Earnings Call Transcript - MVIS Q3 2025

Operator, Operator

Good afternoon. Welcome to the MicroVision Third Quarter 2025 Financial and Operating Results Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to Drew Markham. Please go ahead.

Drew Markham, Executive

Thank you, and good afternoon, everyone. I'm here today with our CEO, Glen DeVos; 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, expectations regarding business product and go-to-market strategies, products and solutions and market needs and timing, status of commercial engagement and future demand, level of customer and partner engagement, market landscape and opportunities, acquisition benefits and risks and collaborations, projections of future operations and cash flow, cash, liquidity and the impacts of recent financing activities, availability of funds and conditions for raising 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 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. Now, I would like to turn the call over to Glen DeVos, our Chief Executive Officer. Glen?

Glen DeVos, CEO

Thank you, Drew, and it's great to be with all of you today. I'd like to start today's call by answering a question I've been asked quite a bit over the past few months, which is why did you join MicroVision? The reason I joined first as CTO back in April and now as CEO is that MicroVision has a unique opportunity to transform the lidar industry. I've been directly involved with this industry for more than 10 years from the first CES automated car demonstrations in 2015, the autonomous cross-country drive, our robotaxi fleet deployments in Singapore and Vegas and the very first Level 3 OEM system deployments. These were truly exciting times for lidar. But as of today, the adoption rate of lidar sensors has been very limited, and we remain a niche product. The reason for this is simple. It's cost. Lidar sensors are too expensive, and this has limited our market penetration. There are three developments that are required to bring costs down to the levels required for mass adoption. The first is the move from electromechanical systems to solid state. The cost floor for electromechanical systems is significantly higher than that of solid state. As a result, lidar is only used when it is not possible to do the job with cameras or other lower-cost alternatives. For example, while automotive Level 2+ systems would benefit greatly from the use of lidar, they are typically deployed with only vision and radar. We must move to wafer-level processes that have a much lower cost structure than current electromechanical systems can ever achieve. Roughly 25 years ago, radar started as large, complex and expensive assemblies with very limited adoption. So where are we now? In 2024, over 140 million were produced for the automotive market alone. Lidar can follow a very similar path. The second development is related to system architecture and the move to satellite sensors. We started this in automotive roughly 15 years ago with the introduction of satellite radar and camera sensors, working with the central ADAS domain controller. This approach breaks down the perception challenge and simplifies the individual sensors, delivering the highest level of performance at the lowest total system cost. The third is to further simplify and reduce the cost of the hardware through software. We'll talk more about this in future calls, but solving the perception and the processing challenges in software enables the further optimization of the hardware, again, resulting in lower total cost. These are the steps to mass adoption. And if they sound familiar, it is because this is exactly what has been done for vision, radar and other sensing modalities. And this is exactly what we're doing at MicroVision, and it is the reason why I am so excited to be part of the MicroVision team. So let's talk about Q3 and how it relates to the key issues we just covered. I'll start with our recent announcements at IAA in Munich in September, where we introduced both MOVIA S and our Tri-Lidar architecture. MOVIA S is an industry-leading ultra-wide field of view solid-state sensor. The MOVIA S 180-degree field of view sensor we demonstrated at IAA is the first of a full family of short-range sensors for the automotive, industrial and defense sectors. It is easily configurable and can deliver full perception and advanced lidar-based driver assistance features such as MicroVision's localization and collision avoidance functions or simply provide a clean point cloud. It is the right product at the right time, delivering performance at a breakthrough cost level enabled by its solid-state design and MicroVision's proprietary image and signal processing software. This is that first step to achieving mass adoption, dramatically lowering the cost of lidar perception for our customers. MOVIA S is an amazing stand-alone product, but