Earnings Call Transcript - MVIS Q3 2022

Operator, Operator

Good day. And welcome to the MicroVision Third Quarter 2022 Financial and Operating Results Conference Call. At this time, all participants are in 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.

Drew Markham, Presenter

Thank you, Operator. I am 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 today 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, customer and partner engagement, 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. Now, I’d like to turn the call over to our CEO, Sumit Sharma. Sumit?

Sumit Sharma, CEO

Thank you, Drew. Good afternoon, everyone, and thank you for joining us today. Q3 represents another quarter of tremendous progress at MicroVision. This includes delivering on a number of critical milestones in our go-to-market strategy. As we approach the end of calendar 2022, MicroVision is better positioned than ever and offers a complete hardware and software solution that exceeds the expectations and requirements of OEMs for their planned RFQs in 2023 and beyond. I will cover this topic in more detail later in the call. I would like to start by highlighting three important accomplishments in this quarter that have put us in a leadership position heading into 2023. First, we delivered on our commitment by achieving Class 1 compliance and beginning to sell samples to OEMs and Tier 1s. Class 1 compliance is a critical milestone, the importance of which cannot be overstated. MicroVision has more than 20 years of experience and expertise in developing products based on laser beam scanning, so the Class 1 compliance process is not new to us. We have taken an incredible amount of engineering and technology to develop a solution that meets Class 1 safety criteria, while also meeting the performance standards set out by OEMs. We view our patented Automatic Emissions Controls system as one of the numerous key differentiators that make the MicroVision solutions superior by combining safety and performance. Thanks to our experience and our innovative approach to safety with our patented AEC system, we are proud to be the first LiDAR product to achieve Class 1 compliance at a unit level, offering pixel-by-pixel safety. This news was well-received by OEMs and shows our commitment to safety and how it will further enhance the functional safety OEMs can offer to their ADAS system in a cost-effective 905-nanometer laser LiDAR, the only laser technology nodes that are shipped in volume to automotive standards. Our technology unlocks all the benefits of 905-nanometer lasers without the high cost and high power structures associated with 1550-nanometer products. Achieving Class 1 paved the way for a second key Q3 milestone, delivering samples to OEMs and Tier 1 customers. The start of sample sales with the first deliveries made within the quarter is a major achievement for the company. I am proud of our teams in Redmond and Nuremberg for achieving this important milestone. This step is significant toward potentially being selected by automakers to power their next-generation safety programs. These samples will allow OEMs to continue to evaluate our solution in their own test environments, as they look towards RFQs expected in the first half of 2023. I will elaborate on this later in the call. The start of sample sales also means that we can begin developing our non-automotive channels. We expect new sources of revenue from these initiatives starting next year. Anubhav will cover this potential opportunity during his prepared remarks. Finally, one of our big accomplishments to date has been traveling nearly 7,000 kilometers to promote our technology to OEMs across Europe. These relationships have allowed us to gather meaningful feedback and align our program milestones with their upcoming RFQs in 2023. We are on track with our samples and development to participate in these RFQs. We introduced MAVIN DR, our low-profile, high-resolution and dynamic range cost-competitive sensor, and we continue to receive validation that its performance, size, and future costs are the best that OEMs have reviewed to date in any A-sample. This positions us well for the next phase of OEM RFQs requiring LiDAR. To put it simply, our current hardware meets or exceeds all requirements and puts us in a leadership position to compete in the 2023 RFQs. I would now like to move our focus to discussing the key features OEMs are looking for in 2023 and beyond in LiDAR technology, and how MicroVision is positioned as best-in-class. First, we understand that OEMs are looking for a low-profile sensor with low power requirements for roofline mounting without unsightly sheet metal bump-outs. Low profile is of utmost importance because it offers more flexibility in terms of where and how it can be effectively mounted and seamlessly integrated into the car’s design. Only MicroVision’s slim design allows for the desired flexibility. Plus, our planned ASIC will provide an object-level interface from the LiDAR. The combination of these attributes in a small footprint results in the lowest power system solution. MAVIN is designed with a low profile and a mere 18-millimeter-tall