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VC

Vuzix Corp (VUZI)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue grew 19% year over year to $1.30M, driven by higher M400 product sales; EPS came in at -$0.10, a $0.02 beat versus Wall Street (-$0.12*) while revenue missed consensus ($1.63M* actual $1.30M) .
  • Vuzix received the $5M second tranche from Quanta after exceeding manufacturing yield and performance gates; waveguides shipped in volume to a first tier-1 OEM customer, and multiple new tier-1 engagements were announced .
  • LX1 enterprise smart glasses were introduced with initial sampling and a production rollout scheduled before year end, targeting warehousing/logistics with integrated voice and vision workflows .
  • Cash and equivalents increased to $17.5M with positive working capital of $20.3M; management reiterated confidence in receiving the final $5M Quanta tranche in 2025 and highlighted expected defense production orders in H2’25 .
  • Likely stock catalysts: LX1 commercial rollout, final Quanta tranche receipt, defense program orders, and continued OEM waveguide shipments .

What Went Well and What Went Wrong

What Went Well

  • “Met all the manufacturing and performance gates tied to receipt of the second Quanta tranche and received that $5 million… bringing Quanta’s investment thus far to $15 million” and commenced volume shipments of waveguides to a tier-1 OEM customer .
  • LX1 smart glasses introduced with “integrated voice and vision assisted workflows… purpose-built for warehousing and logistics,” with production rollout scheduled before year end .
  • Management emphasized strong progress: “from the very first runs we delivered yields far north of [Quanta’s] expectations” and met/surpassed metrics “including contrast, haze, brightness, efficiency and production run rates,” while hitting target price points for margins at scale .

What Went Wrong

  • Gross loss widened to $0.8M from $0.3M YoY due to inventory obsolescence reserves and increased unapplied manufacturing overhead costs; engineering services saw a gross loss due to additional costs beyond the project budget .
  • Sequential product revenue decline vs Q1 ($1.045M in Q2 vs $1.324M in Q1) and total revenue fell q/q ($1.296M in Q2 vs $1.581M in Q1), reflecting lower engineering services and production levels .
  • Revenue missed consensus ($1.63M* est vs $1.30M actual), and the company did not provide quantitative revenue/margin guidance, limiting visibility despite qualitative momentum .

Financial Results

Quarterly Trend – Income Statement and Liquidity

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$1.272 $1.581 $1.296
Net Loss ($USD Millions)$(13.656) $(8.638) $(7.666)
Loss per Share ($USD)$(0.16) $(0.11) $(0.10)
Cash & Equivalents ($USD Millions)$18.2 $15.2 $17.5

Q2 Year-over-Year

MetricQ2 2024Q2 2025
Sales of Products ($USD Millions)$0.601 $1.045
Sales of Engineering Services ($USD Millions)$0.491 $0.250
Total Sales ($USD Millions)$1.093 $1.296
Total Cost of Sales ($USD Millions)$1.426 $2.057
Gross Profit (Loss) ($USD Millions)$(0.333) $(0.761)
Net Loss ($USD Millions)$(40.612) $(7.666)
EPS ($USD)$(0.62) $(0.10)

Segment/Revenue Breakdown

MetricQ4 2024Q1 2025Q2 2025
Sales of Products ($USD Millions)$1.069 $1.324 $1.045
Sales of Engineering Services ($USD Millions)$0.204 $0.257 $0.250
Total Sales ($USD Millions)$1.272 $1.581 $1.296

KPIs

KPIQ4 2024Q1 2025Q2 2025
Operating Cash Flows Used ($USD Millions)N/A$3.5 $4.7
Working Capital ($USD Millions)$24.6 $19.5 $20.3
Quanta Investment Received ($USD Millions)$10.0 $5.0
ATM Proceeds ($USD Millions)$8.2 $2.8

