Revenue and Market Growth - Ouster's revenue primarily comes from the sale of lidar sensors and accessories, with revenue recognized upon product shipment [109]. - Ouster anticipates a multibillion-dollar total addressable market for its lidar solutions across automotive, industrial, robotics, and smart infrastructure sectors [107]. - Revenue increased by $7.6 million, or 39%, to $27.0 million for the three months ended June 30, 2024, compared to $19.4 million for the same period in the prior year [125]. - Revenue growth was driven by increased sales of the REV7 sensors, with notable increases in the Americas (24%), Asia and Pacific (77%), and Europe, Middle East and Africa (50%) regions [124][126]. - Revenue increased by $16.3 million, or 45%, to $52.9 million for the six months ended June 30, 2024, from $36.6 million for the comparable period in the prior year [136]. Cost and Expense Management - Cost of revenue decreased by $1.3 million, or 7%, to $17.9 million for the three months ended June 30, 2024, primarily due to lower excess and obsolete inventory [127]. - Total operating expenses for the three months ended June 30, 2024, were $34.3 million, a decrease of $88.9 million, or 72%, compared to $123.2 million in the prior year [128]. - Research and development expenses decreased by $12.0 million, or 45%, to $14.4 million for the three months ended June 30, 2024 [128]. - Sales and marketing expenses decreased by $4.9 million, or 42%, to $6.8 million for the three months ended June 30, 2024 [128]. - General and administrative expenses decreased by $4.7 million, or 26%, to $13.2 million for the three months ended June 30, 2024 [128]. - Cost of revenue decreased by $0.4 million, or 1%, to $36.4 million for the six months ended June 30, 2024, from $36.8 million for the comparable period in the prior year [138]. - Total operating expenses decreased by $232.4 million, or 77%, to $67.6 million for the six months ended June 30, 2024, from $299.9 million for the comparable period in the prior year [139]. Financial Position and Cash Flow - The company had an accumulated deficit of $863.7 million and cash, cash equivalents, restricted cash, and short-term investments of $185.8 million as of June 30, 2024 [146]. - As of June 30, 2024, the company had cash and cash equivalents, restricted cash, and short-term investments totaling $185.8 million [161]. - For the six months ended June 30, 2024, operating activities used $27.4 million in cash, primarily due to a net loss of $47.7 million [153]. - During the same period, cash provided by investing activities was $9.1 million, mainly from $60.0 million in proceeds from short-term investments [155]. - Financing activities generated $20.3 million, primarily from $19.5 million in proceeds from the issuance of common stock under the ATM Agreement [156]. - The remaining availability under the ATM Agreement as of June 30, 2024, is approximately $98.0 million [149]. - The company entered into a revolving credit line agreement with UBS Bank USA for up to $45.0 million, initially borrowing $44.0 million [150]. - As of December 31, 2022, $40.0 million had been drawn under the Term Loan Facility with Hercules Capital [150]. Research and Development - The company is focused on expanding its software solutions and advancing hardware development as part of its strategic objectives for 2024 [106]. - The company anticipates continued investment in new lidar technology and related software, indicating a commitment to innovation and market expansion [112]. - The company expects R&D expenses as a percentage of revenue to decrease over time as the business grows [112]. - Research and development expenses decreased by $12.0 million, or 45%, to $14.4 million for the three months ended June 30, 2024, from $26.4 million for the comparable period in the prior year [129]. Internal Controls and Risks - The company is executing a remediation plan to address material weaknesses in internal control over financial reporting [170]. - The company has identified material weaknesses in its internal control environment, which could lead to misstatements in financial reporting [167]. - The company continues to provide internal control training for personnel responsible for implementing internal controls [171]. - The company has made significant progress in improving the stability of its accounting organization, but time is needed to demonstrate sustainability [172]. - There were no changes in internal control over financial reporting during the quarter ended June 30, 2024, that materially affected the company's financial reporting [173]. Market and Competitive Environment - The company expects to continue experiencing downward pressure on average selling prices due to large multi-year agreements and competitive market dynamics [107]. - Ouster's gross margins are subject to fluctuations based on product mix, pricing, and volume volatility, impacting overall financial performance [111]. - The company views international expansion as a key strategy for revenue growth, with plans to enhance its presence in the Americas, Asia Pacific, and Europe [108]. - The company has not engaged in any hedging strategies to manage foreign currency exchange risk, which could adversely affect operations as international operations grow [164]. - The company is exposed to inflation risk, which has increased operating costs and may lead to reduced customer orders, potentially harming sales [160]. - The company is exposed to interest rate risk, with $44.0 million of variable rate debt outstanding under the Loan Agreement as of June 30, 2024 [163]. - A hypothetical 100 basis point change in interest rates would not have a material impact on the company's financial condition due to the short-term nature of its investment portfolio [162]. - The company has $44.0 million of variable rate debt outstanding under its Loan Agreement, with a sensitivity analysis indicating that a 1% change in interest rates would affect interest expense by approximately $0.4 million over the next 12 months [163].