it also enables the implementation of the satellite architecture I referred to earlier, what we call Tri-Lidar for automotive applications. Low-cost, compact, high-performance sensors are the key to unlocking satellite architectures, and it is exactly what vision and radar have accomplished. It's why in most cars today, they have between 3 to 5 radar and 6 to 9 cameras. Lidar can and will follow the same path, not just for fully autonomous systems such as Level 3 or 4 cars or AGVs and AMRs, but for driver and operated assistance systems as well. The industry refers to this as the democratization of safety, and that's what MicroVision's products are enabling. MOVIA S is currently being demonstrated with numerous customers and its production launch is planned for Q4 of 2026. Additionally, we announced the asset purchase agreement of Scantinel Photonics. This is a key move for MicroVision as it gives us access to 1550 nanometer FMCW ultra-long-range lidar technology. Scantinel's ultra-long-range capability perfectly complements our current 905 and 940-nanometer time-of-flight portfolio of MOVIA and MAVIN products. MicroVision will be unique in its ability to offer our customers a complete range of solutions for their perception challenges across all end market sectors. We will share more details of our ultra-long-range product plans and timing at the upcoming CES. Regarding our defense-related activity, I'm excited to share a few more details about our recently announced Aerial Systems team, which is responsible for our drone-based lidar developments. The addition of this team dramatically accelerates our work in the space of drone-based real-time mapping, ISR and denied environment navigation. We are on track to complete the initial proof-of-concept phase for both fixed wing and rotor drones by the end of the year, and the aerial systems team is now up and operational at our airstrip and office in Virginia. We've also been working closely with our Defense Advisory Board and have started initial customer engagements this month. We'll share more details about next steps and about the technology at CES in January. Now let me shift to our commercial engagements. In the Q2 earnings call, we talked about the number of ongoing industrial and automotive RFQs and RFIs. These remain active, and we continue to be engaged with our customers as they work through their sourcing processes. What has changed significantly are the post-IAA engagements where we have experienced strong interest in both MOVIA S and our Tri-Lidar Architecture offerings. We are currently demonstrating MOVIA S to a number of automotive OEM, industrial and autonomous vehicle customers. Another key differentiator for MOVIA S beyond price point, compact size and its ultra-wide field of view is its open software framework, which enables our customers to embed their software on the MicroVision sensor. This dramatically changes how perception systems are developed. MicroVision's open software framework gives our customers the ability to develop, optimize and validate their systems with the most advanced and most efficient software DevOps model. This is another example of how MicroVision is leading the industry and how we are helping our customers solve their perception system development and their deployment challenges. We also see tremendous interest in our MOVIA lidar collision avoidance system, what we call LCAS. These are for applications where the customer wants to have a solution that is ready to go out of the box, easily installed with preprogrammed and configurable LCAS feature libraries that they can set up and operate on their own. We are currently demonstrating our LCAS system with several customers and plan to launch in Q2 of 2026 with our MOVIA L platform. Finally, let me bring you up to speed on several developments as we strengthen our leadership team. Fraser McMahon has joined MicroVision as our Vice President of Global Sales. Fraser brings decades of sales and commercial experience in the automotive and adjacent markets. Fraser will be expanding our commercial team, and I'm looking forward to working closely with him as we accelerate our customer acquisition plans. Also, Greg Scharnbrock has joined as our Vice President of Global Engineering. With his experience with Toyota, Delphi as well as Intel, Greg brings proven technology leadership and management capability for our global engineering organization. These are key additions to ensure that MicroVision has the leadership capabilities as well as the experience to execute and deliver our growth plans across the automotive, industrial and defense markets. We have the opportunity to transform the lidar industry, and MicroVision is making that happen. As I said at the beginning, that is why I'm here with you today. With that, thank you for your attention, and I'll turn it over to Anubhav for his remarks.

