Vuzix (VUZI) Q1 2026 Earnings Transcript

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Date

Thursday, May 14, 2026 at 4:30 p.m. ET

Call participants

• Chief Executive Officer — Paul Travers
• Chief Financial Officer — Grant Russell

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Takeaways

• Total Revenue -- $1.4 million, reflecting a 12% decrease year over year.
• Engineering Services Revenue -- $0.35 million, increasing by 36% over the comparable 2025 period.
• Gross Loss -- $0.4 million, wider than the $0.3 million gross loss reported a year ago due to lower sales and less absorption of fixed manufacturing costs.
• Research & Development Expense -- $3 million, up 16% year over year, driven by wage costs from headcount growth and higher depreciation on R&D waveguide equipment.
• Sales & Marketing Expense -- Approximately $1.55 million, nearly flat, up 1% from the prior year period.
• General & Administrative Expense -- $2.1 million, falling 46% as a result of a $1.7 million decline in noncash stock-based compensation.
• Total Operating Expenses -- $6.8 million, down 20% year over year from $8.5 million.
• Net Loss -- $7.1 million, or $0.09 per share, reduced from a $8.6 million loss or $0.11 per share a year earlier.
• Cash & Cash Equivalents -- $20.2 million as of March 31, 2026.
• Net Working Capital -- $20.8 million at quarter-end.
• Cash Used in Operating Activities -- $5.6 million, increased from $3.5 million in the prior year's period.
• Cash Used in Investing Activities -- $1.2 million, up from $0.8 million in the year-ago period.
• Cash Provided by Financing Activities -- $5.8 million, primarily from ATM equity sales, compared to $1.3 million previously.
• Debt Obligations -- None outstanding, current or long-term, at quarter-end.
• Initial OEM Shipments to Amazon -- Shipping of initial EVT-based Ultralight Pro platform smart glasses to Amazon starts in Q2 for AI and data center support use cases.
• Expansion with Amazon -- M400 custom smart glasses deployed for reliability and maintenance engineering continue to expand globally in Amazon's fulfillment operations.
• Automotive OEM Collaboration -- Delivered initial waveguide-based smart glasses for operational evaluation by a leading auto manufacturer with the possibility of wider enterprise rollout under the Vuzix brand.
• Defense Sector Momentum -- Secured a 6-figure development order from a Tier 1 defense supplier for next-generation waveguide head-mounted display systems and received another 6-figure production order from Collins Aerospace for waveguide AR displays supporting drone applications.
• New U.S. Defense Program -- Preparing to begin a 7-figure, U.S.-funded next-generation waveguide project, explicitly cited as funded by the Department of Defense.
• Waveguide Ecosystem Partnerships -- Custom waveguide design collaborations noted with at least a dozen partners over 24 months, including TCL, Saphlux, Himax, Avegant, RayPrus, and Redoxlens.
• Manufacturing Expansion -- Continued plant floor upgrades and integration of advanced etching equipment and chemistry laboratory in Rochester, NY, with the goal of enhancing throughput and R&D speed.
• Patent Portfolio -- Over 500 patents and patents pending worldwide related to core technologies.
• Management Outlook -- CFO Grant Russell stated, "our overall cash position, along with maintaining disciplined cost structure, general business expansion, particularly on the ODM and OEM side and judicious use of our ATM facility will collectively give us sufficient runway to execute our current operating plan well into 2027."

Summary

Vuzix (NASDAQ:VUZI) emphasized its dual-focus growth strategy centered on OEM products and waveguides, highlighting expanded Amazon deployments, new automotive and defense partnerships, and increased momentum in the U.S. defense sector with multiple active bids. Management specifically referenced a “progression of ecosystem validation, product readiness, [and] customer expansion” as evidence of strengthening market positioning. Collaborations with numerous display and optics ecosystem partners were highlighted as a driver for future revenue opportunities. Expanded manufacturing capacity and new in-house R&D infrastructure in Rochester were cited as supporting the increased volume of development programs. Management stated their cash and liquidity is sufficient to execute planned operations into 2027 without current or long-term debt.

• CEO Paul Travers cited industry shifts—"Geopolitics is changing how defense and security agencies think about wearable technology"—as an explicit driver for heightened defense and government demand.
• Waveguide technology investment and partnerships with firms like Quanta Computer and Collins Aerospace are positioning Vuzix at the center of emerging AI smart glasses ecosystems.
• Infrastructure upgrades, including the consolidation of advanced etching equipment and a new chemistry lab, are explicitly intended to lower cycle times and support custom optical development.
• Large-scale, U.S.-funded projects are explicitly advancing, with management stating, "We're having entertaining and actually receiving 7-figure programs, which you'll hear more about here as the summer unfolds."