Company Performance - Ouster, Inc. (OUST) closed at $10.98, reflecting a -1.17% change from the previous day, underperforming the S&P 500 which gained 1.04% [1] - Over the past month, Ouster's shares increased by 6.11%, while the Computer and Technology sector declined by 13.91% and the S&P 500 fell by 6.74% [1] Earnings Forecast - The upcoming earnings report for Ouster, scheduled for August 13, 2024, is highly anticipated by the investment community [2] - Zacks Consensus Estimates predict earnings of -$2.34 per share and revenue of $92.2 million for the fiscal year, representing increases of +62.26% and +10.71% respectively from the previous year [2] Analyst Estimates - Recent changes to analyst estimates for Ouster are being closely monitored, as they reflect short-term business dynamics [3] - Positive adjustments in estimates indicate analyst optimism regarding the company's business and profitability [3] Zacks Rank System - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), has a history of outperforming, with 1 stocks averaging a +25% annual gain since 1988 [5] - Currently, Ouster, Inc. holds a Zacks Rank of 3 (Hold), with the Consensus EPS estimate remaining unchanged over the past month [5] Industry Context - Ouster operates within the Electronics - Miscellaneous Components industry, which is part of the Computer and Technology sector [6] - This industry currently holds a Zacks Industry Rank of 176, placing it in the bottom 31% of over 250 industries, indicating weaker performance compared to higher-ranked industries [6]

Company Overview - Ouster, Inc. currently holds a Zacks Rank of 2 (Buy), indicating a positive outlook based on earnings estimates and revisions [1] - The company is part of the Electronics - Miscellaneous Components industry, which consists of 30 companies and is ranked 186 in the Zacks Industry Rank [2] Performance Metrics - Ouster, Inc. has achieved a year-to-date return of approximately 27.1%, outperforming the average return of 25.3% for the Computer and Technology sector [4] - The Zacks Consensus Estimate for Ouster's full-year earnings has increased by 33.9% over the past three months, reflecting improved analyst sentiment and a stronger earnings outlook [6] Industry Context - The Computer and Technology sector, which includes Ouster, consists of 618 individual stocks and is currently ranked 11 in the Zacks Sector Rank [7] - Another notable company in the sector, Alpha and Omega Semiconductor, has returned 43.4% year-to-date and has seen a 62.6% increase in its consensus EPS estimate over the past three months [8]

Company Overview - Ouster, Inc. (OUST) has experienced a share price decline of 9.24% over the past month, underperforming the Computer and Technology sector's gain of 6.77% and the S&P 500's gain of 3.15% during the same period [1] - The current stock price of Ouster, Inc. is $10.20, reflecting a slight decrease of 0.2% from the previous trading day's closing [6] Financial Performance - The Zacks Consensus Estimates for Ouster, Inc. indicate expected earnings of -$2.34 per share and revenue of $92.2 million for the full year, representing year-over-year changes of +62.26% in earnings and +10.71% in revenue [2] - The Zacks Consensus EPS estimate has increased by 33.9% within the past month, indicating a positive trend in earnings expectations [9] Industry Context - Ouster, Inc. operates within the Electronics - Miscellaneous Components industry, which is part of the Computer and Technology sector. This industry currently holds a Zacks Industry Rank of 174, placing it in the bottom 31% of over 250 industries [4] - The strength of individual industry groups is measured by the Zacks Industry Rank, with research showing that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [10] Analyst Insights - Market participants are expected to closely monitor the upcoming financial results of Ouster, Inc. [7] - Recent changes in analyst estimates for Ouster, Inc. are important as they reflect evolving short-term business trends, with positive revisions seen as a favorable sign for the company's outlook [8] - Ouster, Inc. currently has a Zacks Rank of 2 (Buy), indicating a favorable investment rating [9]

Shares of Southwest Airlines rose 9% on Monday and headed toward their largest single-day gain in nearly four years, after activist firm Elliott Investment Management announced a nearly $2 billion stake in the company and called to oust the airline's chief executive and board chair. Southwest shares rose to $30.25 Monday morning, on track for the company's largest single-day jump since November 2020. Savanthi Syth, an analyst for the investment bank Raymond James, said it is "unclear if a management change ...

The Computer and Technology group has plenty of great stocks, but investors should always be looking for companies that are outperforming their peers. Ouster, Inc. (OUST) is a stock that can certainly grab the attention of many investors, but do its recent returns compare favorably to the sector as a whole? Let's take a closer look at the stock's year-to-date performance to find out. Ouster, Inc. is a member of our Computer and Technology group, which includes 618 different companies and currently sits at # ...

1 TE metamorworks Before we start our article, we would like to thank Robert Dydo for his successful calls on Ouster. His comprehensive analysis and outstanding research played a key role in bringing Ouster to our attention, which led us to initiate coverage on this stock. Strong Q1 Earnings, Stock Jumps 20% Ouster (NYSE: OUST) reported its Q1 2024 results on May 10th 2024. Earnings were very positive as revenue increased 51% to $26 million, exceeding expetations. The market liked the results, and the stock ...

