Earnings call transcript: Ouster’s Q2 2025 results show revenue beat, stock surges

Ouster Inc. (OUST), with a market capitalization of $1.2 billion, reported its second-quarter earnings for 2025, revealing a revenue beat and an unexpected earnings per share (EPS) loss higher than anticipated. The company posted a revenue of $35.05 million, surpassing the forecasted $33.57 million, marking a 4.41% surprise. The EPS came in at a loss of $0.38, missing the forecast of a $0.29 loss, representing a 31.03% negative surprise. Following these announcements, Ouster’s stock surged 20.17% in premarket trading, reflecting positive investor sentiment despite the EPS miss. According to InvestingPro, the company maintains a "Fair" overall financial health score of 2.08 out of 5.

Want deeper insights? InvestingPro has identified 11 additional investment tips for OUST, including key metrics on profitability outlook and financial stability.

Key Takeaways

• Ouster’s revenue exceeded expectations by $1.48 million, driven by strong sensor shipments.
• The company reported a significant EPS loss, higher than forecasted, but investors reacted positively.
• Gross margin improved by 11 points year-over-year, reaching 45%.
• Stock price increased significantly in premarket trading, indicating market confidence.
• Ouster is expanding distribution channels and investing in AI and next-generation silicon.

Company Performance

Ouster showcased robust performance in Q2 2025 with a 30% year-over-year revenue growth and a 7% sequential increase. The company shipped a record 5,500 sensor units, contributing to its revenue beat. Despite the higher-than-expected EPS loss, the company’s strategic investments in AI and silicon development, along with expanding distribution channels, were well-received by the market.

Financial Highlights

• Revenue: $35.05 million, 30% YoY growth
• EPS: -$0.38, compared to a forecast of -$0.29
• Gross Margin: 45%, up 11 points YoY
• Operating Expenses: $43 million, 24% YoY increase
• Cash and Equivalents: $229 million

Earnings vs. Forecast

Ouster reported an EPS loss of $0.38, which was larger than the forecasted loss of $0.29, resulting in a 31.03% negative surprise. Despite this, revenue outperformed expectations by 4.41%, driven by strong product shipments and market expansion.

Market Reaction

Following the earnings release, Ouster’s stock rose by 20.17% in premarket trading, reaching $27.76. This surge reflects investor optimism about the company’s growth trajectory and market positioning. The stock’s movement contrasts with its 52-week low of $5.84 and high of $31.77, indicating a strong recovery and confidence in future performance.

Outlook & Guidance

For the upcoming quarter, Ouster projects revenue between $35 million and $38 million, maintaining a target gross margin of 35-40%. The company aims for a 30-50% annual revenue growth, supported by continued investment in AI and silicon advancements.

Executive Commentary

CEO Angus Pakala stated, "We have transformed from a LiDAR manufacturer to a physical AI company," highlighting the strategic shift and innovation focus. He further emphasized, "Our technology roadmap will bring the largest transformation to Ouster’s product portfolio in our history," underscoring the company’s commitment to innovation and market leadership.

Risks and Challenges

• Supply Chain Issues: Potential disruptions could impact production and delivery timelines.
• Market Saturation: Increasing competition in the LiDAR and AI sectors.
• Macroeconomic Pressures: Economic downturns could affect demand for Ouster’s products.
• Regulatory Changes: New regulations in key markets could impact operations.
• Technological Advancements: Keeping pace with rapid technological changes is crucial for maintaining competitive advantage.

Q&A

During the earnings call, analysts inquired about the transition to the L4 platform, with management highlighting its gradual implementation. Questions also focused on the defense market, where Ouster sees emerging opportunities. The company addressed its pricing strategy, emphasizing alignment with customer business models and flexibility across different sectors.

Full transcript - Ouster Inc (OUST) Q2 2025:

Conference Operator: Hello, and welcome to ABRSAIR Second 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 completion of this call. I would now like to turn the conference over to Chen Geng, Senior Vice President of Strategic Finance and Treasurer.

