Earnings call transcript: Vuzix Q3 2025 results show improved EPS, stock dips

Vuzix Corp (VUZI) reported its third-quarter 2025 earnings, revealing a mixed financial performance. The company posted an earnings per share (EPS) of -$0.09, which exceeded the forecast of -$0.11, marking an 18.18% positive surprise. However, revenue fell short, coming in at $1.16 million against a forecast of $2.2 million, resulting in a revenue surprise of -47.27%. Following the earnings release, Vuzix’s stock experienced a decline, closing down 10.19% at $2.7. In premarket trading, the stock showed a slight recovery, rising by 1.85% to $2.75.

Key Takeaways

• Vuzix posted a narrower net loss compared to the previous year.
• Revenue fell significantly below expectations, impacting investor sentiment.
• The company announced strategic partnerships and product innovations.
• Vuzix maintains a strong cash position with no debt obligations.
• Stock price fell post-earnings but showed signs of recovery in premarket trading.

Company Performance

Vuzix’s financial performance in Q3 2025 showed some improvement in terms of net loss compared to the same period last year. The company reported a net loss of $7.4 million, or $0.09 per share, improving from a $9.2 million loss, or $0.14 per share, in Q3 2024. Despite the improvement in EPS, the significant revenue shortfall has raised concerns among investors. The company’s strategic focus on augmented reality (AR) technology and smart glasses positions it well in a growing market, although the current financial results reflect ongoing challenges in revenue generation.

Financial Highlights

• Revenue: $1.2 million, down 16% year-over-year
• Earnings per share: -$0.09, improved from -$0.14 in Q3 2024
• Gross loss: $0.4 million
• Cash and cash equivalents: $22.6 million, up from $17.5 million in June 2025
• Positive working capital: $24.3 million

Earnings vs. Forecast

Vuzix’s Q3 2025 EPS of -$0.09 exceeded the forecast of -$0.11, providing a positive earnings surprise of 18.18%. However, the revenue of $1.16 million was significantly below the forecast of $2.2 million, marking a negative surprise of 47.27%. This mixed performance reflects the company’s struggle to meet revenue expectations despite managing to control its losses.

Market Reaction

Following the earnings release, Vuzix’s stock price dropped by 10.19% to close at $2.7. The stock’s decline reflects investor concerns over the substantial revenue miss. In premarket trading, the stock showed a modest recovery, rising by 1.85% to $2.75, indicating some investor optimism about the company’s future prospects.

Outlook & Guidance

Looking forward, Vuzix expects business and revenue momentum to increase in Q4 2025. The company is exploring expanded manufacturing capabilities and aims to produce millions of waveguides annually in the future. Vuzix also anticipates potential growth opportunities through defense contractor programs in 2026. The company has sufficient cash reserves to support its operating plan through 2026.

Executive Commentary

CEO Paul Travers highlighted the transformative potential of Vuzix’s smart glasses, stating, "These glasses could replace the phone. When that happens, it’s a billion or two waveguides a year that’ll be needed." Chris Parkinson, President of Enterprise Solutions, emphasized the role of AI in enhancing product usability: "With AI comes the natural language interface, and almost immediately, those clumsy devices can become eminently usable at scale."

Risks and Challenges

• Revenue shortfall: Continued underperformance in revenue could affect future growth.
• Market competition: Increasing competition in the AR space may pressure margins.
• Execution risks: Delays in product development or manufacturing expansion could hinder progress.
• Economic conditions: Macroeconomic factors may impact consumer and enterprise spending on AR technology.
• Supply chain disruptions: Potential disruptions could affect production timelines and costs.

Q&A

During the earnings call, analysts inquired about the strategic partnership with Quanta Computer and the potential for volume expansion. Vuzix also addressed questions regarding Amazon’s expanding use of its smart glasses and developments in the defense industry. The company noted the potential for improved gross margins in 2026, driven by increased production capabilities and strategic partnerships.

Full transcript - Vuzix Corp Cmn Stk (VUZI) Q3 2025:

Conference Call Operator: Welcome to Vuzix third quarter ending September 30, 2025, financial results and business update conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the call, please press star zero on your telephone keypad. As a reminder, this call is being recorded. Now, I would like to turn the call over to Ed McGregor, Director of Investor Relations at Vuzix. Mr. McGregor, you may begin.

