Earnings call transcript: Ouster Q1 2025 results miss EPS forecast, stock rises

Ouster Inc. reported its first-quarter 2025 earnings, revealing a larger-than-expected loss per share but exceeding revenue forecasts. The company posted an actual EPS of -$0.42 against a forecast of -$0.29, while revenue reached $33 million, surpassing the anticipated $30.78 million. According to InvestingPro data, the company’s revenue growth remains robust at 33.41% over the last twelve months. Despite the earnings miss, Ouster’s stock price rose by 4.6% during regular trading and saw a further 5.2% increase in after-hours trading, reaching $9.10. The stock appears undervalued based on InvestingPro’s Fair Value analysis.

Key Takeaways

• Ouster’s Q1 2025 revenue outperformed expectations, reaching $33 million.
• The company reported a larger-than-expected EPS loss of -$0.42.
• Stock price increased by 4.6% during regular trading and 5.2% in after-hours.
• Ouster shipped approximately 4,700 sensors in the quarter.
• The company maintained a strong cash position with $171 million and no debt.

Company Performance

Ouster’s performance in Q1 2025 highlighted its ability to exceed revenue expectations despite a challenging earnings environment. The company continues to focus on innovation and product development, which has helped it maintain a competitive edge in the LiDAR market. With a beta of 2.26, the stock shows higher volatility than the market average, typical for growth companies in emerging technologies. The company reported a gross margin of 41%, bolstered by a $1.5 million patent royalty, and emphasized its commitment to scaling its software-attached business. InvestingPro subscribers can access 8 additional key insights about Ouster’s growth potential and financial health metrics.

Financial Highlights

• Revenue: $33 million, surpassing the forecast of $30.78 million.
• Earnings per share: -$0.42, compared to the forecast of -$0.29.
• Gross margin: 41%, including patent royalties.
• Cash and equivalents: $171 million with zero debt.

Earnings vs. Forecast

Ouster’s EPS of -$0.42 missed the forecast of -$0.29 by approximately 45%, marking a significant deviation from expectations. However, the revenue of $33 million exceeded the forecast by 7.2%, providing a positive counterbalance to the earnings miss. This mixed result reflects the company’s ongoing investment in growth and innovation.

Market Reaction

Despite the earnings miss, Ouster’s stock experienced a positive reaction, increasing by 4.6% during regular trading and an additional 5.2% in after-hours trading, closing at $9.10. This movement suggests investor confidence in Ouster’s strategic direction and future growth potential, particularly in light of its strong revenue performance and positive cash position. InvestingPro data reveals a significant 14.12% return over the past week, while analyst price targets range from $11 to $17, suggesting potential upside. The company maintains a healthy current ratio of 2.8, indicating strong short-term liquidity. For detailed analysis and comprehensive valuation metrics, investors can access Ouster’s full Pro Research Report, available exclusively on InvestingPro.

Outlook & Guidance

Looking ahead, Ouster expects Q2 2025 revenue to range between $32 million and $35 million. The company is focused on doubling its addressable market through new product releases and continues to invest in functional safety LiDAR and software-attached business growth. Ouster aims to maintain a gross margin of 35-40% while controlling operating expenses.

Executive Commentary

CEO Angus Vekala stated, "We are starting off the year on solid footing," highlighting confidence in Ouster’s strategic initiatives. CFO Chen Gung emphasized, "Automation is just such a strong trend," reflecting the company’s focus on capitalizing on growth opportunities in automation and robotics.

Risks and Challenges

• Potential market saturation in the LiDAR segment could impact growth.
• Macroeconomic pressures may affect consumer and business spending.
• Competitive pressures from established and emerging players in the LiDAR market.
• Supply chain disruptions could impact production and delivery timelines.
• Changes in regulatory environments affecting autonomous technologies.

Q&A

During the earnings call, analysts inquired about pricing trends, which show a gradual reduction in average selling prices (ASP). Ouster reported no significant impact from current tariffs and emphasized its focus on expanding autonomous solutions. Analysts also expressed strong interest in the company’s warehouse and robotics applications, highlighting the growth potential in these areas.

Full transcript - Ouster Inc (OUST) Q1 2025:

Conference Operator: Hello, and welcome to Alstair’s First Quarter twenty twenty five Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After today’s presentation and remarks, there will be an opportunity to ask questions.

