Microvision, Inc. Q2 FY2023 Earnings Call

Good afternoon, and welcome to the MicroVision Second Quarter 2023 Financial and Operating Results Conference call. At this time, all participants are in a listen-only mode. Please note this event is being recorded. I would now like to turn the conference over to Drew Markham. Please go ahead.

Thank you. I'm pleased to be joined today by our CEO, Sumit Sharma; and our CFO, Anubhav Verma. 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, statements regarding our product development and performance, comparisons to our competitors, market opportunity, 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 potential, believe, expect, plans, 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 statements. 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. 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 in 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 our CEO, Sumit Sharma. Sumit?

Thank you, Drew, and welcome, everyone, to this review of our second quarter 2023 results. We're very pleased with the accomplishments of our team during the second quarter towards our annual and multi-year goals. I'm happy to report that the strategic changes we initiated in Q1, the completion of our acquisition and planned integration, proceeded smoothly. With our combined global team and expanded LiDAR and software portfolio, we can address the needs of our OEM customers with a wider range of solutions. I would like to elaborate on this a bit later. We continue developing our revenue streams for strategic and other channels, and I am very happy with the progress we've made so far. The biggest opportunity for the company remains in strategic partnerships with automotive OEMs for our LiDAR products. First, I would like to start by updating you on our progress on RFIs and RFQs. We remain engaged in multiple RFQs with multiple OEMs that are expected to be nominated in 2023. We are the only LiDAR company that offers multiple technology nodes, from the highest resolution, smallest form-factor, long-range LiDAR in our MEMS-based MAVIN, as well as a small form-factor short-range sequential flash-based MOVIA LiDAR product lines. Our teams remain engaged with multiple OEMs who are looking to identify their next LiDAR partner for expanded ADAS safety for their passenger vehicles and commercial trucking product lines to be nominated in 2023. The combined lifetime volume of all the programs up for nomination in 2023 is for millions of units. This, of course, is the most exciting part. We have the right products that are targeted to supply ADAS safety for higher-volume passenger vehicles and commercial trucking. We remain very excited about where we are in the nomination process. In case of a program win, we expect two phases for the engagements. In the first phase, we expect to customize our core technology with the specifics of each OEM's needs under a development agreement. And in the second phase, we expect to supply parts as an ADAS Tier 1 with our contract manufacturing partner under a master supply agreement with each OEM. For the first phase with our core technology remaining the same, we expect modifications will be required for the product mechanicals, thermal, and some custom perception software features, security, and interfaces. All of this would have to go through extensive validation and verification on our side, and more so from our potential partners. We don't expect customization to be a high-risk path for our team. We also expect multiple production lines to be required at our contract manufacturing partner to support customer production sites in North America, Germany, and Asia in this phase. In case of multiple nominations, all OEMs will want to validate that we have dedicated engineering resources for their programs. I am very confident in the size of our global team and our capability to add talent as needed to support multiple program wins. We are heavily engaged in financial due diligence as well. The continued strength of our balance sheet and capability to fund operations until the start of production is a requirement in all possible nominations. Management has articulated this to our investors and the broader market clearly in the first quarter, as you may recall. Again, I believe we are well-positioned for this item, being a publicly traded company on the NASDAQ with no debt, control of our expenses, and a clear understanding of how to grow proportionally to meet the needs of multiple potential customers. Just to summarize my assessment of the engagements. Our technology and products are being well received; our solutions offer higher technology in the smallest form factor with long-term cost stability based on our custom silicon. I strongly believe we remain on target for our 2023 objectives for strategic sales. Second, I would like to update you on our direct and software sales efforts. These segments will contribute meaningful revenue on our path to mass production for LiDAR products. In order to start our revenue cycle with MOVIA direct sales, we expect to place a large order for MOVIA sensors. With this inventory in place, I see its accelerating paths to revenue. With our team in Germany and our new team in Detroit, we expect great things in the future. As you may recall, Ibeo partnered with ZF Autocruise with a production line that was qualified to automotive C-sample level. The custom silicon from MOVIA's sensor was developed and owned by our Hamburg team. This product and the partnership were part of the Ibeo acquisition, and we expect to provide a mature product to support our direct sales markets. Having inventory will allow us to expeditiously enter a wide range of markets looking for LiDAR solutions. We still experience many moving pieces, including macroeconomic factors for direct and software sales. We have great contacts and a good sales funnel for these segments. In general, I'm very confident that in the future, we will have stable direct sales of our MOVIA sensor and our reference software suite to generate meaningful revenues. Third, I would like to update you on the broadest and most comprehensive LiDAR product portfolio that MicroVision offers and the advantage it represents. We are a unique LiDAR company. We offer a long-range dynamic view LiDAR with unmatched performance, size, cost, and immunity. We also offer a sequential flash-based short-range LiDAR with unmatched validation performance, cost, and silicon maturity. We will remain competitive with a wide range of RFQs every year with our LiDAR products. I believe this will allow us to scale our business faster than anyone else on the scene. In addition, we will offer various levels of perception from the LiDAR products that eliminate the need for additional AI ECU, and instead integrate with the computer platforms developed by companies like Nvidia and Qualcomm. This remains our go-to-market strategy, and I can say, with confidence, it is the preferred strategy I have seen in feedback from OEM engagements. This will remain one of our biggest advantages for a long period of time. This is a testament to MicroVision's foresight on products. Beyond that, we continue investing modestly in sensor fusion system development. This represents a future opportunity to expand our LiDAR sensor sales and supplement with software. I want to conclude by thanking our global team for their hard work that has allowed us to be well-positioned for an incredible year ahead of us. I would like to now turn over the call to Anubhav to talk about financials. Anubhav?