Ed McGregor, Director of Investor Relations, Vuzix: Thank you, Operator, and good afternoon, everyone. Welcome to the Vuzix third quarter 2025, ending September 30, financial results and business update conference call. With us today are Vuzix CEO Paul Travers and CFO Grant Russell. Additionally, Chris Parkinson, President of Enterprise Solutions, will be joining for a portion of this call. 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, November 13th, 2025. 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 Q3 2025 financial results and filed its 10-Q with the SEC. Participants in this call who may not have already done so may wish to look at those documents as the company will only provide a summary of the results discussed on today’s call.

Today’s call may include certain non-GAAP financial measures. When required, reconciliations of the most direct comparable financial measures calculated and presented in accordance with GAAP can be found in the company’s filings 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 Chris Parkinson, President of Enterprise Solutions. We’ll also briefly discuss developments in the enterprise smart glasses space. We will then hear from Grant Russell, Vuzix CFO, who will provide an overview of the company’s third quarter results, after which we’ll move on to the Q&A session. Paul?

Paul Travers, CEO, Vuzix: Thank you, Ed, and thank you to everyone else joining us today. The race to deliver production-ready waveguides and display engines for broad markets is fully underway, and Vuzix is in it with momentum. Inbound interest from leading ODMs and micro-display suppliers has accelerated over the last 12 months, led by Quanta Computer, one of the world’s largest ODMs. Just over a year ago, Quanta made an initial $10 million strategic investment to support a long-term waveguide design and supply partnership. We received a second $5 million tranche in June and completed the third $5 million tranche in September after meeting or exceeding the agreed-upon manufacturing milestones. This brings Quanta’s total investment to $20 million. We are now into discussions with Quanta on how to ramp in a more significant way, capacity-wise, as the AI smart glasses industry begins to accelerate much further.

Both of us want to be primed and ready to deliver. We also announced two new display ecosystem partnerships in Q3, one with TCL, China Star Optoelectronics Technology, to develop an integrated AR optical solution that combines our high-transparency production-ready waveguides with their micro-LED display engines, initially a monochrome green module with a roadmap to full color in 2026, and another with Saphlux to co-develop next-generation AR display engines, pairing their high-brightness mono-green micro-LEDs with our waveguides, targeting a reference design and ultimately full-color, mass-producible optical solutions. Beyond these public announcements, we’ve signed NDAs with multiple other ODMs, micro-display makers, and consumer electronics brands seeking a capable, cost-effective waveguide supplier. Put simply, demand for high-quality color waveguides continues to rise, and Vuzix is making sure it is well-positioned to serve it.

In parallel, our OEM and defense business continues to accelerate, and active programs, engagements, and revenue and our ties with prime contractors continue to deepen. We are now transitioning into production deliveries of the waveguides and display engines for a lightweight heads-up display for fielded military personnel, with revenue contribution beginning in Q4 this year. We also have secured, as previously announced, a six-figure development order for a new program that was received and expected to be delivered in Q4. Finally, a third program is advancing pending a display engine modification that Vuzix needs to make to support the high dynamic range required for that unique application. On the enterprise side, which currently accounts for the majority of revenue, AI-enabled smart glasses are driving a new wave of interest as customers bring us their specific operational challenges. We’ve seen a real shift from push to pull.

Customers now are coming to Vuzix with specific workflows and ROI targets and asking us to help deliver for them. A good example of this is Amazon. As we disclosed in May of this year, Amazon is using Vuzix’s smart glasses to support reliability and maintenance engineering teams with see-what-I-see capabilities to reduce cost, speed repairs, and improve safety in large-scale logistics facilities. That program, which started in Europe, has now entered commercial rollout in the U.S. and Canada, with discussions underway to expand to additional regions, business units, and use cases. As a result, we expect this business to grow materially, with Vuzix delivering more and more custom M400 kits for them as they scale. Overall, business and revenue momentum is increasing in Q4 as quarter-to-date revenue and purchase order obligations have already exceeded Q3 levels, with both our OEM waveguide and products business performing well.

Finally, our waveguide development efforts are not only focused on cost-effective, high-volume manufacturing, but we are developing advanced high-index materials that are designed to deliver on the future performance requirements that this industry is going to demand as the industry matures. We will have more to share on this in 2026 as these new developments unfold, but you can imagine technology that revolves around all the way to silicon carbide waveguide solutions. In September, we welcomed Dr. Chris Parkinson, co-founder and former Chief Technology Officer and CEO of RealWear as President of Vuzix Enterprise Solutions business. Chris’s mandate spans the entire enterprise stack, product portfolio and roadmap, solutions architecture, sales, strategic partnerships, customer adoption, and global channels. We can capture the clear, measurable value smart glasses deliver in the enterprise: higher productivity, faster time to resolution, better safety, and more consistent quality.