The call today is being recorded, and a replay of the call will be available on the Ouster Investor Relations website an hour after the completion of this call. I’d now like to turn the conference over to Jim Fanucchi, Investor Relations. Please go ahead.

Jim Fanucchi, Investor Relations, Ouster: Thank you, operator, and good afternoon, everyone. Thank you for joining our first quarter twenty twenty five earnings call. Today on the call, we have Chief Executive Officer, Angus Vekala and current Interim Chief Financial Officer, Chen Gung. As a reminder, after the market closed today, Ouster issued its financial news release, which was also furnished on a Form eight ks and is posted in the Investor Relations section of the Ouster website. Today’s conference call will also be available for webcast replay in the Investor Relations section of our website.

Before I pass the call over to Angus for his opening remarks, I want to remind everyone that on this call, we will make certain forward looking statements. These include all statements about our competitive position, anticipated industry trends, our business and strategic priorities and our revenue guidance for the second quarter of twenty twenty five. Actual results may differ materially from those contemplated by these forward looking statements. Factors that could cause actual results and trends to differ materially from those contained in or implied by these forward looking statements are set forth in the first quarter twenty twenty five financial results release and in the annual and quarterly reports we file with the Securities and Exchange Commission. Any forward looking statements that we make on this call are based on assumptions as of today.

And other than as may be required by law, Ouster assumes no obligation to update any forward looking statements, which speak only as of their respective dates. In today’s conference call, we will discuss both GAAP and non GAAP financial measures. A reconciliation of GAAP to non GAAP measures is included in the financial results release that was issued today. I would now like to turn the call over to Angus.

Angus Vekala, Chief Executive Officer, Ouster: Hello, everyone, and thank you for joining us today. I’ll start with a brief recap of the quarter, an overview of the market and an update on our strategic priorities. Chen will cover our financial results in more detail before I close with some final thoughts. Our first quarter results demonstrate our commitment to continued operational execution. We reported revenue of $32,600,000 and gross margin of 41%, which includes certain patent royalty of $1,500,000 First quarter shipments exceeded 4,700 Sensors.

Our balance sheet remains one of the strongest in the industry, ending the quarter with 171,000,000 of cash and equivalents with zero debt. During the quarter, we won multimillion dollar deals across all four of our verticals. Within our smart infrastructure vertical, we expanded our relationship with Lazze Pico and signed our largest ever contract for software attached sales in Europe. Lazze will upgrade to Rev seven along with Ouster Gemini to power real time people counting, mobility analytics and perimeter protection. Within the industrial vertical, we closed a multimillion dollar deal with Komatsu, one of the world’s largest heavy equipment manufacturers, to equip their next generation autonomous mining equipment.

By replacing legacy two d LiDAR systems with short and long range REV seven sensors, we are helping Komatsu increase productivity and reduce the total cost of ownership. Within automotive, we were chosen by the mobility subsidiary of a global OEM to supply both short and long range sensors to support the development of their autonomous vehicles. Finally, in our robotics vertical, we continue to expand our relationship with the world’s largest provider of mapping and navigation. Alstro is a physical AI company leveraging our expertise in advanced perception solutions to enable intelligent real world autonomy across industries. Our digital LiDAR sensors combined with our AI software empower autonomous systems to perceive, understand, and interact with the physical world in real time.

Physical AI demands hardware and software that is not only intelligent but rugged and scalable, qualities that we embed in every product. Turning to our 2025 strategic priorities, we progressed across all three key focus areas: one, scaling the software attached business two, transforming the product portfolio and three, executing towards profitability. Starting with the software attached business. We had our strongest quarter yet, landing our largest ever contract for software attached sales in Europe. Another highlight of the quarter was our partner, Conolite, winning a five year contract with the Utah Department of Transportation to deploy REV seven and Alstair Blue City to enhance traffic flow, safety and operational efficiencies at intersections and roadways throughout the state.

The Utah DOT assessed multiple LiDAR detection systems, and our solution, in conjunction with EconoLite, received the highest overall score. In addition to Utah, we see the potential to expand into additional states as part of the United States DOT’s grant for the Connected West project. Moving to LIDAR development. We’re excited to be transforming our entire product portfolio in 2025 with new hardware, upgraded firmware capabilities, enhanced features in the Ouster SDK, and expanded software functionality. I want to share some updates on a few of these products discussed in our last call.

