Good afternoon, and welcome to the MicroVision third quarter 2026 financial and operating results conference call. At this time, all participants are on a listen-only mode. At the end of management's remarks, there will be a question-and-answer session. Investors can submit their questions within the meeting webcast by typing them into the Q&A button on the left side of their viewing screen. Analysts who publish research may ask questions on the phone line. For an analyst to ask a question on the phone line, please press star one on your phone. Please note this event is being recorded. I would now like to turn the conference over to Drew Markham. Please go ahead.
Thank you, Matthew. Good afternoon. I am here today with our Chief Executive Officer, Glen De Vos, and our new Chief Financial Officer, Christine Chambers. Following their prepared remarks, we will open the call to questions. Please note that some of the information you will hear in today's discussion will include forward-looking statements, including, but not limited to, expected near-term and future revenue, operating expenses and cash usage, strategic plans and execution, expectations regarding product deliveries and commercial growth, impact of cost reduction activities, product applications and use cases, market opportunities, cash flow forecasts, liquidity and financing activities, availability of funds and access to capital, as well as statements containing words like believe, expect, plan, and other similar expressions.
These statements are not guarantees of future performance. Actual results could materially differ from the future results implied or expressed in the forward-looking statements.
We encourage you to review our SEC filings, including our most recently filed 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. In addition, we will present certain financial measures on this call that will be considered non-GAAP under the SEC's Regulation G.
For reconciliations of each non-GAAP financial measure to the most directly comparable GAAP financial measure, as well as for all the financial data presented on this call, please refer to the information included in our press release and our Form 8-K, dated and submitted to the SEC today, both of which can be found on our corporate website at ir.microvision.com under the SEC Filings tab. This conference call will be available for audio replay on the investor relations section of our website at www.microvision.com. Now, I would like to turn the call over to Glen De Vos, our Chief Executive Officer. Glen?
Thank you, Drew, and good afternoon, everyone. Welcome to MicroVision's third quarter 2026 earnings call. Over the past several quarters, we have talked about the transformation underway at MicroVision and our strategy to build a fundamentally different lidar company. Our goal was to broaden the portfolio to enable MicroVision to have the right solutions for our three primary end markets: industrial, security and defense, and automotive. Now, as we enter the final months of 2026, I can state with confidence that our strategy is working, and Q3 was a very important quarter for us. It achieved significant progress across all areas of the business, the portfolio, commercial success, as well as the organization. Our progress in Q3 positions MicroVision for near and long-term revenue growth with an operating model that will drive positive cash flow.
We will first take a look at the financials, and then I will go into more detail about the key developments in the quarter that are delivering these results. One of those key developments was the addition of Christine Chambers to our team as our Chief Financial Officer. It is a pleasure to have her with us on the call today. With that, I am going to turn it over to Christine to go through the financials.
Thank you, Glen, and good afternoon, everyone. During my first two months in MicroVision, I have spent time with our employees, customers, and shareholders. What I have seen and heard reinforces two priorities that will define our financial strategy going forward. First, improving operating efficiency and reducing cash burn. Second, building a strong financial foundation that supports long-term growth and attracts long-term capital. Today's results demonstrate progress against both of those objectives. Before I provide an update on the Q3 results, let me start with operating discipline, cash flow, and how we fund the business while we execute our roadmap. For the nine months ending September 30, 2026, cash used in operating activities totaled $49.2 million. We remain on track to finish the year near our target operating cash burn of $60 million, depending primarily on the timing of certain working capital items.
Looking ahead at 2027, we are targeting approximately $40 million of operating cash burn, a reduction of roughly one-third from current levels. To support that objective, we recently implemented a workforce reduction affecting approximately 28% of our organization. These functions focus primarily on non-revenue generating functions while preserving the resources required to support customer shipments, commercialization activities, and continued HALO development. These decisions were not made lightly. They were intended to create a leaner, more efficient organization while positioning us to support growth and improved operating leverage as revenue scales. Reductions focused on R&D and G&A groups while strengthening our operations and our supply chain resources. The more efficient operating cost structure aligned with commercial priorities is real and underway. Turning to revenue, we remain confident in our full year 2026 revenue outlook of $10 million-$15 million.