Anubhav Verma, CFO

Thanks, Glen. I want to start by welcoming our new CEO, Glen, and marking a new era for MicroVision. The progress we've made under his leadership in just a few short months has been phenomenal. The lidar industry is ready for a revolution, much like the one we saw with radar. Glen was a key architect of that evolution, and he's now bringing his 30 years of automotive experience to do the same for lidar. I'm excited about MicroVision's game-changing strategy. Number one, the simplified sensor architecture, our Tri-Lidar system transforms the traditional single sensor model into a cost-effective trial of sensors, two short range and one long range. And the second is economic disruption. We're setting a new industry standard with solid-state products priced at $200 for short-range and $300 for long-range sensors. This strategy addresses OEM demands and positions MicroVision to accelerate lidar adoption while securing a competitive edge. To accelerate our long-term vision, I am excited to announce our strategic investment in Scantinel, a leader in 1550-nanometer FMCW lidar technology based in Bavaria, Germany. This partnership secures our leadership in next-generation ultra-long-range lidar. Just as FMCW revolutionized radar with superior performance and interference resistance, it is ideal for long-range sensing in lidar. This move positions MicroVision as one of the few companies offering both FMCW and time-of-flight technologies, enabling us to deliver a comprehensive product suite that meets the diverse and evolving needs of OEMs. After the success related to MOVIA S launch, we are very energized by it and are now driving momentum in the industrial AGV, AMR market to drive near-term revenue opportunities, leveraging our perception software and MOVIA hardware to solve complex business problems. Since MOVIA S has a significantly lower price point than MOVIA L, most of our customers are looking to migrate from MOVIA L to MOVIA S. We believe this will be transformational for the industrial and warehouse automation markets. Our prior visibility of $30 million to $50 million over the next 12 to 18 months was primarily driven by the MOVIA L product. However, with our new strategy to transition customers to MOVIA S and ongoing delays on part of our customers, we anticipate that this revenue pipeline will take longer to realize. Given that we're moving away from MOVIA L, we're actively managing our production commitments with ZF as we plan to bring up manufacturing capabilities for MOVIA S next year. We plan to provide an update as part of the Q4 earnings and full year 2025 results early next year. Moving on, we continue to press ahead with our pursuit of revenue opportunities in the defense vertical. We recently added a small team in Virginia in the Greater D.C. Metro area with deep experience in aeronautical engineering and avionics. We will be demonstrating a complete solution with multimodal sensors and our full stack software capable of enabling unmanned drones to complete specific missions in the first half of 2026. I'm also excited about the addition of key executives with rich backgrounds from Intel and Visteon to join us and build the engineering and go-to-market functions of MicroVision. Now let's review our third quarter financial performance. For the third quarter, we reported revenues of $0.2 million. This quarter's revenue was driven by our sales in industrial and automotive verticals. From a cash burn standpoint, in the third quarter of 2025, our R&D and SG&A expenses totaled $12 million. This includes $1.2 million of severance payments related to CEO transition, $1.6 million of noncash income related to a stock-based compensation expense reversal resulting from the forfeiture of executive PRSUs from former CEO's departure as well as $1.4 million in noncash charges related to D&A. Excluding these items, our core R&D and SG&A expenses were approximately $11 million for the quarter, flat with respect to the second quarter, in line with our expectations. The cash burn for the quarter was $16.5 million. That includes a one-time $3.2 million payment related to the inventory buildup of MOVIA L. Q4 CapEx was $0.1 million, in line with our expectations. Now looking ahead, we anticipate an increase in current spending levels to support several strategic initiatives. These include the onboarding of the aerial systems team and related costs for our new D.C. office, several senior hires aimed at strengthening our engineering and go-to-market functions. Additionally, we will incur expenses related to the Scantinel acquisition in Bavaria, Germany. We plan to provide further updates on this transaction and associated funding during our next call once the closing occurs later this year. We anticipate that these new initiatives will lead to an increase in our annual spending by approximately $1.5 million to $2 million per quarter. To summarize, we're modestly ramping up our expenses from Q4 onwards to invest in three key areas: number one, accelerate product readiness; number two, invest in industrializing our products; and number three, accelerate time to revenue by investing in go-to-market and sales organization for building a solid pipeline for the products. We look forward to sharing more updates and providing full-year cash burn guidance for 2026 in conjunction with our 2025 year-end earnings. Now let's talk about our balance sheet. We finished this quarter with $99.5 million in cash and cash equivalents. In addition, the company has availability of an additional $46.2 million under our current ATM facility and $30 million of undrawn capital under the convertible note facility as of Q3. As of today, approximately $18 million in principal is outstanding on the convertible note. That converts at a fixed price of $1.60. With $99.5 million cash at hand at the end of the third quarter, we are adequately capitalized to make these debt payments in cash or through stock if the holders choose to exercise their option due to favorable market conditions. The $30 million second tranche remains undrawn. As previously highlighted, MicroVision's average trading volumes have experienced a substantial increase since last year, driven in part by committed investments exceeding $90 million from a single investor. This investment has also enabled the company to raise approximately $30 million in net proceeds during the third quarter through its ATM program, strengthening our balance sheet. While we will continue to pursue opportunistic capital raising strategies as appropriate, the combination of recent funding activities and our operational cost management has extended our financial runway into 2027. The lidar industry is evolving with the largest lidar company by market cap now facing significant financial challenges. In contrast, MicroVision stands out due to its strong capital structure, financial discipline, corporate governance and superior product portfolio. Our approach remains centered on diversifying revenue streams through targeted disciplined investments. This long-term outlook makes MicroVision an attractive investment for large-scale institutional investors and has notably increased this visibility within the institutional investment community. We're confident that our new leadership team is well positioned to successfully execute our current business strategy to be the frontrunners of the autonomy enablers for the three end markets with significant TAMs. Operator, I would now like to open the call for questions.

