Ouster, Inc. Q4 FY2023 earnings call

Key Points

• Successfully completed merger with Velodyne, strengthening balance sheet, patent portfolio, and cost structure.
• Achieved record $142 million in new business and $83 million in revenue in 2023, a 103% Y/Y increase.
• Made advancements in digital lidar roadmap, including taping out the L4 chip and progress on the Chronos chip.
• Launched Ouster Gemini and Blue City software solutions, adding new revenue streams and increasing customer stickiness.
• Exceeded post-merger annualized cost savings target by over 40% and significantly reduced cash burn.

In the fourth quarter of 2023, Ouster recognized a record $24.4 million in revenue, a 10% increase over the third quarter. The robotics vertical was the largest contributor to revenue, followed by smart infrastructure. Both verticals had multiple customers each generating over $1 million in revenue. For the full year 2023, Ouster reported record revenues of $83 million, a 103% increase year-over-year. The company shipped over 13,500 sensors and achieved an average selling price of roughly $6,000.

Forward-Looking Statements

• For the first quarter of 2024, Ouster targets between $25 million and $26 million in revenue.
• 2024 strategic priorities include expanding software solutions, advancing digital lidar hardware development, and achieving a financial framework with 30% to 50% annual revenue growth, 35% to 40% gross margins, and operating expenses at or below third quarter 2023 levels.

Risks

• Uncertainties in achieving forward-looking plans, estimates, and expectations as actual results may differ materially from current expectations.
• Risks and uncertainties related to market conditions, competition, and execution of business strategies as detailed in SEC filings.

Q: Hi, good afternoon, everyone, and congratulations on the quarter. And thanks for taking our question. Angus, I wanted to maybe get your thoughts around the auto industry in kind of where that stands in terms of beginning to fully ramp up on lidar sensors.

A: Thanks for the question. Well, the auto industry is an interesting piece for lidar, because it represents huge promise, but also huge uncertainty, given the uncertainty in timelines of adopting the technology. And for that reason, Ouster has taken a measured approach that we feel very confident in with our automotive strategy...

Q: Yes, thanks for taking my question and congratulations on the great results and great progress. But along those lines on the gross margin you're at 35%. So, you're getting very close to your target. But can you say what the moving parts are for potential improvement from here?

A: Yes. So, I'll hit on the couple of items that led to the kind of improvements over the last couple of quarters and I'm sure Angus will want to talk a little bit about kind of the software opportunity. After we did the merger, the most important thing was really reducing the cost structure of the organization...

Q: Hey, this is Shadi Mitwalli on for Richard Shannon. Congrats on the side, guys. My first question is on your Q1 guidance. Q1 guidance implies 35% growth year-over-year, which is on the lower end of your full-year guidance of 30% to 50% growth. So, maybe here, what is giving you the confidence that you'll be able to maintain that 30% plus growth throughout 2024?

A: Yes, thanks for the question. I mean, we really highlighted three strategic priorities for Ouster and the first two are focused on growth. So, those being the software solutions, expanded business, the advancement in our digital lidar hardware, both at OS and DF and the third priority, just executing more generally on the financial framework we've laid out...

Q: Yes. Hey, good afternoon Angus and Mark and thanks for taking my questions and congrats on the results. I think I asked you this last quarter, but any update on what software revenues were this quarter? Is it too small? Or is it still too small? And any plans to expand software into other end markets?

A: Yes, so we aren't breaking software revenues out. At this point, we have mentioned that we've booked millions of dollars in software-attached business, software-coupled business. That's the combination of the software solution with the lidar hardware that we're selling. We put out a pretty fulsome press release in Q3 around the traction that we've seen over 300 sites deployed with our software solutions to-date in 2023...