At a time when most tech stocks are struggling, insiders at Vuzix Corp (NASDAQ:VUZI) are signing major contracts. Thanks to deals with Intel, Toshiba, DHL, BlackBerry and John Deere, the Augmented Reality ("AR") products developer will soon earn millions in new client revenue. Deals announced this summer will see Vuzix supplying smart glasses to a number of Fortune 500 companies, both as an engineering partner and an equipment supplier.

One deal, with DHL's supply chain, is already generating revenue for the company. Vuzix was DHL's main smart glasses supplier during its recent AR tests, which assessed possible applications of AR in warehouse operations. The tests were hailed by the company as a major success, yielding average productivity increases of 15%. As a result, DHL is now increasing the use of smart glasses and vision picking at its warehouses.

The DHL deal was a major breakthrough for Vuzix. Another development deal with Toshiba is expected to bring in over $1 million in revenue, creating a distribution channel that could sell thousands of glasses every year starting in 2018. In addition, Vuzix began recently working with Ubimax to deliver custom versions of its M300 headsets to John Deere and WS Kunststoff-Service. Finally, a new partnership with BlackBerry was announced just days ago around Vuzix's M300 smart glasses and BlackBerry's enterprise software users.

These new partnerships underscore Vuzix's unique market strategy. The company develops products for consumer and enterprise customers, but has placed particular emphasis on the latter. This is one of the company's key differentiators. In its marketing, Vuzix has consistently emphasized its products' usefulness in remote support, warehouse logistics, telemedicine and manufacturing settings. This is in sharp contrast to other AR and wearable tech developers, which prioritize the consumer segment of the market.

Vuzix Enjoys Strong AR Industry Growth

The past two years have seen major growth in the AR and wearable tech markets. Private investors have made than 225 venture capital investments, valued at $3.5 billion total, in this sector. These investments include 'seed' funding for small startups as well as second and third stage investments for growing companies.

Broadly speaking, analysts are expecting the AR industry to grow rapidly in the years ahead. Digi-Capital expects the AR industry to reach total volume of $150 billion in 2020, while Goldman Sachs has set a more conservative target of $80 billion by 2025. According to Digi-Capital, the AR industry generated $1.2 billion in revenue in 2016.

Vuzix is among the companies driving innovation in this fast-growing industry. The company holds 49 patents, has won over a dozen Consumer Electronics Show (CES) awards, and has extensive contacts with Fortune 500 companies (including Intel, which invested $25 million in the company in 2015). Vuzix's status as AR/wearables innovator was affirmed this year when DHL Supply Chain chose the company as its exclusive smart glasses supplier (previously, it had been using headsets from both Google and Vuzix).

DHL Goes Global with Smart Glasses

DHL Supply Chain recently announced it was bringing smart glasses into day-to-day use at its warehouses. The company had previously shown interest in wearables, exploring their applications in a series of 'vision picking' tests, which had employees locate and move items using smart glasses. The tests were a success, yielding productivity improvements of 15% on average, and as high as 25% in some individual tests. DHL also claims that "user friendly" smart glasses have cut its onboarding and training times in half.

As a result of these test outcomes, DHL is now using smart glasses to speed up order picking at its warehouses. Employees receive item locations and instructions through their smart glasses, allowing them to fulfill orders with both hands free. As a result, they can complete tasks faster, no longer needing to "stop" to read instructions.

Vuzix was a key smart glasses supplier to DHL during its vision picking trials. DHL also sourced smart glasses from Google, but had some trouble acquiring them in the Asia-Pacific region. As a result, several Australian tests were run using Vuzix M100 and M300 smart glasses alone. The company had also partnered with Ubimax during the tests, using the company's XPick software to help guide employees through vision picking tasks. As a result of its collaboration with Vuzix and Ubimax, DHL claimed to have "established a new way of order picking in the [logistics] industry."

Toshiba Taps Vuzix for Development Deal

On February 24, 2017, Vuzix announced that it had entered an agreement to build "a customized pair of smart glasses for Toshiba Client Solutions Co. Ltd." The new glasses are to be based on Vuzix's M300 smart glasses, but with custom features that will be designed to Toshiba's specifications.

The deal positions Vuzix as a manufacturing and engineering partner to Toshiba, one of the largest electronics companies in the world. The deal includes over $1 million in milestone payments from Toshiba to Vuzix, and is expected to sell thousands of units of smart glasses starting in 2018.

The Toshiba deal is unique because it has Vuzix partnering with a larger company to manufacture consumer products. Toshiba has contracted Vuzix to develop smart glasses that will be sold under its own brand, which stands in contrast to other Vuzix partnerships, where the company has mainly served as an equipment supplier.

Prior to partnering with Vuzix, Toshiba had developed its own smart glasses product, Wearvue. The project was canceled just a week before the glasses were set to launch, with little elaboration by the company. Despite this setback, the company remains optimistic that it can succeed with Vuzix.

In a recent statement, Toshiba Client Solutions VP Carl Pinto said, "We believe that Toshiba can leapfrog other wearable technology products with Vuzix' support and look forward to a very successful collaboration between the companies."

A Match Made In Heaven

Vuzix has been a long term partner of Ubimax, a company that develops smart glasses software for enterprise use. Ubimax's xPick software is designed to facilitate a "hands-free work experience" at warehouses and manufacturing work sites. DHL used xPick (running on Vuzix M300 smart glasses) in its vision picking tests, and reported average productivity increases of 15% over several years of testing.

Vuzix and Ubimax continue to work together on contract engagements with larger companies. Recently, Vuzix announced that it was collaborating with Ubimax to deliver enterprise solutions to companies like John Deere and WS Kunststoff-Service. These projects will use modified versions of the Vuzix M300 smart glasses (running Ubimax software) to "reduce errors, optimize processes, and simplify new employee training."

Vuzix Ups Production Capacity

The recent flurry of partnership activity at Vuzix has resulted in the company upping its production capacity. The company recently finished the transition to a larger manufacturing plant in China, after initiating the process in Q2 this year. According to the company's official statements, it now has the capacity to manufacture 1500 M300 headsets and 24,000 Waveguide components per month, in line with its production targets.

In a statement, Vuzix management said that the transition lowered the company's expenses per-unit. As a result, the company is on track to realize a 33% reduction in the M300's cost.

Vuzix Raises Millions at Favorable Share Prices

Another bullish sign for Vuzix came this month as the company announced its first common stock offering in many years. Vuzix offered 1,500,000 shares at $5.75 per share, expected to result in gross proceeds of $8,625,000 before commissions and fees. Sources suggest that the shares will mainly be sold to Vuzix's existing institutional investors.

The press release explains the company is raising cash to "execute on its aggressive business plans." Specifically, proceeds will be spent on expanding the company's product line, supporting the rollout of the M300 Smart Glasses, and developing new products such as the Blade 3000.

Additionally, in early August, the company's new COO Paul Boris acquired 10,000 shares at $6.10 per share. Boris worked eight years at SAP and also served as VP of Manufacturing Industries at General Electric.

In all, major developments are underway for Vuzix in the final half of 2017, including sales and partnership developments with Toshiba and DHL, as well as preparation for the annual Consumer Electronics Show in Las Vegas on January 9-12, 2018.