Vuzix Corp Q4 FY2024 earnings call

• Strategic partnership with Quanta Computer: Received $10 million in September 2024, on track for milestones to unlock remaining $10 million. Quanta's scale and expertise combined with Vuzix's waveguides and smart glasses tech to drive ODM/OEM growth.
• CES 2025 launches: UltraLight Pro AR Smart Glasses platform for enterprise, awarded best in show; UltraLight Audio Smart Glasses platform with dual speakers and noise-canceling mic. Mobile World Congress reference design with Micro OLED and STMicroelectronics for sports/outdoor apps.
• Z100 UltraLight AR Smart Glasses: Price reduction in November 2024 led to increased demand; focused on OEM and white-label customers. Vuzix 6100 Smart Glasses actively fielding RFQ opportunities.
• Waveguide technology: Proprietary tech allows high-volume production of waveguides, patent portfolio grew 50% to over 425 patents/pending, solidifying AR industry leadership.
• Financials: Cash position at year-end 2024 was $18.2 million, net loss for full year 2024 was $73.5 million, but expense reductions in Q4 2024 vs Q4 2023 led to $2.7 million quarterly cash operating cost reduction.

For the three months ended December 31, 2024, total revenues were $1.3 million compared to $1.1 million in the prior year's comparable fourth quarter, primarily due to higher unit sales of M400 smart glasses. For the full year ended December 31, 2024, total revenues were $5.8 million compared to $12.1 million in the prior year. Product sales decreased by 58% year over year as unit sales of M400 declined. Engineering services for the year ended December 31, 2024, were $1.3 million compared to $1.4 million in 2023, a decrease of 7%. There was an overall gross loss of $5.6 million in 2024 compared to $2.6 million in 2023, driven by inventory obsolescence reserves and increased unapplied manufacturing overhead costs.

• Anticipate growth in ODM/OEM business with Quanta partnership, expecting increase in reference designs and OEM customers. Multiple projects with Quanta have potential for significant business opportunities.
• Confident in meeting Quanta milestones to unlock remaining $10 million investment, with potential further equity sales under ATM program. Company has resources to support operating plan into 2026.
• Inventory from M400 expected to convert to cash, potentially generating $9-10 million plus margin, with some accounts potentially taking thousands of units.
• Expect further design wins and rollouts in 2025 across consumer and enterprise OEM products, particularly in defense and security markets with current OEMs.

• General economic and business conditions could impact results.
• Competitive factors may affect market share.
• Changes in business strategy or development plans could disrupt operations.
• Ability to attract and retain qualified personnel may be challenging.
• Changes in legal and regulatory requirements could impose additional costs or restrictions.

Q: Can you let us know how much inventory you have of the M400 that you plan on selling?

A: There's as much as $9 million worth of inventory cost, with anything not finished goods fully provisioned, but potential to generate $9-10 million plus margin from selling it.

Q: When will the ramp with Quanta start logically and what's the ASP on that?

A: Several reference designs with Quanta for third-party OEMs, Vuzix will sell waveguides, price points competitive, with production programs expected before end of 2025, particularly in enterprise space with higher margin and selling price.

Q: How do you assess competitive threat from larger players entering the AR SmartGlass market?

A: There will be other players, but Vuzix differentiates with price, performance, longer industry experience, and high-volume waveguide capabilities, positioning to capture a sizable market share.