Industry glossary

• EVT: Engineering Validation Test; the hardware development phase immediately preceding Design Validation and Mass Production in consumer electronics.
• Waveguide: An optical component that directs light within smart glasses and AR displays, enabling see-through visuals ideal for heads-up displays and near-eye applications.
• ATM Facility: At-the-market equity offering facility, enabling a public company to incrementally sell shares into the market to raise capital as needed.
• ODM: Original Design Manufacturer; a company that designs and manufactures a product as specified and eventually rebranded by another firm for sale.
• HUD: Head-Up Display; a transparent display that presents information within the user’s natural line of sight, commonly used in aviation, automotive, and defense applications.
• LCOS: Liquid Crystal on Silicon; a microdisplay technology combining liquid crystals with a silicon backplane, often used in near-eye displays.
• MicroLED: A display technology using tiny, individually addressable light-emitting diodes to create lightweight, high-brightness, low-power visual displays.
• RFP: Request for Proposal; a formal bid solicitation used to procure custom products or services, particularly in enterprise and government sectors.

Full Conference Call Transcript

Paul Travers; and our CFO, Grant Russell. Before I turn the call over to Paul, I would like to remind you that on this call, management's prepared remarks may contain forward-looking statements, which are subject to risks and uncertainties, and management may make additional forward-looking statements during the question-and-answer session. Therefore, the company claims the protection of the safe harbor for forward-looking statements that are contained in the Private Securities Litigation Reform Act of 1995.

Actual results could differ materially from those contemplated by any forward-looking statements as a result of certain factors, including, but not limited to, general economic and business conditions, competitive factors, changes in business strategy or development plans, the ability to attract and retain qualified personnel as well as changes in legal and regulatory requirements. In addition, any projections as to the company's future performance represent management's estimates as of today, May 14, 2026. Vuzix assumes no obligation to update these projections in the future as market conditions change. This afternoon, the company issued a press release announcing its Q1 2026 financial results and filed its 10-Q with the SEC.

So participants in this call who may not have already done so may wish to look at those documents as the company will provide a summary of the results discussed on today's call. Today's call may include certain non-GAAP financial measures. When required, reconciliation to the most directly comparable financial measure calculated and presented in accordance with GAAP can be found in the company's Form 10-K annual filing at sec.gov, which is also available at www.vuzix.com. I will now turn the call over to Vuzix' CEO, Paul Travers, who will give an overview of the company's operating results and business outlook.

Paul will then turn the call over to Grant Russell, Vuzix CFO, who will provide an overview of the company's first quarter financial results, after which we'll move on to the Q&A session. Paul?

Paul Travers: Thank you, Ed, and thanks to everyone for joining us today. With our first quarter of 2026 behind us and as we have shared previously, Vuzix continues to drive forward with a clear strategy focused around two primary growth engines for the company, OEM products and waveguides. We believe these are areas where we can create the greatest long-term value for Vuzix. Importantly, many of these OEM and waveguide opportunities begin as customer-funded engineering and development programs. We believe this creates a more capital-efficient path towards long-term production opportunities while allowing Vuzix to leverage the technology, manufacturing and customer relationships we have spent years building.

This strategy is built directly on the core technologies, products and capabilities we have developed over the last several decades. Vuzix established its position through two closely connected strengths. Advanced waveguides and designing and selling enterprise smart glasses products. Together, those capabilities helped us develop deep technical know-how, real customer experience and market credibility while also opening doors with larger organizations seeking a partner that understands not just optics, but the full product deployment and support equation. Since the beginning of 2026, our announcements have not been isolated updates. They show a progression of ecosystem validation, product readiness, customer expansion, defense and OEM momentum and broader waveguide partner engagement.

The first leg of our growth strategy is centered around the OEM products business across enterprise, defense, security and ultimately, broader consumer markets. We are particularly excited that we'll begin shipping initial EVT-based OEM orders in Q2 for the new Ultralight Pro platform-based smart glasses to Amazon to support the business outcomes and operational challenges presented by the rapid adoption of AI and data center expansion. At the same time, Amazon's reliability and maintenance engineering teams use of the Vuzix M400 smart glasses continues to expand to support fulfillment center operations worldwide. Our custom M400 kit for Amazon ensures fulfillment center machinery, robotics, conveyors and automation equipment run safely and efficiently.

In addition to Amazon, we're also working with a leading auto manufacturer where Vuzix is developing a waveguide-based smart glasses solution for widespread use on their factory floor operations. We recently delivered initial units to this customer to support operational evaluation and workflow validation activities within active manufacturing environments and look forward to the next phase of the relationship. We expect derivative versions of this platform could ultimately support broader enterprise market opportunities under the Vuzix brand, and we are currently evaluating that option. Within defense, we continue to see growing momentum as wearable displays, advanced optics, AI-assisted visualization and drone-related applications become increasingly important.