To date, we have approximately $10 million of customer purchase orders awaiting shipment, with a majority of inventory already built and available for delivery. These orders, together with the $4.8 million of revenue recognized through September, give us visibility into our full year revenue outlook. The primary variable is going to be shipments rather than customer demand. While certain supply chain dependencies remain, our focus is on shipping products and continuing to scale commercial operations. The second question I frequently get asked is how we intend to fund the business while we execute our roadmap. For the remainder of 2026, our priority is maximizing non-dilutive sources of liquidity. This includes active working capital management, monetization of non-core assets, and other opportunities to unlock value from assets already on our balance sheet.
We also continue to maintain access to existing financing tools and have approximately $40 million remaining on the ATM facility should we determine it appropriate to use. As we look ahead to 2027, we expect revenue to double from our 2026 level. 2027 is supported by committed purchase orders exiting 2026, expansion of IRIS sales to existing customers, as well as sales of our MOVIA product to existing and new customers. Alongside expected lower cash burn, we're evaluating financing alternatives to secure what I would describe as clean capital. This includes strategic partnerships and commercial and licensing opportunities, together with continued balance sheet improvements that strengthen our ability to attract long-term capital.
We also continue to evaluate strategic alternatives for certain non-core assets, including opportunities to monetize technologies or establish partnerships that can generate value while maintaining focus on our commercialization priorities.
The combination of sustainable commercial growth, the lower cash burn, and disciplined financing will create a significantly more attractive financing profile. Turning to our third quarter results, the most important takeaway is that we're beginning to see commercial progress translate into financial results. Third quarter revenue was $2.4 million, compared to $0.2 million in the third quarter of 2025 and equal to the $2.4 million generated during the entire first half of 2026. Year-to-date revenue was $4.8 million, nearly 5x the $1 million reported through the first nine months of 2025. Just as important as the growth in revenue is the change in the revenue mix. This time last year, revenue was largely driven by software licensing and royalties. Today, the business is increasingly being supported by product shipments into industrial, security and defense, and automotive sectors.
Commercialization progress is beginning to show up in financial performance, and Glen will describe details of this progress in a moment. Gross profit was $1.2 million, or 50% of revenue, compared with a negative gross profit of $0.7 million in the third quarter of last year. Year-to-date gross margin improved to 46%, compared with -126% in the same period of 2025. The improvement in gross margin was driven by our ability to leverage inventory and assets purchased as part of the Luminar acquisition, including the new manufacturing facility in Orlando. While gross margin will continue to fluctuate based on product mix and shipment timing, these results demonstrate the operating leverage available in the business as revenue scales. Total operating expenses were $22.5 million in the quarter, down approximately 7.5% from our first half quarterly average of $24.4 million. Research and development expenses declined to $13.2 million.
SG&A expense was $9.4 million, including approximately $1.2 million of non-recurring finance-related costs. While operating expenses remain above prior year levels due to the acquisitions of Luminar and Scantinel, the third quarter reflects the first benefits of our ongoing cost reduction initiatives. Importantly, we are now actively aligning resources towards program and markets with the greatest near-term commercial potential. Adjusted EBITDA loss was $11.1 million. This compares to our first-half quarterly average of $18 million. Note that in Q3, we did recognize a $6.3 million research and development German government grant. While we still have work to do, these results reflect the early impact of both revenue growth and operating discipline. GAAP net loss for the quarter was $12.2 million or $0.45 per share, compared with a net loss of $14.2 million or $0.72 per share in the third quarter of 2025.
We ended the quarter with $28.9 million in cash and cash equivalents, compared with the $27.2 million at the end of the second quarter. Cash used in operating activities was $13.6 million, improving from $16.5 million in the prior year period. The quarter benefited from the receipt of that German R&D grant. Inventory increased by $3.7 million compared to December 2025 as we built sensors to support customer demand, and accounts receivable increased $1.4 million on higher product shipments in the quarter. As we look ahead to the fourth quarter and into 2027, our priorities remain clear. Continued converting our expanding commercial pipeline into repeatable product revenue and broaden our customer base, and complete the cost reduction initiatives already underway and deliver our objective of reducing annual cash burn by approximately one-third while continuing to support MOVIA production and HALO development.
Continue to strengthen the balance sheet and discipline capital management. We will focus on clean funding opportunities, strategic partnerships, and further simplification of our capital structure. Before I hand back to Glen, I will leave you with three messages. First, commercial activity is increasingly translating into measurable financial results, and we are on track to meet the 2026 revenue guidance of $10 million-$15 million. Secondly, we are taking decisive actions to improve efficiency and reduce cash burn by a third next year. And third, we are building a stronger balance sheet and financial foundation to support long-term growth and attract long-term capital. We have more work ahead, but I am really encouraged by the progress we are making and confident in the direction we are taking. And with that, I will hand the call back to Glen.