aperture window. There is no competition in the market with A-sample ready now that offers such a low-profile sensor. Our meticulously designed hardware is arriving at the perfect time and is what OEMs are looking for in future models. Next, OEMs expect extremely high resolution, enabling the detection of small objects and road surfaces at longer ranges and high speeds. This translates to 200-plus-meter range, 0.04-degree vertical angular resolution streaming at 30 hertz with an object-level software interface in line. These are our core features. The quality of the MicroVision point cloud is unmatched. Our resolution and range are second to none. The raw, unaltered LiDAR point clouds we have shared through the late summer and fall attest to this. With our proprietary pixel-by-pixel Class 1 solutions, we are able to achieve the long range and resolution OEMs desire. No other current solution in production or promised by any competitor comes close. While other competitors may be sharing data that uses low frame rate super resolution or other sensor fusion techniques to augment gaps in their raw LiDAR data, MicroVision videos are pure, 100% LiDAR. We offer the clearest, most actionable picture of the road ahead. OEMs appreciate this authenticity during live demonstrations. Next, OEMs have reiterated the importance of hardware with an established supply chain and known cost. MAVIN is built with materials already in OEM supply chains today. This means our solution is scalable, sourceable, and supports a lower cost structure, guarding against supply chain challenges with no exotic materials. Finally, object-level perception software running on a custom ASIC will be another important criterion for OEMs in their 2023 RFQs. This capability gives them an efficient and scalable approach to building new and differentiated safety features in a timely manner. Only the MicroVision solution is built from the ground up with this approach in mind. Our fully pipelined LiDAR means that control of the entire system is happening in the custom ASIC in real-time. This unlocks massive opportunities for lower cost solutions that are reliable, secure, and deliver high performance, allowing all systems to operate in parallel. I am more confident than I have ever been that MicroVision is positioned for success in 2023 and beyond. Looking ahead to 2023, we have several focus areas for customer acquisition and continuing to advance our technology and manufacturing capabilities. From the customer acquisition standpoint, we are focused on several OEM RFQs targeted for the first half of 2023. This is based on their timeline. As I have outlined on today’s call, I am confident that the majority of our technology, OEM-focused business model, and track record for partnering and delivering solutions positions us well for success. In 2023, we expect to achieve a number of new technology milestones, including launching our analog and digital ASIC, as well as establishing new automated manufacturing lines that will prepare us to scale up production closer to our OEM customers. Our LiDAR hardware is already breathtakingly thin today, a mere 18-millimeter aperture window with less than 45-millimeter sensor height. To put this in context, the face of an Apple watch is just 44 millimeters. To achieve the optics, power management, and digital systems integration in this design is truly a feat of engineering. I applaud our team for achieving this. With the introduction of our ASIC, we will be able to reduce the overall footprint of the hardware even further by making MAVIN even more compact than it is today. Before handing the call over to Anubhav, I’d like to sum up these key thoughts. We continue to offer the best-in-class sensor ready for OEM RFQs expected in 2023. We have visibility into multiple customer programs where low-profile and low-power sensors are required to allow mounting along the roofline. We continue to offer greater than 10 million points per second at 30 hertz. This enables key features like small object detection and will expand the object-level interface. Again, we are the only LiDAR company that can offer this, and with a strong balance sheet and disciplined operational expenses, we remain positioned to execute. While I expect the LiDAR space will experience consolidation in the months ahead, MicroVision is strongly positioned and prepared to deliver to customers. Our A-samples are shipping to customers now. And with our pedigree for delivering on development agreements, MicroVision is in an unmatched position to become a trusted partner to a top-tier OEM. The ADAS market with LiDAR-enabled safety has real demand from multiple OEMs instead of being captive to the ebbs and flows of a single customer demand. There is real demand for multiple years of programs from OEMs that pioneer automotive safety. Some realignment in this sector will happen in the coming quarters, but with our strong balance sheet and the opportunities ahead, I expect us to remain a strong contender. I have never been more confident in MicroVision’s future than I am today. I would now like to hand the call over to Anubhav to discuss financial performance. Anubhav?

