Good morning, and welcome to the MicroVision Shareholder Update conference call. At this time, all participants are in a listen-only mode. You can submit your questions within the meeting webcast by typing them into the Q&A button on the left side of your viewing screen. Type in your question and press Submit, or you may ask a question on the phone lines. If you would like to ask a question on the phone line, please press star zero on your telephone keypad. Please note, this event is being recorded. I would now like to turn the conference over to Drew Markham. Ma'am, please go ahead.
Thank you, Ali. Good morning. We're glad that you've joined us for this shareholder update. On today's call, our CEO, Sumit Sharma, and CFO, Anubhav Verma, are pleased to answer your questions. Please keep in mind, however, that we plan to hold our regular quarterly earnings call in early November, so we will not provide any details about our third quarter twenty twenty-four financial results beyond the preliminary results that we publicly announced on Tuesday.
Some of the information you'll hear in today's discussion will include forward-looking statements, including, but not limited to, statements regarding the expected benefits and implications of the recently announced convertible note financing, our cash position and financial condition, customer and partner engagement, market landscape, opportunity and program volume and timing, product development and performance, comparisons to our competitors, product sales and future demand, business and strategic opportunities, projections of future operations and financial results, availability of funds, as well as statements containing words like intend, 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 statement. We encourage you to review our SEC filings, including our most recently filed annual report on 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. This conference call will be available for audio replay in the investor section of our website. Now, I'd like to turn the call over to our CEO, Sumit Sharma. Sumit?
Good morning, everyone, and thank you, Drew. As Drew mentioned, we're excited to talk to you this morning and give you an update on this most recent transaction and give you a lot more color what this is about. We've had a lot of inbound questions from our investors and of course, also analysts, and it we felt it was most efficient to do it in a combined call. So I'd like us to focus our questions and discussion on this transaction and perhaps other previous earnings calls, if there's anything lingering that people would like to ask, because we'd like to maintain our normal schedule of updating you at the next earnings call. So with that, I'd like to turn it over to Anubhav or to start the meeting.
Yep, we can.
Operator, can you open the line for questions first?
Yes, indeed. Ladies and gentlemen, the floor is open for questions. If you have any questions or comments, please press star one on your telephone keypad. We ask that while posing your question, you please pick up your handset, if on speakerphone, to provide optimum sound quality. Once again, if you have any questions, please press star one on your telephone keypad at this time. One moment, please, while we pull for questions. Okay, thank you. We have a question from Ty Bordner. Your line is live.
Okay, thank you. Thanks, everybody, Sumit Sharma and Drew, for taking our questions. Appreciate that very much. Congratulations on the financing deal as well. I think I have four questions, so I'll try to go, be quick. Has the conversion price for the convertible note been determined and fixed? And if not, when do you expect that to happen?
Thanks, Ty. This is Anubhav. Yes. So the conversion price as has been fixed at $1.56, which is 20% over the closing price of $1.33 as of Monday. There are some parts of the note, the initial payments, for which the conversion price will be set when the registration statement goes effective, you know, in probably a few weeks. But yes, most of the principal of the convertible note, the conversion price, have been fixed.
Can you clarify that? So what does it actually mean then, if the conversion price has been fixed, but yet-
Yep.
... But yet the conversion price... You mean, you mean for the second, for the $30 million tranche is not fixed yet? Is that what you mean?
Well, yes. So the 30 million tranche obviously is not fixed yet, so that will be determined when the tranche is drawn. What I meant was there are some initial payments for this convertible loan, a small amount. The conversion price for that will be determined on the registration statement effective date, which will be, like I said, in a few weeks. But the bulk of the principal, part of the 45 million, has been determined at $56.
So those payments are the ones that could potentially begin on January first of twenty twenty-five?
That's right. That's right.
Okay. All right. I mean, it is a little confusing as to what the conversion price is, but, I mean, it's confusing in the sense that it's fixed, but yet it isn't fixed for those payments, so. Okay.
Yes, the reason for that, Ty, was, again, you know, High Trail, which has been, you know, a very sophisticated investor during all this, process with us, and this, the reason for this is obviously they wanted to give us flexibility. Because I think, and this would come up, you know, in a lot of questions, because I think they're a great financial partner because this is where all the incentives are aligned, for them, and MicroVision shareholders and the, and the company, because like I said, this deal is a very strategic deal for us to find a partner who is, equally incentivized for the stock price, to build up momentum and, go up from there.
Because obviously, they make more returns when the stock price goes up, as you can imagine.
Sure. So it seems like the maximum conversion price is like, I think, $1.76, right? That's fixed. That can't. It can't go higher than that.
Yeah. Correct. That's right. $56, sorry, to, just to make sure.
Okay. And does High Trail Capital understand what you just said regarding, you know, their incentives to, you know, the long-term appreciation of the MicroVision prices in line with, obviously, MicroVision and shareholders? Are they allowed to short the MicroVision stock?
So here again, I think the mechanics of the deal is important, right? So they are obviously going to get the shares as the stock price converts at $1.56. And, you know, if the stock price stays below, you know, we're obligated to pay them in cash, as you would have seen in the agreement. So the reason why I think, you know, the incentive is perfectly aligned, because obviously they make... They ride, potentially ride the upside with the shareholders, because, you know, obviously they would want to have increased returns if the stock price goes up. Because they are not incentivized if the stock goes down, because obviously their returns get capped at, you know, the 10% redemption premium that the notes are on.
So as you can imagine, their economic incentive is to hold on and ride the upside wave. And for this reason, you know, I think I would also like to draw attention to High Trail Capital's DNA and obviously their past transactions, because again, like I said, they're a very sophisticated investor. They have a affiliation with Hudson Bay Capital, which again, manages over $20 billion, and has assets under management over $20 billion. So as you can imagine, you know, they have a very sophisticated DNA and a track record as well. I would encourage you and all the investors to read about their investments.
For example, they did a deal with Plug Power in 2019, similar to this fixed convertible, fixed conversion price, where basically the incentive is the, the downside is, fixed or capped, while the upside is, kind of unlimited because they want to ride the momentum. And that's why we believe they are a very ideal and a strategic partner, and hence, you know, they, they ride the upside wave for the, for, enhanced returns on their investment.
Right. So any price at the time of redemption that's below the conversion price is, you know, presumably they take in cash, which is, like you said, like, you know, 10% really, over the life of the term of the note, on their money. But anything above the conversion price, they're gonna benefit on the upside of the stock price, right?
That is correct.
But I guess what I was asking is: Are they allowed... I mean, it certainly incentivizes them to have a lower conversion price, right? Because they can buy stock cheaper. And it certainly hurts MicroVision to have a lower price because-
But Ty, as everyone mentioned, that's already fixed.
That's already fixed, right? That's what... Yeah, the price is-
You said it's already fixed, but you said the redemptions that are coming up, it's not fixed yet. It'll be fixed upon the issuance of the,
It is fixed, Ty.
No, no, no. So, no, I think. Yeah, so there are some payments which are, again, you know, if you add up to $5.75 million principal, the first three payments, so those are not fixed, as an example.
Okay.
So like I said, the bulk of the principal is fixed at $56.
Okay. Got it. Got it. All right, good. But, okay, in your press release this week, you mentioned the heavy equipment vertical, and I guess my question is: Do you consider the forklift and the AGV businesses as part of that heavy equipment vertical? And can you provide an update on the-
Among others, yes.
Yeah.
Yeah, among others, yes.
Okay.
I think, you know, we have to have a pipeline, you know, that's deeper and there's multiple segments involved. So you look at these different segments of stuff that's ready right now and projects that will be coming that we believe that can be converted in twenty twenty-five. And having a strong balance sheet, as we discussed with those customers, this is the thing that I've been saying for a year. The customers that you go to, they need to have confidence that they give a big PO, you can convert it. So now when you look at industrial, it's better. Because unlike automotive, there's like, in automotive, it's like four years of waiting and doing custom development for them, not getting paid before revenue starts. In this case, what we're looking at is a revenue start in next year.
So that's why we're very, very focused on that, and it's, you know, big enough numbers. And as you can imagine, the trust that High Trail has put into us, based on what we have shared with them, you know, this was the best mechanism. So yeah, industrial space is where we're focused on for these next crunch of revenues.
Okay. All right, thanks. Appreciate that. So the second part of that question was, can you provide an update on the industrial and automotive opportunities? Like, sounds like you've somewhat just provided an update on industrial. What about automotive?
Let me give a clear update so everybody can hear it. Been working a lot on the industrial space. As you imagine, we started off with the acquisition of Ibeo last year, and with that, we inherited the MOVIA L product. MOVIA L was, of course, created by that team for the automotive space. There was a bunch of things that automotive always has you do that kind of, you know, dissects your product, and it's not ideal products. We've invested for over a year, and we got things done, so now we can address industrial with the same core product. I'm sure somebody's gonna ask me a little bit later in the call, so I'll cover it then, what that means.
So I'll, I'll give you what the dissection is, and it'll be interesting for all you guys to understand. But effectively, what we have now is we have a standalone LiDAR product, where all the LiDAR, you know, point cloud data, everything comes from the LiDAR, but also the perception, which I've been talking about for a while. And this LiDAR no longer is just a LiDAR. It is a full-blown hardware and software solution. So this solution, through Ethernet, plugs in directly to their ECU, and it can tell their device, you know, in, in the cases of, as you said, AGVs, you know, slow down, avoid this obstacle, here's in this zone, you know, all those things, all of the alerts over the interface that we provide them, the custom interface we provide them.
In some cases, they can actually stop, you know, directly instruct if there's an emergency situation, you know, if there's a person that just kind of, you know, jumped in front of a moving object to send an alert that would immediately stop it, right? It all depends upon each customer, what they wanna do, but it all comes from the LiDAR. That's the industrial part of it. That's exciting, and while we continue working on the hardware is somewhat fixed. What we have to do on the hardware now is start placing the long lead items with the long lead silicon and with our manufacturing partners, start gearing them up for ramping up production next year with this new product with everything inside, and that's going well.
I think, you know, samples are gonna get ready for that now, and start going out, so we feel like we're in good shape, but we have to start the ramp. On the automotive side, you know, the RFQs are still going, and the best way I can describe it is that the timelines are still 2020 to 2029, so nothing has moved out. But there's just so much work involved in each and every one of those. The truth is that there's a lot of changes at the OEMs. That's a fact. You know, they're thinking about put it behind the windshield, put it in the headlamps, put it in the roof line, put it in the grille.
