2013. Revenue for the fourth quarter of 2014 was$ 0.7 million , compared to$1.2 million for the same quarter in 2013. - Reduced operating loss to
$ 13.2 million for 2014, compared to$15.1 million in 2013, and$3.4 million for the fourth quarter of 2014 compared to$3.9 million for the same quarter in 2013. - Net loss for the year of
$18.1 million , or$0.44 per share, compared to$13.2 million , or$0.47 per share for the prior year and$3.3 million , or$0.08 per share, compared to$2.4 million or$0.08 per share for the same quarter a year ago. The 2014 net loss includes a$5.0 million non-cash loss on the exchange of warrants in the first quarter. - Maintained cash used in operations at
$13.0 million in 2014, compared to$12.7 million for 2013, reflecting the company’s continued focus on managing cash use.
As of December 31, 2014 , backlog was $5.1 million and cash and cash equivalents were $8.3 million . This cash balance is exclusive of the license fee MicroVision is expecting later this month from its recently announced license agreement.
2015 Objectives and Outlook
“2015 is expected to be a transformational year for MicroVision . We expect to achieve significant year-over-year growth by focusing attention on making our customers successful whether providing high quality components or assisting them with their go-to-market efforts,” said Alexander Tokman , president and CEO of MicroVision .
MicroVision’s key goals for 2015 build on the momentum from 2014 and include:
- Support the Fortune Global 100 customer with display module commercialization
- Develop new OEM/channel opportunities for display engine manufacturing partners that are incorporating PicoP display technology
- Increase supply capacity for key components
- Achieve significant year-over-year growth through component sales and licensing of PicoP display technology
- Evolve technology platform to offer enhanced features and capabilities for a compelling roadmap for licensees of PicoP display technology.
Questions and Answers:
Key points (so far.)
1) DGL pricing is approximately the same as the cost of other lasers
1) DGL pricing is approximately the same as the cost of other lasers
2) 90% of recent efforts/resources was dedicated to the SONY project. (This frees up resources)
3) MicroVision's business model will leverage sales forces of partners
4) Celluon overwhelmed with orders for PicoAir and PicoPro
5) Significant power/brightness advantage with MEMS and lasers
6) .... brightness that people wouldn't expect. (will QUOTE this comment when I can.)
SUMMARY
Seeking Alpha
The transcript of the full call is available there. I've simply highlighted some points that seem to be key.
Q: What about the relationship built on our technology with a world-class sponsor?
Alexander Tokman - President and CEO
We put 90% plus of our resources in past two years to make Sony a successful, 90% plus. If we did not do this, we would have not been successful. So, we have to manage cash and we’d have to focus on vital few. Now that we transition and we've done a lot of heavy lift to support our Fortune Global 100 customer, we have resources become available for other opportunities.
As we start selling components and receive licensing revenue from our customer selling their display modules to everybody, we obviously are going to have more revenue and more margin and we’ll be able to invest more into the technical development resources and to expand our base so we can focus on more opportunities, yes.
Alexander Tokman - President and CEO
Ooyala, for example, a leader in reporting digital video trends, year-over-year smartphone and tablets use more than doubled showing 114% increase.
5) Significant power/brightness advantage with MEMS and lasers
6) .... brightness that people wouldn't expect. (will QUOTE this comment when I can.)
SUMMARY
Seeking Alpha
The transcript of the full call is available there. I've simply highlighted some points that seem to be key.
Key timelines that your customers are trying to hit?
Alexander Tokman - President and CEO
Because most of the customers we’re dealing with right now are selling it globally. Each region has its own preferential time. In North America, it's Christmas time. In Asia, it's could be Chinese New Year or summertime where they launch the product. So there is not really a specific time and it depends on the region.
What types of end-user products that you are seeing?