[Form 10-Q Filing Information](index=1&type=section&id=Form%2010-Q%20Filing%20Information) This section provides the official filing details for Ouster, Inc.'s Quarterly Report on Form 10-Q for the period ended March 31, 2024, including registrant identification, exchange listings, and filer status - Registrant: Ouster, Inc., Delaware, Commission File Number: 001-39463[2](index=2&type=chunk) Trading Symbols and Exchange Registration | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :--- | :--- | :--- | | Common stock, $0.0001 par value per share | OUST | New York Stock Exchange | | Warrants to purchase common stock | OUST WS | New York Stock Exchange | | Warrants to purchase common stock expiring 2025 | OUST WSA | NYSE American | Filer Status | Filer Status | | :--- | | Non-accelerated filer | | Smaller reporting company | - As of May 9, 2024, **45,225,055 shares of common stock** were outstanding[5](index=5&type=chunk) [Table of Contents](index=3&type=section&id=Table%20of%20Contents) This section outlines the structure and page references for the various parts and items included in the Quarterly Report on Form 10-Q [Forward-Looking Statements and General Information](index=4&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section provides a disclaimer regarding forward-looking statements, highlighting that actual results may differ materially due to various risks and uncertainties - The report contains forward-looking statements covered by safe harbor provisions, identified by words such as 'believe,' 'may,' 'will,' 'estimate,' 'continue,' 'anticipate,' 'intend,' and 'expect'[10](index=10&type=chunk) - Forward-looking statements are subject to risks including limited operating history, Velodyne integration challenges, R&D costs, operating result fluctuations, competitive environment, supply chain constraints, and intellectual property risks[10](index=10&type=chunk) - Investors are encouraged to review information on the company's investor relations website (https://investors.ouster.com/overview) in addition to SEC filings[13](index=13&type=chunk) [Part I - Financial Information](index=5&type=section&id=Part%20I%20-%20Financial%20Information) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents Ouster, Inc.'s unaudited condensed consolidated financial statements for Q1 2024, including balance sheets, statements of operations, equity, and cash flows, with detailed explanatory notes [Condensed Consolidated Balance Sheets (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) The unaudited condensed consolidated balance sheets show a slight decrease in total assets and stockholders' equity from December 31, 2023, to March 31, 2024, with stable total liabilities Condensed Consolidated Balance Sheets (Unaudited) - Key Figures (in thousands) | Item | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total assets | $317,683 | $330,743 | | Total liabilities | $150,451 | $151,071 | | Total stockholders' equity | $167,232 | $179,672 | [Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss%20(Unaudited)) Ouster reported a significant increase in revenue and a substantial reduction in net loss for Q1 2024, driven by improved gross profit and reduced operating expenses Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - Key Figures (in thousands) | Item | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Revenue | $25,944 | $17,230 | | Gross profit (loss) | $7,425 | $(376) | | Loss from operations | $(25,821) | $(177,102) | | Net loss | $(23,849) | $(177,280) | | Net loss per common share, basic and diluted | $(0.55) | $(6.03) | - Revenue increased by **51% YoY**, from **$17.23 million** in Q1 2023 to **$25.94 million** in Q1 2024[18](index=18&type=chunk) - Gross profit improved significantly from a loss of **$0.38 million** in Q1 2023 to a profit of **$7.43 million** in Q1 2024[18](index=18&type=chunk) - Net loss decreased substantially from **$177.28 million** in Q1 2023 to **$23.85 million** in Q1 2024, largely due to the absence of **$99.41 million** in goodwill impairment charges present in the prior year[18](index=18&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity (Unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Unaudited)) Total stockholders' equity decreased from **$179.7 million** at December 31, 2023, to **$167.2 million** at March 31, 2024, primarily due to net loss Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - Key Figures (in thousands) | Item | December 31, 2023 | March 31, 2024 | | :--- | :--- | :--- | | Total Stockholders' Equity | $179,672 | $167,232 | | Accumulated Deficit | $(816,026) | $(839,875) | | Additional Paid-in Capital | $995,464 | $1,007,502 | - Stock-based compensation expense contributed **$9.4 million** to additional paid-in capital during Q1 2024[20](index=20&type=chunk) - Proceeds from at-the-market offering, net of commissions and fees, added **$2.3 million** to additional paid-in capital in Q1 2024[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Operating cash flows significantly improved, reducing cash used from **$53.0 million** in Q1 2023 to **$5.7 million** in Q1 2024, while financing activities provided **$3.7 million** Condensed Consolidated Statements of Cash Flows (Unaudited) - Key Figures (in thousands) | Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(5,722) | $(53,012) | | Net cash (used in) provided by investing activities | $(469) | $46,277 | | Net cash provided by financing activities | $3,653 | $18 | | Net decrease in cash, cash equivalents and restricted cash | $(2,708) | $(6,796) | | Cash, cash equivalents and restricted cash at end of period | $49,925 | $117,482 | - Operating cash outflow decreased by **89% YoY**, from **$53.01 million** in Q1 2023 to **$5.72 million** in Q1 2024[22](index=22&type=chunk) - Investing activities used **$0.47 million** in Q1 2024, a significant change from the **$46.28 million** provided in Q1 2023, which included cash acquired from the Velodyne Merger[22](index=22&type=chunk) - Financing activities provided **$3.65 million** in Q1 2024, primarily from at-the-market stock offerings[22](index=22&type=chunk) [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) These