Each and every one of these, you know, there's a bunch of work that has to be done to provide them what they need, and then keep thinking about how much customization we would have to do to accommodate them and try to keep them, you know, as minimal as possible. Those keep going, and, you know, are there other RFQs? Yeah, other RFQs are developing. I think I just returned from Germany, and I've been to several meetings, and they're starting to talk about the next round of RFQs, new RFQs, for the same 2020 and 2021 launch for passenger vehicles. I expect in the next six months or so, you know, we'll talk about additional RFQs coming in.
But the thing that all of us should remember, automotive is a long cycle, and it will remain a long cycle. There is no fast revenues coming from that. You know, there's some NREs that come in, but it's minimal compared to what we end up spending, and we have to wait many, many years. So industrial is very important to us as a company and all the shareholders. We need to get this revenue started and focus on this because this is a bridge. This is a very important bridge that we have to convert.
Okay, thank you for that. And last question, do you expect to wait until the annual shareholders meeting to seek shareholder approval of the seventy-five million share increase that was outlined in the convertible note documents?
This is on-
Yeah.
Yes.
Yeah.
Yeah.
Go ahead.
Go ahead. Sumit, I was gonna take that question. So yes, so I think-
Go ahead.
Look, we're gonna stick to our cadence because again, like I said, the intent behind this is. So maybe I'll give you a few data points, Ty. So obviously, as you recall, as of June thirty, 10-Q, our outstanding share count is approximately 210 million. So, which sort of gives you an indication or an idea that we have been very prudent in using the share count that was authorized in the last annual shareholder meeting about two years ago. So, so there's that. The second point I would like you to sort of, you know, appreciate it, because again, now we have sophisticated investors or, you know, you can call them smart money or institutional investors with a track record.
So obviously, any company, it's in the benefit of shareholders to have a higher share count, not to draw on it, but to just have as a-
... as a firepower, so that obviously the company can engage in transactions or obviously it's beneficial for the company, overall. And hence, that was the reason why, this number, was inserted in the, in the document. So this obviously is, this unlocks the second tranche of the, the $75 million convertible note. But again, this was again, part of the strategy that High Trail wants us to become a, a mature public company, to have higher share, to authorize share count, so just so that we don't have to, you know, keep going back to the shareholders. So I think that's why it's important, sort of, appreciate, why having a higher share count or authorized share count is in the benefit of the company, despite the fact that we may not end up using it, right?
That's why I think the numbers as of last quarter, second quarter, two sort of highlights of how judicious the company has been in making sure the dilution is controlled. And this is actually one of the reasons why this deal actually makes a lot of strategic sense, because this is non-dilutive to a very heavy extent, as I described the mechanics of it, because the bulk of the payments, as I mentioned earlier, are gonna be paid through cash that's gonna come in next year from the revenue streams that we expect to start ramping up.
Okay. Yeah, so and I appreciate the color, and certainly, you know, understand the need for the additional authorized shares, right? But, sounds like as of now, and I know it can change, you're planning to wait until the ASM to seek that approval.
That's right. That's, that's exactly correct. So we, we will wait for the cadence because again, like I said, we just want to have a regular cadence. Again, a mature public company, and that's sort of why I was giving you the color that we, you know, because that's what High Trail's trust in the company, has been based on, and I'm gonna talk about it in, in a few more questions that we have received, along the way.
Okay. All right. Thanks for answering my questions. I look forward to hearing from you guys in a few weeks. So thanks. Appreciate it.
Thank you. Our next question is coming from Reed Keller. Reed Keller, your line is live.
Hi there, Sumit, and hi there, Anubhav. Thanks for taking my call. I actually so my call, my question was in relation to marketing and sort of public perception of the company. I had submitted that before. I hope that's okay. I know it's a, it's a different topic.
Go ahead, Reed.
Great. Yeah, so one thing that I think some investors have noticed is that we tend to be somewhat sort of conspicuously omitted in some wrap-ups of the industry. You'll see you know, analysts talking about the LiDAR business, other companies that are doing things in the space. And I find and I think other shareholders find that MicroVision isn't necessarily mentioned, especially given what we hear from management in relation to the product that we offer. So I guess I'm curious as to I mean, to what degree is that intentional or I guess considered by management to not be a priority? Or you know, is there something else going on behind the scenes that we don't see?
To what degree does that affect, you know, negotiations when you're trying to close a deal with OEM?
Can you be a little bit more specific about the question? I don't think I want to get it precisely right. I don't know how long you've known me. If you ask me a direct question, you're gonna get a direct answer. So please, don't hold back. Go for it.
Okay, great. I mean, I guess the question is, when you look at MicroVision's reputation or public perception, are you happy with the level of awareness the company has, especially within the LiDAR space? Do you feel that there's room to grow in terms of how the company is seen, you know, by maybe media outlets or industry analysts?
I understand now. I think we try to balance out, you know, with so much cash. If you think about all the cash we raised, you know, I think the question keeps coming up, you guys raised so much cash, what's going on? You know, everything is public. We don't spend it on crazy things. We spend it on developing technologies, developing partnerships, and going after good deals. So there is some budget for marketing. There's certainly like, you can always spend more, and, you know, different people will have different flair, and, you know, you can spend more on marketing and create that flair, but if you don't have the business deals on the back end, it will not work.
Let me just tell you why this industrial business we're about to get into, why is it very important for each and every one of you, or why it could be something really positive. I think everybody thinks about the word LiDAR as just a box, and the box does something and so on and so forth, right, and everybody kind of moved on. But really good products give you the opportunity to have high-margin business, recurring business, and that's what you really want to create. So you don't want to have one and out. So as you think about it, the way we were actually going to create our reputation in industrial is not by coming up with, like, big marketing. These are old companies. Some of them are 100 years old, right? And they're more. They look at you, you know, they want to meet us.
They want to come see our factories. They want to come see the company. They like the fact that we have such a long history of being a public company. We don't spend crazy money because that's who they are, right? They don't want to see the flair, and the flair would not do much. It would not excite them to accelerate any of their decisions. They want to see prudence in spending money because that's what they do, right? So I get what you're saying, that as an investor, you'd like to see like, you know, hey, create a splash, so perhaps your stock price could be impacted by that. Great. But I think the best that I always try to make, and you know, Anubhav and I, we always talk about this is it really is about customers. Get revenue up and running, right?
Spend the money there right now, and we'll have other opportunities that will be given to us. So, can we do more marketing? Absolutely. Would our marketing team love that I would give them a much bigger budget annually? Absolutely. I'm pretty sure they will know how to spend it. But I think we're being much more strategic about how we spend the money right now while we're creating this bridge to the real bookend, the real, the real promised land for all of us, is when you start getting this automotive business and not just get the automotive business, you're starting to recognize revenue from an automotive business, which is the bookend. And I think we're gonna talk about, you know, the bookend, as in, like, you think about some of the companies in China that are just selling LiDAR in China.
They're public companies as well in the U.S., so you see their numbers, you can tell that, wow, once this thing gets going, it is huge. It accelerates pretty fast. So that bookend we wanna do, but right now where we are, I think the amount of marketing that we're doing, I think it's okay. I, I don't think it accelerates or decelerates our path. I think what accelerates our path is sitting with customers face-to-face, figuring out their problem, and offering them a solution faster than anybody else. Does that answer your question?
Yeah, definitely. I appreciate that. So, I mean, I guess just to follow up, you would feel then that there's a gap maybe between the company's awareness level within the industry and the maybe public perception of where MicroVision sits in-
Yeah
the LiDAR race?
I can pick up the phone, and I can get a meeting with any automotive OEM in Germany, in the US. You know, our engineers can go there, we can create visits for them. You know, certainly, like, you know, we have our great sales and BD team that have done a really great job and made the name MicroVision relevant in the industrial space, where every key account that you can imagine, they know us, you know? I mean, I'm gonna be out on the road next week visiting customers here in the US. So I would not say that there's any impediment on awareness. There's always more you can do, and that's, you know, if you're thinking about you're in the hunting mode for additional business for 2026, so you better get to know them right now. So you work on that, right?
And you do some, you know, campaigns, and you try to figure out who those customers are and who the key decision makers are over there. And for that, you have to have the right BD folks that have already worked with those teams, perhaps, so it's in their Rolodex. So if you think about that industrial industry, right, it's more about who they know. They don't look at marketing that they saw on LinkedIn or, you know, some big flair that you may do at, like, CES. That gets them there, but they don't really know how you would solve their problems, so it has to be more hands-on. So we spend our money. If you think about marketing, your traditional marketing, think about we spend more money on BD with face-to-face visits, doing demos, and doing custom development demos for them, for their platform, multiple of them.
That's, you know, if you think about it, that's also marketing, right? But it's not your traditional marketing. It's for a customer, more of a bespoke service, where I take their problem, and instead of theoretically showing them how we'll fix it, we spend the money with our engineers to take our device, work with them, and actually go do a demo on their device at no cost to them and show them how we solve their problem. So that's marketing also, and that's, I think, more meaningful marketing spend, in my opinion, at this moment.
Reed, if I can add one more thing, which I think you would appreciate, because, yes, that's, I think, the, the public side of marketing. But I think MicroVision has really come a long way, with the awareness amongst the, the financial industry as well, because I think that's what matters. Because if you think about it, this is a new chapter in the history of MicroVision, where an institutional investor has come in with $75 million of capital commitment. And if you look around, the competition, no other company has actually been able to achieve this, with one investor coming in with this chunk of capital, having placed so much trust in the company.
And I think that's also evident in the fact that we're competing with all the other SPAC companies. And if you simply look at the average daily trading volume, we trade about, you know, 46 million shares a month, which is really higher than any other company except Luminar. I think that speaks volumes of, you know, how far MicroVision has come along, and I think that's why I'm really excited for High Trail to come on board. Because obviously they really ushered in a new era for MicroVision because this is really the start of a new chapter for the company.
Okay, that makes sense to me. I appreciate the candor, and thanks for taking the time to answer.
Our pleasure. Thank you.
Thank you. Our next question is coming from Joseph Seaborn. Your line is live.