Operator, Operator

Your first question is coming from Casey Ryan from WestPark Capital.

Casey Ryan, Analyst

Sorry, I was on mute. A lot to discuss today. Thank you for the update. So the acquisition in Germany of FMCW technology is really interesting in light of your comments about driving the cost point down. In general, I guess, my view has been that's been an even costlier product, but do you think you can get it down to the targets that you talked about for your core products in terms of lidar and the ASP being consumable, because I guess a lot of the FMCW, I think, has been concentrated in long-haul trucking and sort of higher kind of ASP end markets previously.

Glen DeVos, CEO

Yes, I can address this. You're correct that FMCW technology has historically been more expensive in terms of material costs. However, it allows for wafer-level and chip-scale packaging, which is where the significant value in silicon lies. Transitioning from discrete components to integrated chip-scale packages is key to reducing costs. Moreover, FMCW offers fundamental advantages in eye safety, real-time velocity measurements, and overall range capability, which help lower the total system cost. As we move forward, we believe we can meet the necessary cost targets to make this attractive for the commercial vehicle market, which appears most favorable initially, and eventually for passenger cars. Additionally, operating it behind the windscreen reduces losses from transmission through the vehicle's windshield, further helping to keep costs down. Our plan with Scantinel is focused on accelerating this roadmap.

Casey Ryan, Analyst

Okay. Terrific. So you're raising one other thing that I'll try to be quick about, which is the importance of putting a lidar sensor behind the windscreen versus a bubble or some other part of the car. Are you hearing from customers that that's a really important component for solutions to be able to operate behind the windscreen and operate effectively?

Glen DeVos, CEO

Yes. Generally, it's an ideal location for the lidar sensor. If you consider the rearview mirror area in a passenger car, that's where cameras are typically mounted today. This location benefits from the windshield cleaning system, which includes the wipers and heating functions. However, there is a challenge with transmitting signals through the windshield, which can lead to losses. We're noticing that this location is beneficial for vehicle design because it avoids adding height to the top of the car. Additionally, it offers effective cleaning and heating options, and from a visibility perspective, mounting the lidar there provides an optimal field of view down the road. However, it is a crowded area with various components like cameras, controls, and detectors, making it crucial to miniaturize the sensor as much as possible.

Casey Ryan, Analyst

Okay. Yes. That's helpful and actually quite exciting. Quickly, another quick detail, I guess, should we expect Scantinel whenever it's closed and sort of fully integrated, does that business already have revenues is my question? Will we see some revenue show up from that? Or is it sort of a low for sort of de minimis revenue type business today?

Glen DeVos, CEO

No, in the immediate — go ahead. I'm going to...

Anubhav Verma, CFO

No, go ahead, Glen.

Glen DeVos, CEO

No, no. I was going to just say, at this point, no, there's — it's pre-revenue. And really, what we'll be doing right now, and this is what I'll talk about here and as we come into CES and end of the year is we're putting that plan together to take that technology and industrialize it into an automotive-grade sensor. So where MicroVision can basically wrap around Scantinel's technology, all the supportive processing, packaging, hardware, software, integrating their 1550 FMCW imaging capability. That's how the two really combine effectively. We'll put that plan together now, and then we'll be sharing specific dates and expectations on timing of product and revenue here later this year.

Anubhav Verma, CFO

Yes. And if I can just add, Casey, that's why we don't anticipate this acquisition to add a lot of cost into the system because as I mentioned in my remarks, we're really only getting about 20-odd engineers adding them to the workforce because we would be utilizing some of the talent that we have at MicroVision as well to develop some of the packaging capabilities, et cetera. So all in all, I think the cost that we're adding to the system is not going to be more than $2 million a quarter from that perspective.

Casey Ryan, Analyst

All right. Okay. And then correct me if I'm misstating, but I believe you all have an office in Germany. And will the offices be combined or are they near each other? Or does that not matter?

Anubhav Verma, CFO

No, they're not near each other because the other office we have is in Hamburg, while the Scantinel office is in Bavaria, south of Germany in a city called Ulm, so near Munich and Stuttgart.