Thanks, Christine. I would now like to turn the focus to how we are making this happen. It really starts with our portfolio and the commercial success we are experiencing across the board. Earlier this year, with Luminar acquisition, we significantly expanded our portfolio with IRIS, our long-range 1550 nm time-of-flight lidar. Over the past three quarters, we have reestablished commercial contracts for IRIS and restarted the production line in Orlando. This has enabled us to secure POs that not only support 2026 guidance, but continue to expand revenue in 2027 and beyond. IRIS delivers outstanding performance and is the pathway to HALO, our next generation 1550 nm time-of-flight lidar, which will replace IRIS and deliver even greater value to existing and new customers. HALO will launch in Q4 of 2027, and we are now in customer evaluation phase of the program.
IRIS and HALO are perfectly positioned to dominate the industrial and security and defense spaces, where 1550 nm harsh environment operation and a high-performance point cloud are essential requirements. 1550 nm lidar is also critical for defense applications as it operates beyond the detection range of night vision systems like night vision goggles. Finally, IRIS and HALO are also fully NDAA compliant products made in the U.S. This is exactly what our security and defense customers require. IRIS is delivering, and customers like Overland AI and Lake Fusion Technologies will recognize the value and performance that IRIS brings together for their applications. The selection of IRIS for these programs is another important validation of the technology and the broader opportunity for MicroVision in ground autonomy and aviation applications.
Now, we are also seeing traction with the intelligent transportation system-related customers, or ITS, for traffic management and analytics, which represents a new customer base within the security and defense space. In Q3, we made critical deliveries to our development partners for work in this area. We see ITS and traffic management as a key growth area for us in 2027 and beyond, as HALO is a perfect fit for these applications with its range and field of view. Furthermore, as we now have the critical suppliers fully engaged, Q4 will see a significant increase from Q3 for IRIS shipments as we accelerate our deliveries. In August, we announced initial and repeat purchase orders from customers in North America and Europe, representing thousands of IRIS sensors across industrial security and defense applications. Those orders spanned applications including off-road autonomy, space systems, material handling, logistics, robotics, and other intelligent systems.
Now, this is important for two reasons. First, near-term revenue confidence for 2026 and 2027. Those are the IRIS shipments. IRIS is the gateway to HALO. Existing IRIS customers will be able to seamlessly transition to HALO starting in Q4 of next year. New customers can start their development using IRIS with a planned migration to HALO in early 2028. This secures both near-term and longer-term revenue expansion. HALO will bring the same outstanding performance and reliability in a smaller, lower power, and lower cost package. We have already begun customer evaluations of HALO during Q3, and we will have our pre-production samples available early next year for full customer testing and evaluation. IRIS isn't the only thing that's going on. Scantinel continues to make significant progress with the development of their 1550 nm FMCW ultra-long-range A sample scheduled for early next year.
As we have discussed, the progression from discrete components to a lidar on a chip is exactly how we will continue to drive down costs for lidar while expanding performance, and that's exactly what Scantinel does. Now, in addition to long-range lidar, Scantinel's fundamentally technology, which is the packaging of high-power lasers and amplifiers onto a low-cost photonic integrated circuit or PIC. This applies to adjacent industries, and that is why the introduction of Scantinel ELSFP, which stands for the external laser source, small form factor package, why that ELSFP product is so compelling. The move to photonic interconnects for high-speed processing requires energy and cost-efficient solutions. Scantinel ELSFP delivers exactly that, and this is just part of the overall trend going to optical interconnects for high-speed data.
Now, that creates an opportunity for MicroVision and AI data center infrastructure, where increasing compute density is creating those significant challenges around bandwidth, power consumption, and data movement. To frame it up, the external laser source market is rapidly expanding, with the TAMs growing into the multi-billion dollar levels by 2030. As Christine mentioned earlier, we are currently in discussion with potential licensees and development partners as we evaluate commercialization paths for this technology. It's just an amazing opportunity for us. It's a good example of what we mean when we talk about extracting greater value from the technology portfolio we have assembled. We didn't have to build an entirely new technology stack to do this. We identified an additional significant commercial application for the technology we already own and as part of our portfolio.
