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]

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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 # ...

Core Viewpoint - Ouster reported strong Q1 2024 earnings with a 51% revenue increase, leading to a significant stock price jump, indicating positive market reception and growth potential in the lidar sector [3][12]. Financial Performance - Q1 2024 revenue reached $25.94 million, a 6.3% year-over-year increase, with a GAAP EPS of -$0.55 [3][4]. - The company achieved a GAAP gross margin of 29%, up from -2% in Q1 2023, and a non-GAAP gross margin of 36%, compared to 25% in the same period last year [3][4]. - Net loss decreased to $24 million from $177 million in Q1 2023, and adjusted EBITDA loss improved to $12 million from $27 million in the same quarter last year [3][4]. Market Position and Growth Potential - Ouster's market cap is approximately $550 million, with a potential to reach $1 billion in revenue within five years, driven by strong demand in robotics and autonomous vehicles [6][12]. - The lidar market is projected to grow at a 21% CAGR, reaching $8 billion by 2030, with Ouster estimating its total addressable market (TAM) at $8.5 billion by 2025 [7][12]. Strategic Focus - The company is focusing on verticalization and software integration to enhance its product offerings, which is expected to create high-margin revenue streams [5][8]. - Ouster's software platforms, Gemini and Bluecity, are designed to complement its lidar hardware and target new industries, aiming to diversify its product portfolio [8][9]. Competitive Landscape - Ouster is positioned against major competitors like Hesai and Luminar, with Hesai currently holding a significant market share but facing geopolitical challenges that may create opportunities for Ouster [7][11]. - The company aims to differentiate itself by focusing on high-value verticals such as robotics and smart cities, leveraging AI capabilities to enhance its offerings [11]. Valuation Insights - Ouster's current valuation does not reflect its long-term growth potential, with a forward P/S ratio of 4.6 based on estimated 2024 revenue of $117 million [13]. - The company is expected to achieve sustained revenue growth of 30% to 50%, which could lead to a significant re-rating of its stock in the future [13][15].

[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 ...

Ouster, Inc. (OUST) could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank #1 (Strong Buy). An upward trend in earnings estimates -- one of the most powerful forces impacting stock prices -- has triggered this rating change.A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years.The power ...

Merger and Acquisition - The company completed a merger with Velodyne Lidar, Inc. on February 10, 2023, enhancing its product offerings and operational efficiencies[298]. - The company completed its merger with Velodyne Lidar, Inc. for an acquisition price of $306.6 million on February 10, 2023[383]. - The company recorded $2.5 million of hardware developed technology and $5.4 million of customer relationships as part of the merger[383]. - The company completed the Velodyne Merger on February 10, 2023, with an acquisition price of $306.6 million, which included $8.6 million for the Amazon Warrant[465]. - Total identifiable net assets from the Velodyne Merger were valued at $191.1 million, with goodwill recorded at $115.5 million[467]. - Velodyne revenue for the period from February 10, 2023, to December 31, 2023, was $29.0 million[471]. Financial Performance - Revenue increased by $42.3 million, or 103%, to $83.3 million for the year ended December 31, 2023, compared to $41.0 million in 2022, driven primarily by the Velodyne Merger which contributed $29.0 million[326]. - Total revenue for 2023 was $83,279,000, representing a 103% increase from $41,029,000 in 2022[390]. - The net loss for 2023 was $374,110,000, compared to a net loss of $138,560,000 in 2022, reflecting an increase in losses of approximately 170%[390]. - The net loss for the Company in 2023 was $372.7 million, compared to a net loss of $326.3 million in 2022, indicating a 14.2% increase in losses[471]. - Gross profit decreased to $8.3 million, representing a gross margin of 10% for 2023, down from a gross profit of $10.9 million and a gross margin of 27% in 2022[323][330]. - The company expects to continue experiencing significant operating losses and negative cash flows from operations in the foreseeable future[403]. Expenses and Costs - Research and development expenses rose by $26.9 million, or 42%, to $91.2 million in 2023, largely due to increased headcount-related expenses from the Velodyne Merger[332]. - Sales and marketing expenses increased by $10.8 million, or 35%, to $41.6 million in 2023, primarily driven by headcount-related expenses from the Velodyne Merger[333]. - General and administrative expenses grew by $20.8 million, or 34%, to $82.0 million in 2023, influenced by increased headcount-related expenses and litigation costs associated with the Velodyne Merger[334]. - Total operating expenses surged by $225.2 million, or 144%, to $381.5 million in 2023, reflecting the impact of the Velodyne Merger[331]. - Stock-based compensation increased to $57,725 in 2023 from $33,321 in 2022, reflecting higher expenses related to employee compensation[394]. Cash Flow and Liquidity - Cash used in operating activities for the year ended December 31, 2023 was $(137.9) million, compared to $(110.7) million in 2022, reflecting a worsening cash flow situation[354]. - Cash provided by financing activities in 2023 was $15.7 million, a significant decrease from $55.6 million in 2022, primarily due to lower proceeds from stock issuance[357]. - Cash and cash equivalents decreased to $50,991,000 in 2023 from $122,932,000 in 2022, a decline of about 59%[389]. - The company reported a total of $191.8 million in cash, cash equivalents, restricted cash, and short-term investments as of December 31, 2023[402]. - The company anticipates requiring additional capital to execute its business plan and may need to reduce discretionary spending if cash flows do not improve[403]. Assets and Liabilities - Total assets increased to $330,743,000 in 2023, up from $256,137,000 in 2022, marking a growth of about 29%[389]. - Total liabilities rose to $151,071,000 in 2023, compared to $84,518,000 in 2022, which is an increase of approximately 78%[389]. - Stockholders' equity increased to $179,672,000 in 2023, slightly up from $171,619,000 in 2022, showing a growth of about 5%[389]. - The company has recorded a full valuation allowance against its deferred tax assets due to a history of operating losses as of December 31, 2023[459]. Market and Strategic Focus - The company anticipates a multibillion dollar total addressable market (TAM) for its lidar solutions, particularly in industrial automation, smart infrastructure, robotics, and automotive sectors[307]. - The company aims to expand its international presence, viewing it as a key strategy for revenue growth and profitability[309]. - The company has invested heavily in patents, creating significant barriers to entry for competitors in the digital lidar space[294]. - The company plans to integrate its next-generation L4 custom silicon chip into its OS sensor family, which is expected to improve range, field of view, and manufacturability[306]. Risks and Challenges - The company is exposed to market risks primarily due to fluctuations in interest rates and foreign currency exchange rates[366]. - General inflation has negatively impacted the company's operating costs and may affect customer purchasing behavior[367]. - The company has not engaged in any hedging strategies to manage foreign currency exchange rate risks[371]. - The company expects R&D expenses as a percentage of revenue to decrease over time as the business grows, despite absolute R&D costs continuing to rise[315].