Thanks, Sumit. I'm really pleased with the progress we have made in the first half of 2023. I'm proud of the company we are building in MicroVision, especially with the integration of our teams in the U.S. and Germany. Our acquisition has positioned MicroVision to become one of the most experienced and technologically advanced LiDAR hardware and software companies in the market, with over 50 years of combined operating history and 735 patents. Let me talk in detail about our progress on RFQs on the technical front. Well, let me discuss some of the key financial items that the OEMs are looking for in their due diligence on prospective LiDAR suppliers. In particular, it is important for suppliers like MicroVision to show strength in the following two areas: number one, sustainable existing cash burn, allowing a longer financial runway; number two, ability to scale up operations to handle multiple high-volume RFQs, both in terms of dedicated engineering resources and production capabilities. On point number one, MicroVision continues to demonstrate one of the lowest cash burns out there. Our publicly-disclosed operating history shows that MicroVision has been consistently disciplined about deploying capital for growth. Point number two, MicroVision has the strategic advantage when it comes to quickly and efficiently scaling up operations, as we consider multiple RFQ wins we have the ability to add dedicated engineering resources at the customer's preferred locations in either North America or Germany. In addition to the maturity of our technology and superior technical specifications, the above advantages are also positioning us well with these RFQs. Our customers and potential partners, including contract manufacturers appreciate MicroVision's strong and deep IP portfolio, and our industry experience, financial discipline, and technical know-how, all of which are key differentiators for us. We are thankful to our shareholders for supporting us and presenting our best foot forward with the OEMs in the RFQ processes. Now, let's dive into the Q2 2023 financials. For the second quarter, we recorded revenues of $329,000. This revenue is both from automotive and non-automotive customers. The revenue in this quarter is lower than the first quarter as some of the non-automotive customers pushed out the delivery of units. We expect the momentum in revenue to pick up in the third quarter. At this time, we are maintaining our $10 million to $15 million revenue targets. Over the past several months we have invested in our sales team by bringing in some highly industry-talented veterans, especially in the Detroit area. I expect some opportunities especially in the direct sales business to ramp up in the second half of this year as our sales team puts their experience and energy to work for the company. To remind investors, our direct sales model includes the sale of MOSAIK to automotive customers and MOVIA to non-automotive customers, and this obviously has a much shorter sales cycle. To that end, we have placed an order to build new MOVIA inventory with ZF Autocruise to help satisfy the demand from non-automotive customers. We expect this strategic investment and inventory build-up to drive the revenue growth of the company in the near-term. We expect the revenue momentum to pick up in the second half of this year, and into 2024 as our RFQs progress and software sales materialize. In 2024, we expect there will be an increase in revenue associated with RFQ wins related to specific customizations required for product's mechanicals, thermals, and custom software for security. Coming back to this quarter, the split of the quarter's revenue is approximately 45% hardware and 55% software. The customers in the hardware revenue stream include customers in the industrial and agricultural sectors. The customers in the software revenue streams include major automotive OEMs. Before we move on to expenses, a quick recap on Microsoft, we received communication from Microsoft that no units were reserved in this quarter. As a result, we still have an unapplied $4.6 million left on the contract liability. Our agreement with Microsoft continues to be in effect with an expiration date of December 2023. Expenses, we had approximately $24 million OpEx, including R&D and SG&A expenses. This includes $3.9 million of non-cash stock-based compensation and $1.6 million of non-cash depreciation/amortization. Besides this, this also includes about $2 million of one-time transaction expenses and related integration expenses that occurred in this quarter. We expect the run rate of the expenses going forward to be approximately between $16 million and $17 million a quarter. For the second quarter, $16.6 million cash was used in operating activities, which was well in line with our 2023 full-year guidance. To remind our investors, we continue to show discipline with our cash burn being on the expected trajectory. In these times of uncertainty and weaker macroeconomic conditions, MicroVision stood out and beat competitors in terms of maintaining one of the lowest burn rates in the industry, with a highly talented pool of engineers in both the U.S. and Germany, and a strong balance sheet. As expected, CapEx in the second quarter was $0.9 million, in line with our expectations. This quarter we also received $3 million of incentive payment we were expecting to help us recover the build-out and tenant improvements associated with the move into our new headquarters in 2023. This payment hits the other income line item on the P&L. Well, let's talk about our cash position. As of June 30, 2023, we have made the majority of the payments associated with the Ibeo acquisition. We have an expected liability of €2.7 million on our balance sheet related to the acquisition. We expect to pay this to the seller later this year once both parties reconcile and agree to the amounts. Our total liquidity was $94 million as of June 30, including cash and cash equivalents and investment securities. As an update, we had announced a follow-on capital raise in June to strengthen the balance sheet. We chose to withdraw the offering and instead proceed with the ATM program. This was a strategic decision intended to ensure the best possible outcome for the company while minimizing shareholder dilution and fees related to the capital raise. Based on our current operating plan for 2023 and beyond, we anticipate that we have sufficient cash and cash equivalents to fund our operations to at least the end of next year. Looking ahead, we are excited about 2023 as we march forward on our paths to $10 million to $15 million in revenue this year. We believe our three product lines, MAVIN, the perception software LiDAR sales with non-recurring engineering revenues from OEMs; MOVIA, the sales of flash-based LiDAR for non-automotive customers; and lastly, MOSAIK, the sale of auto annotation software for automotive OEM validation, should be able to drive momentum in the remainder of the year. To summarize, we are really excited about 2023 and beyond. With our milestones and key focus on winning RFQs, we will be proving to the market our value proposition as a unique well-positioned LiDAR company. I would now like to open the line for questions.