Good morning. Thank you for taking my question. I'm gonna do my best to not sound too foolish. Gentlemen, will a product ever be placed in a forklift, a ship, a tractor, a car or truck with MicroVision branding on it?
Yes. Absolutely.
Excellent. That's all I wanted to hear. Next question: Ultimately, be it near term or long term, is acquisition of the company still the desired goal?
Now, here's the thing. You start, and again, like, I'm gonna talk very generally. This is not forward-looking. There's nothing. I'm not giving guidance. There's nothing, right? This is just me talking out loud, just, you know, what all of us as shareholders have to be hopeful about. If you're a company, and you endeavor to get hundreds of millions of dollars worth of revenue started for yourself, recurring revenue started for yourself, and put yourself in that position, you're in a pretty good place. The thing, however, is that the other mistake, the mistake that others are making, that we're not gonna make, is have these OpExes that cannot support, that you're, you know, making 100 million, you're still losing lots of money. That doesn't make sense either.
So we have to do all those things at the same time, build the right company for the right size business. All right? If that's a successful company, you know, it comes down to other investors. At that point, you know, if it's going towards cash flow positive, it looks like it's gonna be a sustainable company, and they have already another product in the hopper that's gonna be five extra revenue or, you know, annually there in the future, people will come up with their own valuations, right? I mean, I'm not going to project right now, but all of us can imagine, smarter people than me can sit down and say, "You know what?
This is what a fair valuation would be, and here's the intrinsic value that perhaps will be and where the stock price will be." And if that excites somebody to still buy the company ahead of time, that's always. We're public companies, I've always said we're always up for sale. That's all I know, everybody knows. But it's not a strategy that somebody works on. That everybody doesn't wake up one day and say, "You know what? I'm gonna just get to step number one, and I'm gonna check out to the first chance I get." I mean, you can't work with anything with real passion. Now, that's the truth. I'm just being honest with you. Unless you wanna just say, "You know what?
I'm gonna build the biggest thing that, that somebody has ever built." So I think, like, your question, perhaps I'm not answering it the way to your satisfaction, but it's the truthful answer. You build it so it's bigger than you can even imagine, right? Every employee that's working so hard, they're not, you know, they don't get up every morning saying, "Oh, this is the target share price." You know, that's not how they work. These guys in our company, they work hard, they want a big- be the biggest thing that anybody solves in this space. They wanna solve that. And how big the company will be, nobody can imagine. And whenever they think they can imagine a number, they think something bigger, and that's what's great about the people that work in the company. So is it a strategy?
No, I think if it was a strategy, then, you know, we would talk about it at an earnings call, you know, if the board has decided that's a go-forward strategy. But that's always on the table. Anybody can make that claim. But of course, we continue to build it as big as possible. It could be as fast as possible, it could be.
Thank you, sir. Big, big as possible and fast as possible sound very good to me, so thank you so much for that. Thank you for taking my question. This is gonna be my last one, but as we are now within, well within previously stated timelines for revenue producing deals and with funding runway now secured, can we expect more exciting weeks like this one as we move to close out twenty twenty-four?
I think we're hyper-focused on what we've been hyper-focused on for years now is to get sustainable revenue started. You know, I think Anubhav is gonna talk a little bit about, you know, the pre-release, perhaps. I think there's a question that somebody was shy to ask live, but they have submitted it. So I'll, you know, let him talk about that, but I think we focus on revenue, and that's really the only thing that we all focus on right now. We have enough technology, we have great engineers. It's time for us to get revenues, and not just revenues, but revenues are sustainable, and we can all see why this was a better chess move than anything else.
Awesome. Thank you so much, gentlemen.
Thank you. Our next question is coming from Adam Jones. Adam, your line is live.
Hey, Sumit, how are you doing?
Hey, Adam.
So I actually wanna circle back because you mentioned a solution plugging into the system, and I wanna ask you, basically, your overview of the state of the sector, because there's probably no one better to give us that than you. But I hope you'll bear with me for a second, because I kinda wanna set it up with a little context that maybe sharpens your answer.
You know, we all get decisions are pushing out. It's a long-term plan, but in the context of that, things are constantly evolving. There's cost engineering in play. It's not just with ADAS or autonomy, it's, you know, throughout the OEM business structure. RFQ parameters seem to be changing. Dynamic View, early on, seemed like it was in play on every RFQ, now that seems to be evolving somewhat. And then concurrently, to make perceptions even more complicated, you have companies like Waymo that are achieving higher level autonomy, showing it can be successful as a mobility business at scale. They're expressing a desire to be in showrooms. We're seeing, like, higher resolution camera solutions now that are being pitched as good enough or more, also being able to plug into the system, some of them aftermarket. There's cost engineering benefits to that.
So, you know, the overview I'm hoping to get is, you know, where does... In this whole sea of what's going on in the sector, where does one plant a flag? Like, what can we rely on? And maybe get some updated context for how you're planting our flag in this environment.
So I think that's a-- I'm gonna start answering, so I picked a couple of points, and if I miss some of your question, please pause me and ask the question again, right? Because I'm probably sure that I'm gonna start talking and forget some parts of your question. Okay, Adam?
No worries. You got it.
So let me start with the context first. This is very, very important. And let's start with all of us understanding what our product is and what OEMs do incorrectly to screw up our product that causes company harm. They don't do it intentionally, but they just don't realize it. All right? So this is very important context, and this applies to also Ibeo. Pretty much this is what happened to them as well, and this is happening to other companies as well. So technically speaking, if you think about a LiDAR, it's a measurement device. All it does is fire a laser, collect the data, speed of light, tells you time of flight. Our job is to make a LiDAR that is as cheap as possible and is reproducible, meaning that it can achieve scale if somebody came through the door.
Steering systems with glass prisms spinning, this is what, you know, Scala was. This is what some of the other companies are shipping. Yeah, they're shipping volume, but they're not scalable. They're, you know, hyper-prone to vibration. All the stuff that any engineer will tell you, it's there, but they're available, so they keep using them. But guess what? No OEM is scaling them up. MEMS was designed for steering a laser beam. I mean, think about DLP has got multiple MEMS. It's never a problem. So MAVIN will... And I'll be vindicated at some point, right? MAVIN is the right product, guaranteed, but certain things involved. For example, we were put on the path by OEMs through this dynamic view LiDAR. We did it. It works great. Then they come back and say, "You know what?
We really have to have you go back to the single view, through the entire thing," and the question was, why? "Well, our software guys are used to having a structured data set coming in where, you know, they know exactly where every pixel is gonna be." ... And that's the way, the decision that was evolving, but that's where we are right now.
Okay. Yeah, I just-
So we can start with the-
I just want one quick piece of context on that. There was recently a Ford CEO interview where he talked about one of the inherent problems in the OEM system is how all the parts in the system communicate with each other. They're all different. They're like 100 different products from 100 different vendors, all speaking different languages when it comes to the system. So there is context for that in the market. Go ahead.
Yeah. Two weeks ago, I was at an OEM meeting. This was the same gentleman who I met June nineteenth, 2018, that set us on the path of the dynamic view LiDAR. All right? And I've never seen him as excited about our product. I've never seen any OEM, and this guy is pretty up there, excited about our LiDAR. So that makes me happy, right? Okay, we're there. But what got him excited was we finally delivered a single-view LiDAR, and he saw things in there that he has not seen from anybody else, right? So I know you guys hear a lot from them, but you know, I'm pretty genuine about that, right? I mean, I was just. I sat there and I've told a couple of employees, like, "This is the guy that put us on the dynamic LiDAR path.
This is the guy, you know, and he knows that that's the right thing, and we did it, and now he's admitting like, "Yeah, but our internal guys have said this is all they're gonna do, so I'm so glad you guys have done this for us, so that's context, right? Because they make choices, you know, they're customers, so you wanna, you know, give them something custom, whatever they need, right, so their needs are also evolving, for example, so this is very important context. The other important context people have to understand is, if you just take the electronics of the LiDAR, you see these beautiful point clouds? There's a significant amount of software, so what comes from the analog side is pretty noisy. If you saw that, it's jittery, it's got lots of problems in it that you can't do anything about.
Then you have the software that looks at all the points, live, streaming, and creates that beautiful image you see. And even then, in that image, we can always find some defects, and then we keep addressing that software to come up with this very beautiful point cloud that everybody wants to see, right? And that. Think about that. We call it internally the sensor model, but it's a piece of software, effectively. It's our firmware and our software combined, that sits on top of that hardware, that creates that beautiful LiDAR image. The next step in the stack is what's called, okay, now that you have a LiDAR, inside my sensor, what if I had this module called perception, where I could do road boundary, road markings, you know, clustering and, you know, object identification, all those kind of things. That's called perception now.
So that's a higher level of software, but it still sits inside on top of the base software that I described called the sensor model. So you can take your own sensor model, plus given the fact that you can look deeper into the analog, into the noisy data, extract more information, and you can do something in perception that nobody else can. So you would give them, not just a LiDAR, it's no longer a LiDAR. It's a LiDAR that's got all this smart software that's in there. It's really a solution now, because that hardware is already telling you what's happening in the scene. As it's sending you the point cloud, it's also telling you what's happening in the scene. And, you don't have to have any kind of technical background.
You can imagine for the past fifteen years evolving, you know, I mean, fifteen, twenty years, we've all been promised this thing called, you know, it used to be called IoT, the smart sensor that were gonna change the world, but nothing really came out of it. All that came out of it was some camera module technology, right? Which is pretty incredible, and the best interpretation of that is in your cell phone. Now, here comes a LiDAR product that's gonna start doing that level of capability at high velocities. That's the real product, okay? What did the OEMs do that kind of hindered this? They saw the fact that if I had the sensor model and if I had the perception software on top of my own hardware, I would become indispensable.
So they almost encourage you to break apart that software, and they want to put it in different places. And they do that because this way they can ultimately control you on cost, because they can drive you down on cost, and the software is, you know, they're not gonna pay you the licenses, what it costs for you to develop it. Because one company, you know, and you guys can imagine who that company is, they put the entire solution together and they were very, very profitable, and they're saying, "Never again." And as a company that spends hundreds of millions of dollars developing a product of investor money, and the only way you can get inside is by bifurcating their own solution, so they can completely drive the price down, I mean, they're their own worst enemy, right?