Please go ahead.

Chen Geng, Senior Vice President of Strategic Finance and Treasurer, Ouster: Thank you, operator, and good afternoon, everyone. Thank you for joining our second quarter twenty twenty five earnings call. Today on the call, we have Chief Executive Officer, Angus Pakala and Chief Financial Officer, Ken Gianella. 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 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 2025. 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 second 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 Pakala, 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. Ken will cover our financial results in more detail before I close with some final thoughts. Ouster delivered strong second quarter results with revenue just over 35,000,000 above the high end of guidance with a solid gross margin of 45%. This performance was driven by record sensor shipments, which surpassed 5,500 units in the quarter, bringing physical AI to life across logistics, industrial, and smart infrastructure sites around the world.

We finished the second quarter with a robust balance sheet of $229,000,000 of cash and equivalents and no debt, underscoring our continued financial strength. Proven in the field, our LiDAR solutions are enabling intelligent real world autonomy across industries and driving tangible improvements in safety, efficiency, and sustainability. Our strategic investments in AI algorithms and data training infrastructure are enabling new capabilities to unlock significant commercial opportunities. One of our longtime customers has deployed Ouster Gemini at hundreds of facilities and driven by performance improvements from new Gemini AI algorithms, this customer is now testing new high value use cases, which require more than quadruple the number of sensors per site. Our ability to land and expand deals was a highlight during the quarter as we continue to convert customer pilots into large volume orders as they roll out deployments or move into production.

In smart infrastructure, we successfully converted a pilot program with a Fortune 500 technology company into a multimillion dollar global deployment. We are installing OS Dome sensors in their retail locations worldwide to provide powerful analytics while ensuring personal privacy. With over 500 locations in more than two dozen countries, we see tremendous potential for future growth. In our industrial vertical, we are partnering with an ag tech company to power autonomous mowing and precision application of crop protectants. We have worked with this customer for multiple years, helping them transition from prototypes equipped with Velodyne sensors to larger volumes powered by the OS zero.

In Asia, we are installing our OS one sensors on smart cranes to increase throughput at one of the continent’s busiest container terminals. We also continue to solidify our competitive mode. During the quarter, Ouster’s OS1 became the first and the only three d LiDAR sensor to be approved for blue UAS and certified by the US Department of Defense for use in unmanned aerial systems. This sets Ouster apart as a trusted solution for government applications and positions us well to benefit from the US government’s efforts to strengthen the domestic industrial base for critical technologies and promote trustworthy supply chains. For example, we recently won a pilot program for the OS one, OS dome, and Oster Gemini to provide perimeter security for a US army base, and our technology is already deployed in systems used by the United States Navy, NASA, and National Labs.

Looking ahead, we anticipate continued momentum driven by powerful secular tailwinds. Recent legislation has unlocked billions in federal funding dedicated to accelerating the deployment of autonomous and intelligent systems across defense, transportation, and industrial sectors. We are uniquely positioned to capture this demand to enhance critical systems for government, defense, and civil infrastructure institutions worldwide. We are seeing similar trends play out in Europe and Indo Pacific with increased adoption of our technology for US allied defense and infrastructure applications. Turning to our 2025 strategic priorities, we progressed across all three key focus areas, scaling the software attached business, transforming the product portfolio, and executing towards profitability.

Starting with software attached business. In 2026, the world’s most watched sporting event is coming to The United States, the FIFA World Cup. We won an award to deploy Oscar Rev 7 and Blue City across dozens of sites at a World Cup host city to bring real time on demand traffic data to reduce congestion and improve safety for visiting fans. We also recently expanded an agreement to meet demand from Utah Department of Transportation to bring Ouster Blue City to nearly 100 intersections across the state to enhance traffic flow, safety, and operational efficiencies. A key focus this quarter was to expand our distribution channels, and we made significant progress for both our smart infrastructure and security solutions.