We continue to see robust customer interest in on sensor three d zone monitoring. For industrial and material handling operators, this firmware feature supports collision avoidance on moving vehicles with warnings, deceleration, and emergency stop. By leveraging REV seven and three d zone monitoring, we recently secured a collision avoidance program with one of the world’s largest manufacturers of material handling equipment. I’m optimistic that we will be able to further expand our industrial footprint with this feature. We are also pleased to see rapid customer adoption after the recent launch of our cloud portal for Ouster Gemini, which enables our customers to seamlessly and securely configure, manage, and view all of their LiDAR deployments through a single unified interface.

Since its launch last quarter, we already have dozens of customers managing hundreds of their sites on Gemini portal, allowing these customers to optimize their operations at any time and anywhere. With Gemini Portal, we have combined the convenience of cloud data and device management for Gemini customers for the first time, a key feature for scaling customer deployments. Gemini Portal also supports Alstair BlueCity, our turnkey traffic management solution to improve traffic management and road safety for all road users. BlueCity is the first digital LiDAR solution to leverage a deep learning model for traffic management. And in the first quarter, we achieved a major development milestone in our collaboration with NVIDIA to bring physical AI to cities around the world.

BlueCity’s proprietary AI model has now been trained on over 4,000,000 labeled objects collected from 800 sites encompassing diverse traffic patterns, intersection designs, and environmental conditions using NVIDIA’s advanced computing technology for real time inference at the edge. Deep learning offers significant advantages over classical algorithms, including improved generalization, persistent object detection, and continuous improvement. This expands upon Ouster’s long standing relationship with NVIDIA, including our integration with NVIDIA DRIVE for autonomous vehicles, NVIDIA Isaac for industrial and robotics, and the NVIDIA Metropolis ecosystem for smart city applications. In addition to reaching new milestones and shipping new firmware and software products, our next generation l four and Cronos custom silicon remain on track to bring significantly improved performance, reliability and security to the Ouster product family. Recent conversations with leading automotive and industrial accounts reinforce the value of our digital ADA road map, and we estimate these innovations will more than double our current addressable market.

Finally, our solid first quarter results represent another step in our execution towards profitability. We continue to align with our long term framework of 30% to 50% annual revenue growth, maintaining gross margin of 35% to 40% and operating expenses at or below third quarter twenty twenty three levels, irrespective of the patent royalty. Last week, we announced the appointment of Ken Gianella as Chief Financial Officer, effective May 19. Ken was most recently the CFO and COO at Quantum Corporation and has extensive operations and finance experience in the technology and communications industries with both public and private companies. I am confident he will have a positive impact on I also want to thank Chen, who will remain with Auster in his expanded role as Senior Vice President of Strategic Finance and Treasurer for leading the finance group through this transition period.

I’ll now turn the call over to Chen, who will provide more context on our first quarter financial results.

Chen Gung, Interim Chief Financial Officer, Ouster: Thank you, Angus, and good afternoon, everyone. In the first quarter, we shipped approximately 4,700 Sensors and recognized $32,600,000 in revenue. The industrial vertical was the largest contributor to first quarter revenue followed by automotive. We shipped large volume deals to support applications in warehouse autonomy, robotaxi and yard logistics. First quarter gross margin increased by 1,200 basis points year over year to 41%.

Gross margin strength reflects the benefit of higher revenues, favorable product mix and the patent royalty. As Angus stated, our first quarter results include approximately $1,500,000 in patent royalty following a confidential legal ruling. This had a positive impact of approximately 300 basis points on GAAP and non GAAP gross margin. We continue to view 35% to 40% as an appropriate annual gross margin target for the business. For purposes of preparing and presenting our second quarter guidance, we have assumed that we will not have any material revenue from patent royalty.

GAAP operating expenses of $37,000,000 in the first quarter were up 12% over the prior year. The increase was primarily driven by higher litigation expenses. We expect operating expenses to fluctuate on a quarterly basis, largely due to the timing of R and D project spending and litigation costs and remain committed to keeping our operating expenses at or below third quarter twenty twenty three levels. Our balance sheet remains among the strongest in the industry with cash, cash equivalents, restricted cash and short term investments of $171,000,000 at March 31. During the first quarter, we did not receive any proceeds from our ATM.