Anubhav Verma, CFO

Thanks, Sumit. I am pleased to report that as of this date, we have achieved all the milestones we had laid out earlier this year. To remind investors, we are tracking the testing of our highway pilot feature for our integrated LiDAR solution with perception software in both the U.S. and Germany for complex highway driving scenarios. As Sumit described earlier, we achieved pixel-by-pixel Class 1 compliance, which we believe is a first in the industry and positions our MAVIN product well to be adopted by OEMs for their safety standards. These two achievements have further helped us begin sample sales to OEMs and Tier 1s in the fourth quarter. The continued engagement with OEMs highlights the capability of roofline integration, as our product has one of the most streamlined form factors on the market, along with a low latency highway pilot solution, positioning us well to compete in the upcoming RFQs. Now, let’s discuss our Q3 financial performance. Revenue: our current customer, Microsoft, communicated to us that there were no units delivered in the third quarter. As we have stated previously, our revenue recognition is directly tied to the number of units delivered by Microsoft. Hence, no revenue was recognized in Q3. As a reminder, this revenue is attributable to the contract executed in April 2017 with Microsoft for using our technology in their AR display product, HoloLens 2. As of September 30, we have an unapplied $4.6 million balance left on this contract liability. We provided revenue guidance last quarter based on the information provided to us by our customer. However, at the end of the third quarter, the customer revised its statement and communicated to us that there is no forecast available. Our agreement with Microsoft continues to be in effect with an expiration date of December 2023. Please note that no cash has been received for this royalty revenue in the past several quarters, as we received an upfront payment of $10 million at the contract signing in 2017 and are applying recognized revenue against that prepayment. In terms of expenses, this was one of our most efficient quarters, with our cash burn being only $9 million for the quarter. This was in line with our expectations as I had provided in our prior call. R&D expenses totaled $7.5 million compared to $5.8 million last year. The increase was primarily driven by higher salary and benefits, non-cash stock-based compensation, and higher non-direct labor expenses. SG&A expense totaled $5.5 million in the third quarter this year compared to $5 million last year. The increase was primarily due to higher non-cash stock-based compensation and higher salary and benefits. We continue to invest to accelerate our business development and marketing efforts. The increased non-cash stock-based compensation is an important component as we invest in our talent pipeline and motivate our employees to share in the upside of the growth of the company. I am very pleased with the $9 million cash used in operating activities for the third quarter. As I described in previous quarters, this burn number has declined sequentially in line with our guidance. This demonstrates our strong financial discipline. In these times of uncertainty and weaker macroeconomic conditions, MicroVision has stood out and outperformed all other competitors in terms of maintaining a healthy burn rate and headcount with a strong balance sheet. We have been prudently investing and not following the aggressive spending model as most of our competition, who now have to announce rightsizing their headcount initiatives. We believe our financial discipline positions us well to gradually scale as we march towards establishing a sustainable business model. CapEx in the third quarter of 2022 was $0.9 million, which was driven by build-outs and tenant improvements in the new facility that we are moving into at the end of this year. While CapEx is expected to increase in Q4 2022, the move to new facilities with larger labs and manufacturing capabilities will mostly be cash neutral, as we are financing this move with incentives to leave our existing premises. Again, in line with continuing our discipline and rigor, we do not expect this move to be a significant cash burden on the company. We finished the quarter with liquidity of $83 million, including investment securities. As interest rates have ticked up in the year-to-date period, we have added short-dated one-year treasury bills to capture some yield from the market; hence our investment securities have increased from $33 million at the end of December to $61 million at the end of September. Looking ahead, at this point in time, we do not have visibility into future revenue from Microsoft, but we will provide an update if and when we do. Regarding our core area of focus, revenues from automotive LiDAR sales, we expect to recognize some revenue from the direct sale of samples to OEMs and Tier 1s in the fourth quarter. At the moment, we do not expect significant revenue from these direct sales of LiDAR sensors. However, as our continued engagement with OEMs moves further along, we expect to provide some color on 2023 revenues as part of our fourth quarter fiscal year 2022 results in February next year. Our 2023 revenue expectations will comprise a combination of revenue streams, including our LiDAR solution, hardware and software sales, and non-recurring engineering projects with OEMs and Tier 1s. In terms of expenses, we are reaffirming our guidance of $18 million to $20 million of operating expenses cash burn for the second half of 2022. Hence, we expect cash used in operating activities for the fourth quarter of 2022 to be in line with the third quarter. Before we open the line to questions, I want to close by reiterating a few key themes. First, our strong financial discipline and the rigor of our mature public company make MicroVision stand apart from our peers, as we deliver on our commitments and execute our strategy to create a truly scalable business. Second, our impressive financial metrics, including having the lowest cash burn in the industry and a strong balance sheet, have positioned us as one of the leaders in the automotive LiDAR category. We believe our peers that have maintained aggressive spending practices will struggle in the current macroeconomic environment. Third, the business model we have committed to remains strong, and the market opportunity lucrative. We believe we can build a business where the cumulative revenue opportunity through 2030 for MicroVision could be between $2 billion to $4 billion. This corresponds to a cumulative EBITDA profile of $1 billion to $2 billion once we secure series production partnerships with Tier 1s and OEMs for our sensor units to be included in their fleets. All these assumptions are based on an estimated $500 ASP for our LiDAR solution, with the market share of MicroVision growing from 15% to 40%, depending on the adoption by the number of OEMs. Finally, our company DNA prioritizes being disciplined in using cash to execute our strategic objectives. Based on our annual burn rate and current liquidity, we are well positioned to scale the business as we gain more momentum in our engagement with OEMs. Another metric we internally track is price to cash, which is the ratio of market cap to the latest reported cash balance. Using this metric, we are one of the most valuable LiDAR companies on the market and well positioned to become one of the industry consolidators, as some other LiDAR companies with significantly higher cash burn, 3 to 5 times ours, and high headcount, continue to struggle and falter. To put it simply, not only is MicroVision well positioned to win OEM RFQs from the standpoint of offering the best technology and the most mature solution, as Sumit discussed, but thanks to our disciplined approach, our business is in a position of financial strength and stability, poised to execute on our strategy. With this, I would like to open the line for questions.