We signed three exclusive partnerships to bring BlueCity to major markets such as Texas, Michigan, New York, and Pennsylvania. With these key additions, our BlueCity partnership network now spans 39 states and gives us a direct line of sight to capture the vast nationwide market of over 300,000 signalized intersections. For Ouster Gemini, we formalized a partnership with one of the world’s largest security integrators. This agreement will support deployments into some of the world’s most critical and high value security sites where the global market for end system security cameras is already in the tens of billions. Moving to product development.

Alstergemini and BlueCity are delivering AI solutions to solve our customers’ most complex challenges through powerful new software features and major performance improvements. We implemented advanced actuation for Ouster BlueCity that enables filtering for additional subclasses and objects, allowing our customers to control their traffic systems with additional rule based nuances. We also added three d event recording, which allows customers to automatically record and review safety incidents without disclosing personally identifiable information. These features leverage BlueCity’s proprietary deep neural network that has been trained on more than 4,000,000 labeled objects collected from 800 sites and runs on NVIDIA Jetson and Orin system on modules for real time inference at the edge. Turning to our Gemini platform.

We made significant improvements in core perception and ease of deployment. One of the most complex challenges in perception is maintaining stable object tracking over long periods of time. To solve this, Ouster Gemini now features a breakthrough multisensor AI model that fuses point clouds together in the early stages of the perception pipeline for improved accuracy. Ouster Gemini now delivers significantly improved long term object identity persistence, a critical requirement for many customer applications. We also launched the Gemini Event Server to accelerate customer adoption and reduce deployment time and cost.

This is a powerful no code environment with built in logic modules, enabling our customers to easily build and deploy their own automated solutions for applications like intrusion detection, proximity monitoring, and zone occupancy tailored to their business needs. During the quarter, we progressed on engineering bring up of our next generation l four and Kronos custom silicon. These investments will unlock a new era for our products, including major performance, security and reliability gains for the OS product family and the introduction of the solid state digital flash or DF line. Early customer feedback reinforces our belief that these innovations will more than double our current addressable market and represent the most significant product cycle in Oster’s history. Finally, our excellent second quarter results keep us on path to meet 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.

Before turning to our financial results, I’m delighted to welcome Ken Gianella as our new Chief Financial Officer. Ken brings a wealth of experience and a proven track record of financial leadership to Ouster and is already instrumental in driving our financial strategy and supporting our growth initiatives. Ken, welcome and please go ahead.

Ken Gianella, Chief Financial Officer, Ouster: Thank you Angus and good afternoon everyone. I’m thrilled to join Alstair at an exciting moment in the company’s journey and I look forward to working with Angus and the team towards Alstair’s continued success. Turning to slide nine in the presentation, I will now give an overview of our second quarter twenty twenty five results. First, we shipped a record 5,500 sensors in Q2 and generated just over $35,000,000 in revenue. These results are right at the high end of our guidance range.

Revenue growth was 30% year over year and 7% sequentially. Adjusting for the impact of patent royalty in the first quarter, sequential revenue growth was 13%. The industrial vertical was the largest contributor to second quarter revenue, followed by automotive. We shipped large volume deals to support applications in warehouse autonomy, robotaxi, yard logistics and defense. GAAP gross margin in the second quarter increased by 11 points year over year to 45%.

Gross margin strength reflects the benefit of higher revenue, product mix and favorable employment tax refund. The refund had a positive impact of approximately five points on GAAP gross margin. While we are pleased with our operational execution this quarter, we continue to view 35% to 40% as an appropriate annual gross margin target for the business. Next, GAAP operating expenses were $43,000,000 in the second quarter, up 24 over the prior year. The increase was primarily driven by higher stock based compensation and litigation expenses.

We remain vigilant on managing our operating expenses as we execute the business. While we do anticipate expenses fluctuating on a quarterly basis, these are largely driven by investment in our innovation, our go to market execution, and other one time investment in costs. Ulster is committed to our growth strategy and maintaining a disciplined path towards profitability. Next, turning to our balance sheet. Cash, cash equivalents, restricted cash, and short term investments were $229,000,000 at June 30, which includes approximately $59,000,000 of net proceeds from our ATM.