Thank you. At this time, we are conducting a question-and-answer session. Our first question comes from Anand Balaji with Cantor Fitzgerald.

This is Anand on for Andres. Congrats on the quarter, and thanks for taking our questions. I've got a few here, and I just wanted to start with the recent reported revenue drop to $300 million. I just wanted to check to see how confident you are in reaching the midpoint of guidance, so about $12.5 million, that you just reaffirmed your range of $10 million to $15 million? And how do you guys expect the revenue to be spread out in the back half of the year, between 3Q and 4Q?

Thanks, Anand. So, yes, I think as I had mentioned in my remarks, we expect that the third quarter revenue momentum to pick up. This was primarily because some of our customers pushed out their deliveries, which we're expecting to happen in the third and the fourth quarter this year. And primarily the growth is going to come from the sale of MOVIA. And to that end, we have invested in building up the inventory, as I mentioned in my remarks, at ZF Autocruise, where we have placed an order to stock up the inventory that we can use to satisfy the demand in the second half of this year. Besides that, I expect the momentum in the sale of MOSAIK as well as to some of our automotive customers where we are in the process of installing and implementing that software in their ecosystems for that work. So, I do feel good that we should be confident about hitting the guidance this year based on these factors. And lastly, we had invested in bringing on some talented industry veterans, especially in the Detroit area, who have background in both automotive and non-automotive customers, to accelerate the momentum and get the shorter sales cycle, which again the MOVIA and the MOSAIK product to help us hit the revenue targets that we have announced for this year.