Chris’s leadership of our enterprise business also frees me to double down on core waveguide and optical technology, the defense business, and strategic development funding opportunities, ensuring we solidify being the supplier of choice for brands and prime contractors with the made-in-U.S.A. operations. Of course, we also have our eye on Asian operations for some of our high-volume broad market programs. His arrival coincides with the formal introduction of the LX1, our purpose-built, warehouse-ready voice and vision smart glasses designed for full shift duty and fast time to productivity. Early customer feedback has been excellent, and Chris is already engaging with multiple key accounts that will shape this market. With that, I’m delighted to introduce you all to Chris Parkinson. Chris.

Chris Parkinson, President of Enterprise Solutions, Vuzix: Thank you, Paul, and thank you, investors, for allowing me to share a little about myself and what I’m up to at Vuzix. I’ve been in the enterprise wearable space since 2007 and have been watching with increased interest the evolution of smart glasses over the last few years. We’ve seen an amazing improvement in displays and optics, a steady miniaturization of electronics, better batteries and power-efficient operating systems, and have seen an increased awareness and desire by the enterprise to want wearables. One problem has continued to plague the industry: the user interface for hands-free systems, causing a barrier for wide-scale adoption. About two years ago, AI burst into our space to solve this overnight. With AI comes the natural language interface, and almost immediately, those clumsy devices can become eminently usable at scale. Just talk to the device and it works.

This huge convergence of technology over the last few years has left me eager to continue to be a part of the smart glasses revolution, but not as a customer to a waveguide company, but rather part of the company that owns the building blocks of that future. That is the Vuzix opportunity for me. Plus, of course, the Vuzix made-in-America story is such a strong message that just makes sense in the enterprise sales area. As you know, I have only been on board at Vuzix for about two months, but I already feel I am hitting the ground running. We are rebuilding the sales motion at Vuzix, building on the work performed by the teams today and adding procedure, accountability, and discipline to the way we go to market.

That means working with trusted software partners to identify and assemble solutions, working with trusted resellers to educate, train, and help them scale their businesses, and to enhance the reputation and quality of Vuzix products in the field. This is by no means a small feat, but the end justifies the effort. Done well, we will have an army of people around the world eager, excited, and incentivized to sell Vuzix products and customers that are happy with the value that Vuzix brings. By products, we are talking about the M400. Maybe long in the tooth for some, but actually a really solid device. We are seeing sales pick up at the moment, and I believe this device, when positioned correctly, has strong legs through 2026.

Of course, we have the LX1 coming out very soon, not to replace the M400, but to sit side by side as a portfolio of devices. Choose your model: lightweight M400 or rugged LX1 with integrated all-day battery. They make a very strong pairing, giving customers a choice to own what they need. And what of the Ultralight Pro? This is one device I’m really excited about, but it was never designed to be an end product. It’s a platform to seed an industry, which I am looking forward to helping to deliver on. I’d love to tell you more, but I feel I’m going to get in trouble if I do that. Needless to say, though, I’m actually very buzzed about these products, very buzzed about the story and the portfolio we’re building. It’s exactly why I’m here at Vuzix.

With that said, I’ll hand the microphone over to Grant for the financial overview.

Grant Russell, CFO, Vuzix: Thank you, Chris. As Ed mentioned, the 10Q we filed this afternoon with the FCC 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 third quarter 2025 revenue was $1.2 million, down 16% year over year due to decreased sales of our M400 smart glasses. Engineering services revenues recognized were $0.3 million for the three months ended September 30, 2025, versus $0.4 million in the prior year’s period. The decrease was primarily due to the timing of work on a major project, and we have a strong pipeline for Q4 currently expected. There was an overall gross loss of $0.4 million for the three months ended September 30, 2025, as compared to a gross loss of $0.3 million for the same period in 2024.

The larger gross loss was primarily the result of lower product sales to absorb our relatively fixed manufacturing overheads. Research and development expense was $2.9 million for the three months ended September 30, 2025, as compared to $2.3 million for the comparable 2024 period, an increase of approximately 26%, primarily due to $0.3 million increases in both external development costs for new products and depreciation expenses, a $0.2 million increase in cash compensation, salary expenses, all partially offset by a $0.4 million decrease in non-cash stock-based compensation expense. Sales and marketing expense was $1.1 million for the three months ended September 30, 2025, as compared to $1.8 million for the comparable 2024 period, a decrease of approximately 35%.