Operator, Operator

Thank you, Anubhav. And the first question will be from Andres Sheppard with Cantor Fitzgerald. Please go ahead.

Andres Sheppard, Analyst

Hey, Sumit. Hey, Anubhav. Great to hear you. Congrats again on the quarter and all the milestones. I guess, first question I am wondering is in terms of revenue. Now, I know you don’t guide Q4, but can you give us a sense of how we should be thinking about Q4, particularly given that the sample sales have begun? Should we expect a larger ramp up in Q4? Thanks.

Anubhav Verma, CFO

Thanks, Andres. Let me take that question. So in Q4, I want to break this question into two parts. The first is revenue from our new MAVIN products. We have made some sample sales, so we expect to recognize revenue in this quarter. However, as I mentioned, this won’t be a significant number. As we ramp up in 2023, our engagements would yield meaningful streams of revenue coming from the sale of samples. The second stream would be non-recurring engineering projects with OEMs, where we will be working on customizations or whatever they need for the product to be included in their fleets. And obviously, direct sample sales will be accelerated as our MAVIN product is Class 1 certified and we can expand the streams into research labs, universities, or whoever is interested in buying our product. So these would be the three streams of revenue from the automotive LiDAR that we expect in Q4 and next year. Obviously, I think I touched on this in my prepared remarks. Microsoft revenue, obviously, is in autopilot mode. They send us volume data of our MEMS models shipped at the factory, and we report and reduce our contract liability based on that data. They had given a volume forecast earlier, and then at the end of the quarter, as late as last week, they came back to us and reported zero shipments. At this point, we do not have a forecast from Microsoft for Q4 and beyond for this stream of revenue, but as and when we get the forecast, we will convey that to the market and that could also be added to the revenue forecast of next year. Hopefully, that covers your question.

