Ouster(OUST) - 2024 Q2 - Quarterly Report

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$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$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$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$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$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$0.4 million over the next 12 months [163].