notes provide detailed explanations and disclosures supporting the condensed consolidated financial statements, covering business, accounting policies, and key financial components [Note 1 – Description of Business and Basis of Presentation](index=11&type=section&id=Note%201%20%E2%80%93%20Description%20of%20Business%20and%20Basis%20of%20Presentation) Ouster, Inc. provides high-resolution digital lidar sensors, completed a merger with Velodyne in 2023, and maintains **$189.5 million** in liquidity - Ouster, Inc. provides high-resolution digital lidar sensors for machinery, vehicles, robots, and fixed infrastructure, enabling advanced 3D vision and autonomy[27](index=27&type=chunk)[147](index=147&type=chunk) - The company completed a merger with Velodyne Lidar, Inc. on February 10, 2023, accounted for as a business combination[29](index=29&type=chunk) - As of March 31, 2024, Ouster had **$189.5 million** in cash, cash equivalents, restricted cash, and short-term investments, deemed adequate to fund operations for at least twelve months despite recurring losses[34](index=34&type=chunk) [Note 2 – Summary of Significant Accounting Policies](index=12&type=section&id=Note%202%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) This note confirms no significant changes to accounting policies in Q1 2024 and details credit risk management, including major customer and supplier concentrations - No significant changes to accounting policies were made during the three months ended March 31, 2024[35](index=35&type=chunk) - The company manages credit risk by assessing customer creditworthiness and provides for uncollectible amounts through a valuation allowance[39](index=39&type=chunk) Accounts Receivable from Major Customers (10% or more) | Customer | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Customer A | 41 % | 42 % | | Customer B | 12 % | 12 % | Revenue from Major Customers (10% or more) | Customer | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Customer C | * | 11% | | Customer E | 11% | * | * Customer accounted for less than 10% of total revenue in the period. Purchases from Major Suppliers (10% or more) | Supplier | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Supplier A | 17 % | 11 % | | Supplier B | 25 % | 17 % | [Note 3. Business Combination and Related Transactions](index=13&type=section&id=Note%203.%20Business%20Combination%20and%20Related%20Transactions) Ouster completed the Velodyne Merger on February 10, 2023, for **$306.6 million**, resulting in **$115.5 million** in goodwill and significant pro forma impacts - Ouster completed the Velodyne Merger on February 10, 2023, with Velodyne treated as the acquired company for financial reporting[42](index=42&type=chunk) - The acquisition price for the Velodyne Merger was **$306.6 million**, including the fair value of common stock issued and the Amazon Warrant[42](index=42&type=chunk) Velodyne Merger Purchase Price Allocation (in thousands) | Item | Estimated Fair Value | | :--- | :--- | | Purchase consideration | $306,602 | | Total identifiable net assets | $191,079 | | Goodwill | $115,523 | Identified Intangible Assets Acquired (in thousands, except years) | Asset | Estimated Useful Life (in years) | Estimated Fair Value | | :--- | :--- | :--- | | Developed technology - Hardware | 3 | $2,500 | | Developed technology - Software | 5 | $5,100 | | Customer relationships | 8 | $5,400 | | Intangible assets, net | 5.9 | $13,000 | Unaudited Supplemental Pro Forma Information (Three Months Ended March 31, 2023, in thousands) | Item | Amount | | :--- | :--- | | Revenue | $20,886 | | Net loss | $(175,835) | [Note 4. Fair Value of Financial Instruments](index=15&type=section&id=Note%204.%20Fair%20Value%20of%20Financial%20Instruments) This note details fair value measurements of financial assets and liabilities, totaling **$161.3 million** in assets and **$0.25 million** in Level 3 warrant liabilities Fair Value of Financial Instruments (March 31, 2024, in thousands) | Item | Level 1 | Level 2 | Level 3 | Total | | :--- | :--- | :--- | :--- | :--- | | Money market funds | $21,793 | — | — | $21,793 | | Commercial paper | — | $82,917 | — | $82,917 | | Corporate debt and U.S. government agency securities | — | $56,629 | — | $56,629 | | Total financial assets | $21,793 | $139,546 | — | $161,339 | | Warrant liabilities | — | — | $250 | $250 | - Private Placement warrant liabilities are valued using Level 3 measurements, employing the Black-Scholes option pricing model with unobservable inputs[51](index=51&type=chunk) Changes in Fair Value of Level 3 Financial Instruments (Private Placement Warrant Liability, in thousands) | Period | Fair Value | | :--- | :--- | | December 31, 2023 | $229 | | Change in fair value (Q1 2024) | $21 | | March 31, 2024 | $250 | [Note 5. Balance Sheet Components](index=17&type=section&id=Note%205.%20Balance%20Sheet%20Components) This note details key balance sheet components, including cash and cash equivalents at **$48.3 million**, inventory at **$21.1 million**, and intangible assets, net, at **$22.6 million** Cash and Cash Equivalents (in thousands) | Item | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash | $26,477 | $40,648 | | Money market funds | $21,793 | $7,354 | | Commercial paper | — | $2,989 | | Total | $48,270 | $50,991 | Inventory (in thousands) | Item | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Raw materials | $7,819 | $10,062 | | Work in process | $119 | $75 | | Finished goods | $13,132 | $13,095 | | Total | $21,070 | $23,232 | Intangible Assets, Net (in thousands) | Item | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Developed technology | $16,501 | $17,552 | | Vendor relationship | $1,283 | $1,833 | | Customer relationships | $4,808 | $5,051 | | Total | $22,592 | $24,436 | - Amortization expense for intangible assets was **$1.8 million** for Q1 2024, up from **$1.1 million** in the prior year[61](index=61&type=chunk) [Note 6. Debt](index=19&type=section&id=Note%206.