Casey Ryan, Analyst

Okay. All right. One last big area that was exciting on the call was, I think, Anubhav, you started laying this out, sort of talking about a target ASP of $200 for short-range and $300 for long-range. Did I hear that right, first of all?

Anubhav Verma, CFO

Yes.

Casey Ryan, Analyst

And did you put a target date? I mean, even if it's aspirational, I wasn't sure if I heard that or if that was just a long-term goal.

Anubhav Verma, CFO

No. I think our goal is to get that product for MOVIA S out next year. So we will be providing more exact dates probably as part of our next earnings call because that's sort of what we are accelerating right now in the product readiness to get from MOVIA L to MOVIA S, and obviously setting up the manufacturing capabilities, et cetera, to be able to fulfill customer demands starting next year.

Casey Ryan, Analyst

Because those price points are extremely competitive with radar in particular, right, and then functionality versus cameras and would certainly put you well ahead of, as far as I know, any competitors in the lidar space from like an ASP perspective. Does that track with what you guys are thinking?

Anubhav Verma, CFO

I think that’s why...

Glen DeVos, CEO

Yes. No, that's exactly right. And that gets us — I think that's the price point that really gets Level 3 or maybe even Level 2+ systems essentially a great value for the OEMs where they can sell those systems at a very high — at the right price for their end customers and still have a really high margin with that. Long term to get into ADAS, you have to drive it further down.

Casey Ryan, Analyst

Is it appropriate to compare it with camera and radar ASPs? While it may be relevant, the overall sensor cost could also be a concern for certain car concepts, particularly mid-tier and low-end models.

Glen DeVos, CEO

Yes. If you think about radar and cameras, which are now fully commoditized, cameras as a passive sensor, which frequently kind of hit somewhere between the $50 to $100 range. Radar for short-range below $50, between $50 and $100 for long-range. When you think about those price points, lidar, as it achieves, I mentioned the $140 million a year for radar, When you get into those kind of numbers and you really standardized across an industry, yes, we would expect to be sub-$100 in that range as an active sensor with lens and lens assemblies and everything else. So it's going to be in that neighborhood, $100 or less. Now that's a ways off, obviously, but you got to get there stepwise. And the first big step we want to take is with MOVIA as a short-range sensor getting down to $200, unlocking the satellite sensor architectures for lidar. And then as volume comes and you continue to standardize, continue to drive that cost down.

Casey Ryan, Analyst

And then the second piece of my question was, it feels like that would put you in a fairly dramatic leadership position from an ASP standpoint against potentially all the, let's call them, Western lidar competitors. I don't know what they're seeing out of China. But does that sound accurate to you that like the gap between what I'm hearing from other Western vendors is significantly higher when we talk about ASPs?

Glen DeVos, CEO

Yes, that's exactly right. We believe that to drive volume in this market, being competitive on price is essential, especially considering the price points in China. The team has done an excellent job in designing costs and developing a product that aligns with this strategy.

Casey Ryan, Analyst

Yes. Okay. Last question, I promise. With defense and the opportunities with defense, it feels like there's a significant push to sort of enable new platforms and new form factors. And do you find that price is a key consideration? Or is it more just about functionality and maybe availability of product are sort of more important in those markets today?

Glen DeVos, CEO

Price is still a factor. When you consider drones, they can sometimes be described as attritable assets, which means cost plays a significant role. Although the average selling prices in these applications are much higher compared to automotive or industrial sectors, cost remains important. Our sensors, designed at scale, can be applied across automotive, industrial, drones, and defense. This versatility not only enhances functionality but also provides a cost-effective solution. However, it does come with a different price point.

Casey Ryan, Analyst

Right. Okay. Terrific. Thank you for the feedback and the answers to these questions. It's a very exciting update, Glen, for your first call, and we look forward to the next one for sure.

Operator, Operator

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

Anubhav Verma, CFO

Thank you, Matt. All right. So the question is, what is the status of the RFQs? Are there any updates on the timing? Are we stuck? What more do OEMs want? And how can we compete against the Chinese lidar makers?