Andres Sheppard, Analyst

Yeah. No. It does. Thanks, Anubhav. And I guess maybe just a quick follow-up on that. I think in the previous call, you had mentioned something about closer to the $1.5 million in revenues for the year. Now, obviously, revenues for this quarter were not what you were expecting given the Microsoft revenue. So should we still look at that $1.5 million as a framework, or just given the reduction in this quarter, should we foresee a little bit less than that?

Anubhav Verma, CFO

At this point, Microsoft has informed us that they do not have a forecast for Q4, and we are operating on autopilot. Consequently, we only receive volume data from them, which we report as revenue. Therefore, we currently lack visibility into what the Q4 volume will be, which is why the $1.5 million you mentioned was based on the previous forecast we received, leading to a change in that number due to the latest communication.

Andres Sheppard, Analyst

Got it. Okay. No. That’s helpful. Thanks for clarifying. In terms of milestones, right, so obviously, congratulations on achieving Class 1 compliance and on completing the track testing of the highway pilot. Can you just remind us folks on the call what are the next milestones, what should we be focusing on both for the remainder of the year and for next year?

Sumit Sharma, CEO

I think I will take that one, Anubhav. For the remainder of the year, we are building out samples for our A-sample sales that we have talked about, but as Anubhav mentioned, they are limited. They are primarily targeted towards those who will evaluate for RFQs, which OEMs have their own timeline for, and those RFQs are expected in the first half of 2023. It’s not solid, but they have a process they are going to start with. Our priority is getting those samples ready and providing access to them. It is much easier now because we can create a handful of samples here in Redmond and will scale up as needed. Next year, our primary focus is of course these RFQs and achieving them, but as you can imagine, we cannot discuss specific milestones that we can talk about publicly until we have some wins. We will update on the earnings call how things are progressing as we go along, if we are permitted and given clarity on the process. However, it’s a long-drawn-out process. We need to ensure OEMs are comfortable with our company, technology roadmap, manufacturability, and we simply have to go through the process. I am confident that we will get through it. As for other milestones that the market can track: as I mentioned earlier, our analog and digital ASIC programs will need to launch in series for any potential volume deliveries in several years. We are continuing development on the ASICs, and we anticipate launching the analog ASIC first, followed by the digital ASIC. The reason for the offset is that if a potential customer, an OEM, wants a custom feature integrated into our ASIC for themselves, we are open to that; we have done that before. Hence, we will see some lag time. Another big milestone will be transferring to our automated line that we have shown pictures of previously and establishing a manufacturing footprint for this pilot line, which will again increase their comfort level with the entire technology of how it scales, while maintaining control over hardware sales, as that is how we will monetize the technology. Does that answer your question, Andres?

Andres Sheppard, Analyst

Yeah. No. Absolutely. That’s very thorough and insightful. Thanks, Sumit. Maybe a quick follow-up: you are reaffirming guidance on cumulative guidance, which includes securing more than two partnerships with OEMs by 2030. So I guess my question is, when do you think we could see an OEM partnership announcement?

Sumit Sharma, CEO

I think it’s difficult for me to provide a specific timeline for that process, but I can give you a general idea. If I had a specific time, I would be more specific. Generally, we expect some time during the timeline established by the OEMs. They will likely make design win nominations sometime in the summer. That’s the best I can offer right now without divulging too much.

Andres Sheppard, Analyst

Got it. Okay. Thank you. Maybe my last question, if I may, in terms of your capital needs, right? So, obviously, you have that $70 million ATM facility. Although I am wondering, at these levels, issuing shares might not be preferable as that will dilute shareholders. Do you foresee going into the market to pursue any other sort of capital raising opportunities, perhaps a pure debt offering in the future?