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
LX1 production rollout2025 (before year end)Product development underway (Q1 commentary) “Production rollout scheduled before year end” Introduced timeline (raised clarity)
Quanta final tranche ($5M)2025“On track to meet milestones” (Q1) “Anticipate receiving the final $5 million… before the end of this year” Maintained/clarified timing
Defense production ordersH2 2025“Expect production rollouts in 2025” (Q1) “Start to see first production orders here in the back half of this year” Affirmed near-term timing
Revenue/margins/OpEx quantitative guidance2025Not provided Not provided (qualitative momentum only) Maintained (no numeric guidance)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
AI/technology initiativesUltralite Pro/Audio launched (CES); OEM scaling; Quanta partnership; microLED backplane with Fraunhofer; Silicon Valley waveguide R&D facility LX1 introduced; volume waveguide shipments; exceeded Quanta yield/performance metrics Strengthening
Supply chain/tariffs/macroTariff policy changes may pressure margins No new tariff update; remained focused on cost control Unchanged concern
Product performance (enterprise)Nadro 500 M400 units; Airbus Helicopters rollout; Atomax reorder Higher M400 unit sales drove YoY growth; LX1 sampling underway Improving
Regional trendsMexico (Nadro) efficiencies Warehousing/logistics focus; global OEM/defense engagements Broadening
Regulatory/legal2024 impairments detailed (Atomistic, goodwill/intangibles) No new legal items disclosed Lapped
R&D executionMicroLED backplane; rapid prototyping capability Met/exceeded Quanta technical gates; high run-to-run yield consistency Advancing
Defense sectorExpected production rollouts in 2025 First production orders anticipated in H2 2025 Converting to orders
Accessibility/health featuresXander largest reorder (Q4) TranscribeGlass follow-on orders using Z100 Building adoption

Management Commentary

  • “We have met all the manufacturing and performance gates tied to the second Quanta tranche… bringing Quanta’s investment thus far to $15 million” and “shipping waveguides in volume to our first tier-1 OEM waveguide customer” .
  • “From the very first runs we delivered yields far north of their expectations… met or surpassed all required performance metrics… and we’re hitting target price points that will produce strong production margins for Vuzix at scale” .
  • On LX1 positioning: “Purpose-built… voice and vision assisted workflows… falling squarely on top of human-in-the-loop automation… production rollout scheduled before year end” .
  • Liquidity and outlook: “Cash and cash equivalents of $17.5 million… positive working capital… anticipate receiving the final $5 million investment… confident in securing additional design wins” .

Q&A Highlights

  • OEM shipments and Quanta timeline: The tier-1 waveguide customer with volume shipments is outside the Quanta partnership; programs with Quanta are expected to ramp more materially in 2026, with some activity before year end 2025 .
  • Defense outlook: “Start to see first production orders here in the back half of this year,” with visibility into 2026 as programs unfold .
  • Inventory and supply chain: Management aims to reduce inventory further (target ~$2M on current revenue base), move toward made-to-order with LX1 manufactured by Quanta, and better manage finished goods for responsiveness .
  • LX1 market focus: LX1 is designed for all-day warehousing use with ruggedization, integrated NFC pairing to Zebra scanners, and 10-hour runtime; remains applicable for remote support and operating-theater use cases .
  • Consumer AI smart glasses hurdles: Weight (<35–40 grams) and fashion are key barriers; Vuzix waveguides and display engines target these constraints for broader adoption .

Estimates Context

MetricQ4 2024Q1 2025Q2 2025
Revenue Consensus Mean ($USD)$1,525,000*$1,336,000*$1,628,000*
Revenue Actual ($USD)$1,272,403 $1,580,941 $1,295,709
Primary EPS Consensus Mean ($USD)$(0.12)*$(0.12)*$(0.12)*
Primary EPS Actual ($USD)$(0.16) $(0.11) $(0.10)
Primary EPS – # of Estimates1*1*1*
Revenue – # of Estimates1*1*1*
  • Q2 2025: EPS beat by $0.02 vs consensus (actual -$0.10 vs -$0.12*); revenue missed by ~$0.33M (actual $1.30M vs $1.63M*) .
  • Small sample size (one estimate) limits read-through; however, management’s LX1 rollout and OEM/defense milestones may prompt upward revisions to 2H narrative while near-term revenue sensitivity remains to product shipments and engineering services timing .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • OEM validation: Volume waveguide shipments and exceeding Quanta’s manufacturing gates de-risk Vuzix’s scale-up and support margin potential at volume .
  • Product catalyst: LX1 addresses a large warehousing/logistics TAM with integrated voice+vision workflows and a near-term production rollout; watch partner ISV traction and initial customer conversions .
  • Defense inflection: First production orders are expected in H2 2025, adding a new revenue vector with visibility into 2026 .
  • Liquidity runway: $17.5M cash, $20.3M working capital, plus expected final $5M Quanta tranche and $2.8M ATM proceeds in Q2 extend execution runway into 2026 per management .
  • Revenue mix: M400 strength drove YoY growth, but sequential revenue declined; engineering services variability and overhead absorption continue to impact gross results—monitor inventory conversion and LX1 uptake .
  • Estimates posture: Q2 revenue miss and EPS beat (small sample) suggest near-term focus on delivery cadence; LX1 and defense/OEM conversions are the likely narrative drivers for estimate resets .
  • Execution watch items: Inventory reduction progress, pace of LX1 customer sampling→orders, timing of defense orders, and confirmation of the final Quanta tranche receipt are near-term checkpoints .