They're slowly driving the LiDAR companies into a bad place. So where do I plant our flag, Adam? I keep talking about this single LiDAR solution, where we are gonna make the product and we're gonna put it inside. It's all our IP. It's the money no investor has given. My investors have given to me. It's not been invested by industry. So we are gonna take and make the product one big, you know, holistic solution. And if OEMs in the automotive space are not allowing to do it, get in there, the industrial will, and we're gonna start shipping solutions in there. When you ship hundreds of thousands of units into the industrial space, that's who you are, and that's the solution everybody's gonna look for. So you talk about marketing, that's the best way to market yourself.
You have to completely change the perception of people of what the right product is. And anybody that'd be in this space, if you wanna win, you wanna do this, because those are all things you took investor money to develop. You have to come with a solution, and it is actually better, cheaper for your customers. And the industrial guys, they appreciate that because they don't have the massive teams, the massive budgets, to pay NREs or discuss with us, because they don't have the massive volumes. You know, they don't have volumes, annual volumes of like hundreds of thousands of units. They recognize that, so they're happy to take our solution the way we give it.
But once we get established, and you think about what I call the bridge, and you shift, you know, significant number of units, you kind of establish what the right product would have to be. And are you ever gonna be in equal footing with OEMs? No. But what I can tell you is in the last six months and from the meetings, that they are starting to change, where they start realizing that, hey, people are gonna have their own solution, and that's what's called the white box solution, where you have your own solution, but they want access to certain parts in there that can enable them to come up with something custom for them, but allows you to come up with your own holistic solution... I know that's a long answer, but did that cover everything?
No, but just to circle it back to the business. I guess what I'm asking is, so obviously, you've altered, you know, the way you approach business with OEMs such that you can make these kind of breakthroughs, and I guess, you know, where does that stand? I get that, you know, things are pushing out, things are changing, but, you know, from a business perspective, you know, where's the breakthrough? Where's the breakthrough coming? How do you see that unfolding?
I think the breakthrough is gonna come with the industrial business when it's up and running. They see the solution, what they call active emergency braking, active emergency steering, you know, other features. In industry are gonna be the same features, but just with a different spin. And they will see that they're getting deployed, and they're getting deployed in places that, yeah, they may be lower velocities than 130 kilometers an hour, but, you know, people do get hurt, and, you know, we will establish ourselves as, you know, we'll have a safety sensor, we will have our, you know, safety solution that customers are fielding. I mean, that's to turn the tide. But I can tell you that independent of that evidence, it is starting to turn.
They're starting to realize that they cannot bifurcate everybody else's product, because once it's bifurcated, their software teams cannot incorporate them into one lump and deliver a product. That's the other thing, right? Their teams are great, but they have, I mean, there's, as you said, there's so many different interfaces in a vehicle, it's a lot of people. So they actually want, you know, a lighter company to start going to more of a solutions company and providing a full-blown solution, but not a solution where their sensor model or the perception software has to run on a NVIDIA or, you know, somebody else's ECU, that it really runs on an Arm core processor on traditional algorithms inside the LiDAR. So the solution is coming from the piece of hardware they're gonna buy.
It's starting to happen already, but again, you know, so I think by the time the 2028, 2029 launches will happen, you know, this is this will be the state of the LiDAR players you'll see. They'll be the companies that survive, the companies that will be the strongest. This is a solution they're gonna ship. I'm convinced of that.
So they're gonna see it practically in use industrially, and obviously, probably still be in some of the same positions they're in now, where their own teams aren't quite getting there. So hopefully, that pushes us over the top. Is that kind of what I'm hearing?
That's right. You got to get investors going, because if that's how I'm running the business, I have an OpEx, I'm successful, right? Then they're saying, "Okay, you know what? I want you to break your software apart and give to this." Great, we'll do that. You're gonna give me an NRE because you're breaking my business model. See, right now, none of the LiDAR companies have demonstrated a business model because all of us try to do is to make them happy, and we're willing to bifurcate anything for them, right? And we take on, you know, tons of engineers working on it, delivering. No revenue comes in, they slide out, they owe nothing, they take no risk, right? But if I have a business model that works in an industry and I got revenues, right, and I'm running sustainably, I'm able to definitely give them the technology.
They'll see that. But if they want it a different way, a white box solution, then, of course, it's gonna be expected to pay. So again, it's not so simple that, you know, we're sitting on a high hill there, Adam, that we can just say, "Well, take it or leave it," right? We're always gonna work with them, always. But at some point, they start funding the level of development they ask.
Yeah, and in some ways it's a similar solution, so it all makes sense that it would be a natural path to scale.
Yeah.
I just wanna circle back to Waymo for a second, who's, you know, suddenly become a lot more visible in what they're doing. They're in an extreme cost engineering mode with trying to get their costs down, including LiDAR. Are you seeing them as possible customers at this point, some of these burgeoning mobility companies?
Absolutely. I think those are going to be there, but I think their timelines are further out. And it's just like the OEMs, they're towards the end of the decade. So like anything else, we have solutions, we promote them, you know, we engage with them. I think, you know, when you talk about those kind of companies, right, the software that they're at, you know, they are way beyond perception. They have great software engineers. And, you know, so the perception we provide, right, they that's part of their stack. They're just looking for a LiDAR up to the sensor model standpoint that does significantly more, right? So the architecture of those vehicles is significantly, for Level 4 and higher, different than the architecture for Level 3 and lower ADAS features that the traditional OEMs are working on.
But yeah, I think, do I see them as customers? Absolutely.
So you-
But they are much higher horizon companies.
Yeah, you just answered another one of my questions because I was wondering whether what they're doing is being reverse engineered down to Level 2, 3 but evidently, you're saying it's not.
No.
But are-
There are two different islands, always two different islands.
Since they are, essentially would be a hardware-only customer, is that business we are pursuing now? Are we trying to make inroads there now?
No, I think we always make inroads, right? But, like, my job is to make, try to make inroads anywhere possible. But the way I always think about it is, at peak, what volume they're gonna buy, what my ASP could be with them, how much software I'm providing-
Yeah.
And how many people do I need to sustain that, and can I build a business, right? So I mean, we have to switch gears. I mean, I love being an engineer. I will never give that up, right? But at some point, we have to think about this as a business, right? So I love their technology. I worked there. Great, sensitive people. Awesome. But they're gonna buy five thousand units, and it's gonna cost me more to sustain them. I better have other customers to subsidize that, and no, they don't need my subsidy. So yeah, we're gonna promote what we have, but we're not gonna pin all our hopes on a customer like that. You know, that we have to go broader in the market and focus.
Where's revenue coming from, and who do we have to go service, and what problems they have that we want to solve? So maybe like in our customer list that comes up, right? I find them exciting. I go there and I'm impressed with what they do. I am actually, right? They do some really incredible work, and they ship revenue, hardcore revenue, right? But maybe those names, when we talk about them, right? It's not exciting for some investors. I'm pretty sure some investors will find it exciting, some will not. But you know what? This is a paying customer with a real problem, with real revenue. I think we should be excited about that.
Yeah, no, I'm actually excited about all of it. Which is why I'm asking. Cool, I'm good. You know, it's just, as you know, it's just an ever-shifting environment, and there's not a lot of information, and every day, something seems to change or get weighted differently. So, you know, one of the tough parts for investors is, you know, how do we stay updated? You know, how do we get... You know, how do we keep a finger on the pulse of what's actually going on? You know, some of that comes directly from you. So, you know, oftentimes-
I think we do the earnings call, and I think they are, you know, they're kind of more traditional. I think, you know, like, the call like we're having today, right? I think, you know, periodically we will try to do this because I think, I mean, we're really lucky that we have such passionate investors. And trust me, you guys may not understand that we talk about that often, including the board, including the employees, right? You guys are just as passionate as employees, and we appreciate that.
Cool. You know, I have one just minor capper question, then I'm done. You know, I know you made it clear for quite a while that LiDAR is your sole focus.
-which is cool, and it's obviously, you know, playing out, playing out nicely. I can see that, so we all can. But, you know, for whatever reason, people still like to talk about AR a lot. So-
Now that the Microsoft contract is concluded, is there... can you put any kind of cap on that? You know, how it, maybe how it's contributed to where we are now, along with, you know, anything that either gives definitive closure or belies any future expectations. Can you wrap that in a bow for us?
I think if you were to take a scorecard, you know, that contract was good for us in the sense that we were compelled to create things that we had never attempted before, and we had a partner that had a contract to go for. So there was a real reason to motivate ourselves to do that. There's things that we learned while we did that, that was not relevant to them, that has enabled to, for us to create the LiDAR. While we were creating this stuff, I just came along, "Hey, if we do this, we could probably make LiDARs as well," right? So it was definitely. In that sense, it was good. You know, where we are today, if you're excited about it, I'm excited about where we are right now.
It was, again, it was part of our journey, so in that sense, that was good. Now, what do I think about the AR space? I have spent quite a lot of time in the AR space. Some of you know this, and I'm passionate about it. But you know what? It, the AR space is going through a transformation, and the transformation is, can somebody actually adopt something? So, yeah, you know, a very powerful OEM launches a product with MicroLEDs , and I got some, you know, questions from, a few people about that. Like, okay, that's at a resolution that's much lower at a field of view that's this, but they're exploring their space. They're creating software. They're gonna come up with a better product. This is great, right?
But ultimately, it is, again, a R&D expense that a very powerful, very rich company is taking on. This is not mass adoption yet. And at the end of the day, MicroVision technology, what are we good at? We're very, very good at, in a small form factor, in a very cheap format, steering a laser or a group of lasers very, very precisely. That will never go away. That's always gonna be part of our core. So if a market ever comes up for that, yeah, of course, we'd enter it. But even now, unless you're super rich and you're willing to put billions of dollars, tens of billions of dollars behind some initiative, you know, it is not a mass market product yet.
So, wait on the side, you know, and I can't wait for this market for the next, you know, three or four years to develop. We have ahead of us, LiDAR. Let's focus on that. Let's get revenue going. Let's establish us as a company. We can always resurrect this stuff, but the market is just not ready yet. And I can tell you, you know, I rate the product, you know. I have a few friends that work there and work in a different company. I talked to them. We talked about the product just to catch up on it, right? And, you know, I still made the point. I wear glasses. The number one thing, if something's 100 grams, somebody that wears glasses, the people on this call that wear glasses know what I'm talking about.