%20Debt) Ouster repaid its **$40.0 million** Hercules loan and secured a new **$45.0 million** UBS credit line, with **$44.0 million** outstanding and covenant compliance - The previous Loan Agreement with Hercules Capital, Inc. for up to **$50.0 million** was repaid on October 25, 2023, resulting in a **$3.6 million** loss on extinguishment of debt[69](index=69&type=chunk) - A new revolving credit line of up to **$45.0 million** was entered into with UBS Bank USA on October 25, 2023, maturing on August 2, 2025[71](index=71&type=chunk) - As of March 31, 2024, the company had borrowed **$44.0 million** under the UBS Agreement and was in compliance with the minimum liquidity requirement of **$52.0 million**[72](index=72&type=chunk)[73](index=73&type=chunk)[77](index=77&type=chunk) [Note 7. Warrants](index=20&type=section&id=Note%207.%20Warrants) This note details Private Placement, Public, and Amazon Warrants, with the Amazon Warrant allowing acquisition of up to **3,264,516 shares** at **$50.69 per share** - Private Placement warrants are exercisable for one-tenth of an Ouster common stock share at **$115.00 per share**, expiring 5 years from the Colonnade Merger completion[78](index=78&type=chunk) - Public Warrants (including Velodyne Public warrants) are exercisable for Ouster common stock at **$115.00 per share** (Ouster) or **$140.20 per 0.6153 share** (Velodyne), with redemption clauses[81](index=81&type=chunk)[83](index=83&type=chunk) - The Amazon Warrant, assumed in the Velodyne Merger, allows Amazon to acquire up to **3,264,516 shares** of common stock at an exercise price of **$50.69 per share** as of March 31, 2024, subject to anti-dilution adjustments[84](index=84&type=chunk) - Amazon Warrant shares vest based on payments by Amazon for goods and services, with **56,634 shares** vesting in Q1 2024, leading to a **$0.2 million** non-cash stock-based reduction to revenue[86](index=86&type=chunk)[88](index=88&type=chunk) [Note 8. Commitments and Contingencies](index=22&type=section&id=Note%208.%20Commitments%20and%20Contingencies) Ouster faces legal proceedings, including a **$27.5 million** Velodyne securities class action settlement and ongoing patent infringement litigation with Hesai - A **$27.5 million** settlement for the consolidated Velodyne securities class action lawsuits was preliminarily approved on April 23, 2024, with **$23.4 million** expected from insurance proceeds[95](index=95&type=chunk) - Ouster filed a Section 337 complaint with the ITC and a patent infringement complaint in Delaware against Hesai Group, alleging infringement of its LiDAR patents[101](index=101&type=chunk)[102](index=102&type=chunk) - The ITC investigation against Hesai was terminated based on an arbitration agreement from a 2020 settlement between Hesai and Velodyne, which Ouster disputes applies to its patents[101](index=101&type=chunk) - Hesai filed Petitions for Inter Partes Review challenging the validity of four of Ouster's five asserted patents, with PTAB instituting review for four patents[104](index=104&type=chunk) - The SEC concluded its investigation into Ouster's projected financial information from 2020 and does not intend to recommend enforcement action[100](index=100&type=chunk) [Note 9. Common Stock](index=25&type=section&id=Note%209.%20Common%20Stock) Ouster is authorized to issue **100 million** common and preferred shares, and sold **343,571 common shares** for **$2.3 million** in Q1 2024 via ATM - The company is authorized to issue **100,000,000 shares of common stock** and **100,000,000 shares of preferred stock**[108](index=108&type=chunk) - During Q1 2024, Ouster sold **343,571 shares of common stock** under the ATM Agreement for net proceeds of **$2.3 million**[110](index=110&type=chunk) - As of March 31, 2024, approximately **$114.4 million** remains available under the ATM Agreement[112](index=112&type=chunk) [Note 10. Stock-based Compensation](index=25&type=section&id=Note%2010.%20Stock-based%20Compensation) Ouster recognized **$9.4 million** in stock-based compensation expense for Q1 2024, a significant decrease from **$21.8 million** in Q1 2023, with **$31.0 million** unamortized for RSUs Total Stock-Based Compensation Expense (in thousands) | Item | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Total stock-based compensation | $9,404 | $21,780 | Stock-Based Compensation Expense by Award Type (in thousands) | Award Type | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | RSUs | $6,809 | $16,330 | | Stock Options | $1,530 | $2,005 | | Employee stock purchase plan | $505 | $184 | | RSAs | $560 | $3,261 | - As of March 31, 2024, unamortized stock-based compensation expense for unvested RSUs was **$31.0 million** (weighted-average remaining vesting period of 1.9 years) and for RSAs was **$6.7 million** (weighted-average remaining vesting period of 1.4 years)[123](index=123&type=chunk)[124](index=124&type=chunk) [Note 11. Net Loss Per Common Share](index=28&type=section&id=Note%2011.%20Net%20Loss%20Per%20Common%20Share) Ouster reported a basic and diluted net loss per common share of **$(0.55)** for Q1 2024, a significant improvement from **$(6.03)** in Q1 2023 Net Loss Per Common Share (in thousands, except share and per share data) | Item | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net loss | $(23,849) | $(177,280) | | Weighted average shares | 43,454,127 | 29,411,612 | | Net loss per common share, basic and diluted | $(0.55) | $(6.03) | - The net loss per common share improved significantly from **$(6.03)** in Q1 2023 to **$(0.55)** in Q1 2024[127](index=127&type=chunk) - Over **11 million** potentially dilutive securities were excluded from diluted EPS calculation due to the net loss[128](index=128&type=chunk) [Note 12. Income Taxes](index=28&type=section&id=Note%2012.%20Income%20Taxes) Ouster's income tax provision for Q1 2024 and Q1 2023 was not material due to tax losses and a full valuation allowance against deferred tax assets - The income tax provision for Q1 2024 and Q1 2023 was not material[129](index=129&type=chunk) - The company maintains a full valuation allowance against its net deferred tax assets due to the unlikelihood of their realization[129](index=129&type=chunk) [Note 13. Revenue](index=28&type=section&id=Note%2013.