Strong Second Quarter Results

Company builds on momentum with significant year-over-year revenue growth

Earnings Call
Audio Recording Available Here
Transcript here
Second Transcript


REDMOND, Wash.--(BUSINESS WIRE)--Jul. 29, 2015-- MicroVision, Inc. (NASDAQ:MVIS), a leader in innovative ultra-miniature projection display and imaging technology, today announced its results for the second quarter of 2015.

MicroVision continued to build on the strong momentum witnessed in 2014. Revenue in the quarter was $4 million, showing significant growth both year-over-year and sequentially. The company delivered three times as many components to its Fortune Global 100 customer during the second quarter as it did in the first quarter 2015. Revenue for the quarter was comprised of component deliveries (product), royalties and contract revenue: component deliveries and royalties accounted for $2.5 million while $1.5 million was from contract revenue following completion of a display module support services agreement with MicroVision’s Fortune Global 100 customer.

In addition to increasing shipments of components, MicroVision continued to engage in cooperative business development activities with its Fortune Global 100 customer. Also during the second quarter, the company continued to make solid progress developing product opportunities for pico projection and other applications.

The following financial results are for the three and six months ended June 30, 2015, compared to the same periods one year earlier.

• Revenue was $4.0 million for the second quarter 2015 compared to $611,000 for the second quarter a year ago. Revenue for the first half of 2015 was $4.9 million, compared to $1.8 million for the first half of 2014.


• Operating loss for the second quarter of 2015 was $2.8 million, compared to $3.4 million for the second quarter a year ago. Operating loss was $6.7 million for the first half of 2015, compared to $6.5 million for the first half of 2014.


• Net loss for the second quarter of 2015 was $2.8 million, or $0.06 per share, compared to $3.4 million, or $0.08 per share, for the same quarter a year ago. Net loss was $6.7 million, or $0.15 per share, for the first half of 2015 compared to $11.4 million, or$0.29 per share, for the first half of 2014. The first half 2014 net loss includes a $5.0 million non-cash loss recognized on the fair value adjustment of MicroVision’s warrant liability.


• For the second quarter of 2015, cash used in operations was $3.6 million compared to $3.7 million for the same period in 2014. For the six months ended June 30, 2015, cash flow provided by operations was $1.5 million compared to cash used in operations of$6.7 million for the same period in 2014.

As of June 30, 2015, backlog was $15.0 million. The company expects to fulfill this backlog in the second half of 2015 and into 2016. Cash and cash equivalents were $15.1 million. In the second quarter 2015, MicroVision received $900,000 in proceeds from the exercise of warrants and gross proceeds of $1.8 million from the sale of stock through an At-the-Market (ATM) equity facility established in May 2015. Net proceeds from these activities are included in the cash and cash equivalents.

LINK TO 8K

Market Treatment of High Growth

What CAN happen in a market.

This isn't a prediction. It's all my opinion, you decide whether to take it or leave it.

It is perhaps a study of why it may be foolish to make predictions. As we get closer to product releases, considering what might happen with MicroVision shares, the "how high could they go?" question gets more and more difficult to answer. I'm sure the shares will go higher. 

I'm sure the product will get vast public appeal. (EVERYONE I've showed the PicoAir to has wanted it. Not most of the people - EVERYONE.) I really enjoy using it, and I know that in the US... this is a cool toy, elsewhere, much more than that.

In China, Malaysia and India, PicoP technology will be a way for regular people to enjoy media how rich people in the US do. And in India the need for PicoP is huge.

Screen shortage in India

SO, what happens when the investing public's imagination catches fire about a product or anything that grows quickly?

The stock price goes insane. I like to be conservative with estimates, but what if the other investors who find this aren't conservative. (If you're reading this close to its publication date, you are WAY ahead of the normal investor -- PicoP, at this point is almost totally unknown.)

Shake Shack

Shake Shack is a recent IPO. People like their food. Investors like their stock -- probably a little too much.

As of 5/26/2015 at noon eastern time, SHAK is trading at 85.45 with a Price/earnings ratio of 1,225. For each dollar of SHAK earnings, investors are paying $1,225.*

To make this further understandable, Shake Shak has 63 locations. If we divide their market capitalization (3.01 Billion) into those 63 location, we have the value of each restaurant. Each restaurant is [over]valued by the market at 47.7 MILLION dollars. Clearly, the market has exceedingly high hopes for this restaurant chain.

Transfer

So, if a similar situation happened with MicroVision... I'll assume that MicroVision has medium market penetration success, and the same kind of market success that Shake Shack has had... (just to be clear, I'm not suggesting that this will happen, but it can happen, and as an investor, watching for this to happen is a good thing. If the price gets this crazy, the market will have given you a nice opportunity to sell some of your shares at a peak.)

For my exercise I'll assume that during the next year MicroVision collects royalties on 2 million PicoP licenses. My own estimates have been that MicroVision will ultimately collect $12/unit. Further, I'll assume that the cost of goods sold is 40% of that. (Cost of goods on the parts that MVIS provides is 60% -- I am assuming 40% -- AFTER royalty payments -- which could be considered conservative.)

Assuming that MicroVision earns $12/engine. They pay for the cost of the goods, and their standard cash-burn rate. MicroVision ends up with a $7.2 million annual profit.
($12 million is cash burn & 60% of the remaining 12 million is 7.2 million. )

There are 48.5 million shares of MicroVision outstanding.

$7.2/48.5 = .15 (Earnings / shares outstanding = Earnings per share)

At a normal PE range for a growth company (60-80*earnings) the price range to expect there would be between ($9 - $12/share)

What happens if it hits the public imagination like Shake Shack?

.15 * 1,225 = $183.75/share

Do I expect this to happen? No. CAN it happen? Absolutely.




For fun, I'll run the numbers at a major CE product number: ten million

10,000,000 - 1,000,000 (Standard burn rate)
(9,000,000 * 12) * .6 = 64,800,000
64,800,000/48,500,000 = $1.34 
$1.34 * 1,225 = $1,641

*(At the same time, investors in Apple are paying $16.23 per dollar of Apple earnings, or $14.06 per dollar of Caterpillar earnings.)

*Older price estimate
*Valuations

Highlights of the call -- so far

Eight year contract with SONY (This is good!!)

Plenty of Cash & Back-orders

SONY

Five OEMs showing various devices this year at CES. (They don't show them unless they're going to try and sell them soon!)

More OEMS showing interest since CES.

Details Later.....