Recently, we announced that we had received a 6-figure development order from a Tier 1 defense supplier supporting the design of a next-generation waveguide-based head-mounted display system intended for military applications and future production deployment. In addition, a program with Collins Aerospace is moving into production as evidenced by a recently received 6-figure order for waveguide-based AR display systems to support drone-based applications. We currently expect order volumes associated with this program to continue to increase throughout the year. Another project slated to kick off shortly is a 7-figure program for U.S.-based next-generational waveguide design and manufacturer funded by the U.S. Department of Defense.

Overall, we believe our position within defense and government opportunities is substantially stronger today than it was even just 3 months ago. The broader engagement, including several active RFPs, clearer pathways towards production programs and increasing interest tied to secure U.S.-based manufacturing capabilities. Geopolitics is changing how defense and security agencies think about wearable technology. Drones have rapidly become a critical operational tool as smart glasses and HUDs are becoming an important interface for real-time situational awareness, coordination, visualization and secure information delivery. More broadly, secure information access, situational awareness and AI delivered through wearable displays are becoming increasingly relevant across defense, homeland security and public safety use cases.

We believe these trends will become an important driver of long-term demand for advanced wearable systems and waveguide-based display. The second major leg of our strategy is capitalizing on our waveguide technology where scalable, cost-effective production of advanced waveguides position Vuzix to play a central role in the next generation of AI-enabled smart glasses. Over the past year, we have continued strengthening our position through our strategic relationship with Quanta Computer, which is building the infrastructure for what should be meaningful revenue-generating opportunities surrounding Vuzix waveguides as a strategic supplier to Quanta and their customer ecosystem. The microdisplay industry is witnessing tremendous investment and innovation as the race to support the AI smart glasses ecosystem accelerates.

For Vuzix, the opportunity is not to bet on a single display technology, but rather to support and enable multiple display technologies that we believe could become important over time. Including LCOS, laser-based displays and microLED technologies. These relationships matter because the more third-party display partners we can support, the more ways we have to embed our waveguides into wearable products. As Vuzix is one of the few companies with both advanced waveguide design expertise and scalable manufacturing capabilities, we continue nurturing and expanding our relationship across the broader display ecosystem. These collaborations, which have resulted in as many as a dozen custom waveguide designs in the last 24 months currently include TCL, Saphlux, Himax, Avegant, RayPrus, Redoxlens, among others.

This matters because the industry increasingly recognizes that success in AI glasses will require the right combination of waveguides, display performance, manufacturability and cost. We believe the waveguide business represents the single largest long-term opportunity for Vuzix. As near-eye display-based smart glasses evolve towards becoming a true mass market computing platform over time, advanced waveguides will become one of the key enabling technologies supporting that transition. That is why scale matters. That is why manufacturability matters, and that is why Quanta matters as a world-leading contract manufacturer. As part of preparing for that next phase of growth, we're continuing to expand and optimize our manufacturing and development infrastructure in Rochester, New York.

During the quarter, we continued expanding our plant floor manufacturing capacity to better support the increasing number of OEM, defense and waveguide development programs now moving through the company. These ongoing upgrades are designed to improve throughput, reduce development cycle times, minimize manufacturing changeovers and allow Vuzix to manage multiple advanced programs simultaneously as a broader set of opportunities move towards production. We are also in the process of expanding and consolidating additional advanced waveguide tooling and development capabilities into the Rochester facility. This includes the relocation of our advanced etching equipment that was acquired from a Silicon Valley-based entity last spring.

Bringing these capabilities closer to our core optical science and engineering teams is expected to improve development speed, process integration and next-generation waveguide research activities. In addition, during Q1, we completed the on-site construction of a new and more capable chemistry laboratory focused on advancing the materials used within our waveguide manufacturing process. This effort is being led by our newly added PhD-level chemistry team and is focused on improving polymer formulations, advanced in printing materials and better matching material properties to the next generation of high-performance waveguide substrates. These investments continue to strengthen our position as one of the few companies combining advanced waveguide design expertise with scalable manufacturing capabilities in the United States.

Ultimately, the waveguide manufacturing market will not be won by simply demonstrating a strong laboratory prototype or hero samples as known within our industry. It will be won by having technology that performs, can be produced reliably and can scale cost effectively to support the needs of the large volume customers. Vuzix has spent years building towards that exact position. The broader consumer smart glasses market is now entering an important new phase. AI is making smart glasses more practical.

Customers are becoming more specific about what they need with additional technology companies, platform providers and eyewear brands bringing products, software platforms and ecosystem support into the category and advanced waveguide manufacturing, scalable optics and protected enabling technologies are becoming increasingly central to success. That is why the emergence of platforms such as Google's Android XR and similar ecosystem initiatives are important. The market is increasingly evolving from a device story into a platform and ecosystem story. Emerging technology markets often move through cycles of early enthusiasm, consolidation and infrastructure build-out before real commercial adoption begins to scale. We believe the smart glasses market has now entered that next phase.