Got you. Thanks, Anubhav, that's helpful. And I just wanted to switch gears to the gross margin, and wanted to see what the driver was behind the drop in gross margins? And how do you expect margins to progress over the rest of the year?

Yes, so the gross margin drop was primarily due to economies of scale. Obviously, as we sort of put more revenue through the funnel, we expect the gross margins to be again what we had described earlier. We expect to hit the target of over 30% gross margins this year because, again, the margins are primarily coming from the sale of software and hardware, from that standpoint. So yes, so we do expect to hit our numbers from a gross margin standpoint.

Got it, sweet. And just to switch gears a little bit, I know you talked about this a little bit with OEMs. I wonder if you could give us an update on discussions you're having with an OEM or when you might be able to expect your first partnership with an OEM or how you would potentially expect NREs to eventually materialize.

I'll take that one. I believe we are on track for 2023, and I think everyone involved would agree. It's evident they want the nominations completed this year so they can move forward. There is a specific timeline for delivery and start of production. Therefore, I remain confident that the nominations will happen in 2023 as the OEMs have suggested.

Got you.

And after that, of course, think about, right, we have a core technology done, but every week think about a consumer vehicle versus even a trucking application, you have to customize. And so the core technology is the same, but they need some level of customization on the software side or the hardware side or the thermals. So, there is that whole customization part of it, but it's not a full-blown development. Right, the core technology is the same. The reason they're picking somebody who is ahead is when they look at the silicon part of it or they look at the technology development part of it, where is your level of maturity, and they don't want to change that core part, but they want to customize what they need. A lot of it is in software, true. And a lot of it in the NRE is going to come from validation, verification that has to be done for their scenarios, right, so we have to give them a validated product. Of course, they can do their own validation with themselves or with a third party. But on top of that is like there's always some customization on the mechanicals, right, so how do you mount it, which side of the connector, what connector do they want, and some other customization on the inside, on the thermal side of it because of that, right. But I would not quantify this as something that starts new development. Some of our investors that I've known for a long time, when they think about customization they may think about what we did for Microsoft and what we did for Sony, those were full-blown development programs. That's not it. We've already funded the core development to a certain point; the NREs will cover the customization for each individual. And as you can imagine, a production line has to be put into place for whatever they want. And you can't have a single customized line that’s going to make low-volume high-mix, it's not going to make one part for one, one part for the other because each and every one of these product lines and RFQs we're talking about has pretty high volumes, so you're going to need multiple lines done also in parallel. So, for all that work to happen in the timelines that they have, they clearly understand, they dove deep into it with our team; thousands of hours have already been spent by our team on this, I can assure you that. They have a very good understanding of how that has to be executed and what the timelines are. So, that's why I feel pretty comfortable, and the NREs are going to be some magnitude, but it's clearly not going to cover all our development because it is our core technology and we intend to not license it away or give the IP away to anybody.

Got you.

No, I think you covered it all, Sumit.

Thanks, guys, that's very helpful. I've just got one last strategy question. So, I was wondering if you guys have plans for expansion in the non-automotive market with Ibeo if OEM revenues take longer than expected to materialize. And if that were the case, what segments would you be focusing on and how would you view the trucking market for this purpose, like automated trucking?