Glen DeVos, CEO

The RFQs we discussed last quarter are still ongoing. It's not that we're stuck; we're keeping pace with the OEMs. Starting with automotive, there’s been significant change among the OEMs regarding their platform definitions, balancing internal combustion engine platforms with electrification, and managing costs. This has led to a lengthy sourcing process for the safety systems in those vehicles, which is typical, particularly for new features enabled by lidar. We are continuing to navigate this process. OEMs typically conduct a broad round with their suppliers to gather various proposals and feedback, analyze the responses, and then proceed to the next phase based on what they’ve learned from that initial round. We are currently in that phase. They are seeking more updates and Q&A sessions as they progress, which will take some time. We remain engaged with them. Regarding the industrial side, it's somewhat different. The larger engineered solution activities are still in their evaluation phases, and we are supporting customers during this process. There is nothing new to report on this call, but we are actively engaged and aiming for successful outcomes. On the topic of competing with Chinese lidar, I have been in this field for 25 years, facing competitors from China in various sectors, particularly automotive. Competing solely on price and hardware is challenging; instead, we need to focus on innovation. One way we achieve this is through our open software framework, which allows us to provide sensors that are highly flexible and transparent, enabling system integrators or developers to utilize their software. We can drive innovation through our software capabilities. Thus, we have strategies to position our products competitively against Chinese offerings by either adding value or being more price competitive. The reality in both the automotive and industrial markets is that competitiveness is essential to winning business. We believe our approach allows us to remain competitive against all participants in this space.

Anubhav Verma, CFO

Thank you, Glen. Next question. We're concerned that the $200 price tag could be unprofitable and/or unsustainable customer deals, the type of deals that led to Luminar losing money on every unit being sold to Volvo. How are we going to be different?

Glen DeVos, CEO

Yes, that's a great question. It's crucial to avoid a situation where high production volume negatively impacts margins; that outcome is unacceptable. We invest significant effort into securing business and developing products, and we cannot afford to ship products at a loss. Our confidence in the $200 price point stems from a thorough analysis of costs, ensuring we know exactly how much it will take to produce a product that meets our performance standards. This includes all associated costs, manufacturing expenses, and the necessary capital for production. We are committed to our cost model, which informs our design and development plans. From my experience in the automotive sector, it’s essential to stay laser-focused on costs, monitoring them closely at every stage and continuously working to reduce them. I'm confident our team can achieve this. The $200 figure is a solid starting point for us, but our objective is to drive costs significantly lower than that.

Anubhav Verma, CFO

Thanks, Glen. Glen, you indicated in public comments at IAA in Munich that MicroVision has been working with a couple of customers on what I would call predevelopment contracts to validate our system. We expect those products to be sold very quickly. Can you clarify those comments as a predevelopment because a predevelopment would indicate that we are in early stages of engagement, but prior comments by management indicated that the company was much further along in testing and validation with those customers. And where do we stand with these customers today and the timing for sales?

Glen DeVos, CEO

Yes, that's a great question. Predevelopment encompasses the entire phase prior to launching the production platform. When I mention predevelopment, I am referring to the stage where we have sensors in place and customers are still evaluating how the features will operate within their systems. For instance, the bolt-on LCAS system we discussed, based on the MOVIA L, is still in exploratory work where customers are assessing its functionality and integration. At this point, the customer has not begun formal development activities for that system. We are also involved in qualification phases where the customer is currently testing our product on their vehicle or robot to validate the technology and ensure it can meet the required key performance indicators for a lidar solution, with MicroVision as the supplier. Both activities are ongoing, and we have received very positive feedback. Ultimately, we need to transition to a commercial contract, but both areas are seeing significant interest, especially with LCAS and MOVIA S. I believe progress will occur quickly, though we will proceed at the pace dictated by our customers. Based on their perspective and the positive feedback so far, I am optimistic about our success in this area.

Anubhav Verma, CFO

Thanks, Glen. Next question. How does the recent upheaval at Luminar affect our opportunity to make inroads at Volvo Automotive and Volvo Trucks?

Glen DeVos, CEO

I may not discuss the specifics of the situation, but historically, when suppliers face challenges with an OEM, it often creates opportunities for those programs to be revisited and for OEMs to consider alternative sources. We need to be aware of this and leverage those opportunities as they arise. This isn't the first time such events have occurred in the industry, and OEMs are very proactive in their risk management; they will seek other sources to ensure their vehicle production is protected. This highlights the importance of maintaining credibility as a supplier, ensuring that your product is mature and proven, capable of being produced at scale, and demonstrating supply security and resilience. You need to assure OEMs that you won't pose any risk or jeopardize their production. Therefore, it's crucial for suppliers to establish that credibility. I believe the MicroVision team has the necessary components in place, and we will carefully monitor these opportunities to see how they could benefit us.