Now, in addition to IRIS and Scantinel, we have continued to develop our MOVIA short-range flash lidar products. MOVIA 120 continues its success for the European UGV market, and we plan to replace that in 2027 with MOVIA Pro, which we've launched this month. I'll come back to MOVIA Pro in just a moment. First, I want to talk about MOVIA L60, the foundation for our MOVIA Air platform. We now have three offerings within that MOVIA Air platform. The first is MOVIA Air, which is based on the MOVIA L60 sensor and adapted for use in drones to provide navigation and collision avoidance capability. This is especially important for package delivery and near ground applications, delivery drones, or drones that operate in congested areas.
The second is MOVIA Air Plus, which is a complete lidar and camera-based mapping and ISR, or intelligence, surveillance, and reconnaissance payload that can be mounted to any drone to provide real-time ISR capabilities and real-time communications to the ground. This is where MicroVision's perception platform shines in being able to fuse camera and lidar into a human and computable readable 3D map in real-time. No post-processing, no waiting for the drone to come back. The payload develops a lightweight and highly detailed map that is securely transmitted to the ground, the UGVs, or to other assets in real-time. Third, we now have MOVIA Air Plus ISR, where we can deliver the entire system, including the drone and the supporting peripheral equipment. This allows our customers to have a complete out-of-the-box solution ready to deploy.
We've demonstrated the complete system with our development partner, Robinson Unmanned and J.A. Green & Company's AUSA, and have a full slate of upcoming U.S. and European demonstrations scheduled for the next months. Our partnership with J.A. Green & Company is now a key part of moving from this demonstration phase to engagement and contracts. Similarly, our work with Avular in Europe is opening up that region for us. Air, land, and sea-based autonomy are massive growth areas for MicroVision, and we can play a critical role in all of these systems. Our full range of MOVIA Air platforms enables MicroVision to deliver exactly what our customers need at every level of system capability. We first announced MOVIA Air products in August, and they are now ready to go. Let's come back to MOVIA Pro. You've heard me talk about MOVIA S in the past.
This was the generic description of our next-generation MOVIA short-range flash lidar platform. MOVIA Pro is the first configuration to launch, and it is like no other short-range lidar in the industry. MOVIA Pro not only delivers exceptional point cloud with unmatched uniformity and coverage, it has the full capability of an onboard system-on-chip, an IMU, which means it can support not only the sensor model or the point cloud model, but full perception and advanced features. This eliminates the need for costly external compute and interconnects, and MOVIA Pro is supported by MicroVision's open software framework, making it easier than ever for our customers to develop and integrate advanced features using MOVIA Pro's histograms, point cloud, or metadata. MOVIA Pro brings physical AI to the edge in a fully solid state, compact, and cost-effective package.
We are currently engaged with requests for MOVIA Pro lidars with over 70 end customers, a significant increase versus the prior period when we were doing the pre-development with MOVIA S. With our launch of MOVIA Pro now taking place, we will begin that process of converting these customers from development to production contracts. The strong customer interest in orders for MOVIA Pro gives us confidence in our revenue outlook for 2027 and beyond. MOVIA Pro is just the beginning for the MOVIA family of products. Over the course of the next year, we will be announcing additional MOVIA variants as MOVIA replaces existing MOVIA L applications and begins production with new MOVIA customers across all of our end markets. Shifting gears a bit, in July, we announced the formation of MicroVision Semiconductor in Colorado Springs, our advanced ASIC development and mixed signal design center.
With more than three decades of custom IC development experience, MSI expands MicroVision's ASIC internal development capabilities, which is critical for us really on all of our products, but also opens up external revenue opportunities as we announced in September with our Photonics application award. MSI brings a critical capability in-house while being able to serve the broader market and as an additional source of engineering service revenue for us. Finally, earlier this month, we announced our strategic commercial alliance with Blue-Band, an established leader in intelligent transportation system design and implementation. While Blue-Band will continue to support their existing customer and partnership base, this alliance immediately opens up the ITS market for both hardware and software sales from MicroVision.