%20Revenue) Ouster's revenue, primarily from lidar sensor sales, increased by **51% YoY** to **$25.9 million** in Q1 2024, with contract liabilities totaling **$17.9 million** - The majority of revenue is recognized at a point in time when customers obtain control of lidar sensor kits[130](index=130&type=chunk) Total Revenues by Geographic Area (in thousands) | Region | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Americas | $10,624 | $9,904 | | Asia Pacific | $6,149 | $2,669 | | Europe, Middle East and Africa | $9,171 | $4,657 | | Total | $25,944 | $17,230 | - Revenue increased by **51% YoY**, with Asia Pacific growing **130%** and EMEA growing **97%**[130](index=130&type=chunk) Contract Liabilities (in thousands) | Item | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Contract liabilities, current | $13,429 | $12,885 | | Contract liabilities, non-current portion | $4,483 | $4,967 | | Total contract liabilities | $17,912 | $17,852 | - Revenue recognized from contract liabilities at the beginning of Q1 2024 was **$1.29 million**[142](index=142&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Ouster's financial performance, condition, and key operational factors, including a detailed analysis of Q1 2024 results, liquidity, and accounting estimates [Overview](index=31&type=section&id=Overview) Ouster, founded in 2015, is a leading global provider of high-resolution digital lidar sensors and perception software, expanding its offerings through the 2023 Velodyne merger - Ouster is a leading global provider of autonomy solutions, offering high-resolution digital lidar sensors and perception software for various markets[147](index=147&type=chunk) - The company's hardware includes OS product line sensors (OSDome, OS0, OS1, OS2), with the newest REV7 series powered by the L3 chip, and a solid-state digital flash (DF) product line under development[150](index=150&type=chunk) - Ouster completed a merger with Velodyne Lidar, Inc. on February 10, 2023, integrating Velodyne's Alpha Prime and Puck sensor models into its product offerings[155](index=155&type=chunk)[156](index=156&type=chunk) - The company's digital lidar design offers manufacturing cost advantages, relying on main manufacturing partners Benchmark and Fabrinet in Thailand[153](index=153&type=chunk) [Factors Affecting Our Performance](index=32&type=section&id=Factors%20Affecting%20Our%20Performance) Ouster's performance is influenced by lidar commercialization, customer production, ASPs, R&D investments, supply chain, market trends, and international expansion strategies - Performance is affected by the timing of end market and customer adoption of lidar technology, with fluctuations expected until more customers commercialize products[157](index=157&type=chunk) - Critical to success is customers reaching commercial production and selecting Ouster's products, with production cycles varying from six months to seven years[158](index=158&type=chunk) - ASPs and gross margins are influenced by sensor volumes, product mix, and solutions provided, with expected downward pressure on prices from large multi-year agreements but also anticipated volume-driven cost decreases[161](index=161&type=chunk)[162](index=162&type=chunk) - Continued investment in R&D, including the next-generation L4 and Chronos custom silicon chips, is essential to maintain a leading market position[163](index=163&type=chunk) - Supply chain continuity is a risk due to reliance on limited or single-source suppliers for key components[164](index=164&type=chunk) - International expansion in Americas, Asia Pacific, and EMEA is a key strategy for revenue growth, exposing the company to additional foreign currency risk, taxes, and operational costs[167](index=167&type=chunk) [Components of Results of Operations](index=35&type=section&id=Components%20of%20Results%20of%20Operations) This section defines Ouster's revenue recognition, cost of revenue, operating expenses (R&D, Sales and Marketing, G&A, Goodwill Impairment), and other income/expense components - Revenue is primarily from lidar sensor and accessory sales, recognized when control of the product transfers to the customer, typically upon shipment[168](index=168&type=chunk) - Cost of revenue includes manufacturing costs, personnel expenses, third-party contract manufacturer fees, depreciation, amortization, warranty, and inventory write-downs[170](index=170&type=chunk) - R&D expenses cover design, prototyping, testing, new product development, SoC design, and custom manufacturing equipment, with absolute amounts expected to grow but decrease as a percentage of revenue[172](index=172&type=chunk)[173](index=173&type=chunk) - Goodwill impairment charges of **$99.4 million** were recorded in Q1 2023 due to a decrease in market capitalization, with no addition to goodwill in Q1 2024[176](index=176&type=chunk) [Results of Operations: Comparison of the three months ended March 31, 2024 and 2023](index=37&type=section&id=Results%20of%20Operations%3A%20Comparison%20of%20the%20three%20months%20ended%20March%2031%2C%202024%20and%202023) Ouster's Q1 2024 revenue increased by **51%** to **$25.9 million**, gross profit improved, operating expenses decreased by **81%**, and net loss narrowed significantly to **$23.8 million** Revenue by Geographic Location (in thousands) | Region | 2024 | 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Americas | $10,624 | $9,904 | $720 | 7 % | | Asia Pacific | $6,149 | $2,669 | $3,480 | 130 % | | Europe, Middle East and Africa | $9,171 | $4,657 | $4,514 | 97 % | | Total | $25,944 | $17,230 | $8,714 | 51 % | - Revenue increased by **$8.7 million**, or **51%**, primarily due to the REV7 sensor launch and full quarter results from Velodyne product lines[182](index=182&type=chunk) - Cost of revenue increased by **$0.9 million**, or **5%**, to **$18.5 million**, primarily due to increased revenues, partially offset by lower inventory write-downs and compensation expenses[184](index=184&type=chunk) Operating Expenses (in thousands) | Expense Category | 2024 | 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $13,806 | $32,459 | $(18,653) | (57)% | | Sales and marketing | $6,860 | $13,533 | $(6,673) | (49)% | | General and administrative | $12,580 | $31,325 | $(18,745) | (60)% | | Goodwill impairment charges | — | $99,409 | $(99,409) | * | | Total operating expenses | $33,246 | $176,726 | $(143,480) | (81)% | *Not meaningful - Total operating expenses decreased by **$143.5 million**, or **81%**, primarily due to reductions in headcount and other costs from 2023 restructuring initiatives, and the absence of goodwill impairment charges[185](index=185&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk) Other Income (Expense), Net (in thousands) | Item | 2024 | 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Interest income | $2,651 | $1,719 | $932 | 54 % | | Interest expense | $(741) | $(1,669) | $928 | (56)% | | Other income, net | $193 | $54 | $139 | 257 % | - Interest income increased by **54%** due to higher average cash balances and interest rates, while interest expense decreased by **56%** due to a new credit agreement with a lower interest rate[191](index=191&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) Ouster's liquidity sources include cash and investments totaling **$189.5 million**, with a **$45.0 million** UBS credit line and **$114.4 million** remaining under its ATM program - Principal liquidity sources include cash, cash equivalents, short-term investments, revenue, at-the-market equity offerings, and debt financing[194](index=194&type=chunk) - As of March 31, 2024, Ouster had an accumulated deficit of **$839.9 million** and approximately **$189.5 million** in cash, cash equivalents, restricted cash, and short-term investments[195](index=195&type=chunk) - Management believes existing liquidity is adequate for at least twelve months, but additional capital may be required for growth, technological advancements, and market challenges[195](index=195&type=chunk)[197](index=197&type=chunk) - During Q1 2024, **$2.3 million** net proceeds were raised from the ATM Agreement, with **$114.4 million** remaining available[198](index=198&type=chunk) - The company has a **$45.0 million** revolving credit line with UBS, with **$44.0 million** borrowed, secured by assets in securities accounts and requiring a minimum liquidity of **$52.0 million**[199](index=199&type=chunk)[201](index=201&type=chunk) Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Operating activities | $(5,722) | $(53,012) | | Investing activities | $(469) | $46,277 | | Financing activities | $3,653 | $18 | - Net cash used in operating activities decreased significantly from **$53.0 million** in Q1 2023 to **$5.7 million** in Q1 2024[209](index=209&type=chunk) [Critical Accounting Estimates](index=43&type=section&id=Critical%20Accounting%20Estimates) Ouster's critical accounting estimates remain largely unchanged since the 2023 Annual Report, except for revenue policies and investments related to the Velodyne Merger - No significant changes to critical accounting policies since the 2023 Annual Report, except for revenue policies and the addition of investments due to the Velodyne Merger[215](index=215&type=chunk) - Financial statements require estimates and assumptions based on historical experience and business environment changes, which can materially impact financial condition and operating results[216](index=216&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Ouster faces market risks from interest rate fluctuations, foreign currency exchange rates, and inflation, with **$189.5 million** in liquid assets and **$44.0 million** in variable-rate debt - Market risks include fluctuations in interest rates, foreign currency exchange rates, and inflation[217](index=217&type=chunk) - Inflation increases operating costs and reduces customer capital, potentially decreasing sales, and may enhance volatility in currency exchange rates[218](index=218&type=chunk) - As of March 31, 2024, the company had **$189.5 million** in cash, cash equivalents, restricted cash, and short-term investments, subject to interest rate risk, but mitigated by their short-term, liquid nature[219](index=219&type=chunk) - A hypothetical **1%** change in the effective interest rate on the **$44.0 million** variable-rate debt under the UBS Agreement would impact interest expense by approximately **$0.4 million** over 12 months[221](index=221&type=chunk) - Foreign currency exchange risk exists due to international operations, but a hypothetical **10%** change would not materially impact historical financial statements, and no hedging strategies are currently used[222](index=222&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Ouster's disclosure controls and procedures were not effective as of March 31, 2024, due to material weaknesses in internal control over financial reporting, with ongoing remediation efforts - Disclosure controls and procedures were deemed not effective as of March 31, 2024, due to material weaknesses in internal control over financial reporting[225](index=225&type=chunk) - Material weaknesses include an insufficient complement of personnel with appropriate internal controls and accounting knowledge, and ineffective controls over the period-end financial reporting process[228](index=228&type=chunk)[230](index=230&type=chunk) - Remediation measures are ongoing, including recruiting personnel, reallocating roles, operating entity-level controls, providing internal control training, and strengthening financial close and reporting procedures[232](index=232&type=chunk)[234](index=234&type=chunk) - No other material changes in internal control over financial reporting occurred during Q1 2024, apart from the described remediation measures[233](index=233&type=chunk) [Part II - Other Information](index=47&type=section&id=Part%20II%20-%20Other%20Information) [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 8, 'Commitments and Contingencies,' and Note 14, 'Subsequent Events,' in Part I for details on legal proceedings - Details on legal proceedings are incorporated by reference from Note 8, 'Commitments and Contingencies,' and Note 14, 'Subsequent Events,' in Part I[236](index=236&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) Investing in Ouster's securities involves a high degree of risk, with no material changes to risk factors since the 2023 Annual Report on