While we retain access to capital markets, we are comfortable with our current cash position within the context of our execution of our business plan. Finally, we continue to actively manage the challenges of the current geopolitical and macroeconomic environment, specifically around our supply chain and tariffs. The landscape remains fluid, but we are fortunate to have close relationships with our customers and our partners as we navigate the potential impacts. As I stated earlier, we continue to view 35% to 40% including the impact of any tariffs we may have as an appropriate annual gross margin target for the business. We will continue to work diligently to manage the situation as we assess potential near and long term impacts on our operations and our margins.

Moving to guidance on slide 10. For the third quarter, we expect to achieve revenue between $35,000,000 and $38,000,000 Before I hand the call back to Angus, I just want to reiterate how excited I am about the opportunity for Alster and how pleased I am to be able to contribute to the company’s success. I look forward to getting out this quarter and meeting our stakeholders. Thank you for your time. And I’ll now turn the call back to Angus for his closing remarks.

Angus Pakala, Chief Executive Officer, Ouster: Thanks, Ken. I’m proud of our team for delivering a record quarter as Ouster continues to drive the accelerating adoption of physical AI. We have now delivered 10 of revenue growth and meeting or beating our guidance. This is particularly fitting as we recently celebrated Ouster’s ten year anniversary. We have transformed from a LiDAR manufacturer to a physical AI company, adding software solutions to our industry leading hardware portfolio to enable intelligent real world autonomy across industries.

I am proud of our performance and achievements to date, but our most exciting chapter is just beginning. Our technology roadmap will bring the largest transformation to Ouster’s product portfolio in our history, taking us into larger markets and more use cases than we’ve ever had. We’re at the forefront of a monumental market transformation driven by LiDAR. And as our customers scale from prototype testing to commercial production, we are well positioned for continued growth. Our story is just getting started, and we have the team, customers, and strategy to be a leader in physical AI.

With that, I’d like to open the call for q and a.

Conference Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Our first question comes from the line of Colin Rusch with Oppenheimer. Please go ahead.

Colin Rusch, Analyst, Oppenheimer: Thanks so much. And guys, congratulations on all the progress. As you get into the latter part of the year and start getting ready to ship commercial volumes of the L4 chip, can you talk about that

Angus Pakala, Chief Executive Officer, Ouster: Apologies, sound cut off on the question. Okay.

Colin Rusch, Analyst, Oppenheimer: Sorry for the trouble guys. Just want to get a sense of how quickly as you move the start ramping the L4 platform that you’re going to be able to start moving customers onto that platform and really transition to the lower cost modules.

Angus Pakala, Chief Executive Officer, Ouster: Yeah, absolutely. So I mean, so the good thing is, Colin, that we’ve been through this before many times. The L4 is the fourth generation of our silicon. And there’s a huge opportunity behind it and we want to make sure that it’s both the future for new opportunities and doubling the TAM of the company with its release, but also that it’s if we provide a smooth transition, like you said, for existing customers to move into greater scale, more applications, kind of land and expand opportunities with existing customers. Historically, we have many customers, probably roughly half our customer base that takes a year to transition from one iteration to the next.

And we’re generally complete with a product transition, let’s say from Rev six to Rev seven being the most recent in about two years. It’s going to be a little different though with REV seven to REV eight. We’ve been we provided more heads up for our customer base and more long term commitments around how we manufacture this technology. We have many more customers in production with Rev7 than we’ve ever had with Rev6 to Rev7. And so, we’re making sure that we’re working with every single customer to not leave anyone behind on a previous generation platform.

And that work started long before we ever talked about a future product release. So I think we’re going to make this a graceful transition for everyone while we’re also just expanding the overall opportunity for addressable markets with the L4 chips.