This reduction was largely due to a $0.3 million decrease in bad debt expense, a $0.2 million recovery of previously written-off bad debt, and a $0.2 million decrease in non-cash stock compensation expense. General and administrative expense for the three months ended September 30, 2025, was $2.6 million versus $4.3 million for the comparable 2024 period, a decrease of approximately 41%. The reduction in total G&A expenses was primarily due to a $1.8 million decrease in non-cash stock-based compensation expense, which was driven by the cancellation of the company’s original LTIP plan approved by the stockholders in June 2025. Total operating expenses for the three months ended September 30, 2025, declined $1.8 million or 20% to $7.1 million versus the prior year’s period of $9 million, the lowest quarterly level achieved since 2020.

The net loss for the three months ended September 30, 2025, was $7.4 million or $0.09 per share versus a net loss of $9.2 million or $0.14 per share for the same period in 2024. Our cash and cash equivalents position as of September 30, 2025, was $22.6 million, up from $17.5 million as of June 30, 2025, and we had a positive working capital position of $24.3 million. As of September 30, 2025, the company continues to have no current or long-term debt obligations outstanding. For the third quarter of 2025, net cash flows used in operating activities were $5 million versus $5.3 million for the comparable 2024 period. For the nine months ended September 30, 2025, net cash flows used in operating activities were $13.3 million versus $19.7 million for the same period in 2024, a decrease of $6.5 million.

Cash used for investing activities for the third quarter of 2025 was $0.5 million versus $0.3 million in the prior year’s quarterly period. During the third quarter of 2025, we received a total of $10.6 million from various financing activities, which primarily included the final tranche of $5 million from the sale of Series B preferred stock to Quanta Computer and $5.3 million in net proceeds from the sale of common stock under our ATM program. Total financing activities for the nine months ending September 30, 2025, were $19.8 million. Let me close by reiterating that we believe our overall cash position, along with maintaining a disciplined cost structure, further conversions of our finished goods, inventories into cash, and general business expansion, particularly on the ODM and OEM side, and potential future years of our ATM program, gives us sufficient runway to execute on our current operating plan through 2026.

With that, I would like to turn the call over to the operator for Q&A.

Conference Call Operator: Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your alignment in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we pull for questions. Our first question is from Christian Schwab with Craig Hallum Capital Group. Please proceed.

Christian Schwab, Analyst, Craig Hallum Capital Group: Great. Thanks for taking my questions. I just wanted to start with Quanta and potential your conversation about having conversations with them to ramp capacity even further. I think previously you’ve said you had capacity for a million waveguides a year. I mean, should we assume that when CEF comes and some people introduce their products, that there’s high hopes for substantial volume? I’m just trying to understand that statement a little bit better.

Paul Travers, CEO, Vuzix: Yeah, Christian, thanks for asking the question. It’s a good one. There are multiple programs that we’re working on with our friends from Quanta right now. There’ll be three, maybe four new glasses presented, I think, at the Consumer Electronics Show. The forward momentum in this space, Quanta has inbound all over the place, of which I don’t know all of it, frankly. They don’t share. They’re a very conservative company when it comes to who their customers even are. There is a big pressure on being able to ramp to much more significant volumes than what we can do, the one million per year out of our plant here in Rochester. Actually, the very initial input or communications between us and Quanta was, how do we get to the point to where we can make millions a year?

If you think about the size of this business, right, ultimately, these glasses could replace the phone. When that happens, it’s a billion or two waveguides a year that’ll be needed. Yes, we are in discussions about the best way, where to do it, and how to get it done so that the volumes can ramp much more significantly than what we have here in Rochester. I will say that the Rochester plant is easily expanded. However, I also think there’s supply chain issues that need to be addressed. There are issues associated with tariffs these days that need to get looked at, at least for North American versus the rest of the world markets. There is a whole lot of discussions about the best way to go from where we are today to where we need to be over the next year.

Christian Schwab, Analyst, Craig Hallum Capital Group: Following up on that, how long are these discussions in the early stages, or do you think you’re down the path to find? Is that something that we’re going to hear about in the next one to two quarters, how those discussions end, or is it yet to be determined how long that may take?