ITS is a high-value, rapidly expanding market, and this partnership enables MicroVision to accelerate its position in the space, expand its customer reach, and generate revenue from Blue-Band's established customer base. Also, separate from our Blue-Band alliance, a leading smart mobility technology provider recently selected IRIS as its long-range sensor for applications within its automated traffic safety solutions. IRIS is also in the final stages of evaluation by a provider of autonomous and intelligent system solutions to deliver an integrated lidar perception solution for automatic traffic enforcement applications. These are two really good examples of programs starting with IRIS that will continue to grow over time with HALO. As I mentioned, Q3 was the inflection point for MicroVision, and we have made tremendous progress in strengthening our and broadening our portfolio. Why is this so impactful?
It enables MicroVision to win in our primary end markets, delivering near-term revenue for 2026, as well as strong growth in 2027 and beyond. This is exactly what we are now seeing. Let me shift over to the organization, the third element. As MicroVision advances its commercial growth strategy and path to profitability, we are taking deliberate steps to align our organization, talent, and resources with our highest priority opportunities. Our focus is on building a leaner, more agile, commercially driven organization that operates with greater precision, accountability, and efficiency. This includes restructuring our teams to ensure we have the right capabilities and resources directed towards the markets, products, and customer opportunities we believe offer the greatest potential for near-term revenue generation and long-term growth. These decisions are part of a broader commitment to financial discipline and operational efficiency.
By prioritizing investments, streamlining our organizational structure, and reducing our costs where appropriate, we are positioning MicroVision to execute more effectively, accelerate commercialization, and make measurable progress towards positive cash flow. Our objective is clear: focus on people, our capital, and our capabilities where they can create the greatest impact. This restructuring is not simply about reducing costs. It is about building the organization MicroVision needs for its next phase of commercial growth with the discipline, focus, and execution capabilities required to deliver on our priorities and advance our path to profitability. Before we call for questions, I want to leave you with a few thoughts about where MicroVision stands today and where we are headed. When I started as CEO of MicroVision just over a year ago, we set out a plan to transform the company, and that is exactly what we have been doing.
Over the past quarters, we have consolidated an industry-leading lidar-based technology portfolio, a unique skill set in mixed signal, now in photonics, where that serves our needs, but it also serves a lot of needs in the broader industry, and in particular for markets and applications where they want, in defense and in space, where their customers want to maintain control of that in the U.S. with security, et cetera. What we determined was MSI can be a great capability for us, but also basically a nice revenue generator so that we essentially can keep that capability running, but without incurring a lot of additional costs and overheads for it.
It was kind of best of both worlds.
Okay. What MSI's core technology is not necessarily built into the broader pre-existing MicroVision product line. It was really serving Luminar and then also the third-party markets, I guess, or-
Yeah.
new markets.
Not today. It was definitely part of the Luminar product line.
Yep.
We brought them in to support Scantinel on the photonics integrated circuit design that is being done.
They are actually helping on custom silicon now in MOVIA.
Those products and technologies have not gone to production, so those have not launched yet. They are now supporting the broader organization within MicroVision.
But, in addition to that, are attracting outside customers as well.
Okay. All right. Thank you. I know that was a little in the weeds, but that is helpful for me to understand. Well, more importantly and broadly, the commercial engagement seems to have really accelerated across multiple end markets. I am curious if you could describe maybe how you have done that, what has helped do that. But it seems like the level and just what I am more impressed by is the broadness, right? All of a sudden, there seems to be a lot happening
in defense and industrial and ITS. Something has changed for the positive, but I wonder if you'd elaborate more on how you've done that.
Yeah. I think there's three pieces to that. The first starts with really good products. IRIS is just an amazing performing product. It develops a point cloud that is just outstanding, at range, really good detection. As we've brought that to other customers, it's just easy to demonstrate and showcase that. The same with MOVIA now. When you look at the point cloud that MOVIA Pro develops, it's just beautiful. It starts with good products and having the right product for the end market. Those were two where we knew the demand was going to be there. It's just a matter of how do you get the right product to it. The second is there is some tailwind in terms of the technologies that we have now, and the fact that we're a U.S.-German company building in the U.S.
Whether it's FCC rulings or it's just the general concern about sourcing lidar from other countries, they want to. German OEMs and defense want to source in European, want to source from European suppliers. There's some tailwinds in terms of just we're positioned really well to be able to provide that, manufactured in the U.S. and NDAA compliant. Certainly that's a tailwind. The third part of it is, I would say, James and the commercial team really getting traction. James joined us back in early August, and has been able to drive engagements to closure and really move things. When you look at those three things, those three factors, that's what's driving the overall, really, step function improvement and trajectory now going forward.