Colin Rusch, Analyst, Oppenheimer: That’s super helpful. And then you’ve talked about upwards of 1,000 customers and, call it, 10% that are looking at production volumes and then really a limited number that are in production. Can you talk about some of the prototypes that are out there and how quickly some of these machinery or off road vehicles or some of the other products might end up moving into volume production? Because it seems like a limited number of customers could start really leveraging some of their revenue growth here pretty meaningfully for you guys.

Angus Pakala, Chief Executive Officer, Ouster: Yes. I mean, it doesn’t take this is a great question. Because what we’ve said is, Alstair, is that the very early innings of physical AI automation propagating into every moving machine on earth. And so at the scale that we’re operating, 4,000 to 5,000 units plus a quarter, it doesn’t take many customers each quarter to significantly expand our volumes and their shipments. And so we had almost 1,000 unit delta between Q1 and Q2 shipments.

And 1,000 units of an automated industrial platform is a big expansion for a single customer. So that’s all to say, we don’t need 100 different customers to reach production to keep growing at the pace we’re growing. We need single digits to continue on this really solid 10 quarters in a row of revenue expansion and keeping that going for the next couple of years. Obviously, we want to move as many customers as quickly into production as possible. And once in production, production also scales significantly from quarter to quarter.

But yeah, there’s a lot the vast majority of our customer base and our customers that will move into production have not yet, and that’s just going to fuel our growth to come. Thank you so much, guys.

Conference Operator: Your next question comes from the line of Andrew Shepard with Cantor Fitzgerald. Please go ahead.

Anand, Analyst, Cantor Fitzgerald: Hey, guys. Congrats on the quarter, and thanks for taking our question. This is Anand on for Andre. So it looks like you’ve really cemented market leadership with this quarter, especially with the the blue UAS certification. And that seems to be a huge part of the story this quarter.

So I was wondering perhaps what opportunities you’re looking at there and how that could really translate for the company. I know you touched on on touched on that on the earnings call and maybe potentially where could this go besides the first thing that comes to mind, the drones?

Angus Pakala, Chief Executive Officer, Ouster: Yes. This is a great question. Thank you, Anand. The blue UAS milestone for the OS1 was a big deal for us. We are the first three d LiDAR sensor that got this certification.

And that means that now we can be deployed on DoD aerial platforms as a sensor payload. So it’s a big deal. We’re the first company. And I think that’s a trend for Ouster as we are a first mover in many different markets because we have the products and we have the strategy and we have the commercial team to get all of that done ahead of our competitors. Blue UAS is part of a bigger expansion in kind of defense focus for The United States for our Western allies.

I mentioned on the script, there’s a lot of good progress here behind the scenes. We’re already working with United States Navy, for instance. We are deployed now at a U. S. Military base and army base for perimeter security with not just our LiDARs, but with our full Gemini physical AI solution.

So there’s a lot going on in the background. It’s ultimately fueled by an investment from the U. S. Government and from Western Allies. And I think that’s playing into our favor.

And I don’t think there’s been any company better positioned to serve that demand than Ouster right now.

Anand, Analyst, Cantor Fitzgerald: Fantastic. That’s very helpful. And I guess switching to another vertical. I was wondering, since autonomous vehicles are coming into play more nowadays and they’re getting more popular here in The States, how you’re seeing that opportunity play out for you guys and if there is potentially anything that you’re pursuing in that vertical or within OEM?

Angus Pakala, Chief Executive Officer, Ouster: Yeah. So it’s good to see that there’s been an upsurge in an uptick in interest on autonomous vehicles. I think that’s fueled by Waymo’s proof points in the market showing that the technology is reaching a level of maturity where it becomes a business and not an R and D effort. And I think that’s good for Alstair and the Ladder sector at large. For a long time, Alstair has our strategy has been to be at the right place at the right time for this industry to emerge as viable.

And I think that’s starting to happen. So we have great products for these autonomous vehicle and automotive customers. Actually, this last quarter in Q2, automotive was our second largest vertical. So we’re a big player in this space. We’ve had great positive announcements from longtime customers like May Mobility making big announcements with end customers like the rideshare companies.