Alexander Tokman - President and CEO
Sure. There are several types of products actually. We can’t specify it because this would shed light on something that people ask us not to discuss publicly into their outlook but the companion products are part of the portfolio. They are obviously working with smartphone manufacturer. We obviously are working with several companies who want to introduce simpler version aftermarket head-up displays. Also, there are applications that related to home and that are not your traditional projection applications.
Q: What about the relationship built on our technology with a world-class sponsor?
Alexander Tokman - President and CEO
Sony makes it a lot more exciting for us. We always believed that the success in this market for us is not going to be from trying to work with hundreds of people at the same time, but rather take the vital few market makers who can go and use their expanded marketing and sales arm and promote this technology the way it should be promoted to be successful with consumers. Obviously, Sony is one of the companies that can do this. And this is why we're very excited about it.
So the valuation point is simply that if they didn't believe in this market opportunity, we would have not gone this far. They've invested a significant amount of money into this proposition. What they've given us is a fraction of what they are investing because they truly believe that there's something special about this emerging market and once the success is shown, we believe that there will be many copycats who would join -- like pigs of the trough.
We put 90% plus of our resources in past two years to make Sony a successful, 90% plus. If we did not do this, we would have not been successful. So, we have to manage cash and we’d have to focus on vital few. Now that we transition and we've done a lot of heavy lift to support our Fortune Global 100 customer, we have resources become available for other opportunities.
As we start selling components and receive licensing revenue from our customer selling their display modules to everybody, we obviously are going to have more revenue and more margin and we’ll be able to invest more into the technical development resources and to expand our base so we can focus on more opportunities, yes.
Q: Now when you look at the competitive landscape and you look at Lycos and you also look to DLP, there are significant advantages as a lumen output increases? Could you talk a little bit to that and show where we stand in that competitive edge?
Alexander Tokman - President and CEO
Sure. One of the fundamental advantages we have for any application to require miniaturization and low power consumption is due to the fact we use lasers and MEMS versus let say panels and the LEDs. So our ability to increase brightness without any significant increase in power is what separates us.
For example, when the projector is very large, we don’t have real advantage on power, but when the requirements for the projection system to be very small, we actually have significant advantage. At low brightness, we slightly differentiated and as brightness increases from 10 lumens to 100 lumens, our differentiation on power increases exponentially.
Unidentified Analyst
Now as you start to look at higher lumen output, are there limitation to the start or are you seeing that the current, I think, 32 lumens is what Celluon is coming out with. Let say if you looked at the 50 to 60 lumen area, is that doable without any major obstacles that need to be overcome?
Alexander Tokman - President and CEO
Yes.
Unidentified Analyst
Okay. And component wise? Go ahead.
Alexander Tokman - President and CEO
... at CES under NDA we showcased to customers in Vegas some of the roadmap activities that we have about increasing brightness to the levels that people would never expect us to get.
it is exciting, because you’re replacing three or four MicroVision business development, marketing and sales people with several thousands that Fortune Global 100 has.
Unidentified Analyst
Okay. And when it relates to cost of digital green lasers, at one time there were 5x of the reds and blues. How close are we coming in line with the cost of the other colors right now?
Alexander Tokman - President and CEO
Very close, Tom, very, very close. It was 20x actually when we started in 2010 and now it’s almost even.
Unidentified Analyst
Excellent. Good. Congratulations on great milestones this year. Looking forward to seeing additional products, I have got the Celluon projector and I am amazed that the quality and the ability of it to be able to -- always being focused and beautiful colors. So thanks for the work.
The way the agreement is structured without going into specific details is that Fortune Global 100 customer would sell these modules internally and externally.
it's related to scanned beam display technology that we license to them. It's not related to a number of patents, but it’s related to instantiation of the technology at that time.
Ooyala, for example, a leader in reporting digital video trends, year-over-year smartphone and tablets use more than doubled showing 114% increase.
We believe that solutions that with MicroVision's PicoP display technology are poised to enable truly differentiated end-user experience that are not attainable from other technologies. And there’s a lot to be excited about.
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