We are pleased with our cash burn rate in the first quarter, which reflects our strong operational execution and prudent balance sheet management. Finally, a quick note on the geopolitical and macroeconomic environment. The landscape is fluid and we have worked diligently to assess the effect of tariffs on our costs. We are partnering with our customers to mitigate the impact of these changes. Based on what we know today, we do not expect the currently proposed tariff levels to prevent us from achieving our long term framework.

However, there remains a large degree of uncertainty and we are currently unable to predict how the demand drivers will play out for the rest of the year. Moving to guidance. For the second quarter, we expect to achieve revenue between 32,000,000 and $35,000,000 I’ll now turn

Angus Vekala, Chief Executive Officer, Ouster: the call back to Angus for his closing remarks. Thanks, Jen. We are starting off the year on solid footing, delivering our ninth consecutive quarter of meeting or exceeding our guidance and making meaningful progress on all three of our 2025 goals. We remain focused on executing towards profitability through the combination of consistent revenue growth, strong gross margins and stringent control of operating expenses. I’m encouraged to see our business expanding with multimillion dollar awards from existing customers to support the scaling of their commercialization efforts.

We’re also seeing a growing number of long standing Tier one customers commit to Ouster for their multiyear production and delivery schedules. The thousands of sensors shipped each quarter and a growing installed base of connected software solutions underscore our customers’ confidence in both our product performance and long term road map. These real world applications exemplify the accelerating adoption of physical AI. Ouster Digital LiDAR combined with AI software enables machines to perceive, understand, and interact with the physical world in real time. From bustling cities and remote farms to mines, ports, and global supply chains, Alstair is bringing physical AI to life.

With that, I’d like to open up the call for Q and A.

Conference Operator: Your first question comes from the line of Richard Shannon from Craig Hallum Capital Group LLC. Please go ahead.

Richard Shannon, Analyst, Craig Hallum Capital Group LLC: All right. Thanks, Agus and Chen, for taking my questions. First one I want to ask is on gross margins. If I look at the pro form a number here, excluding the patents revenues, you’re about 43%. This is the third straight quarter you’ve had above 40%, which is above your 35% to 40% framework here.

And while you haven’t delineated the software contribution to that, I got to believe it’s at least noticeable at this point given your bookings have been good in this area. So I guess I’m wondering why we haven’t seen that gross margin framework move up here. And I guess I’d want to delve into a couple of ways that maybe you’re thinking about. And if you could address it, that would be great. Is there some sort of mix dynamics you’re expecting in the future, like with automotive, that could break that down?

And I think you’ve been clear on what you expect there. Does this give you some room to lower ASPs while keeping that same margin range? Or are you worried about tariffs? Maybe you could just discuss how those bleed into and why we’d see that framework go up at least at some point in time.

Chen Gung, Interim Chief Financial Officer, Ouster: Hey, Richard, this is Shannon. It’s a good question. We’re very pleased with the margin performance of the business. We have been trending towards the higher end of our range in the past few quarters. So I would note 35% to 40% we look at on a GAAP basis.

So when you look at our GAAP gross margins adjusted for some of the one time items that we have seen in the past few quarters, we are at the high end of the range. And we do believe that that is still an appropriate range for the business. On the software contribution side, we’re pleased with the tailwinds that we are seeing in software. What we have said is when it becomes a significant part of the business, we will break it out for additional clarity. And so we’ll continue to work on our software efforts.

And when it’s time to give you some additional detail, we’ll give it at that time.

Richard Shannon, Analyst, Craig Hallum Capital Group LLC: Okay, great. Well, I look forward to seeing that. You guys have done an excellent job in that regard. My second question is regarding the new products. And I know you, Angus, you mentioned this in your prepared remarks, at least last quarter, perhaps before, but I certainly remember last quarter, when you’re talking about new products enabling you to double your TAM here.

And specifically in your remarks today, talked about, I think, conversations in the, I think, automotive and industrial markets that add a little bit more detail to that. So I guess I’m wondering if you could talk to the improvements with the new L4 and Cronos chips are going to give you. And what specific areas should we expect to see TAM expansion? And over what time should we see that happen?