So it’s not just that the technology is ready, but there’s an ecosystem of players that are interested enough to make major commercial and business strategy shifts. And again, Alstair is really well positioned with products to play in this space. So, I’m glad this is happening finally.

Anand, Analyst, Cantor Fitzgerald: Excellent. Thanks for the color, Angus. I’ll pass it on.

Conference Operator: The next question comes from the line of Kevin Garrigan with Rosenblatt Securities. Congrats

Kevin Garrigan, Analyst, Rosenblatt Securities: on the strong results. Angus, you spoke about several design wins. Using the FIFA World Cup as an example, can you give us a sense of who you kind of beat out with that contract? Was it more camera based solutions or other LiDAR suppliers? And with AI everywhere now, is the competition getting any more competitive?

Angus Pakala, Chief Executive Officer, Ouster: Yeah. So it’s interesting because so with the case of FIFA, there’s typically some sort of competitive situation on all of these projects. And what Ouster has shown in the last year or so with Blue City as it’s reached a level of maturity we haven’t really seen before is head to head on the core performance metrics of things like object perception accuracy. Like, are you counting the right number of cars, pedestrians, motorcyclists, and trucks at your intersections, your traffic corridors? There’s nothing that comes close to Blue City and its accuracy.

And it’s for one very good reason, and this gets to your next question about AI. All of the advancements that you hear about in AI for cameras can apply to LiDAR if you take proper advantage of them. And so we actually put out a press release on this subject just the last quarter around Alstair’s massive investment in AI data training, data collection, annotation and training for our BlueCity product. This product that’s being deployed at the FIFA sites around the country and now being deployed at large in the Utah DOT and Chattanooga and all these other intersections. So Alstair is leading the way on investing in true physical AI at the edge, running deep neural networks that we’ve trained on over 4,000,000 annotated objects that we’ve pulled and extracted from a diverse geographic set of our deployed systems.

And we’re doing this constantly. So, we’re constantly improving our AI algorithms to make sure that we maintain this kind of best in class performance of perception accuracy, which is the foundation of all of these products that are doing traffic control and analytics in the field. So, yes. So your answer, your insight that AI is improving everyone’s capabilities, whether it’s cameras or radar systems or LiDAR is correct. But we’re making sure that we’re not left behind.

We’re actually leading the way with a lot of these investments, and we’re applying it to a far more capable sensor data stream with a LiDAR than a camera.

Kevin Garrigan, Analyst, Rosenblatt Securities: Got it. Okay. That makes sense. And then, as a follow-up, can you just talk a little bit more about your distributor strategy? Are you looking to eventually have, you know, maybe a majority portion of your sales through the distribution channel?

Or is your main focus still on dealing with the direct end customers?

Angus Pakala, Chief Executive Officer, Ouster: Yeah. Here, distribution strategy varies by vertical and even by sub vertical. So we have our four major verticals, automotive, industrial, smart infrastructure, and robotics. And what I talked about on the call is really a focus on the sub vertical within smart infrastructure in traffic, and that’s the Blue City product. So there, we think it’s an integrator distributor heavy play.

And we’ve already we embarked on a new strategy there a couple of years ago, and we now have 39 states where we have a selected exclusive distributor integrator for Blue City. So we’re well on our way to fully blanketing The United States in these regional distributors. And they’re really value add integrators of traffic technology with long term established relationships with state, local and federal clients. Security, also a Gemini like solutions product for us. So the security industry mirrors in many ways the traffic vertical, and that there’s a major set of technology integrators and established distribution chains.

So we’re taking advantage of that as well. So it probably will skew again towards leveraging those partners versus a direct sales force. But outside of those two verticals or sub verticals right now, Alstair has succeeded in identifying enterprise partners, having a direct sales force and just being a great direct partner, given how critical typically LiDAR is to a customer like Komatsu or a major industrial OEM or automaker. They want a direct relationship and a direct kind of sales and commercial and support and technical support relationship with Ouster directly.