Okay, terrific. That's helpful. Then quickly, I'll get out of the way here. On the financials and looking forward, I think in the past, we've talked about gross margins, which were good in the quarter, but sort of being in the range of kind of 40%-50% is maybe a rough guide for what you're aiming for. Does that still feel comfortable as you move into Q4 and maybe thinking about 2027 in kind of a general sense?
Yeah. Maybe I can start. I will turn it over to you, Christine, and then I can add a comment.
Yeah, absolutely. I think, obviously, we have seen great gross margins in Q3 and tried to give some context to that with some of the assets and the inventory that we had on hand. Saying that, I think, they will continue to fluctuate. I think, as we change our product mix and the timing of our shipments, we will see some of that leverage that we have experienced in 2026. With the new product mix, we will probably get back to more normalized levels. But I will let Glen add any context to that you want to add, Glen.
Yeah, I think IRIS has been a very strong performer. The team has done a really nice job negotiating with suppliers and really controlling the cost, the COGS on the product. Then as demand has increased, it has helped us. MOVIA, kind of what Christine is alluding to, is your first launch of product, not uncommon for gross margin to be a little bit thinner as your volumes are not there yet. But in terms of long-term target, for these products with the markets that we are serving, yeah, that 40%-45%, that is where we need to be, and I think we have a clear path to getting there.
Okay. Thank you. Then with the workforce reduction, I think Christine mentioned 28%, or sort of the headcount reduction, is it fair for us to sort of think about OpEx being at least 28% lower going forward, I guess? Is that sort of a reasonable thing to think about?
Yeah. I talked about the reduction in cash burn, and that is directly related to your comment in that we focused the cost reductions, the reductions in force in R&D and G&A, so we will see those sort of in 2027 materialize and then drop to the bottom line as well as we think about improvement. Yes is the answer. We will see that next year.
Okay. Terrific. Thank you. I will get out of the way. Great quarter, great update, and thanks for taking my questions.
Certainly. I will now turn this call back over to Christine Chambers to read questions submitted by shareholders. Thank you.
Thank you, operator. Looking at the questions here, Glen, I think there is a first question for you, which talks a little bit about our customers and our brands. The first question is, why has MicroVision only named a couple of customers? Is it because they do not exist? If we do not name them, why are we confident?
Yeah. It's a great question, and it's one I understand totally because when I was in automotive for many years, I used to get the same question, "Why don't the OEMs let you talk about them?" The two comments I'll make is, one, we've been able to now start naming customers and partners, whether it's Robinson, Overland, partners like Avular, Blue-Band. So names will be increasingly forthcoming. But the big gating factor there is the brand management at the customer or the program management at the customer, in a lot of cases, where we are with these customers is pre-production. This, by the way, is a key element to our growth story because we're really happy with the IRIS shipments that we're making, but in many cases, the volume really ticks up as we get into more into 2027 and 2028, and not so much in 2026.
Those customers haven't announced their programs. What's very common in our industry is that customers will hold off on announcing partners, essentially until their programs have been announced. So they control the narrative around the end product and the end platform. That's what we're seeing here. Believe me, we ask our customers, "Hey, can we talk about this?" But we can't do it until they give us their explicit permission. Then we can. So you'll see more because the customers do exist, the POs are real. So you'll see more of that as we go into Q4 and as we go into 2027. But at this point in time, we announce when we can with the customers that are supportive of that.
Like I said, as those programs mature and they get into production, then they complete their announcements, they're going to say, "Hey, sit tight, and we want you to hold off." But I totally understand the frustration because I would love to be talking about what we're doing with our customers, and you just have to sit tight until you have their permission. So more to come on that.
Thanks, Glen. The second question is around our products and applications. Which product applications and markets are expected to contribute most to MicroVision's revenue growth in full year 2026 and full year 2027? What is the central value proposition? Maybe I can take part of that, Glen, then you can add to it.
Yeah.
I think what we've mentioned is that we have, as we think about supporting 2026 and 2027, I've mentioned that we have, first of all, POs, $10 million of POs that we just need to get shipments to. The second thing is that we talked about the work that James is doing, and we really have that committed pipeline for IRIS, which supports roughly half the revenue projected in 2027. The timing of the shipments and supply chain availability will determine revenue timing. There is really a robust, committed pipeline behind both those new products, the IRIS inventory, as well as new products from MOVIA and demand from MOVIA in 2027. Glen, would you want to add to that?