Angus Vekala, Chief Executive Officer, Ouster: Yeah. Thanks for the question. And I’m gonna talk a little probably in more generalizations than than you might want, and there’s good reason for it. We don’t want to talk about unreleased products before they’re real. But, you know, what you’re hitting on is, while we don’t talk publicly about released products, we are able to communicate the incredibly compelling road map that we have to our long standing and important tier one customers, on a confidential basis.

And, you know, the product releases, some are some are imminent enough, you know, in the next year that we’re we’re able to we’re starting to use that to move customers that are looking for a particular set of features, reliability, ruggedization, functional safety certifications, these kinds of things, that are looking for those in order to move into production, communicate those and kind of cement a longer term relationship with the customer that already may be a long term relationship, but one that needs to move into production. So, you know, I see I see the the coming product releases as the most significant, most transformational set of product releases in the company’s history, roughly a doubling of our addressable market. And we’re already seeing some of that impact again, positive impact where we’re able to share our road map behind closed doors with our most important customers. So a lot more to come on that, but definitely positive, positive signals coming from the road map conversations.

Richard Shannon, Analyst, Craig Hallum Capital Group LLC: Great. Thanks for that detail. I will jump out of the queue.

Conference Operator: Our next question comes from the line of Colin Roche from Oppenheimer. Please go ahead.

Colin Roche, Analyst, Oppenheimer: Thanks so much, guys. Could you talk a little bit about, the testing process that you’re going through with some of these new customers and how it’s translating into, new awards. You know, as as you go a little bit deeper with some of these folks, I assume that that process gets a little bit faster, and that you’re able to accelerate some of the production orders.

Angus Vekala, Chief Executive Officer, Ouster: Yeah. So, that’s a great question. Thanks, Colin. So the, when you’re saying a testing process, so there’s testing we we do testing with customers basically on an ongoing basis. Every time we release new firmware, new hardware, new software in Gemini or BlueCity, there’s a certain set of customers that wanna take immediate advantage of of that new capability.

So, that’s one of the ways that we build these kind long long standing and trusted, relationships with customers is through the that testing that just happens all the time. And I think what we’ve seen is in with with some of the releases we just had, like the zone monitoring, feature set that we we announced last last quarter and now now we have at some customers, it’s, we’re testing features that allow customers to move into production for the very first time. So it might be a feature like a ruggedization spec, or a an environmental spec, or a dust penetration capability or a zone monitoring feature that is a is a requirement of a company, you know, let’s say it’s a logistics robotics company or a company like Komatsu that that has been working with us for many years, has developed a robust autonomy stack, but needs to check the box on a final couple of features. And and we’re down to, I’d say, that final couple of features with a lot of customers. And so that testing is proving that they can check those final boxes and expand the scope of their autonomy R and D development into a production type scale.

So and that’s a big part of the strategy and the growth outlook for Alstair is that we have so many of these customers’ pans in the fire, baking over the last couple of years, and now we’re moving tranches of them into production. So that’s going to fuel our growth for years to come. And it’s great to be able to communicate about some really high quality customers like Komatsu on this earnings call. I think there’s gonna be more like that to come, given all the activity we’re seeing behind closed doors.

Colin Roche, Analyst, Oppenheimer: Amazing. And then just, in warehouse automation specifically, can you just give us an update on how close you are to fully validating functional safety, and how how quickly that full validation could trigger some new orders? And that’s it for me. Thanks.

Angus Vekala, Chief Executive Officer, Ouster: Yeah. So the the functional safety, certifications and capability is, is important and coming in future products that we’re releasing. We’re not giving a lot of detail there, but it’s a major focus of future products coming from Ouster. Now the value that we bring is that, traditionally, we play in a nonfunctionally safe LiDAR space, meaning that you need to, as a customer of Ouster, if you’re using our products and you wanna use them in, places where you need to protect human lives, you need to go through your own certifications and usually build redundancy into your system adjacent to the LiDAR. With functionally safe LiDAR, we can tap into new markets, that rely solely on the LiDAR itself to provide that safety for humans in and around the vehicle.

So the customer can side set step a safety certification or cost and time associated with the system level certification. There’s a huge amount of value there. There’s a huge established market for functionally safe LiDAR, and we’ve been investing in this for a long period of time. So as to when that will make a major impact on Alstair’s business, it’s coming, but we’re not committing to a particular time line. But given the immense opportunity, there’s a huge focus internally here on it.