You want to put something worth, you know, that weighs a hundred grams on your face, on your ears and on your nose temple? I have to wear glasses all day. Without that, I can't work. People that wear glasses will tell you, and about, you know, half the world wears glasses. So you still have a long way to go before that technology becomes something that's usable. And maybe there's a use case where, like the device that Microsoft had created, maybe that's the right use case, that's the right form factor, right? So there's so many variables that have to be worked out, so many different variables on the waveguide that have to be worked out before it comes to the display technology. And when that's ready, we have already demonstrated that we can deliver 2017.
Microsoft has announced they're discontinuing HoloLens 2.
Right.
And I have-
But the point was, we did it, right? So if in the future somebody says-
Right
... "Hey, I really want to try this technology." They'll say, "Wait a minute, those guys did it. Let's go back to them," because they did work with them and did that, right? So that's the way to think of it, right? We still got the better of it. We limited our exposure. We did not, you know, keep with it, hoping that more money comes from it, because no big revenue actually came from it for anybody.
So there is no more revenue coming from that, you know, whole section of MicroVision's history. That's over, and now we're on to other things and perhaps some future stuff, but that's basically come to a close, yes?
That is correct. Yes, Adam.
Super. Yeah, and I have a Vision Pro. I can't wear it for more than 20 minutes, so I get it. Yeah. All right, Sumit, thank you very much.
Great talking to you, Adam. Thank you.
Yep, same here.
Thank you. I will now turn the call over to Anubhav Verma to read questions submitted from the webcast. Sir?
Thank you. All right, so we have a long list of questions that have been submitted by investors who didn't feel comfortable asking live. So we will read it on and on their behalf and answer the questions. So we also got a few questions right this morning, so we're trying to answer as many questions as possible. So let's start with question number one. Management needs to give investors a good overview of what lies ahead, including Q4, because they just reaffirmed the financial guidance for the year 2024 of $8-$10 million. That would mean the Q4 revenue would have to be in the range of $5-$7 million. Please give us a breakdown of how they expect to arrive at that number.
Anubhav, why don't you take this one?
Yeah. So let me take this question. So look, I think, obviously, Q3 was a little lighter than our expectations, but it was primarily because a customer, which we already have a purchase order with, decided to just shift the order from Q3 to Q4. So the order came to us in October instead of September. So that was just timing from a revenue recognition standpoint. What I want everybody to understand the nature of the business and the nature of the revenue that can be accounted from a U.S. GAAP ASC 606 perspective as well. I don't mean to get all technical, but just giving you a few milestones that have to be completed before recognizing revenue.
For example, we are working on custom development projects with a customer, so we are already have our engineers working on them. But we can only recognize that as revenue once we get the approval from the customer. So when that approval comes in, that's when it hits the books from an accounting standpoint. And these are the ebbs and flow of the industry that we are in and hence that slide. So obviously, inventory sales we recognize revenue right away when we get the purchase order, so that's a bit easier. But there are some contracts that we have specific NREs for. We are waiting for the customer approval, and once that comes in, that gets recognized as revenue.
So obviously, that, that's what led to the shifting of the revenue from the third to the fourth quarter. And again, $5 million-$7 million, we feel good with the amount of work that's being carried out by our engineers at their site at their facilities, and that's why we feel comfortable with this guidance and what Q4 unlocks for us. All right, next question. I think I speak for many in that we want to believe in management, technology, but it's getting harder and harder. How do you keep investors motivated who have become wary? Somebody want to take that? Sorry about that, I was on mute.
Yeah, I think this is a great question, and I can assure you that the motivation that investors are looking for, so do employees, you know, the rest of us, it's, you know, we're aligned there. I think for us, at this point, you know, why make this bet, continue making this bet with MicroVision, why taking your time and your capital and investing with our company? I think it really comes down to where we are in our journey. It's really about revenue. We are finally at the point where I can say, "You know what? Revenues are gonna get start recognized and start going, and, you know, we've come up with a strategy that allows us to bridge the gap to something bigger." But there has to be a bigger play, right?
Because revenues will come in and, you know, there'll be ebbs and flows to that, just like Anubhav described, but what's the longer view of why this company is more valuable, where, you know, our attention should remain? Based on customer problems that we see and the bigger ones that can be solved, what I see ourselves in as a company is, we're in this place where a solution can be provided in a very easy way to them, and you can start scaling your revenue faster than others in the market. Not just LiDAR solutions, others in the market. You know, companies that make camera module-based technologies in industrial as well, they kind of are capped out, and they're all looking.
So you know, some of the potential customers that we always talk to are traditional companies that shipped and made money on camera module, and they're looking to acquire a LiDAR from somebody, put their software on top of it, and start selling it as their product. So kind of like a white label project, okay? So that kind of tells you that there's a huge opportunity there, because industrial sounds kind of unsexy, but there is, you know, trillions of dollars that flow through these businesses, and there's automation, there is significant amount. Most of the people that work in the world are working in industrial, you know, delivering goods and services to the masses. So there's a big opportunity there. So I think that you know, why is it becoming harder and harder?
It's harder and harder because everybody kind of focuses on automotive OEM and that win. If that win happens, then I'm worth something. And what I'm saying to all of us, and I say this to employees, and I say it to myself also, right? Our worth is more than that. We are gonna win on automotive OEM business. We absolutely are. But if you win something and it's got a four to five-year wait period before revenue, just think from your standpoint, right? You will get exhausted of that, then why can't you go faster? Why aren't OEMs going faster? They're customers. They take their time, you know, whatever their project schedules are. You can't make them go faster, and they're not funding you.
So the smarter thing for us is to think about ourselves and, you know, transform ourselves into a more, you know, traditional business, where you have to think about revenues. Immediate revenues have to get equal love and affection as these very strategic revenues that you're going after for the long term, and that should effectively, you know, be the reason why. Because once we win now, we're gonna really be the last company standing, in my opinion, as other LiDAR companies are looking for exits or figuring out promises they've made and that they cannot deliver. What happens to them? You know, I think that's in the next six to nine months or a year. Those things are gonna start coming out publicly, so you know, that will happen.
...And if we are left standing as a stronger company with revenues and with the strength of our balance sheet, and we still have the better product and a better business strategy to take the long-term view, what the valuation would be, you know, for you, it's valuation. For employees, it's just the benefit of saying that they delivered something that solves big problems much faster. And that's what motivates us, you know, that's why we believe it's a very worthwhile place for us to continue putting all our love and passion. And I hope that excites most of the investors as well to remain with us in the company. Thanks, Sumit. Next question. Will management look to extend the PRSU timelines as the current share price and target numbers seem largely unattainable?
Are you still confident in reaching the 100% bonus management targets, which is a $36 share price, by thirty-first of December 2025? Yeah, there's gonna be no extension to the PRSU. The current plan stays the way it is. We work very, very hard. It's not the only incentive for us. I mean, that's a good incentive to have, and we're very thankful to our generous comp committee that they want to put the incentive out there. There is no changes coming to that. That's plain and simple. I'm always hopeful, I'm always confident. You build a good business, you have great revenues, you have great customers, you have longevity, where you can show recurring revenues for years with established partners, and have the opportunity to win.
You know, really, the share price is not something that I can comment on or I can drive. It really comes down to all of you, you know, the bet you're gonna make to our future once you start seeing results from us. So our focus, our sole focus remains on producing results that are measurable. Thanks, Sumit. How should investors and broader community view the recent capital raise, raising path the company chose over the more traditional dilution methods used previously? Let me take this question. So obviously, like I said, you know, which in my earlier response, that we want to control dilution and make sure that our existing shareholders sort of ride the upside and get the maximum benefit out of it, and that's why this is a great deal.
But what I really wanna give you is five reasons why this convertible is a good deal for us at this point in time as a company. And these are the five points I want you to sort of appreciate. I think number one is the clear lines of sight to revenue that we feel that we have, that we're comfortable to take on this convertible debt that can be repaid in cash and not expensive equity to preserve dilution. I think that's the point that I was making, what this deal does for us, is it controls the dilution, and it offers the ability to repay this in cash when we start generating revenues next year.
The next point is, why get this chunky capital, which again, like I described, this is a transformational point in the history of MicroVision, with one investor pouring in capital, chunky capital. What it gives us is strong balance sheet and extended runway, which makes customers feel safe, in order to secure revenue streams, like Sumit described. And keep in mind, you know, our burn rate has come down, so we're not looking to grow that burn rate. What we're simply using this capital as, as a strength, as a sign of strength, to our customers. Really, the use of proceeds are perhaps gonna be to procure some long lead silicon items, as the revenue ramps up, next year. So that's what we're gonna spend the proceeds on.
But again, the bulk of the cash burn will remain the same, and which has come down significantly, as you guys are aware, in the third quarter. There has been a sequential decline in the cash burn. Number three, what this capital raise does is it reduces our dependence on the ATM, and this is a strong deterrent for short sellers, right? Because obviously it takes out the uncertainty, because we have the capital now. We have secured the capital and extended the runway. So this obviously differentiates us from almost all the other LiDAR players, other out in the market, because we have extended runway, and we don't need to depend on the ATM as much.
Number four, like I described earlier, there's a clear alignment for both High Trail and MicroVision, because they want us to perform, they want the stock price to appreciate, because obviously they make enhanced returns on top of their guaranteed returns. And that's why, having a sophisticated investor in the capital structure is really strategic and, beneficial, for us. And I think the last point, which I think is the most important point, is, because the state of the LiDAR industry is to achieve cash flow break-even, you have to enable faster revenue growth to bridge the gap, and that's what our strategy, as Sumit described, is to procure secure revenues from the industrial stream, while still shooting for the big automotive dream, because that's where you get the volumes.
That's where you get the hundreds of millions of dollars of backlog that we expect from the automotive customers to come. But until that, it's very important to achieve that accelerated revenue growth in the industrial segment. And maybe this is a good time to sort of give you an idea of sort of what obviously was part of this process as well, which came to life. Because if you think about it, our cash burn right now is about what I've just-- what I've guided to is about $55-$60 million a year. And Luminar and all others have cash burn significantly higher. If I were to simply assume that any company needs to generate 30% gross profit to achieve cash flow break even-...