If you consider the trucking market, it's important to differentiate. There are actually two types of trucking markets. One involves trucking OEMs, which operate with lower volumes, not in the millions of units per year or outlook. They have significant volumes but function like any OEM, going through RFIs and RFQs with strict requirements. This business segment has often been overlooked, but it remains an ongoing opportunity. I'm quite optimistic about the advancements in safety for 18-wheelers globally. The other segment you're alluding to consists of various trucking applications or companies across the U.S., Europe, and Asia that purchase sensors and are focused on developing their core software products. Essentially, we see two types of partnerships in the trucking industry. There's the direct sales aspect, where our team can provide sensors and finalize deals, delivering hundreds of thousands of components on a schedule. On the flip side, when looking at trucking applications, you typically need multiple LiDAR sensors. Our presentation illustrates a simulation using actual LiDAR data to show coverage and the number of sensors required. In a typical application, you might need five to six LiDAR sensors, with our MOVIA product enhanced for long-range needs. Although the numbers for OEM trucking aren’t in the millions, they can reach high hundreds of thousands over a product's lifetime, involving various trucking partners worldwide. There's a substantial market, although not 500 partners, there are enough to establish a strong business, which aligns with the ongoing transformation of the trucking industry. A key part of your inquiry relates to U.S. companies like Aurora that are creating automated trucking systems with a primary focus on software. We aim to be their sensor provider, working alongside manufacturers, and seeking to be included in their specifications for LiDAR. Both applications are relevant here. In terms of acceleration, we refer to direct sales because they resemble spot sales, offering more transparency. This is central to our strategy, which is why we've ordered a substantial inventory of MOVIA sensors, seeing a path forward. A year ago, when Ibeo faced insolvency, MOVIA lacked a clear direction, but we've revived the product, and I firmly believe in its value. It addresses numerous challenges in short-range LiDAR and the need for multiple sensors. The trucking sector has lacked a LiDAR solution capable of providing 360-degree coverage around a truck at distances of 30, 40, or 50 meters in a stable design. We are pioneering in this area. Therefore, while both direct and OEM sales will be important, direct sales will serve as our bridge until production starts for the programs we’re discussing.

Got you, thanks, that's very helpful. That's all I've got. Thanks again for taking our questions, and congrats again on the quarter, looking forward to the ramp this year, and I'll pass it on.

Thank you for your time.

Thanks, Anand.

Thank you. I will now turn the call back over to Anubhav Verma to read questions submitted through the webcast.

Thanks, Mike. So, I think one question that we're getting is, can you talk to us about the product portfolio and how it helps MicroVision as a whole, and the strategic rationale behind the product portfolio, and how does it differentiate us as compared to the peers?

Yes, that’s a great question. We discussed it a bit back in April, but I'll summarize it more concisely. Everything we've been discussing at MicroVision, and what others are mentioning, revolves around long-range LiDAR, which is significant and likely to be very successful. However, from an OEM perspective, they aim to provide more than just long-range LiDAR for vehicles; they are focused on delivering products at various automation levels, ensuring a certain safety standard. The MOVIA and MAVIN products represent two different technology paths, giving us a unique advantage that others do not possess. This diversity allows us to participate in more requests for quotes and information. Even if an OEM has chosen a long-range LiDAR that might not perform well, our enthusiastic promotion of our LiDAR technology has been fruitful this year. We've begun to show them the MOVIA product, and they are beginning to recognize its value. This is exciting because most companies can’t meet all the LiDAR needs at a reasonable price point with reliable technology. Consequently, we position ourselves as a comprehensive solution for all their LiDAR requirements. For a young company like ours, this acceleration is a significant achievement that sets us apart. Competitors may continue to focus on long-range LiDAR with fluctuating fortunes; however, we expect to be involved in more RFQs annually, as evidenced by 2023. Moving beyond just LiDAR, perception is another critical need for OEMs, even if the term means different things to different companies. Essentially, it involves taking LiDAR data, applying advanced software, and extracting useful information in real time. This task is quite challenging and vital for them, as it relates to what data they receive from our products. A strong perception interface can reduce overall system costs, especially since we have developed mature technology through the Ibeo acquisition, which enhances our capabilities. Our LiDAR products are tailored to meet market demands, incorporating perception into the LiDAR offerings that enable partnerships, resulting in a significant competitive edge. Not only do we provide LiDAR data, but we also offer features enhanced by perception, which adds significant value. Regarding sensor fusion, it's a modest investment that complements our advanced LiDAR and perception software. OEMs face challenges with demonstrating effective sensor fusion and redundancy, and we believe our research and development can showcase superior integration of cameras, LiDAR, and radar. This approach can further reduce system costs and enhance product lines. With our current team size of about 400 and robust capital resources, we’re capable of delivering exceptional products. We understand the need for timely deal announcements and are aligning with our stated timelines. The MOSAIK software has emerged from our perception work, and it's essential for validation purposes. Our OEM customers also require this software for their validation processes, creating a beneficial side project for us. This software helps us stay ahead of OEM needs and is a worthwhile investment for our future development. In sum, we have a product portfolio that effectively addresses OEM needs, and while strategic sales are crucial, they depend on high-volume customers to truly impact pricing and market share. Many companies attempting direct sales aren’t succeeding due to the scale and cost challenges. Our strategy is designed to work effectively, and successfully securing these strategic deals will be vital for our production capabilities. I know I’ve shared a lot, but I'm passionate about this topic, and I hope this clarifies how our products are interconnected and our consistent strategy moving forward.

