MicroVision, Inc. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023. Unaudited results; amounts below are in U.S. dollars and rounded to millions unless stated otherwise.
Business context
MicroVision develops lidar sensors and perception and validation software for automotive ADAS and autonomous-driving applications, as well as non-automotive markets. Its products include MAVIN long-range lidar, MOVIA short-range lidar and MOSAIK validation software. The January 2023 acquisition of selected Ibeo assets added technology, contracts and employees, and expanded the company’s operations in Germany.
Financial performance and position
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $1.047m | $0 | $2.158m | $0.664m |
| Gross profit (loss) | $0.422m | ($0.045m) | $0.288m | $0.597m |
| Gross margin | 40.3% | Not meaningful | 13.3% | 89.9% |
| Operating expenses | $24.317m | $13.057m | $69.274m | $40.492m |
| Operating loss | ($23.895m) | ($13.102m) | ($68.986m) | ($39.895m) |
| Net loss | ($23.469m) | ($12.851m) | ($63.105m) | ($39.616m) |
| Basic and diluted loss per share | ($0.12) | ($0.08) | ($0.35) | ($0.24) |
Revenue growth reflected primarily software sales, lidar sensor sales and activity on Ibeo-acquired contracts. Nine-month cost of revenue rose to $1.870m, including higher contract activity and amortization of acquired intangible assets. R&D expense rose 84.5% year over year for the nine months, to $42.127m, and sales, marketing, general and administrative expense rose 53.8%, to $27.172m; management attributed much of the increase to Ibeo-related employees and operating costs.
Nine-month other income was $4.846m, including a $3.0m incentive payment for terminating a prior building lease and investment income. The company also recorded a $1.706m bargain-purchase gain on the Ibeo acquisition. These items partially offset operating losses.
At September 30, cash and cash equivalents were $49.366m and available-for-sale short-term investments were $28.677m, or $78.043m combined. Restricted cash was an additional $4.224m. Current assets were $91.427m and current liabilities $24.066m. Total liabilities were $37.690m, including $15.459m of operating lease liabilities; the filing reports no long-term debt balance. Shareholders’ equity was $98.258m and accumulated deficit was $745.629m.
For the nine months, operating cash use was $50.512m, compared with $29.616m a year earlier. Investing activities provided $21.385m, including net proceeds from investment-security sales, while financing activities provided $60.763m, largely from common-stock issuance. Cash, cash equivalents and restricted cash ended the period at $53.590m. The company reported 189.829m shares outstanding at September 30 and 189,985,743 shares as of November 3.
Changes, outlook and notable items
- MicroVision completed the Ibeo asset acquisition on January 31, 2023. Preliminary consideration was $21.6m; purchase-price allocation and working-capital settlement remained subject to finalization. A $2.9m holdback payment was expected in Q4 2023, subject to seller approval of calculations.
- Management said existing cash and cash equivalents were expected to fund operations for at least the next 12 months under its current operating plan. It also disclosed approximately $30.6m of remaining capacity under its $35m ATM equity agreement. This is not a revenue or profitability forecast.
- The company expects significant losses and negative cash flow at least through 2023 and likely thereafter. It has a history of substantial losses and may need additional capital; further equity issuance could dilute existing holders.
- A $12.3m purchase commitment was entered into for MOVIA sensor inventory. MicroVision paid $3.1m in Q3 and expected to pay approximately $9.2m by the end of Q2 2024, subject to the delivery schedule. It also expected the final Ibeo acquisition payment in Q4 2023.
- Revenue remains small and concentrated: one customer represented 71% of Q3 revenue. The company also depends on single- or limited-source suppliers and faces risks around product qualification, commercialization, competition, integration of Ibeo, and the timing of automotive OEM production awards. Management reported no legal proceeding it believed reasonably likely to materially harm financial position, results or cash flows.
- Management stated that disclosure controls and procedures were effective at quarter-end and reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether the reported 12-month funding outlook remains supportable given operating cash burn, planned spending and acquisition or manufacturing payments.
- Progress toward automotive OEM production awards and commercial deployments, and whether these translate into sustained, less-concentrated revenue and improved gross margins.
- Actual MOVIA manufacturing payments and deliveries, and final settlement of the Ibeo holdback and purchase-price allocation.
- Future use of the ATM facility, share issuance and resulting dilution, alongside the company’s funding needs beyond the stated runway.
- Whether customer and supplier concentration, product qualification, competition and Ibeo integration risks materially affect execution or results.