Kevin Garrigan, Analyst, Rosenblatt Securities: Okay, great. I appreciate all the color. Congrats on all the progress.

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

Richard Shannon, Analyst, Craig Hallum Capital Group: Well, thanks, guys, for letting me ask a couple of questions here. My first one is on the defense market here. If I caught the language right here, you mentioned defense is one of the key verticals or top verticals here, and I did a quick search, and I didn’t find any mention of that in past conference calls about that being a leading contributor. Was the Blue AS certification a driver of that or drones? Or can you kind of help us tie those things or not tie them together?

Angus Pakala, Chief Executive Officer, Ouster: Yeah. So, Richard, I think what we said is we didn’t say defense wasn’t one of the top two verticals for us this quarter. But it was actually industrials and automotive that were the top two for this last quarter. We haven’t specifically talked that much about defense in prior earnings calls as well. So you’re picking up on that.

But this is kind of some new this is new development for us. And like I said before, it’s kind of a combination of both the federal and international interest in defense and new investments there in combination with advancements on our commercial side and our products. So getting things like the UAS certification. So I think that this is an opportunity for the future more than it had an outsized impact on our earnings this Q2.

Richard Shannon, Analyst, Craig Hallum Capital Group: Okay, fair enough. Thanks for clearing that one up. Second question, Angus, is really as ramp up the new products with the L4 and Cronos ships, assume they’re going to the same set of next products here. Can you talk about your pricing strategy here? I guess I would assume, given you’re talking about your gross margin profile as being very long term, that I would assume it stretched beyond this product introduction here.

You’re probably going to take down pricing kind of commensurate with cost. But maybe you could just talk about your pricing strategy as that new product line comes up.

Angus Pakala, Chief Executive Officer, Ouster: Sure. Yeah. So the pricing strategy is because Ouster is diversified, it’s hard to, you know, there are many different strategies and it’s a case by case by industry and sub industry. So we have a lot, I think we have a lot of flexibility here. And what I’m looking at in pricing strategy is one, that we are maintaining strong gross margins.

And there, I think that we were committed to the 35% to 40% gross margins as we approach profitability in the next couple of years. And so that’s very important. And we’re doing that by, expanding our volumes and lowering our costs over time. And that gives us some ability to drop pricing where needed, to enable customer business models. So this is an important dynamic that when we drop price, many times it’s because we have assessed a customer business model and identified that there needs to be a lower cost for them to enter the market into production.

And so it’s a very measured, you know, there’s a lot of control on the answer side and how that happens and a lot of working with a customer. This is not a commoditized market where we have to drop price, just to stay in competitive situations. It’s much more a dynamic where we’re working with customers to give them a path to good commercial viability in the long term as they’re going from R and D into production. That being said, there’s always lower priced applications for any technology. And so there is also just a core focus internally on dropping our costs so that we can enter some fundamentally new markets with lower pricing and just lower pricing overall.

So things like some of the emerging robotics opportunities that could hit really high volumes but may need a fundamentally different price point.

Richard Shannon, Analyst, Craig Hallum Capital Group: Okay. That’s helpful perspective, Angus. That’s all for me. Thanks.

Conference Operator: Your next question comes from the line of Tim Savageaux with Northland Capital Markets. Please go ahead.

Tim Savageaux, Analyst, Northland Capital Markets: Hey, good afternoon and congrats on the results. My first question kind of going back to the defense opportunity and understanding this is something that’s emerging for you guys. But is there anything you can share with us about total addressable market in that kind of drone defense area as it relates to your targeted TAMs across other verticals? And I’ll follow-up from there.

Angus Pakala, Chief Executive Officer, Ouster: Yeah, thanks for the question. Traditionally, we have included our defense market our it’s absorbed into our robotics vertical. So when we’ve provided the TAM for robotics, it’s actually defense has been just a sub vertical within there and it’s absorbed and never broken out. That’s really because defense is an emerging market and it’s rapidly evolving. And like even in the last year, there’s been a huge shift in technology companies entering that space, new approaches being taken to old problems in defense.