Anubhav Verma, CFO

Thanks, Glen. Next question. Are the industrial deals still in play? How should investors think about the timing when the efforts in the industrial sector start to show revenue? And perhaps the same question for defense and automotive.

Glen DeVos, CEO

Yes, industrials are still active with MOVIA L, and we are expanding our efforts with MOVIA S. We anticipate seeing revenue primarily from the MOVIA L platform in 2026, with MOVIA S set to launch in the fourth quarter of 2026, potentially contributing some revenue at the end of that year. In 2027, we expect MOVIA S to focus on the industrial sector, either as an independent product or integrated into an LCAS solution. Regarding the automotive sector, whether for robotaxis or traditional passenger cars, I believe the timeline leans towards 2029, with some possibility of revenue appearing in 2028, though that would likely be minimal. I consider 2029 to be a more realistic year for automotive revenue growth, with subsequent expansion in 2030 and 2031. For defense, it is still too early to make predictions, but we are anticipating significant activity in the next year or two, and we are well-positioned to leverage that wave. We expect to publicly showcase our product offerings next year, which should generate significant interest and allow us to better assess revenue projections and market development. In the short term, we may see more revenue from nonrecurring engineering efforts related to development costs, but our long-term goal is to focus on product sales. Given the current state of drone technology and the maturity of what we are developing, we might have a shorter time to market compared to automotive. Additionally, it’s important to highlight that we are leveraging the same core technology across all three markets—imaging hardware, sensors, image processing software, and various applications such as mapping and navigation. This diversification helps insulate our revenue streams since these markets do not all move in sync with automotive or industrial cycles. Thus, defense may fit between the industrial and automotive sectors, and we'll have more clarity on this as we move into next year.

Anubhav Verma, CFO

And actually, perhaps a related question for me. This question is MicroVision had $6.1 million inventory on 6/30, and this number has gone up on the 9/30 balance sheet. Where are these sensors? What happened to them? And what's the plan? And why is the stockpile without sales? So let me answer that question because I think this just adds context to what you just described. We have built this inventory for MOVIA L from the ZF automotive-grade quality product line in France. And I think this was in anticipation of the demand from the industrial customers, which was ultimately fueling our visibility of the $30 million to $50 million pipeline. We still think that while there are some delays, but as the opportunities open up for LCAS and some of the attractive price points, because I think the single most important price point that I think we're very excited about at the price at which you can sell the sensors to the customers because we are significantly lower than the nearest competitor. And I think as we sort of build up our commercial organization and bring on quality people and build out the sales team, we do expect to see traction on the revenue side from this inventory that's being built up to translate into revenue next year just from MOVIA L. And obviously, MOVIA S is expected to be started up next year, but this is in anticipation of the sales that we can get to next year from the commercial traction that we have gotten since Glen has come on board. Next question. Does the Scantinel acquisition replace MAVIN? Or is it complementary? And is FMCW technology better than TOF? How does the Scantinel product compare with Aeva, which is the nearest FMCW product in the market?

Glen DeVos, CEO

So, there are three questions. The Scantinel technology does not replace MAVIN; instead, they complement each other without conflict. MAVIN excels in the 50 to 200-meter range, while Scantinel's technology performs well beyond 50 meters up to 1 kilometer. For commercial vehicle applications, we focus more on the 400-meter range and similar distances. The two technologies are very complementary, without overlapping or replacing one another. When considering FMCW, it’s important to understand the strengths of each technology rather than determining which is superior. Time-of-flight has advantages for shorter-range detection and often allows us to use off-the-shelf components, leading to lower costs sooner. Conversely, FMCW offers excellent performance in terms of eye safety, handling inclement weather, range, transmission through glass, and the intrinsic measurement of velocity via the waveform. Ultimately, they each provide different pros and cons, which is why having all three technologies—MAVIN, MOVIA, and Scantinel—is advantageous for us. Our objective is to reduce the costs of FMCW technology so that it can be integrated into passenger cars, not just commercial vehicles or higher-cost applications. Regarding comparisons with Aeva, I will refrain from commenting, especially in the short term, as we finalize our plans. Later this year, we will provide a more comprehensive overview of the Scantinel and MicroVision products, including specific performance metrics and a head-to-head comparison. What stands out to me about the Scantinel team is their achievement in consolidating the technology into a single photonic IC, along with creating wafer-level packaging for the entire imaging head unit. This aspect is particularly exciting. We will share more details about this ongoing work in the future.