Conference Operator: Our next question comes from the line of Casey Ryan from Westpark Capital.

Casey Ryan, Analyst, Westpark Capital: There’s a lot of exciting things to talk about here for the quarter. You mentioned Chen, you mentioned robotaxis being an area. Could you guys give any color on the region? If it’s sort of global robotaxi opportunities in North America or Europe or any sort of color around what that category means, you know, as we move forward in 2025?

Chen Gung, Interim Chief Financial Officer, Ouster: Hey, Kacine. That’s a good question. Yeah. So historically, we’ve talked about a couple of our robotaxi customers, emotional

Casey Ryan, Analyst, Westpark Capital: being one

Chen Gung, Interim Chief Financial Officer, Ouster: of them, availability being another. I think generally robotaxi as a as an industry as a trend has accelerated over the past twelve months, especially in San Francisco. You see them utilized on a daily basis. It’s becoming real a real example of physical AI. And so we continue to support that trend, it’s part of Altair’s ability to make, physical AI happen.

Casey Ryan, Analyst, Westpark Capital: Okay. And so emotional and AI, I think, are are sort of North American centric, if that’s fair to say. Is that

Angus Vekala, Chief Executive Officer, Ouster: Yeah. So that’s

Chen Gung, Interim Chief Financial Officer, Ouster: with your view?

Angus Vekala, Chief Executive Officer, Ouster: Yeah. So right now, I mean, those are two two of our high profile named robotaxi customers. We have some robotrucking customers, but largely, we’re tapping into a North American market. The other big market for robotaxis is Chinese robotaxi market. We really don’t play in that space for a variety of reasons.

But we feel we’re well positioned in North America. We have some marquee customers there. And, you know, there’s some positive tailwinds for those customers. I saw just, I think, last week, May announcing a contract with Uber to get onto their network and and expand their offering. So, you know, robotaxis are seeing some positive trends.

We’re partnered with some of the best companies in the space and, looking to expand our reach through them and and to new new partners all the time.

Casey Ryan, Analyst, Westpark Capital: Okay. Terrific. Terrific. You guys also called out warehouse, which is really, you know, obviously a large opportunity and and, like, a really great space. There are lots of different types of equipment in in sort of the warehouse space.

Should we think about all of those as being opportunities for Ouster, or can we narrow it down to categories, say, forklifts or sort of loaders, unloaders, AGVs, you know, sort of these automated things or moving pallets around? And then I guess I’m also curious, like, is there an opportunity in these things that have a humanoid form factor that may or may not be impactful in warehouses in the next, you know, twelve months, but sort of are all those form factors opportunities for Ouster, or are there specific categories where where we should sort of spend our time looking?

Angus Vekala, Chief Executive Officer, Ouster: Yeah. So, I mean, the a warehouse a modern warehouse is a bustling hive of activity, and there are many different machines, some autonomous, many driven by a human, all of which are benefiting from increasingly capable and flexible autonomy, that is largely, you know, coupled or or enabled by LiDAR sensors. And some of them, like driver assistance systems, that, significantly reduce accidents in a warehouse even for human operated vehicles. So and we play across all these applications. I mean, this is this is the core of the the thesis at Ouster is that, you know, autonomy is a is a diverse set of applications that span the entire logistics supply chain of of the globe.

And it’s all getting automated or, being improved with its assistance systems. And Ouster is incredibly well positioned to capture all of that that that activity. So, you know, humanoids is kind of the leading edge of the the logistics automation in the warehouse. We do have some humanoid customers. You can see some some examples of our sensors on some humanoids.

I think that’s still you know, it’s unclear what the business model and the timeline for human humanoids are, so I’m not expecting the adoption of that those those devices to kind of drive Oster’s business. But, the good thing is that there is so there’s such an obvious, cost benefit, for driving more automation into a warehouse, filling labor shortages with automation, and improving safety with assistance features that you talk to any warehousing, robotics or OEM equipment manufacturer, and they have an automation strategy. And, you know, Alstair is doing a really good job of blanketing this market. Good example is we were at ProMat just last month, I think, which is a major material handling conference in The United States, and Alstor sensors were on all manner of vehicles and platforms there. So just showing the the great job we’ve had in covering that market.

So tons of opportunity. It’s one of those practical uses of physical AI, today with a clear ROI and tech technology stack that actually works.