So there may be a point where we start breaking it out because there’s enough of an ecosystem and the autonomy technology that has been developed in adjacent markets is now really starting to play in defense. But yeah, I don’t think we’re quite there yet. So again, it’s great opportunity overall. There is an established market for things like drone payloads and just sensor payloads on drones. And that’s where the blue UAS certification kind of is a leading indicator of some of the early opportunities in defense.

I think it will be a little while longer before some of the ground and other autonomous systems come to market and come to technology maturity and start building a TAM around those.

Tim Savageaux, Analyst, Northland Capital Markets: Great. Sorry. And shorter term, as you look at your guidance for Q3, are there any kind of particular verticals driving that expectation for sequential growth that you can call out?

Angus Pakala, Chief Executive Officer, Ouster: Well, I think overall, the diversification at Ouster is what’s leading to robust growth robust and consistent growth for ten quarters straight now and hopefully going on 11 with our guidance. And so ultimately, I think industrial has been bread and butter for Ouster, and it’s important to grow. And we see a lot of tailwinds with the industrial sector embracing physical AI, embracing AI solutions and new sensor technologies. So that I expect to continue to drive our growth. We have a lot of long term industrial customers that are now entering production.

And overall, we just have a huge amount of visibility into the demand for our technology across our verticals, just given the long term relationships that we’ve built with our customer set. So the I’m very pleased to be able to guide up again confidently, dollars 35,000,000 to $38,000,000 next quarter. And that’s just built on, I guess, the momentum from many, many years of playing in a diverse set of industries with high quality customers.

Tim Savageaux, Analyst, Northland Capital Markets: Great. Thanks very much.

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

Richard Shannon, Analyst, Craig Hallum Capital Group: Well, thanks for letting me ask a follow on. I just have one, Angus, here. Just want to touch on the automotive space here. I guess clarifying to the degree to which this past quarter and kind of recent past year has been mostly related to robotaxis. And then as we look forward to your next gen products, you called out the digital flash products enabled by the L4 chip here.

How do we think about your go forward strategy and kind of timeframes you’re expecting for broader volumes in the automotive space?

Angus Pakala, Chief Executive Officer, Ouster: Thanks. And just one clarification. The L4 chip or the digital flash products are using the Cronos chip. So, there’s two pieces of silicon that we’re working on right now, L4 and then Cronos. And Cronos is the one that’s going into the DF or digital flash units.

So, that’s why we actually have an immense amount of activity going on in our product roadmap and development. And that’s why I’ve said we’ve 2x ing our TAM with the roadmap that we have under development right now. It’s the most compelling roadmap Alstair has ever had at the company. So, I’m still incredibly bullish about what we’re working on internally. And so that goes to, you know, where will we be when ultimately the automotive ADAS or consumer ADAS market is ready.

And, you know, my goal there, so this is set apart from robotaxis and the comments around robotaxis being an interesting market that may come in the next couple of years. Consumer ADAS is still a very difficult market for us to predict. But we’ve been working for years on products that will be relevant in that market when OEMs are ready to adopt this technology set and mass. And that adoption looks like L2 plus and L3 ADAS systems in consumer vehicles. So we’re going to have the right products at the right time for them.

But it’s very difficult to predict exactly when the volumes are going to hit in The United States or in the Western world for that market. It’s why it’s not built into really our long term financial framework. We’re confident we can hit our financial metrics, our 30% to 50% revenue growth without needing a silver bullet like consumer ADAS.

Conference Operator: Okay. Appreciate that update.

Richard Shannon, Analyst, Craig Hallum Capital Group: That’s all for me, I guess.

Conference Operator: And it seems that we have no further questions for today. I would now like to turn the call back over to Angus DeCullo for closing remarks.

Angus Pakala, Chief Executive Officer, Ouster: Well, thank you all for joining the call, and I look forward to speaking with you again on the third quarter. Thanks all.

Conference Operator: This concludes the meeting. You may now disconnect your

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.