Paul Travers, CEO, Vuzix: I think people got to hold their breath just a little bit. We’re working through the process. I would suggest that it takes time to bring up new lines. It’s sooner rather than later. I can’t comment on, well, in Q1, you should see this happen, and then in Q3, this should be happening. Sorry about that. I wish I could put a sharper schedule and plan in place for you. I believe that as the next few quarters unfold, this will get way obvious, though. We’ll be able to share a whole lot more.

Christian Schwab, Analyst, Craig Hallum Capital Group: Great. Just another question regarding the defense industry. Can you guys—I know we’ve talked about a six-figure development order with a leading U.S. defense contractor in the past. As these types of programs ramp, when do you think you’ll be able to give greater clarity on volume ramping in a more measurable pace?

Paul Travers, CEO, Vuzix: We’re on the same page here, Christian. We have development programs here in Q4, and we are shipping production waveguides in Q4. These programs are going into production. Looking forward to being able to announce exactly, but you will see in our Q4 revenue numbers that our OEM business is bigger, certainly, than it’s been in a while. A portion of that’s related to production rollout, not a proof of concept and not another development project. There’s also some of that in there too. 2026, this one particular program that is obviously off to the races, we should know a whole lot more here early in the year as to how that’s going to unfold through 2026 and 2027 and into the future. It’s real production now. We’re not—next week, they might get there. This is production.

Christian Schwab, Analyst, Craig Hallum Capital Group: Great. As 2026 unfolds, how do you potentially see the defense contractor customer base expanding? Will we see other customers go into production in calendar 2026? Any of your expectation?

Paul Travers, CEO, Vuzix: This development program that we have is going to happen really fast. It’s with a partner we’ve already had some level of success with, and the project is just waiting for the new waveguides. That one should happen fairly quickly. We might have two programs rolling in production in 2026. There’s another one that needs to have a design change to an engine that Vuzix has to have done. We’re in the process of doing that. It’s got to force a display to do something that it wasn’t really designed for, but it can do it. We have zero doubt about that. It’s just we got to get through the engineering on that. That’s going to have been the one that’s going to hang up for that particular program getting into production. That’s the tip of the spear.

There’s some other programs that we have that are contracted that we’ll be able to share a whole lot more about here in Q1 and after this sequestration or where the continuing resolution happens and people actually go back to work at the U.S. government. Some of that’s been holding some of these things up, including some of our ability to make announcements.

Christian Schwab, Analyst, Craig Hallum Capital Group: Okay. Perfect. No other questions. Thank you.

Conference Call Operator: At this point, I would like to turn the call back over to Paul Travers.

Paul Travers, CEO, Vuzix: We did have a couple of other questions come in that I thought might be germane to the conversation for everybody. One of them does relate to the Amazon program. The Amazon program actually has been around for some time now. They’ve been perfecting on how they use our glasses. I don’t know if you noticed, but if you’re paying attention, you can see that Amazon robots, human in the loop, the use of glasses to help solve problems around some of the things that they’re doing is all over the place at Amazon. Our glasses are being used today in fulfillment and warehouses, not for the picking, actually, but for the maintenance and keeping the equipment up and where there’s human in the loop relations between robots and humans kinds of stuff. They’re expanding that now. That was started in Europe.

They’ve expanded it throughout North America. It is now being moved. This is a brand new component to their data centers to keep all those AI server farms and Amazon Web Services and the likes up and operational. They’re even looking at janitorial services for the glasses. On top of that, Amazon Web Services has an AI component that they’re doing that they’re looking at potentially putting that with the glasses to enable even more all-day use case kinds of applications. Amazon could be significant. It is off to a really good start, and it is finally rolling for Vuzix. The other question, I think, Christian, I kind of answered it about what happened, follow on with our expectations around our partners, Quanta. There was one other question about gross margins. I will say that it is a balancing thing.

The new stuff that we’re doing, like the LX1, its margin models are better just out of the gates. The stuff that we do in defense typically is much higher margin than what we would do on something on the enterprise product side of the house. In general, the product mix in 2026, you should start to see higher margins in the product side of the house. That’s the questions today. I’d like to, again, thank everybody for coming to our call today. It’s really starting to get to be exciting at Vuzix. We’ve said this before, but the train is leaving the station. We look forward to sharing a whole lot more here as all this stuff unfolds. Thanks again, everybody. Have a nice evening.

Conference Call Operator: Thank you. This will conclude today’s conference. You may disconnect your lines at this time. Thank you for your participation.

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