Form 10-K - Investing in Ouster's securities involves a high degree of risk[237](index=237&type=chunk) - No material changes to the company's risk factors have occurred since the filing of the 2023 Annual Report on Form 10-K[237](index=237&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In January 2024, Bluecity Holders exchanged shares for **29,376 shares** of Ouster's common stock, issued without registration under the Securities Act - In January 2024, Bluecity Holders exchanged shares in a Velodyne subsidiary for **29,376 shares** of Ouster's common stock[238](index=238&type=chunk) - The common stock shares were issued without registration under the Securities Act, in reliance on Section 4(a)(2) and/or Regulation S[238](index=238&type=chunk) [Item 3. Defaults Upon Senior Securities](index=47&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the reporting period - None[239](index=239&type=chunk) [Item 4. Mine Safety Disclosures](index=47&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the company - Not applicable[240](index=240&type=chunk) [Item 5. Other Information](index=47&type=section&id=Item%205.%20Other%20Information) This section confirms no disclosures in lieu of Form 8-K, no material changes to board nominee procedures, and no Rule 10b5-1 trading arrangements by directors or officers in Q1 2024 - No disclosure in lieu of reporting on a Current Report on Form 8-K[241](index=241&type=chunk) - No material changes to procedures for security holders to recommend board nominees[241](index=241&type=chunk) - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q1 2024[242](index=242&type=chunk) [Item 6. Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including merger agreements, corporate governance documents, and certifications, indicating their filing status - The section lists various exhibits, including merger agreements (2.1, 2.2), corporate governance documents (3.1, 3.2, 3.3), warrant agreements (4.1, 4.2), executive transition and separation agreements (10.1, 10.2), compensation programs (10.3), stock grant notices (10.4), and certifications (31.1, 31.2, 32.1, 32.2)[243](index=243&type=chunk) - Exhibits are either incorporated by reference from previous filings or filed/furnished with the current report[243](index=243&type=chunk)[245](index=245&type=chunk) [Signature](index=51&type=section&id=Signature) This section contains the official signature of Ouster, Inc.'s Chief Financial Officer, Mark Weinswig, certifying the due authorization and filing of the report on May 13, 2024 - The report was signed by Mark Weinswig, Chief Financial Officer (principal financial officer and principal accounting officer) on behalf of Ouster, Inc. on May 13, 2024[248](index=248&type=chunk)

Financial Data and Key Metrics Changes - In Q1 2024, the company reported record revenues of $25.9 million, a 51% increase year-over-year and a 6% increase sequentially from Q4 2023 [7][68] - GAAP gross margin improved to 29% from negative 2% in Q1 2023 and increased 700 basis points from 22% in the prior quarter [17] - Non-GAAP gross margin reached 36%, marking the highest level in the company's history [17][37] - GAAP operating expenses were $33 million, reduced by 81% year-over-year and 22% sequentially [18] Business Line Data and Key Metrics Changes - The robotics vertical was the largest contributor to revenue, more than doubling year-over-year, followed by automotive, which achieved the highest quarterly revenue in the company's history [7] - The industrial vertical saw million-dollar deals in agriculture and ports applications, indicating strong growth potential [13] Market Data and Key Metrics Changes - The company is currently deploying solutions on only 5% of its global footprint, indicating significant room for expansion [12] - The U.S. government has committed over $20 billion to port infrastructure over the next five years, presenting a substantial market opportunity [80] Company Strategy and Development Direction - The company aims to expand its software offerings and grow its installed base, focusing on smart infrastructure markets, security, crowd analytics, and traffic control solutions [50][70] - The development of the DF sensors is positioned as a long-term strategy to meet market demands for low-cost, solid-state, modular, and high-performance products [102] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a revenue growth range of 30% to 50% for the year, despite challenges in customer adoption of lidar technology [23][36] - The company is focused on maintaining a strong balance sheet to support future growth, with cash and equivalents totaling $189 million as of March 31 [29] Other Important Information - The company has made significant strides in reducing operating cash burn and optimizing its cost structure while growing revenues [72][82] - The company has received positive feedback from major customers regarding its lidar technology, reinforcing its position in the market [14][50] Q&A Session Summary Question: What are the expectations for revenue growth in 2024? - Management confirmed a commitment to a 30% to 50% revenue growth range, citing both tailwinds and headwinds affecting the business [23][36] Question: Are there any 10% customers in Q1, and will there be more in the future? - The company had one 10% customer in Q1 and expects the number of such customers to increase as more clients move into production [64] Question: How does the company view opportunities in the automotive sector? - Management sees significant opportunities in the automotive sector, particularly with advancements in AI and the transition to different product lines [25][31]

Ouster Announces Record Revenue and Margin for First Quarter 2024 Record revenue of $26 million, up 51% year over year GAAP gross margin of 29% and record non-GAAP gross margin of 36% SAN FRANCISCO, CA – May 9, 2024 at 4:15 PM ET – Ouster, Inc. (NYSE: OUST) ("Ouster" or the "Company"), a leading global provider of high- performance lidar sensors and software solutions for the automotive, industrial, robotics, and smart infrastructure industries, announced today financial results for the three months ended M ...