Ouster, Inc. (OUST) Earnings

Management highlights

- Overall Quarterly Performance & Strategic Progress • Delivered the 14th consecutive quarter of product revenue growth, with record revenue and sensor shipments, marking a transformative year for Ouster as a leading end-to-end sensing and perception platform for physical AI. • Raised $98 million via the ATM program in Q2, followed by a $191 million net proceeds common stock offering in early Q3, leaving the company with $263 million in cash/equivalents/short-term investments pre-offering (no debt) and enough capital to fully fund its current operating plan to profitability with no expected future capital raises. - Product Development Launches • Launched Rev8, the world's first native color LiDAR sensor, which sets a new industry benchmark for 3D spatial perception and has received extremely strong customer feedback, with multiple million-dollar-plus orders from leading industrial, agricultural, and autonomous vehicle customers already secured. • Launched the ZX Nano wrist-mount stereo vision camera from acquired StereoLabs, the most successful launch in StereoLabs history, targeting robotic manipulation for humanoid and industrial robots, with strong demand exceeding existing supply. • Achieved Build America, Buy America compliance for Rev8, making Rev8 and Blue City eligible for U.S. government-funded infrastructure projects. - Partnerships and Market Expansion • Deepened the existing partnership with NVIDIA, integrating Rev8 into the NVIDIA Drive and Jetson platforms with dedicated toolkits and drivers to deliver a production-ready ecosystem for customers. • Expanded into the defense industry via a new strategic agreement with Argus Interception, and announced a collaboration with Field AI to use Rev8 for next-generation robotic autonomy in construction, mining, and security. • Scaled Blue City smart infrastructure deployments for the 2026 FIFA World Cup across 42 New Jersey highway locations and 30 Atlanta intersections, with the deployments continuing to provide long-term traffic optimization and safety benefits after the event. Secured a large order for a several-hundred-intersection deployment with the Utah Department of Transportation, one of the largest LiDAR deployments for the company to date. - Operational and Manufacturing Progress • Expanded manufacturing capacity for Rev8 in partnership with Benchmark, establishing capacity that will ultimately exceed 100,000 units per year, with volume production expected by the end of Q3 2026. • Realizing strategic and financial value from the StereoLabs acquisition, with the combined business already generating organic cross-selling opportunities between traditional Ouster LiDAR customers and StereoLabs camera customers.

Guidance

- Q3 2026 total revenue guidance is maintained at a range of $54.5 million to $57.5 million, with Rev8 volume ramping throughout the quarter and into the latter part of the period. - Full-year 2026 revenue guidance remains unchanged from prior announcements. - Full-year 2026 royalty revenue is still expected to total approximately $5 million. - Q3 2026 GAAP operating expenses are expected to be 5% to 8% higher year-over-year. - On a normalized basis, product gross margins are expected to remain in the 35% to 40% range in the near term, with potential for upside as higher-margin software and solution sales grow as a percentage of total revenue. - Management expects the transition from Rev7 to Rev8 across the full customer base to take approximately two years, with Rev8 becoming a material contributor to revenue in the second half of 2026. - StereoLabs revenue is expected to grow at a midpoint of at least 40% year-over-year in 2026, with multi-year growth expected beyond 2026.

Segment performance

Total Q2 2026 revenue was $55 million, a 56% increase year-over-year. The industrial vertical was the largest revenue contributor, followed by the smart infrastructure vertical. Total sensor shipments hit a quarterly record of 17,000 units, consisting of over 9,000 LiDAR sensors and over 8,000 camera sensors (from the acquired StereoLabs business). Royalty revenue for Q2 was $1.9 million, bringing first half 2026 royalty revenue to $2.2 million. Approximately 15% of total Q2 sales came from Blue City and Gemini software-based solutions, with management expecting this percentage to grow in future years. GAAP gross margin for the quarter was 49%, up 400 basis points year-over-year, though this included a one-time 1000 basis point positive impact from a refund; the year-ago quarter included a 500 basis point one-time positive refund impact. GAAP operating expenses were $47 million, a 10% increase year-over-year. Adjusted EBITDA was negative $4 million, a $1 million improvement year-over-year.

Risks & headwinds

No new material risks or operational failures were discussed during the call. Management noted in the forward-looking statement disclaimer that actual results could differ materially from expectations due to factors outlined in the company's prior SEC filings, but no specific new risks were highlighted in the prepared remarks or Q&A.

Analyst Q&A

• Q: How much of the current Rev8 order backlog and booking momentum is already included in your existing multi-year revenue ramp expectations, and how does the competitive landscape look with your new differentiated capabilities? /

  A: Management noted that existing revenue guidance for 2026 remains on track despite strong early customer reception for Rev8. Rev8 is expected to drive core business growth over the next five years, as its native color and long-range capabilities are a major improvement over the prior Rev7 platform. Ouster's 11 years of accumulated investment in sensing and perception technology creates a large competitive moat that few rivals can match quickly, especially with the company's end-to-end hardware and software portfolio that competitors cannot easily replicate.

• Q: Do you have unmet Rev8 order demand that is holding back current guidance, and what is the expansion outlook for Blue City smart infrastructure deployments? /

  A: Ouster maintains a healthy backlog and intentionally avoids depleting backlog to hit higher near-term revenue, so guidance reflects realistic achievable shipment volumes. Blue City follows a clear adoption pattern: customers deploy small POCs, scale to city/statewide deployments, and then order additional capacity after seeing positive results. The new long-range Rev8 capability opens up half of the North American intelligent transportation market (serving high-speed, wide roads) that was previously inaccessible, creating large room for continued growth.

• Q: Why did Ouster invest in 100,000 annual units of Rev8 capacity from its current ~40,000 annual run rate, and what are the capacity dynamics for StereoLabs? /

  A: LiDAR unit volumes are already up 70% year-over-year, and demand for physical AI systems is growing rapidly, so the additional capacity supports expected continued compounded growth. Ouster will likely need to expand capacity beyond 100,000 units to maintain a buffer for customer demand shifts. For StereoLabs, Ouster's existing manufacturing expertise is being used to scale capacity to meet exploding demand for its robotic vision products, with investment ongoing to meet multi-year growth expectations.

• Q: How should investors think about the future unit mix between LiDAR and cameras, and what are the key upcoming catalysts for the business? /

  A: Cameras have lower average selling prices than LiDARs, and robotic applications require more cameras to cover full fields of view, so StereoLabs camera unit volume growth will likely outpace LiDAR unit growth, though LiDAR demand is still accelerating. The biggest upcoming long-term catalyst is Ouster's transition from a hardware component supplier to a full-stack solutions provider, bundling LiDAR, cameras, compute, and software to speed up customer time-to-market for physical AI systems.