Vuzix® Corporation (NASDAQ: VUZI) (“Vuzix” or the “Company”), a leading supplier of Smart Glasses and Augmented Reality (AR) technologies and products, today reported its third quarter results for the period ended September 30, 2021.
“We continue to see growing demand across our product lines with an increasing number of proven use cases, and we have invested to be best prepared to fulfill that demand. While we are pleased to report another period of both sequential and year-over-year revenue growth, our third quarter sales came in at the low end of our expectations largely due to shipping delays, external supply chain challenges, and the timing of larger orders associated with several blue-chip customers,” said Paul Travers, President and CEO of Vuzix. “Healthcare and the return of logistics and warehousing purchase orders following the debilitating impact of the COVID pandemic were high growth verticals for us in the quarter. Additionally, we continued to make good commercial progress with an expanding number of Fortune 100 firms across multiple industries that are looking to standardize on Vuzix Smart Glasses throughout their respective operations to support training, logistics and supply chain use cases. Feedback from these customers about our products and their operational benefits generating meaningful return on investment has been uniformly positive and we intend to extend the breadth and competitiveness of our solutions going forward as industry growth accelerates. At the same time, we are addressing expanding opportunities for our optical and display solutions on the OEM side.”
“Vuzix Next Generation Smart Glasses are being prepped for introduction in what will be a revolutionary leap for enterprise AR smart glasses. On the software side, our new Vuzix Custom Solutions business unit, formerly referred to as the Integrated Solutions Business Unit, is streamlined and focused with strong talent and is engaged with a number of large organizations to drive requirements around solving problems and implementing solutions for enterprises based upon a full suite of Vuzix Smart Glasses-based solutions and services.”
The following table compares condensed elements of the Company’s unaudited summarized Consolidated Statements of Operations data for the three months ended September 30, 2021 and 2020, respectively:
| For 3 Months Ended September 30 | ||||
| ($000s except per share amounts) | ||||
| 2021 | 2020 | |||
| Sales: | ||||
| Sales of Products | $ 3,019 | $ 2,686 | ||
| Sales of Engineering Services | – | 93 | ||
| Total Sales | 3,019 | 2,779 | ||
| Total Cost of Sales | 2,435 | 2,431 | ||
| Gross Profit | 583 | 348 | ||
| Gross Profit % | 19% | 13% | ||
| Operating Expenses: | ||||
| Research and Development | 3,270 | 1,874 | ||
| Selling and Marketing | 1,590 | 936 | ||
| General and Administrative | 3,112 | 1,635 | ||
| Depreciation and Amortization | 434 | 635 | ||
| Loss on Fixed Assets and Other Asset | ||||
| Impairment | 8 | 16 | ||
| Total Operating Expenses | 8,414 | 5,096 | ||
| Loss from Operations | (7,830) | (4,748) | ||
| Net Loss | (7,946) | (4,761) | ||
| Loss per Common Share | $ (0.13) | $ (0.13) | ||
Third Quarter 2021 Financial Results
For the three months ended September 30, 2021, total revenues increased by 9% to $3.0 million versus $2.8 million for the comparable period in 2020. The increase was entirely due to higher sales of Vuzix smart glasses products, which rose $0.3 million or 12% over the comparable period in 2020.
There was an overall gross profit of $0.6 million or 19% of revenues for the three months ended September 30, 2021 as compared to $0.3 million or 13% for the same period in 2020. The increase was largely due to improvements in our product gross margins before overheads and other items compared to the prior year’s period.
Research and Development expense was $3.3 million for the three months ended September 30, 2021 compared to $1.9 million for the comparable 2020 period, an increase of approximately 74%. The rise in R&D expense was largely driven by increases in external development expenses related to Next Generation Smart Glasses and salary, benefits and non-cash stock-based compensation due to head count additions.
Selling and Marketing expense was $1.6 million for the three months ended September 30, 2021, versus $0.9 million the comparable 2020 period, an increase of approximately 70%. The rise was primarily due to increases in salary, benefits, and non-cash stock-based compensation expense related to head count additions (including the hiring of more full-time sales consultants outside of North America) and higher advertising expenses.
General and Administrative expense for the three months ended September 30, 2021 was $3.1 million versus $1.6 million for the comparable 2020 period, an increase of approximately 90%. The rise was primarily due to additional headcount resulting in a net increase in salary and salary benefits related expenses of $1.1 million (of which $0.4 million was related to non-cash stock-based compensation) and higher legal and insurance costs.
The net loss attributable to common stockholders for the three months ended September 30, 2021 was $7.9 million or $0.13 cents per share versus a net loss of $5.3 million or $0.13 for the same period in 2020.
The net cash operating loss after adding back non-cash items for the third quarter of 2021 was $5.8 million as compared to a loss of $3.0 million for the third quarter of 2020. As of September 30, 2021, the Company maintained cash and cash equivalents of $128.7 million and an overall working capital position of $140.3 million.
Management Outlook
“With only eight weeks left in the year, we have a lot on our plate to complete by year-end. We remain focused on successfully completing multiple strategic initiatives that we believe will accelerate the adoption of smart glasses, expand our business model, augment our optical know-how and capabilities, and ultimately unlock significant value for Vuzix shareholders. We are continuing to develop our core technology and next generation products that we believe will be vital to enabling broader market adoption in support of enterprise, defense, aerospace and OEM smart glasses manufacturers. We expect to introduce four new smart glasses products in 2022, starting in the first quarter. Lastly, we are continuing to diversify our sales channels and deliver hand-to-glove service to our cornerstone customers to support their broader adoption of Vuzix smart glasses while continuing to pave-the-way for enabling additional new market adoptions globally,” said Mr. Travers. “For our fourth quarter of 2021, we anticipate another quarter of sequential revenue growth and we feel very confident regarding our growth prospects for 2022.”
Conference Call Information
Date: Monday, November 8, 2021
Time: 4:30 p.m. Eastern Time (ET)
Dial-in Number for U.S. & Canadian Callers: 877-709-8150
Dial-in Number for International Callers (Outside of the U.S. & Canada): 201-689-8354
A live and archived webcast of the conference call will be available on the investor relations page of the Company’s website at: https://ir.vuzix.com/ or directly at https://78449.themediaframe.com/dataconf/productusers/VUZI/mediaframe/47149/indexl.html
Participating on the call will be Vuzix’ Chief Executive Officer and President Paul Travers and Chief Financial Officer Grant Russell, who together will discuss operational and financial highlights for the quarter ended September 30, 2021.
To join the live conference call, please dial into the above referenced telephone numbers five to ten minutes prior to the scheduled conference call time.
A telephonic replay will be available for 30 days, starting on November 8, 2021, at approximately 5:30 p.m. (ET). To access this replay, please dial 877-660-6853 within the U.S. or Canada, or 201-612-7415 for international callers. The conference replay ID# is 13724422.
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