That sort of gives you an idea of the top line each LiDAR company right now has to get, and we are at the bottom of the stack. What that means is, we really have to get to only 180 to 200 million of revenue top line to get to cash flow break even, while others have to get to significantly higher levels of revenue. And hence, that's why to build a successful business, you have to accelerate revenue and chart your own trajectory and be the master of your own destiny, even if the automotive revenues are taking longer to ramp up, is the strategy that will be the winning strategy for this sector. Next question.
With this new capital raise, do we have enough financial stability runway to quell any concerns from the automotive companies that we are in RFQs for? Does MicroVision now satisfy the operating runway or requirement, a runway requirement for automotive OEMs, so they can partner with MicroVision and award a high volume RFQ?
I'll take this one. I'll start with this one, and Anubhav, perhaps you can add some color because you're also involved in some of these discussions. So let me give you a little context. Recently, I was having a very casual discussion with a senior member at an OEM, and this was after our meeting. We're just chatting. And he's talking about, like, you know, LiDAR trajectory, LiDAR costs, you know, how China plays into it, and we were having a very good conversation. And he said something very interesting. He's like: "Yeah, you know, you guys do a great job. You get to this point.
But, you know, our real problem is that, you know, we need all this middleware, all these interfaces, right?" And you have no idea how many interfaces you have to do, software interfaces you have to do to talk to a car. Your LiDAR doesn't go in. There's a bunch of software that has to be done just to make that car talk to your LiDAR, accept the data, even before we do our perception or, you know, our software. I was like, "That's great." And I, of course, was prepared for this, and I said to them, like, "Well, but here's our strategy, how we can do that for you.
I'm not gonna create it, you know, even though we know how to create interfaces. I can actually go work with this company that has actually delivered that to you in the past, and I can actually contract them, and I can give you the middleware." And he was kind of surprised that I mentioned a name that he would be familiar with, right? But again, you have to prepare for these meetings, so I was very prepared. Then he says, "No, no, we don't like that. You know, we really like the Tier 1s , right? The Tier 1s do a great job and they deliver." And I'm like, "Okay, well, we have this other Tier 1 that I've talked to.
You know, if you wanna go that route, we can do that as well. He's like, "Yeah, but we don't like Tier 1s because they're too expensive." So I want to just illustrate a point to you. Like, you guys keep asking, why does it take so long? This is a great example. Even though we were completely prepared to answer the questions they have, any answer I give, the guy, you know, this one individual, is just not ready to make a decision. Because what his preference would be that you give it to them for free and see if they can make something out of it, right? And then they'll, you know, give you a couple of, you know, pieces of bread if you can survive.
And that's just not the way, because when we're giving them their big major problems that we can solve for them, they reject it. And again, at the end of the day, you think about these OEMs as the name of the company, but there's individuals, and you have to make them happy. And, you know, even though they see the paradox in their own statements in that same two-minute exchange, you know, it doesn't change anything. So as you think about, you know, like, you know, questions about capital raise connected, this is context. It's gonna take a while. Even if you win, this is what takes us a long time after the award, before revenue starts working with OEMs. It's just, you know, their platforms are really complicated, and their companies are really complicated, and how they wanna do business is really complicated.
So, how do you... You know, business context is important of what we have to read through. It's not just technical, it's business side of it, right? Anubhav, probably you can give a little bit more color on, you know, how to think about the capital, is it adequate or not, and how we think about it and discuss it.
Yeah, no, I think what this capital raise does is, like I described, it helps us secure revenues from industrial vertical, and it basically helps us secure the path for the future, because obviously, as the stock price appreciates, and I'm hopeful the markets respond positively to the revenue streams, then we obviously can raise capital with more strategic investors coming in, and obviously, the way I think about this is, it's almost like a North Star that I want all of us to get aligned to is, what has happened in China, right? There are three LiDAR companies there, which right now are shipping somewhere between, you know, 500-750,000 units of LiDARs every year.
Now, when that is the Chinese market, imagine when that pressure directly translates into the U.S. and the European market for the volumes to ramp up. If this market catches on, on fire, when that catches on fire, imagine the volume that's gonna be. And I think that's sort of what the price is to be focused on the automotive while securing your path through the industrial, because that de-risks the company. Then obviously the company doesn't need as much capital because we are self-sustaining because of the additional revenue streams, not just entirely dependent on the autos.
Really, the game is to secure these industrial revenue streams, while anybody else who is focused on solely auto for now will fade out and drop out of the map, and then you are there as the only company standing to capture that sea of demand from the automotive out here in the U.S. That's sort of how I want us, all of us, to be aligned as to why this capital raise right now solves the problem for us and basically carves out a trajectory and a path for us in the future to be successful. Next question: How many unique opportunities is MicroVision pursuing outside of automotive? These might not be formal RFQs per se, but unique use cases, vehicle types, would be illuminating to understand how large that opportunity set is.
... Yeah, so I think in the industrial space, I would say there's about, I mean, there's a big funnel, but I would say 15 that are prominent. And all combined, these 15, you know, in the pipeline, I would call them top priority, right? Priority one as in like, I think it's a metric that we talk internally, that we're interacting with those companies on a weekly basis, right? That we're working with them, figuring out how we can be part of their solution and what is in their solution that we can do faster. Yeah, so they're in different stages, but I would call them the 15 top priority companies that we're focused on, that we believe is the funnel that gets us these revenues, sustainable revenues starting next year.
Thanks, Sumit.
Fifteen, not like. Let me give some color. It's not like fifteen that will only buy a hundred units. We're talking about fifteen that will buy, you know, the multiple thousands of digit numbers that we've talked about that gets to the annual numbers. You know, I mean, we're giving a very wide margin because we don't wanna you know, talk about it yet, right? But if you think about on the high end of that that number that we talked about last time, you would need to have multiple companies, you know, all buying, like, you know, more than five thousand, less than ten thousand units to get to that number on the conservative side. So that's what's in play.
Okay. Next question: Multiple times, MicroVision has stated the company primarily focuses on high volume, RFQs. For industrial customers, do you foresee them being long-term and recurring? And if so, what duration do you expect? Additionally, regarding the industrial market, how does MicroVision anticipate the volume for industrial customers compared to that of automotive customers? Can you provide any estimates, for the potential volumes in both markets?
Okay, that's a good question. I'm gonna start on, Anubhav, and then I probably will need your help on this one, so just to give you some color, let's talk about volumes, right? I think in the automotive space, you can achieve something like, you know, 500,000 units a year, maybe like four or five years down the future, maybe seven years down the future, your annual run rate. I think in the industrial space, if you were somewhere short, you know, north of 50,000, south of, like, 100,000 units a year, that's probably where, you know, you would tap out because it would take significant amount of investment to go even higher, and it's not that you would be penetrating the industrial market with, like, cheaper sensors.
You're better off staying with that volume, but having more and more software content. And what we don't wanna make sure is, like, you know, these industrial applications you're creating, that they're not, you know, you're shoving down high technology. You need customers that are gonna adopt that. So that's a real challenge there. So the volume disparity will be there. Like, you know, one could be 1 million units a year, the other one could be only 100,000 units a year. The ASP will be adjusted, of course, appropriately for the economy of scale. I think that's like the order of magnitude that I'd like to give. Anubhav, you wanna give some... I would think, you know, people always wanna model this, right? So probably you have better ways to model this.
Yeah, no, I think, Sumit, you pointed out correctly because the way, I think about modeling this or thinking about it from a cost perspective as well, that there would be synergies down the road as well in our manufacturing capabilities when you are handling that- those kind of volumes, right? So obviously, the volumes that Sumit is describing for the industrial space are-- I think one thing is for sure, maybe industrial volumes will always be lower than automotive volumes, just given the scale, when the automotive business matures, right? And I think I gave you the bookends, what the Chinese LiDAR companies are already able to do.
I think when the demand here catches on fire, that number is gonna be significantly higher, as you can imagine, for the broader market, right? So that's sort of how, at least I feel that it's gonna start ramping up from about 25-30 thousand units a year, for the industrial and gradually build up, but it's never gonna achieve the number that Sumit described, which again, could be 750,000-1 million units per year, for the automotive business. Next, does management still see MicroVision as the front runner in the current automotive RFQs they are actively engaged in?
Yeah, actually, I do. I think from a... So I'm gonna talk about both MOVIA and MAVIN. I think this is a question that I was asked recently by an employee. And the MOVIA I'm talking about is MOVIA S. MOVIA L is, of course, focused on industrial. If you think about it, MOVIA S and MOVIA and MAVIN do not overlap. What one does, the other one does not, so they complement each other. The MOVIA S product, it's a matured version of the existing MOVIA L, will have significantly high resolution, bigger fields of view, up to 180-degree field of view, and while it's getting integrated into the car, the lenses that stick out, they look like camera modules, so the integration into a car's body is much more seamless, right? So that's the real benefit.
What you sacrifice there is range. It's got, you know, it's probably gonna have like, we're not putting numbers out, but just imagine like, you know, 10 meters or less, something like that, okay, so it creates a cocoon around the car, and it's really for some very specific ADAS applications. Someday, you know, it will be in the car in very, very high volume because every car will need 4, so you can really create a cocoon around the car.
MAVIN, on the other hand, forward-looking, either behind the windshield or in the grille or a couple of them in the headlamps or in the roof, right, wherever they wanna integrate, you know, it'll be one per car, and it's really for the long range, and it's got, you know, quite a lot of points per second. It's got full coverage on the road for long distances to places. Small object detection is a big thing, so you can see pieces of tire on the road, hundreds of meters out, those kind of things, you know, that'll be very, very important. So I think, from that vantage point, right, these two products, they don't really overlap, okay? Do I see an advantage in the RFQs we're in? Yeah, absolutely.
The big advantage we have right now is the quality of the point cloud that we're providing, right? There's always places that we have to improve. But once it gets to that level, that we are at a great place, competitively from the data input they would get into their vehicle to do their software. But the smaller form factor, the power, and these are all the things that we're optimizing. Of course, the form factor is already the smallest it gonna be, and it's easier for them to integrate. So I see a strategic advantage, right? That you can provide something in a smaller form factor.
The real advantage that we will have long term is if you were to get enough scale, enough business from multiple OEM to start getting to, like, 500,000 units per year, for example, or more, I think it's about 750,000 per year. There is nothing cheaper for a steering system than a 200-millimeter wafer of MEMS. I don't care what anybody says. You know, them polishing a piece of prism in China, putting it on a motor, spinning it really hard, bouncing the lasers off there, it will never, ever, ever scale cheaper than a MEMS. So we will always have a cost advantage. So as you go into a market where cost is always the ultimate reason why they're gonna pick you, and you can demonstrate sustainable cost, of course, we have a huge advantage.
