Ouster, Inc. Q1 FY2025 earnings call

Quarter Recap

• Reported revenue of $32.6 million and gross margin of 41% (including $1.5M patent royalty).
• Shipped over 4,700 sensors.

Market Overview

• Won multimillion-dollar deals across verticals: smart infrastructure (expanded with LASE PeCo), industrial (closed deal with Komatsu), automotive (chosen by global OEM mobility subsidiary), robotics (expanded with world's largest mapping/navigation provider).

Strategic Priorities

• Scaling software-attached business: Landed largest software-attached contract in Europe, Econolite's five-year deal with Utah DoT.
• Transforming product portfolio: New hardware, upgraded firmware, enhanced Ouster SDK, expanded Gemini portal (enables cloud data/device management), BlueCity's AI model trained on NVIDIA tech.
• Executing towards profitability: Aligning with 30%-50% annual revenue growth, 35%-40% gross margin target, and managing operating expenses.

In the first quarter, Ouster shipped approximately 4,700 sensors and recognized $32.6 million in revenue. The industrial vertical was the largest contributor to first quarter revenue, followed by automotive. First quarter gross margin was 41%, up 1,200 basis points year-over-year, including approximately $1.5 million in patent royalty which positively impacted margins. The company continues to view 35% to 40% as an appropriate annual gross margin target.

For the second quarter, Ouster expects to achieve revenue between $32 million and $35 million. The company has assumed no material revenue from patent royalty for preparing and presenting second quarter guidance.

Geopolitical and macroeconomic uncertainties, including potential tariff impacts, though currently not expecting them to prevent achieving long-term framework. Operating expenses may fluctuate quarterly due to timing of R&D project spending and litigation costs.

Q: On gross margins, why hasn't the gross margin framework moved up?

A: Chen Geng noted 35%-40% is an appropriate GAAP gross margin target, software contribution will be detailed when significant, and margin performance is due to higher revenue, favorable mix, and patent royalty.

Q: New products and TAM expansion?

A: Angus Pacala mentioned next-gen L4 and Chronos custom silicon on track to double addressable market, with positive signals from customer roadmap conversations.

Q: Testing process and new orders?

A: Ongoing testing with customers leads to new orders, with features like zone monitoring helping customers move to production.

Q: Robotaxi regions?

A: Motional and May Mobility are North American-centric, with positive trends in robotaxi adoption.

Q: Warehouse automation and pricing?

A: Ouster covers all warehouse automation applications, with stable pricing managed by unit shipments and new technology driving value.

Q: Competitive dynamics?

A: Angus Pacala noted other lidar companies have fits and starts in non-automotive markets, while Ouster has a consistent presence in diverse verticals.