Casey Ryan, Analyst, Westpark Capital: Yeah. Okay. Well, that’s actually helpful and very, very encouraging. Kind of the last thing I wanna you know, I know we’re all eager to sort of get a software hardware breakout and sort of dig into the impacts, you know, around margins. But what can you say trend wise about sort of just where you’ve had just sensor sales or sort of sensor pricing?

What would you call the environment, I guess, as we get into a little bit higher volumes? Would you say that pricing’s been stable or sort of a natural curve where we see some price reductions? And then as you refresh the product line, does that kind of change what path all that pricing takes?

Angus Vekala, Chief Executive Officer, Ouster: Yeah. So, I mean, generally, prices go down, not up.

Chen Gung, Interim Chief Financial Officer, Ouster: Right.

Angus Vekala, Chief Executive Officer, Ouster: And we wanna see that. I mean, I’m I’m focused as much on maintaining gross margins as making sure that our revenue and our unit shipments are growing. And unit shipments, really, in a healthy business where the technology is working for customers, you generally wanna see unit shipments, rise faster than revenue. And I think we’ve been able to to show that as a business, though though yeah. We’ve been able to show that as a as a business.

So so that that yeah. Whenever you’re, increasing unit shipments faster than revenue, there’s a good chance that ASPs are dropping. Now, of course, we have a software attached business that’s making it a little more difficult to pull out the numbers. But suffice it to say, like, we think we’re managing the ASP trend well. Here, there’s a lot of stickiness, in LiDAR, and so there’s a lot of kind of relationship building and things that get priced into the value of a LiDAR system that, so it’s not just a commoditized piece of hardware where it’s pure pricing discussion.

So, but but there’s also opportunities to unlock new use cases and new markets by offering lower pricing. And I think we’re we’re in a position to do that each and every year that we also lower our cost. And that’s that’s what we’ve been shown we’ve been able to do. So, I don’t think there’s anything, you know, any fundamental change to pricing that’s coming down the line, like, we’re doing a good job managing this and enabling our customers’ applications. Because ultimately, they need to be commercially successful, and some of that does come back down to the cost of their

Chen Gung, Interim Chief Financial Officer, Ouster: platforms. Yeah. Casey, the only thing I would add to the latter half of your question, the impact of future technology certainly does have something to do with ASPs. What you’ve seen Alstair able to accomplish in the past two years since we’ve rolled out Rev seven is we’ve actually seen our ASPs increase given that customers are able to extract more value proposition out of the product offering that we are providing. And so we have been generally consistent with our expectation that ASPs do decline over time, but our ability to introduce new technology, new revisions to our product, new features does have a tailwind in terms of supporting our ability to to price a value proposition to our customer.

Casey Ryan, Analyst, Westpark Capital: Yeah. And, like, I think, certainly, you know, sort of from the analyst perspective. Right? We’re sort of Angus, as you allude to sort of, you know, ASP price drops could actually be really encouraging when units start to jump. Right?

And there’s some, you know, basically halo effect around that, and that all could be, maybe enabling. It doesn’t sound like price is a barrier to adoption at this point. It’s sort of one conclusion that, like, I’m trying to drive to from this conversation, which is, you know, our sensors aren’t limiting people’s demand. It’s sort of an evolution of technology. And, you know, as people get the volume, you guys sound like you’re well positioned to to sort of meet that demand, I guess, from a price you know, hardware price component, I guess, perspective.

Angus Vekala, Chief Executive Officer, Ouster: That’s right. That’s right. For the majority of our customers, the economics are not what is holding back them expanding their volumes. That’s a good conclusion.

Kevin Garrigan, Analyst, Rosenblatt Securities: Right. Yeah.

Casey Ryan, Analyst, Westpark Capital: Yeah. Okay. Great. Thank you. A lot of exciting things.

Great quarter, and thanks for taking my questions.

Conference Operator: Your next question comes from the line of Kevin Garrigan from Rosenblatt Securities. Please go ahead.

Kevin Garrigan, Analyst, Rosenblatt Securities: Yes. Hey, Angus. Hey, Chen. Thanks for taking my questions, and congrats on the strong results. Angus, you talked earlier about having a lot of pans in the fire and you announced a few new multimillion dollar deals recently.

Is LiDAR adoption kind of happening faster than you would have thought maybe a year or two ago? Or has it been pretty much on par with what you’re thinking?