We have the greatest technology, great form factor, and we can demonstrate cost. You know, the problem is, do they have enough volume to get to those economies of scale, right? Their supply chain team can do exactly what our supply chain team does, which is they can say a 200-millimeter wafer cost is this, their MEMS module is this cost, the plastic optic is this much, their electronics is this much. Well, they can price it out themselves also. Then the software part is, of course, where the variable is of how good our software is and, you know, what the premium we can charge on it.
Next question. Please update us on the seven RFQs. How close are we to closing a deal? Why are we stuck with seven RFQs, and why is there no interest from OEMs in our offerings?
I think, yeah, the number seven has been stagnant for a while, but I think this is just the OEMs, right? They're all going through their internal processes of realigning their strategies for their vehicle platforms for the next few years. So I'll give you a great example. I think about a year ago, we were always talking about nine RFQs, and then, you know, at the earnings call last year, I could recall telling you that one of the OEMs has actually dropped out, and the reason they gave us was that they were realigning their internal strategy. They had invested very heavily on a strategy that was based on EV, and they were bringing back, you know, some of that volume back to the ICE engines. And this is a, you know, their model level issue.
This was on nothing to do with us. And that was the first canary in the coal mine, I recall, saying, "That's really interesting, because if they're changing strategy, this is gonna have a cascading effect on all OEMs." And that's exactly what happened this year. So as you noticed, right, nobody's talking about multiple RFQ. I think people hint at it. You know, the discussions we've had is, you know, "Can you do some custom development for us in preparation for RFQ next year?" and we're engaged in that. So we have talked about seven RFQs, that's true, and additional custom developments as a precursor to RFQ next year.
So yeah, I mean, technically speaking, we're still in seven RFQs, but there are other discussions with them that are in preparation for RFQs next year that you know, they would like us to work on.
Thank you.
So again, it's not us, it's the OEMs. It's like the global OEMs are realigning their strategy for 2028, 2029.
Next question is, management talked about SICK AG on the last call, and they are listed as a distributor on the MicroVision website. Will the company partner with SICK on any of the potential upcoming industrial deals?
No. SICK AG is something that, a partnership that Ibeo had. We took it over. You know, that's a distribution channel, I think, in Japan, if I recall correctly, and maybe some other regions. But what we're doing here is, you know, we are gonna launch this product directly, out to the market. This is our product, and, you know, I think the earlier question about marketing, you know, this is more about product marketing. We're focusing directly to the customers, as part of our direct sales strategy. Go-to-market strategy, we're just deploying on that. It's got nothing to do with our partnership with SICK. We've not recognized that much revenue working with them or Ibeo has anyway, so, we're gonna focus our own path of becoming successful.
Okay, next question: Are strategic investments by OEMs a part of the conversation?
I think they always are. I think, you know, you don't walk in looking for money. I think you walk in showing them that you have a solution that can solve the problem at certain scale. Then, of course, we try to give them the opportunity to some custom thing that they want. They give them a differentiated product, and then if we are very crucial to their future, which I expect that, you know, if we were able to deliver a system to them or a solution to them, to become, I think those things, you know, come back on the table. But, you know, we all have to be sort of cautious that if you go in the door with that, kind of like spook everybody, right?
That's why, you know, strong balance sheet, running a sustainable company, having revenues from non-automotive, that actually helps you win more automotive business. So that's why it's very, very important to have a, you know, very traditional way to look at it, that, you know, I'm spread across. You know, I'm not diverse, I'm diversified enough, that, I can sustain myself. That's actually very, very important.
Next question. Management says MOVIA remains in the automotive RFQ discussions. Does that mean OEMs still haven't figured out what kind of sensor configuration they want? Any color on this would be appreciated.
For a long range, high-speed highway pilot, MAVIN is your key product. The MOVIA S is really about, you know, slower speed maneuvering, you know, parking, like valet parking, urban driving, those kind of features. So again, these are much higher level, Level 3 features, perhaps even Level 4 . So OEMs have a clear idea of whether they would use a MOVIA S and whether they would use a MAVIN. The RFQs are primarily focused on MAVIN. There's discussions for MOVIA S for custom development for potential projects coming. But the dominant conversation that everybody's talking about is a high-speed highway pilot solution with a MAVIN DR LiDAR .
Next question. Can you give specific examples of what MicroVision employees are currently working on to resolve issues in attaining RFQs? Simply said, is there any capability being requested by the OEMs that we have not yet accomplished?
I think we've demonstrated the core things that they want, but they have very specific, each and every one of them have a specific target in mind. An example is that if I go to OEM A, you know, and small object detection, meaning, like, they wanna be able to detect a small piece of tire at a certain distance, with a certain level of accuracy, the height of the tire, so they can determine if they can drive over it or they have to maneuver around it, right? Then I go to OEM B, and they will have the same small object detection requirements, except they would have different metrics.
So if you think about it, right, in all the RFQs, what we end up doing is that we have to come up with a different version of the sensor software that each and every one of them sees their own KPIs. On top of that, of course, they wanna dive deep into the technology and understand how it is developed, you know, how it's stacked up, how they will get it. It will be ASPICE ready. Will it get fully qualified? Are you the right partner? You know, that's the other pillar of review that they do. It's under the quality organization, but really, it's engineering quality that we come into. And then, of course, you know, the third pillar always is your operational footprint, and how are you gonna manage the supply chain?
Because what they're recognizing is the LiDAR companies are gonna be a Tier 1 supplier, because none of the traditional Tier 1s wanna invest money. You know, if you think about the Magna thing that I've talked about in the past, you know, after nearly $250 million or more than $200, less than $250 million dollar write-off that they had to do with, you know, their competitor's technology on the Gen 1 of their technology, and OEMs did not even take it, that kind of tells you, right, that the Tier 1 are not, you know, jumping into it. And also, the Tier 1 business is changing. You know, they are transforming as in, like, they're going forward with their workforce is completely changing as well.
The OEMs are looking at the LiDAR companies and are expecting us to be the Tier 1 . So the third pillar, which is how are you gonna manage your operations, where is your cash flow, how are you gonna be a sustainable business, actually becomes very important, equally important to the technical. So I would say the first two pillars are, you know, technical. I think the third pillar has equal gravity to the first two combined. So they really need you to see as a company that they can trust because they're, if you're gonna be a Tier 1 , there's huge expectations of you.
Thanks, Sumit. Next question: With the current geopolitical climate, would it not be a selling point that MicroVision is an American company? Western countries may restrict certain technologies from Chinese manufacturers, adding risk to using their technology. Is this a selling point for our LiDAR? I can't figure out why there isn't already a stampede for MicroVision's technology. Let me provide some context, because I think we have discussed this in the past earnings call as well, that, look, obviously, the Chinese LiDAR companies' volume, which I have talked about, that's the volume that exists in China at the current adoption rate, which is clearly higher than what we have here in the U.S. Given, I'm pretty sure you have seen software-defined vehicles and vehicles running with LiDARs in China.
I think it's a matter of time when the demand catches on fire here, because obviously, our cars have to get as sophisticated as theirs. And this is coming, and I think this is sort of what's changing in the tone when the OEMs are beginning to feel the pressure. Because keep in mind what has happened in the last five years. A lot of the Western OEMs invested heavily in the EV tech, and they're still grappling from the investments, you know, from the losses they suffered from the slower adoption.
But as the OEMs sort of find their footing back, I think they are beginning, which I think Sumit is describing as well, they're beginning to sort of understand the importance of LiDAR and, accelerating that, that urgency to get these, technologies and features in the vehicle. So I think it's a question of when the market catches fire here, obviously, the volumes are gonna be significantly higher, than what we are already seeing in China, from the Chinese LiDAR companies. Let's talk about revenue timing. Devin said on camera at CES that MOVIA L is for $5,000 per unit, and this was cheaper than other solutions.
In the Q2 earnings call, management said that there was a strong potential for industrial sales starting in 2025 for 10,000 and 30,000 MOVIA units per year. Would the price Devin quoted be applicable to that level of volume? Would it be reasonable to assume that the meaningful revenue the management described would amount to between $50 million to $150 million per year?
Yeah, I think I'm gonna take this one. So first of all, you know, I'll apologize to everybody. Devin is unauthorized to talk about any of this stuff, so whatever at CES, and, you know, I'll take full responsibility for that. I think what we've said on the earnings calls in the past, that's the North Star that everybody should orient themselves towards, not comments made at CES by an employee that was not authorized to talk about it. So I think, Anubhav, do you wanna reiterate what we talked about in the last earnings call, how people should model our industrial? Maybe it's a good first option-
Yeah.
to put that in reach for everybody.
... Yeah, I think that's right, because obviously, we're we haven't provided guidance for next year, and we plan to do so, at a regular cadence, next year when we come up with our Q4 earnings call and provide the guidance for next year, twenty twenty-five. I think the way to think about this is, obviously, with these volumes, as you can imagine, we don't think the price would be this, it would be lower. Because obviously, the industrial customers are also looking for value, and especially with these values, with these volumes, they do expect us to have a lower price point. I think what is important to understand is, it's a LiDAR solution.
It's a hardware and a software offering, so there are levers between hardware and software, and which constitute the, the total pricing of, of the LiDAR solution that's gonna be shipped to the industrial customers. But like I said, you know, the actual numbers, we plan to provide a detailed breakdown, next year, as part of our annual, twenty twenty-four results. Next question: Have you been able to downsize MOVIA for use in automobiles yet?
That's the MOVIA S product. I think we are in concept phase. As you can imagine, investing in actually developing a piece of hardware requires custom ASIC, all the things that go with it, and that's a huge expense. As we talked about in the previous earnings call, right now, to win business, you have to show discipline, that you know how to become a sustainable company. Certainly, like, you know, as Anubhav talked about, our new financial partner, I think part of it is, you know, there has to be some discipline in how you spend the money. You have done enough to create enough engineering, now start monetizing it. At the moment, the decision is not to start investing money in developing those samples. Clearly, with the MOVIA L, we can demonstrate we can do it.