Yeah. I think in terms of the central value prop, it really varies a little bit by end market. If you think about the three markets that we serve, industrial has a large range inside of it. For instance, for us in the industrial market is off-road autonomy. It's trucking that's off-road, that's autonomous, that need lidar, or it's heavy equipment mining, that kind of thing. Those are long-lived programs that have multi-year development activities and testing. You have clear line of sight to what that revenue is going to be on that platform, typically for four to five years. On the other hand, on the other extreme with industrial, you have distributors that are selling 10, 15, 20 at a time to automation companies or small buyers that are spot buys.
You try to aggregate demand, and you come up with a schedule, but those are very short time to purchase order and purchase order to invoice. It really varies quite a bit across industrial. Security and defense tend to be a little bit more predictable, not unlike what I talked about with kind of the industrial off-road vehicle base, where you have longer-lived programs, longer line of sight to what that revenue is going to look like. For us, as we kind of put together the picture for 2027, as Christine, as you mentioned, it's really nice to have a significant portion of that revenue stream, more or less in either in POs or in high confidence.
The balance really, we then say, look, based on customer input to us and what they need and what they want to buy, here's where we think that'll be. Our goal, of course, is always to overdrive that piece of it because that's where we can get, I think, some overachievement. Again, across those three end markets, it's really a lot of variability in terms of those lead times and the sell cycle, if you will.
That's great. Thanks, Glen. The next question is about the capital raising alternatives and how should the investment community think about the framework management applies when evaluating future capital risk alternatives to maintain sufficient operating liquidity? Maybe I'll start with that because I've mentioned a few of those in our remarks earlier, but I think there's three aspects to it. We're first of all really prioritizing and maximizing those non-dilutive sources of liquidity. We have some of those examples with Blue-Band and the strategic alliances and strategic partners and licensing opportunities. We do also, as a reminder, we have the ATM as a $40 million facility. I think the third one is around us developing and focusing on communicating fundamental financial results in terms of growth, cost reductions, and cleaning up of the balance sheet to help sustain, to help attract and bring long-term capital.
That's really our focus as we think about capital phase alternatives for operating liquidity. The next question for MicroVision previously indicated that certain industrial customers evaluating MOVIA L choose to wait for MOVIA S. Has MicroVision received any material pre-orders or other firm commitments for MOVIA S? When will these ship, and if so?
Yeah. That's not uncommon, where a new customer looks at MOVIA L and then looks at MOVIA S and wants the latest generation. So not a surprise. The good news for us is I'm confident in our ability to move all the MOVIA L inventory that we have. So that's not a concern for me. What's great is the excitement around MOVIA S, and I mentioned that we already have engagements and demand coming out of 70 POs. We've already, or 70 customers. We have already shipped to over 18 of those customers in terms of evaluation units and samples. As we kind of ramp up the build plan now, the plan is we'll continue to ship out to the balance and more. What that is is this is that phase of moving through evaluation and then getting into POs.
Really for us, it's two paths. One is direct to the OEM. The other is a lot of interest from large distributors that want to, that think, "Hey, this is a great product that they can move." So, we're going down both channels. But right now, really, really excited about the fact that, I think last time we talked it was about 25 customers. Now it's about 70, over 70 now. So just a real strong growth in looking for that product and all of its capabilities. That I think is one of the real bright spots for the quarter, is being able to get that into people's hands.
Thanks, Glen. The next question is, does the FCC action of foreign product robotics components create a measurable tailwind? We have talked a little bit about that tailwind earlier today. To what extent do customers favor domestic supplies, and how much competition does MicroVision face from Chinese lidar manufacturers compared with Western and Chinese competition? How much does MicroVision see itself as differentiated?
Mm-hmm. Yeah, that is a big question. Let me just go through the different pieces of that. Yes, the FCC action on foreign-produced robotic components definitely creates a tailwind for us. We are seeing that effect. That is one of the reasons, as I mentioned earlier, whether it is FCC or the desire for NDAA or it is those types of things, that is one of the tailwinds that we are seeing drive interest in the product and engagement. Because if you are developing a robotic system for the U.S., the last thing you need to be told after you have done all the work is, "Well, you cannot use that component." MicroVision becomes a safe bet for them.
To what extent do customers favor domestic suppliers? It depends a little bit by industry. In automotive, generally speaking, there is not a lot of, their supply chain management will buy from anywhere in the world.