Anubhav Verma, CFO

Thanks, Glen. Next question. It's about the AR vertical. Does the company have any plans to update investors on the status of the vertical? And is the technology being actively marketed to potential customers? And there has been talks of HoloLens 3 launching in 2026. Is MicroVision tech in HoloLens 3?

Glen DeVos, CEO

Yes, I will start with the last question first. To our knowledge, we are not actively pursuing augmented reality markets at this time. We have the intellectual property and capability, and we will monitor those markets. However, currently, our resources and capital are focused on the three areas we have discussed: industrial, defense, and automotive. Augmented reality is an interesting topic, and we are keeping an eye on it to see if it could be relevant for us. But as of now, there is no active development or pursuit in that field.

Anubhav Verma, CFO

Thanks, Glen. Next question. Each MicroVision CEO can be seen as failing. The promise of the MicroVision technology was not realized by any CEO. Will Glen carry us to the promised land and how? How does Glen propose to succeed where all others have failed? And by what measure should you be held accountable and within what timeframe?

Glen DeVos, CEO

Great question. I want to put this in a broader context beyond just MicroVision and look at the entire industry. If you recall the optimism from 2015 to 2017 about lidar, we have not yet met those expectations. The main challenge has been cost; it's an expensive system. Ultimately, if it's not affordable for products, alternatives like vision or radar must be considered. However, I am confident in our potential. Taking on the role of CEO at MicroVision is exciting for me because I believe we can achieve what we did with radar and vision systems for lidar as well. Lidar is an excellent sensor technology that integrates well with radar and vision, creating a high-performing perception system. Our challenge is to reduce costs so it fits within the budgets of vehicles that wish to implement it. We are committed to this, and we are not going to take decades like radar did. We need to make significant progress now for market penetration, aiming for fast adoption rather than a gradual increase. With our team at MicroVision and our existing technologies, I am very optimistic about our ability to deliver. As CEO, my responsibilities include ensuring we meet our product milestones, such as the launch of MOVIA S in Q4 and LCAS in Q2 with MOVIA L. We also need to meet our Scantinel plans. Achieving these goals with the right content, product, and technology at a competitive cost is critical. Another key aspect is transitioning from showcasing our technology to securing commercial contracts. We are enhancing our commercial team to ensure we have effective sales strategies to turn these opportunities into contracts, which should reflect in our backlog bookings over the next year and into 2027, creating a strong and resilient backlog. Ultimately, our aim is to drive shareholder value by providing customer value, and I believe we have the right team and plan in place. Now it's all about execution, and I will keep shareholders and analysts updated on our progress to instill confidence that we are on track. We have a solid plan and an effective team, and it’s time to execute.

Anubhav Verma, CFO

Thank you, Glen. We're a bit over time, but I'll try to address one last difficult question: why did the company sell so many shares and cause dilution in the last six months, and how do we plan to sustain the company? It's a tough question because I receive many concerned emails from investors, and as a shareholder myself, I understand their worries. I want to acknowledge the MicroVision management and Board for being in a position to speak with you today, especially when many others are struggling. This reflects the company's ethos. We have been disciplined and able to fund the company effectively, and we've been fortunate to attract talented individuals like Glen. Having someone of Glen’s caliber leading us is unprecedented in our history, and I'm more confident than ever about our future. We've set the right priorities, focusing on delivering the most efficient product for our customers at the right price to drive volume. Yes, dilution is a necessary challenge during our initial phases to establish stability and attract talent. Remember, this is about customer stability. In my four years here, I've seen a drastic reduction in lidar companies, and this trend will likely continue. The competition is becoming a matter of survival, and our financial position strengthens our standing. Our continued partnerships, including with High Trail, have helped us reach this point. You can see the increasing positions of our institutional investors, which indicate that we are committed to the long run. I'm excited about what lies ahead. Lastly, the recent debt funding for Aeva is a positive sign for our industry, showing that credit quality is improving as larger institutions enter the lidar sector. This evolution suggests that the industry is progressing from equity financing towards a future of revenue growth and cash flow. While dilution can be painful, it is a necessary step for us to be competitive and secure a bright future. Thank you all for your time. I know we've gone over an hour, but I look forward to our discussion at the year-end call early next year. Thank you, everyone.

Operator, Operator

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