You know, if there was a project that we can sign a deal, we can actually deliver it in time. So there is. It's not PowerPoint anymore. It's PowerPoint for the whole product that is getting delivered with revenue. So I am not so concerned about MOVIA S, but if there were actual multiple or even a, you know, big enough customer project that we can sign, and that's what we work towards actively. If that happens, then, yeah, we would be, you know, out here in one of the calls or in an investor update, where we would be talking about MOVIA S and why it's important for us to start investing. But at the moment, if we have customer engagement, we will make the investments. But we're gonna continue focusing on revenue, you know, getting sustainable revenues up and running.
Next question. Can you tell us the status of the ASIC development? Is it done? And if not, when will it be done? When will the ASIC version of MAVIN be completed and the FPGA version be retired?
Our intention was to have the ASIC version, which is called the V1 sample, ready for next year. At this point, you know where we are, we have not started the tape out of the ASIC, and we're on pause. Because as you can imagine, if the plans from the OEMs are changing, the worst thing would be you go out and go develop this ASIC, and then they want a feature, and you have to respin the ASIC, which is a huge expense, and you'd never ship enough volume from the first expense, and you would have to do a second time.
So to avoid those kind of things, you know, we really wanna, you know, spend so much time talking to OEMs to understand where we wanna go or where they wanna go, and, you know, if we can go with them, you know, before we spec the ASIC or, you know, do the tape out for the ASICs we have to do. Where we are right now is, I would say we're in a hold pattern. Again, we've done ASICs in the past. We can start the ASIC cycle, we can finish it. We just wanna make sure that everything they're asking for is in the ASIC, and we don't have to respin the ASIC, because in their minds, they have four years.
They can just say, "Well, now you have to do this other feature and respin the ASIC." That enough ends up costing us a significant amount of cash, and the first ASIC, you know, is not usable anymore. So we've just been very cautious with money in every step of the way, get as much customer input as possible. And again, what I told them is, like, if you do an RFQ award, yeah, you can do a spin. Certainly, we can do a respin of it. But without an RFQ award, asking for a new feature, I start developing that, you change your mind again, I keep spending my money, and there's no RFQ. But if I have an RFQ win, absolutely, we're gonna trigger that.
Thanks. Next question: Is there any insight you could share if there would be another Investor Day, like April twenty twenty-two, or annual shareholder meeting on any tentative schedule for next year to consider? Let me take that question. So yes, look, I think we wanna have meaningful investor days, because if you'd recall, last time we provided a peek inside the MicroVision technology, and especially the Ibeo products, that was a new acquisition, back at that time. So what we wanna do is we wanna have meaningful investor days, and the idea is to have signed deals, and then we can provide more color as to how MicroVision is actually solving the business problem of our industrial customers.
So, you all can appreciate of what value MicroVision is bringing, to these customers, because that's how we, we create long-term value. So yes, so we do plan to have, the investor days, but we wanna, we're trying to make it more meaningful. Next question. It seems like High Trail Capital views MicroVision as a relatively low-risk investment when contrasted with the 14% per annum interest, in, that Luminar recently arranged on their debt. What does this mean? So, so I think that's right, because, let me take that question. So I think that's quite right, because, what we saw, Luminar doing the 14% rate, and again, the conversion price being, you know...
150, 250% of the VWAP plus extensive make-whole premiums, that sort of tells you the risk appetite, what Luminar presents to the investors. That's sort of why I mentioned earlier, and this is where, you know, I think the sophistication of High Trail comes in, because they charted out the map of all LiDAR companies and perhaps ranked them by their cash burn and the ability to get cash flow breakeven sooner, and who has the maximum chance, right? I think the way to think about this is, if you are bullish on LiDAR, all you have to do is pick the right company that will win the long-term game.
And I think that's sort of how they sort of came up with their analysis in terms of you know coming up with the risk profile. Like I said you know the risk profile their returns are protected on the downside and they ride the upside and that's why the incentives are all aligned for them and our shareholders for the stock price to go up. That's sort of what is reflected in the terms of the deal. That's why we are very excited about the terms of the deal.
And also one thing I would like to point out is, market cap to cash ratio, which is sort of what is, we're trading at a premium, which actually tells you that every dollar in MicroVision is invested, actually has a lot more value than any of our competition. Which is sort of why it's another metric that any potential sophisticated investor looks at to see which player will survive this industry on a long-term basis. Next question: Why has the company picked this time to pursue a different funding vehicle in convertible notes versus the ATM and equity-based financing used up until now?
So look, I think it goes back to the point that we want to control dilution and obviously want to make sure that the upside gets restricted to the people who have been invested in the company for a long time. And hence, that's why we feel this is a very good timing for this kind of a debt deal, if you would. And especially in light of the revenue streams that we're expecting to ramp up from the 2025 industrial sales. We believe that this was a non-dilutive way to raise chunks of capital and, like I said, to be a deterrent to the short sellers, because obviously this reduces our dependence on the ATMs.
Like I said, the other thing is, this brings in a sophisticated partner in our capital structure, which further is a signaling mechanism to sort of out there in the market, that who's gonna be the winner in the LiDAR space in the long run. Next question: How were we able to secure a $75 million convertible note without any material revenue? It seems extremely risky to do so without any guarantees of significant future revenue. So like I said, I think this is the sophistication of our partner. What I described earlier, they pick the most likely winner of the industry, given the burn profile and the potential, and the least amount of revenue any company needs to get to cash flow breakeven compared to our peers.
So based on that, they really made their investment decision, which I think, like I described, if you are bullish on LiDAR, you have to just pick, and it's pretty obvious, who will—which company from based on the market cap and the market cap cash ratio, which company will survive this industry and become the last standing LiDAR out there in the industry. Next question: It does not feel like we're at the point as a company to be ready for convertible debt without guarantees for significant revenue. No, I think I would say I would disagree with that, because I think this—we wouldn't have taken on the debt if we didn't think the revenues were that close to get.
I think that's sort of what is reflected in the terms of the deal, like I described, because there is cash redemption option for us to repay back the debt. I like to remind people that at the end of the day, this is the normal evolution of a company, which goes from the most expensive piece of capital, which is equity, then to convertible, and then to hopefully bank debt, you know, which can be financed off of free cash flow down the road.
So, I think this is a natural progression of the company moving up in the value chain, which is again a signaling mechanism which tells you that now there's gonna be more sophisticated investors looking at the story, which again goes back to the point that MicroVision has really elevated its visibility among the financial community, despite not being a de-SPAC, which is again a testament of this deal and how we feel this is gonna shape the trajectory of the company as we move up the value chain and reduce our weighted average cost of capital or WACC as we move up, make our way all the way to lower and lower costs of capital.
Next question: Senior notes can be predatory, and it's not in shareholders' best interest at all when we still have an ATM facility open. Given the company's previous emphasis on fiscal responsibility, sometimes contrasting with competition, how should investors interpret this new debt arrangement? So like I described, I think the terms of the deal are, are again, a testament to what the quality of the credit profile is, versus Luminar, just based on the interest rate that we described, because they have 14% and we have 0% interest rate on this, on this piece of paper. Which again, is reflective of the credit worthiness of, of the company.
The way I think about this is, like I said, it's the visibility of the revenue, it's the ability to pay back the debt in cash, and most importantly, the incentives being aligned, right? Because a bunch of companies who have done capital raises in the past, you have seen the stock getting punitive, the market being punitive to the stock, be it Innoviz, be it all the other players that have recently raised capital in the market. I think this is again a milestone in the company's history, and also an example for the markets where the markets have sort of, you know, reflected the confidence in this deal just by in terms of stock price reaction and the terms of the deal.
And most importantly, like I said, their incentives are aligned. They make more money if the stock price sees momentum due to commercial wins and industry factors, because they convert the stock at $1.56 and potentially ride the upside with all other shareholders. So they have no economic incentive to short the stock. Which is sort of why we feel that this is not a predatory deal, which it could have been for other companies which, like Luminar, which have a tremendously high interest rate and significantly onerous terms from that standpoint. Next question. If the expected growth is not greater than that of the financing, how does the company expect to continue operations going forward? What other kind of financing solutions might end up being required to remain an independent company?
So let me take that question. We truly believe that the growth coming from this piece of growth capital is higher than the cost of capital, because like I said, this will put us on a trajectory, which will lead to cheaper ways to finance the business until free cash flow generation, as we move up the stack, move up the value chain, in reducing our cost of capital. Because right now we're moving, making our way from the most dilutive and expensive equity capital to convertible, and then eventually to bank debt that can be securitized against free cash flow generation down the road. So that's sort of how I want our investors to start thinking about the company.
As we become a more traditional business, those are some of the windows and the doors that will start opening once we start, you know, securing revenues and making our way up the value stack. I think those are all the questions that we accumulated from all our investors. We again thank our investors for being patient-
I got one. Before we close that, I just got one comment. I think thank you for your time, guys. I really appreciate it for, you know, taking the time and joining and spending almost two hours with us this morning. I got a note while we were doing this call, and I guess I want to give some clarification. I think Anubhav mentioned through this call, and maybe I used also words like smart money and sophisticated investor, and some of you on the retail side have taken exception to that and feel like, you know, we were not appreciative of you. This note sort of leaked into the spam filter, so I will address it live.
I think those are more terms that, you know, our partners that joined, they're used to seeing, 'cause they manage billions of dollars. You know, how sophisticated am I, right? I think, you know, the background I come from, I'm running a company, I'm super excited about it. So I can assure you that those are not meant to insult anybody. That's not the intention. I think we truly appreciate you, because we feel appreciated by you and the support that you guys give. So I wanted to just end it at that, that that should not be something you should walk away from thinking that, you know, we do not appreciate you guys to that level.
You know, there are certain industry terms that we have to use that allows our broader group of investors that are coming into this space to acknowledge them, but no way that's meant to, you know, be anything a slight to the people that have supported for so many years. So thank you.
Yeah, I know. I echo that thought. That by no means it was meant... I think what I was trying to describe is, again, this just improves our visibility amongst that universe of investors that will start sort of, you know, looking at the story as we move up the value chain and reducing our cost of capital, which, again, is value creation for the shareholders so that, you know, the long-term value or the long-term wealth is created from the company.
Thank you again for joining us on the call. We really appreciate you taking out this time this morning. We look forward to speaking with you on our Q3 call in a few weeks.
Thank you. Bye-bye.
Thank you. This concludes today's conference. All parties may disconnect and have a great day.