Angus Vekala, Chief Executive Officer, Ouster: Well, that’s a good question. I’m nearing my ten year anniversary at Ouster. So I think you have to be impatient to run a company like this and keep pushing. And so there’s one side of things where we all thought we were going to riding around in, like, flying cars that were autonomous in 2018, and that didn’t happen. But on the other hand, we are tracking to our long term model, our revenue growth, and seeing just a ton of positivity in the field of autonomy, in the field of physical AI, what’s going on with NVIDIA, with edge capability, with the advancements in AI, are making these systems more capable, more affordable, and faster to market.

And so there’s definitely a lot of positivity, and that’s underpinning Alstair’s entire business. So nothing can ever happen fast enough. And yet, I also think we’re doing everything we can to speed things along with our investments in software and the SDK and peripheral features and the support we provide our customers. So I think we’re doing maximizing the speed that things are being adopted, And it’s nothing but kind of a positive outlook for the entire industry.

Kevin Garrigan, Analyst, Rosenblatt Securities: Yeah. That makes a ton of sense. Okay. Great. And then, Chen, you mentioned you’re not seeing any impacts from tariffs at the moment.

But I’d just love to hear any commentary from customers you can give on whether they’re just kind of going about business as usual because things are so fluid and whatever kind of happens, happens? Or are they trying to readjust strategy at all? Anything you’re hearing about how customers are looking at this market would be great.

Chen Gung, Interim Chief Financial Officer, Ouster: Yeah, sure. It’s a good question. We were just talking about this earlier today. We honestly haven’t seen much disruption to our business because of the tariffs. There might be some minor things moving here and there, but overall, I think automation is just such a strong trend.

And again, it goes back to the value proposition that we provide with our hardware, with our software where you know, these tariffs at the current level are not significantly impacting the business. Difficult to predict how things evolve from here, but we feel pretty confident that we’ll be able to execute the business plan with the status quo.

Kevin Garrigan, Analyst, Rosenblatt Securities: Okay. Great. Thanks, guys.

Conference Operator: Our final question comes from the line of Richard Shannon, Craig Hallum Capital Group LLC. Please go ahead.

Richard Shannon, Analyst, Craig Hallum Capital Group LLC: Hey, guys. Thanks for letting me ask a follow-up, and I just have one here. I can’t remember how long it’s been since we’ve heard this question on the call, but I always love to get your thoughts here from the competitive dynamic here. So I’ve seen a lot of other lighter companies have been focused in the automotive space for a long time and have seen the difficulty there in the last year or two and obviously, we’ve been focused their businesses in other markets where you’ve been there frankly since the beginning here. Wondering, Angus, if you’re seeing any changes in competitive dynamics here with other companies who used to be in those spaces primarily now coming into your nonautomotive markets and how you’re responding to that.

Angus Vekala, Chief Executive Officer, Ouster: Yeah. Well, first, I’d love to point out that Alstair has continued to be correct in our thesis that there has been plenty of time to develop automotive LIDAR solutions, given the pace of automotive or LIDAR adoption in the automotive industry. It’s been our founding thesis, diversifying into other industries and being around to be able to be ideally a major player in the automotive industry in the future. So that’s still on track. When it comes to our auto centric competitors maybe rethinking their strategy and moving into our diverse verticals, I mean, I really haven’t seen their fits and starts.

I think each and every earnings cycle, one of our competitors has kind of a refresh of their perspective and some announcement about moving into adjacent industries. But I’ve never seen the consistent push quarter after quarter required to develop ground up solutions, ground up hardware, ground up software, ground up commercial efforts to be a long term player in this space. So may change in the future. I’m surprised, frankly, that there hasn’t been more of a pivot as, I mean, I think Alstair has emerged as a leading player in diverse end markets. But so far, it just fits and starts from, I think, our competitors.

Richard Shannon, Analyst, Craig Hallum Capital Group LLC: Okay. Appreciate that perspective, Angus. That’s all for me. I

Conference Operator: will now turn the call back over to Angus Pakola for closing remarks.

Angus Vekala, Chief Executive Officer, Ouster: All right. Well, thanks, everyone, for joining the call. We look forward to speaking with you all again next quarter. Thanks, and have a good day.

Conference Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect. Please wait. The conference will begin shortly.

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