Vuzix has remained committed to this market through multiple technology cycles while continuing to invest in innovation, waveguide technology, manufacturing capabilities, customer relationships and intellectual property. Today, with more than 500 patents and patents pending worldwide, we believe those investments position Vuzix well for the direction this industry is now moving. As AI-enabled smart glasses move from concept towards broader adoption, we believe the consistency of our execution and our long-term commitment to this market can become increasingly important drivers of shareholder value. With that, I'll now turn the call over to Grant for the financial overview. Grant?

Grant Russell: Thank you, Paul. As Ed mentioned, the 10-Q we filed this afternoon with the SEC offers a detailed explanation of our quarterly financials. So I'm just going to provide you with a bit of color on some of the quarterly numbers. Our first quarter 2026 total revenues was $1.4 million, down 12% year-over-year versus $1.6 million in 2025. Product sales decreased primarily due to lower sales of our M400. Engineering services revenues were $0.35 million for the 3 months ended March 31, 2026, versus $0.26 million in the prior year's period, an increase of 36%.

There was an overall gross loss of $0.4 million for the 3 months ended March 31, 2026, as compared to a gross loss of $0.3 million for the same period in 2025. The increased gross loss was primarily due to lower total sales versus the prior year's period that resulted in less absorption of our relatively fixed manufacturing costs. Research and development expense was $3 million for the 3 months ended March 31, 2026, compared to $2.6 million for the comparable 2025 period, an increase of approximately 16%.

The higher R&D expense was largely due to a $0.4 million increase in wage costs related to headcount increases and a $0.2 million increase in depreciation related to new waveguide manufacturing equipment currently being used primarily for R&D purposes, less a $0.2 million decrease in external development costs. Sales and marketing expense was virtually flat for the 3 months ended March 31, 2026, as compared to the same period in 2025, an increase of approximately 1% to just over $1.55 million. General and administrative expenses for the 3 months ended March 31, 2026, was $2.1 million versus $4 million for the comparable 2025 period, a decrease of approximately 46%.

The overall decline was primarily due to a $1.7 million decrease in noncash stock-based compensation expense related to the termination and cancellation of prior equity incentive plans. Total operating expenses for the 3 months ended March 31, 2026, declined by 20% to $6.8 million versus the prior year period of $8.5 million. For the first quarter ended March 31, 2026, the net loss attributable to common shareholders was $7.1 million or $0.09 per share as compared to a net loss of $8.6 million or $0.11 per share for the first quarter of 2025. Now for some balance sheet and cash flow highlights.

Our cash and cash equivalents position as of March 31, 2026, was $20.2 million, and our net working capital position was $20.8 million. For the quarter ended March 31, 2026, the net cash flow used for operating activities was $5.6 million as compared to $3.5 million in the prior year's period. As of March 31, 2026, the company continues to have no current or long-term debt obligations outstanding. Cash flow used for investing activities for the first quarter of 2026 was $1.2 million versus $0.8 million in the prior year's period.

Cash flows provided from our financing activities during the 3 months ended March 31, 2026, was $5.8 million versus $1.3 million in the first quarter of 2025, all primarily the result of net proceeds from sales of common stock under our ATM facility. Let me close by again reiterating that we believe our overall cash position, along with maintaining disciplined cost structure, general business expansion, particularly on the ODM and OEM side and judicious use of our ATM facility will collectively give us sufficient runway to execute our current operating plan well into 2027. With that, I'd like to turn the call over to the operator.

Operator: [Operator Instructions] There are no questions at this time. And I'd like to turn the call back to Paul Travers for closing remarks.

Paul Travers: Again, everybody, thank you so much for joining us on the call today. Vuzix is continuing to position ourselves for the next major phase of the market for smart glasses and advanced optics. We're building the company around what we believe are the two most important long-term opportunities in the industry, smart glasses and advanced waveguide technologies. We believe the overall market environment is continuing to improve. We see our business accelerating on OEM program after OEM program, which is why we've made these upgrades to our plant floor. We're having entertaining and actually receiving 7-figure programs, which you'll hear more about here as the summer unfolds.

Obviously, Amazon is becoming a great partner that continues to roll product into their operations. While we still believe the industry remains in the relatively early stages, it is very exciting to be where we are today after all these years. The business is coming, and it's going to be an exciting follow of the year. We remain focused on disciplined execution, strategic growth opportunities and continue to build long-term shareholder value. Just as a reminder, our Annual Shareholders Meeting is coming up on June 16. We look forward to all those that want to come. It should be a nice event. We'll have some great demos and some new stuff to show at folks.

Thanks again, everybody, and have a nice evening.

Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.

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