It is a global market. It is a global supply market. You are competing head-to-head with every global supplier out there. When you get into more specialty markets like robotaxis, that is a bit of a different animal. They are going to be a little more concerned about the impact of a Chinese lidar on a U.S. robotaxi. You are going to see there is a greater degree of sensitivity there. As you get into security and defense, there is a very high level of sensitivity there.
In fact, defense is kind of the extreme. As we think about the end markets and paths to revenue for us, we are looking very clearly at, okay, how do I leverage that? Geopolitical advantages are never permanent. Over time, that changes. At the end of the day, we have to be competitive with Chinese or with the rest of the world lidar providers.
When you think about that, one part of your question was how do we see ourselves as differentiated? One of it is through the products that we make, the technologies 1550. It is a real advantage in defense and those applications where we do not want to be able to see and have visibility through night vision goggles or those types of detection because 905 or 940, you can see very easily. It is in the visible light spectrum. The sensor and everything it illuminates can be seen. We play to those advantages as well as the open software framework approach that we have taken to essentially make our products easier to integrate into our customers' systems.
We look at each aspect of the end market, identify those markets where we think we have differentiated advantages and that can maintain better pricing and margin, that's what we're going after. So that's where we have to just keep innovating every year to stay ahead.
Yeah. Thanks. Pivoting to production readiness. So the concerns about production readiness in 2026 and 2027.
No, I think on the production readiness side, from a capitalization, from an operational side, I think we have a good plan for that and managing that now. Depending on demand goes, if we have more demand, we'll have to react to that. That's certainly a good problem to have. I'm confident that the team can do it. This was one of the benefits in the Luminar acquisition, is we were able to acquire a facility that had in place a full operations capability and then consolidate the capital equipment into that operation with very low levels of investment. We were able to bring together those lines and that equipment. So, we're staffing, we're training, we're prepared for that on the operations side. The bigger risk, this is always the case now, is on the supply chain.
That's primarily driven a little bit by tariffs and just managing costs. That's kind of tamped down a little bit, but that's still there. Then also data center demand. Circuit boards are now a constraint, with a lot of price pressure on circuit boards and material cost pressure there, FPGAs and memory chip. The data center demand and the growth in data centers just has put a lot of stress on the electronic supply base for those particular components. That's why earlier in the year, we did pre-buys on FPGAs, we did pre-buys on memory. We did a number of spot buys to make sure that we had access to enough material so we could start production effectively while demand grows. But that's the one area that we'll continue to focus on and strengthen, is supply chain and supply chain risk management.
Great. I think we've got time just for one more question, so I'll go to a slightly different area. How is the perception software stack monetized along with the MOVIA hardware for non-automotive customers, and what role does software play in improving customer adoption and reducing system costs and improving gross margins?
Sure. Software will play a role depending on the end market for security and ITS-related applications like tolling. MOVIA Pro is a great product for toll booth, basically monitoring. That's where ITS software and analytics plays a great role. In defense, it's really all about the real-time mapping and analytics that MOVIA Air delivers and MOVIA Air Plus deliver. So creating that map, building that map, transmitting it securely to the ground or to the UGVs. Broader industrial, it's being able to put safety features like L-CAS or features that our customers want to put onto our products. That's where open software framework comes in. We've talked about software plays an important role in reducing cost of the product.
Software can play an important role in terms of customer adoption through open software framework, which in turn reduces system and development costs for our customers and do those things correctly. That's how you expand gross margins.
Glen, I'm just going to hand it back to you for some closing remarks.
Thanks, Christine. I want to emphasize, as we close up today, three key points that we have discussed. First, when you look at where we are today, we have the product and technology portfolio to compete and win in our end markets. That is what we are seeing in this quarter. Second, we are now delivering sustainable and diversified revenue growth across that expanding customer base. Very healthy, resilient, and diversified revenue growth. Then finally, we have the organization aligned and our operating cost model aligned to deliver the revenue while driving to positive cash flow. It has been an amazing year for MicroVision so far, and personally, I could not be more excited about our future. With that, Christine, I will turn it back to you to wrap up.
Thanks, Glen, and this concludes our question- and answer- session. I want to thank everybody for their participation in our results call and everyone's continued support of MicroVision. With that, I will hand back to the operator.
Thank you. This concludes today's conference call. All parties may disconnect, and have a great day.