Vuzix reported earnings last night and had a conference call this morning. This is a controversial name that has a history of losses and is heavily shorted. Investors betting against Vuzix are walking on thin ice, however, as Augmented Reality (AR) is a monstrous wave that is just now forming, and VUZI could be the Company best positioned to ride it.
There are few who doubt that Vuzix is one of the leaders in the hardware side of the AR industry. I wrote extensively about this in the past and nothing has changed.
However, up until now, the history of VUZI has been one of unrealized potential. This is not a knock on the Company; quite simply the AR industry is only now coming of age. As it does, demand for AR hardware is going to skyrocket. Vuzix is well positioned to take advantage of this rapid expansion of the market.
There are two factors at play here in terms of Vuzix’s ability to realize its potential. First, can they manufacture to supply the growing market? And, will the demand for AR hardware flow to Vuzix?
Based on the earnings call, I believe that the answer to both questions is yes. Here are the key takeaways from the call, and subsequent analysts write-ups, that give me this degree of confidence.
- The transition to a Tier 1 manufacturing partner is complete. There were issues in the last Q, but that bug has been ironed out. Meanwhile, last Q was their best revenue quarter to date, so things are obviously ramping. Credit Paul Boris with taking Vuzix to the next level on the manufacturing side. I believe that their Tier 1 partner can scale to meet any demand.
- Toshiba is expected to begin selling their own white labeled AR glasses in 2018 with a minimum of $5M in 2018 revenue expected. This could be much bigger. We have been waiting for evidence of a large order from a major partner…finally, we are getting it.
- Overall, analysts are expecting revenue in 2018 of at least $30 million!
2018 appears to be a breakout year for VUZI. Importantly, for the first time in my memory, analysts didn’t lower estimates for next year post an earnings call. This is the most sure sign that the Company is starting to fire on all cylinders.
Augmented Reality in the workplace is the future. Vuzix is the leader in this industry on the hardware side. They are ideally positioned to take advantage of this future, which is now coming clearly into focus.
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