MicroVision, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. The financial statements are unaudited. MicroVision is developing lidar sensors and perception software for automotive ADAS markets; reported revenue remained royalty income from its sole customer, Microsoft.
Financial performance and position
| Metric | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Total revenue | $0.350 million | $0.479 million; down 26.9% |
| Gross profit | $0.346 million | $0.484 million |
| Gross margin | Approximately 98.9% | Above 100% because cost of revenue included a $5,000 credit |
| Operating expenses | $13.470 million | $6.709 million |
| Operating loss | $13.124 million | $6.225 million |
| Net loss / loss per share | $13.168 million / $0.08 | $6.231 million / $0.04 |
| Cash used in operating activities | $10.907 million | $4.531 million |
| Cash and cash equivalents | $55.611 million at March 31 | $82.647 million at December 31, 2021 |
| Short-term investments | $47.651 million at March 31 | $32.720 million at December 31, 2021 |
| Total liquidity stated by management | $103.3 million | Cash, cash equivalents and short-term investments |
Research and development expense rose 70.2% to $7.593 million, primarily from higher headcount, share-based compensation and lidar-development costs. Sales, marketing, general and administrative expense rose 161.5% to $5.877 million, reflecting higher share-based compensation, professional services, insurance and staffing costs. Revenue was entirely from one customer and consisted of license and royalty revenue; there was no product or contract revenue.
Total liabilities were $14.301 million at quarter-end, including $5.568 million of operating lease liabilities and $0.039 million of finance lease liabilities. The balance sheet reported $0.098 million of current long-term debt. The company paid $0.294 million of principal on its PPP loan during the quarter. Total assets were $117.769 million; shareholders’ equity was $103.468 million. Cash, cash equivalents and restricted cash fell $27.036 million during the quarter, in part as the company purchased investment securities.
Changes, outlook and risks
- Net loss more than doubled year over year, while operating cash use increased by $6.376 million. Management attributed the higher cash use primarily to increased operating expenses supporting lidar development.
- Management said it expected to test and demonstrate the ADAS solution in the first half of 2022 and forecast small quantities of sales in 2022, but did not expect significant, sustained near-term revenue from the solution. No quantified revenue or earnings guidance was provided.
- Management expected available cash to fund operations for at least the next 12 months. The filing also warns that significant losses and negative cash flow are expected at least through 2022 and likely beyond; additional capital may be needed later, with no assurance it will be available on acceptable terms.
- The company reported an accumulated deficit of $642.6 million and said it had not secured the customers needed to launch its products successfully. Microsoft accounted for 100% of Q1 revenue; royalties declined as fewer royalty-bearing products were distributed.
- COVID-19, supplier capacity and component availability could delay development, productization and customer engagement. MicroVision also cites risks from limited-source suppliers, competition, automotive qualification timelines, uncertain market adoption, product defects, intellectual-property disputes and potential financing needs.
- The company entered into two Redmond office leases in 2021. The forward-starting lease for approximately 36,062 square feet has $13.0 million of minimum payments and a target July 2022 commencement; it is excluded from recorded lease liabilities in this filing.
- Management reported no legal proceedings believed reasonably likely to have a material adverse effect. Disclosure controls were considered effective at quarter-end, with no material changes to internal control over financial reporting during the quarter. The filing notes a material weakness identified in Q2 2021 concerning controls over determining equity-award grant dates.
Important facts for investors to verify
- Progress on the planned first-half 2022 lidar testing and demonstration, and whether any automotive customer awards or commercialization milestones followed.
- Cash burn, investment balances and the assumptions behind management’s stated minimum 12-month funding runway.
- Whether revenue remains dependent on Microsoft and whether the company secures additional customers or meaningful ADAS revenue.
- Future financing activity and potential dilution: the company disclosed a $140 million ATM agreement, with $67.8 million in net proceeds from shares issued under it as of March 31, 2022; it reported no transactions under the agreement since June 2021.
- Resolution of the previously identified equity-award grant-date control weakness, and the financial and operational effect of the planned office lease commitments.