MicroVision, Inc. :MVIS-US: Earnings Analysis: Q4, 2016 By the Numbers : March 20, 2017

MicroVision, Inc. reports financial results for the quarter ended December 31, 2016.

We analyze the earnings along side the following peers of MicroVision, Inc. – Qorvo, Inc., Texas Instruments Incorporated, Himax Technologies, Inc. Sponsored ADR, Kopin Corporation and IntriCon Corporation (QRVO-US, TXN-US, HIMX-US, KOPN-US and IIN-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 2.91 million, Net Earnings of USD -5.37 million.
  • Gross margins narrowed from 20.53% to 17.38% compared to the same period last year, operating (EBITDA) margins now -166.02% from -224.05%.
  • Year-on-year change in operating cash flow of -8.10% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings decline largely a result of non-operational activity, pretax margins improved from -232.83% to -184.85%.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016-12-31 2016-09-30 2016-06-30 2016-03-31 2015-12-31
Relevant Numbers (Quarterly)
Revenues (mil) 2.91 4 4.16 3.7 1.85
Revenue Growth (%YOY) 57.37 66.81 2.77 310.77 168.7
Earnings (mil) -5.37 -4.07 -3.48 -3.56 -4.3
Earnings Growth (%YOY) -24.94 -15.86 -25.53 10.25 -28.45
Net Margin (%) -184.85 -101.75 -83.66 -96.08 -232.83
EPS -0.09 -0.08 -0.07 -0.07 -0.09
Return on Equity (%) -695.37 N/A -937.56 -1051.68 -1076.86
Return on Assets (%) -134.2 -127.75 -92.43 -93.13 -116.24

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Market Share Versus Profits

Revenues History
Earnings History

MVIS-US‘s change in revenue this period compared to the same period last year of 57.37% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that MVIS-US is holding onto its market share. Also, for comparison purposes, revenues changed by -27.38% and earnings by -31.94% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s year-on-year earnings decline was driven by the drop in gross margins from 20.53% to 17.38%. This drop in earnings would have been worse were in not for operational cost control activities, which helped the operating margins (EBITDA margins) improve from -224.05% to -166.02%. For comparison purposes, gross margins were 30.18% and EBITDA margins were -96% in the previous period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

MVIS-US‘s decline in gross margins were offset by some improvements on the balance sheet. The management of working capital, for example, shows progress. The company’s working capital days have fallen to 185.85 days from 258.98 days for the same period last year. This leads Capital Cube to conclude that the gross margin decline is not altogether bad.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

MVIS-US‘s change in operating cash flow of -8.10% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

Margins

The company’s earnings decline is largely a result of non-operational activity. As a matter of fact, the company showed increases in operating (EBIT) and pretax margins. EBIT margins improved from -232.94% to -184.96% and pretax margins widened from -232.83% to -184.85%.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

MicroVision, Inc. is the creator of PicoP scanning technology, an ultra-miniature laser projection and sensing solution based on the laser beam scanning methodology pioneered by the company. MicroVision’s platform approach for this advanced display and sensing solution means that it can be adapted to a wide array of applications and form factors. The company was founded in May 1993 and is headquartered in Redmond, WA.

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