Anubhav Verma, CFO

Yeah. So let me take that question. So, Andres, as I pointed out, our cash burn is $9 million and our balance sheet has $83 million. So obviously, that presents more than nine quarters of runway from that standpoint. We stated historically that we will be using the ATM program as a strategic tool to raise capital as needed, and that strategy remains in place. Now regarding debt, that’s something many in the LiDAR industry are considering, as we would like to see the industry move towards a cheaper cost of capital. So as opportunities arise, we will explore these alternatives, as our goal is to create shareholder value and maintain the lowest possible cost of capital for the company.

Andres Sheppard, Analyst

Wonderful. Thanks, guys. That’s all my questions. Really appreciate it. Congrats again on the quarter, and I will pass it on. Thanks again.

Anubhav Verma, CFO

Thank you.

Sumit Sharma, CEO

Thank you.

Operator, Operator

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

Anubhav Verma, CFO

Thanks, Chad. All right, so I think the first question we have is, what does the company have to say about the Chariot Group's recent announcement for selecting a partner for some of their brands? Similarly, Stellantis’ selection, is MicroVision too late?

Sumit Sharma, CEO

All right. I will take that. That’s a great question. I think I get this question quite often, most recently at Seattle airport. We have answered this before, but let me just highlight this and delve a little deeper today. Public data searches will reveal that what they have actually selected is a single software platform, with no guarantee that it is applicable across all platforms. An OEM of that size has different classes of vehicles, which call for different software platforms that have not been unified. They have endeavored to do that over several years; a CEO was recently let go from that company, which adds context. These brands, all under one big umbrella, each have their own software platforms, making the initiative not straightforward. Now, I will allow others to make statements about their earnings calls and describe the market. At least our shareholders know me to be quite clear on these matters. I will stick to the facts; they are indisputable and public. When we consider Stellantis and Chariot, many of the sensors publicly announced are designed with tall front faces, limiting mounting locations and requiring considerable engineering to fit them nicely on cars. Our technology, however, addresses high-speed highway pilot, roofline mounting, long range, extremely high resolution, and very low latency. Every OEM we've spoken to over the past year has consistently asked for a low-profile design. We may have taken longer to develop our product, but it incorporates many high-demand features early on. I often receive inquiries about our resolution; we significantly outperform our competitors. OEMs greatly value the ability to down sample data according to need instead. They prefer high resolution, and they find our demonstrations impressive. Our LiDAR capabilities provide a sleek design that avoids aesthetic compromises. We believe MicroVision is positioned perfectly for new L3 programs and that the RFQ cycles are currently underway, aiming for resolution in Q1 and concluding in summer 2023. I sincerely look forward to reporting on this, and I don't believe the situation is as dire as some suggest.

Anubhav Verma, CFO

Thanks, Sumit. I will take the next question. It’s about revenue. The U.S. Army has reportedly been accepting the first tranche of 5,000 units of IVAS units valued at over $190 million from the $22 billion contract with Microsoft. Given that IVAS is based on HoloLens 2 and MicroVision provides the display engine, can the team comment on how the acceptance of IVAS units by the Army may affect MicroVision?

Sumit Sharma, CEO

That’s a great question. Look, we have the current agreement with Microsoft still in effect and expect that to continue through the next year. However, at this point, we cannot comment on Microsoft's future plans regarding HoloLens 2 or the IVAS project.

Anubhav Verma, CFO

The next question is on Class 1 compliance. So Class 1 compliance was achieved with patented AEC methodology. Can this be monetized via licensing or would we use it solely to maintain a competitive advantage in capability and cost, and are there other licensing possibilities MicroVision is exploring in LiDAR ADAS with this unique approach?