Thanks, Sumit. And the second question is also similar on these lines, I think you mentioned talking about the AI chip, so, can you elaborate what's the difference between that and MicroVision strategy? And related question is, have you completed the analog and digital ASICs for MicroVision?

As we mentioned earlier, starting with the analog, that's the easier one to address first. The analog ASIC has been initiated, but there are no current plans for the digital ASICs. When you refer to the ASIC as complete, you're likely asking whether the production calculations are finished and the chips are in place. That's still in progress, but we have begun working on those chips with the goal of completing the MAVIN. As for the MOVIA side, those chips are already in existence, so they are not any more advanced. Regarding the AI chip, I'm not entirely clear on your question. Could you please repeat it?

In your remarks, you had mentioned the AI chip, the competition it's using versus what the MicroVision's value proposition is?

Yes, this relates to how we perceive system costs, which are crucial for OEMs. They can create prototypes and demonstrations, but ultimately, if they are to implement this technology in millions of cars, they must address a highly competitive market that demands cost efficiency. It's intriguing that our approach to perception relies on established algorithms, which are actually more powerful than they appear. These algorithms can be viewed as straightforward equations that require finesse to interpret scenes accurately, predict outcomes, and facilitate easier object-level interaction. While AI has its merits—like the generative capabilities in Adobe Pro—it isn't simply about integrating AI into every aspect for OEMs; it must be implemented carefully. I can confidently state that our perception technology surpasses others because its execution is well understood. It's a reliable feature that meets specific requirements, and its effectiveness is clear. I'm not convinced that existing AI solutions from companies focusing on video or similar technologies represent the most efficient use of shareholder resources. We've seen significant success in Hamburg, which fueled my interest in the Ibeo acquisition. I believe we're in a strong position, backed by the feedback I've received from various OEMs. While I can't comment on other strategies or their information sources, I can confirm that, based on my discussions and evaluations, I don't envision perception evolving into just another AI solution.

Thanks so much. Can you give us a little more color on the financial due diligence by the OEMs, and how should investors be thinking about these risks? I think let me take that. So, I think the first thing is perhaps OEMs have learned their lessons from the past, and I think that's why they're conducting a lot more extensive due diligence this time on suppliers. This involves some extensive modeling to fully model how the business and the revenue streams will evolve in the case of multiple links over the next several years. They want to fully understand how the company will be supporting these programs, and that includes modeling headcount projection by geography. And I think if you recall, I had mentioned based on OEM's needs their dedicated resources might be placed in North America or in Germany. So, modeling that is what we are right now in the face-off. And obviously the cash requirements from a fee sample into production, maintaining their silicon inventory, which remains the key critical point of how this will all happen in the next three years. And obviously I think what Sumit described was the non-automotive revenue and the NRE, which is going to support the cash flows from this. So, this is all that's going into the modeling. And in the back-end, this is how we are moving towards going from lowering the cost of capital from equity, moving all the way to fixed income based capital based on the income streams that will be generated, and the receivables that will be part of the balance sheet, which would ultimately make MicroVision a more traditional company with the lower cost of weighted average cost of capital is what the OEMs are looking for in a model of how this will all happen in the case of multiple RFQ wins in the next three years. The next question is, is MicroVision pursuing consolidation M&A opportunities as some of the weaker LiDAR players filter? Let me take that question as well, Sumit, if you don't mind. Not at this moment; at this moment we are laser-focused on our organic targets of multiple RFQ wins, and building the business around that. But look, if some things come along that are strategic and that accelerate our path to get there, we will consider that. But yes, so if I were to answer this question on a short, long answer short, at this point, we are laser-focused on our organic targets for the company. With this, I think we are bumping up against our time. Thank you again for everybody joining on our second quarter call. We looking forward to speaking with you again, and post you with the company updates on our third quarter call next quarter. Thank you so much.

Thank you everyone.

Thanks, Anand.

Thank you. This concludes today's conference. All parties may disconnect and have a great day.