Sumit Sharma, CEO

I will take that question. Our AEC methodology is proprietary technology that gives us a huge advantage in selling our sensor. Our core business model, as we have discussed multiple times, is to monetize our technology towards profitability of the company through the sale of our sensor and software licenses. This method allows us to create a significant competitive moat in the market. On the other hand, AEC is not a software feature that can be implemented elsewhere; it’s an elegant implementation of our future digital ASIC, where the compliance module is embedded into the silicon at the gate level, running in real-time. This creates a competitive moat for us in hardware. To be intellectually honest, if volumes reach the tens of millions and we capture a substantial market share, we would consider licensing our technology. But at present, when the industry is just starting out, we are targeting only a few million units annually across all OEMs combined—we believe it’s crucial to win as many of these design wins as possible and focus on based competitive advantages for now.

Anubhav Verma, CFO

The next question is about competition. A competitor recently filed for shelf registration, and another is on the verge of experiencing shareholder equity negative next quarter. Could you elaborate on MicroVision's positioning compared to other SPAC companies and what capital will be needed to progress and when the company plans to utilize the ATM?

Sumit Sharma, CEO

We believe MicroVision is very different from SPACs and many companies that have emerged from SPAC IPOs. Many of them overspent in the name of growth. Investors noticed that these companies had raised considerable capital and projected much lower cash burn at their IPO valuations than they actually realized, which significantly overshot their burn rates. Conversely, we have been a mature public company, applying financial discipline consistently. This advantage positions us as potential industry consolidators, particularly given the price-to-cash ratio metric I discussed earlier. We use ATM as an efficient growth funding tool; the last time we utilized it was in June 2021. As I also mentioned to Andres, our cash burn and runway position us favorably, and we would only use this tool strategically when opportunities present themselves.

Anubhav Verma, CFO

The next question is regarding the timing of OEM and Tier 1 LiDAR production decisions. Others have stated that they expect two OEM product selection designs to happen by the end of this year, Q1 2023. Is MicroVision receiving similar updates from the OEMs they are in discussions with?

Sumit Sharma, CEO

Yes, we are hearing similar things. We expect to engage in RFQs in Q1, with design win decisions expected by summer 2023.

Anubhav Verma, CFO

The next question pertains to a statement made by Luminar, claiming that 905-nanometer LiDAR is suitable only for traffic jam assist and not highway speeds. Do you have any comments regarding this?

Sumit Sharma, CEO

This is an essential question. I want to stress the importance of being cautious in discussing other companies’ technologies. However, this comment directly affects our technology, so I think it makes sense to address it. In my opinion, this is an educated statement. I’ll let Luminar management defend it; I am focused on the facts. We've demonstrated our LiDAR operating on demonstration vehicles with over 200-meter range and top-notch resolution at low latency, specifically for high-speed highway pilot applications. OEMs show interest in our high-speed highway pilot. While the exact final system may be uncertain, they seek a high-speed solution. My experience in meetings has only yielded positive reactions to our performance. I struggle to comprehend their statement, particularly since we're working with a 905-nanometer laser—a technology the OEMs possess greater comfort with. Our MEMS-based LiDAR utilizes the 905-nanometer laser while offering a competitive high-speed solution. Nor have OEMs expressed dissatisfaction with our data. On the contrary, they have consistently expressed amazement at our abilities and the efficiency achieved at 30 hertz with low power consumption. Thus, it’s hard to rationalize their assertion as we clearly outperform by providing a sleek design that avoids excess bulk.

Anubhav Verma, CFO

Lastly, we received a question about the recent closure of Argo regarding Ford and Volkswagen. Could you share how this impacts the LiDAR industry?

Sumit Sharma, CEO

This indeed validates our strategy. We have always maintained that the pathway to a profitable business is tapping into L3 ADAS applications, which are likely to launch in the next few years. While L4 systems are still in the future, we assert it is critical to navigate through L3 before reaching L4. We believe that our focus on both financial discipline and building a profitable business model positions us advantageously compared to over-extended companies that could exit the market—such as what we see with Argo. With this, I think we are out of time. Thank you, everybody, for joining us on our Q3 call. We hope to see you again as we provide our full year fourth quarter results next year in February. Thank you so much.

Operator, Operator

Thank you. This conference has concluded. All parties may now disconnect and have a great day. Take care.