Ouster(OUST) - 2025 Q1 - Quarterly Report

Part I - Financial Information This section presents the company's comprehensive financial data, including statements, notes, and management's analysis Item 1. Financial Statements This section presents Ouster, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations and comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining the company's business, accounting policies, financial instrument fair values, balance sheet components, debt, Amazon warrant, commitments, common stock, stock-based compensation, net loss per share, income taxes, revenue, segments, and subsequent events for the period ended March 31, 2025 Condensed Consolidated Balance Sheets (Unaudited) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific dates Condensed Consolidated Balance Sheets (Unaudited) | Metric | March 31, 2025 (thousands) | December 31, 2024 (thousands) | | :---------------------- | :------------------------- | :---------------------------- | | Total Assets | $268,587 | $276,148 | | Total Liabilities | $100,644 | $95,237 | | Total Stockholders' Equity | $167,943 | $180,911 | Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) This section outlines the company's financial performance over a period, including revenue, expenses, and net loss Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) | Metric | Three Months Ended March 31, 2025 (thousands) | Three Months Ended March 31, 2024 (thousands) | Change (%) | | :---------------------- | :-------------------------------------------- | :-------------------------------------------- | :--------- | | Revenue | $32,632 | $25,944 | 26 % | | Gross profit | $13,483 | $7,425 | 81.6 % | | Loss from operations | $(23,830) | $(25,821) | (7.7) % | | Net loss | $(22,017) | $(23,849) | (7.7) % | | Net loss per common share, basic and diluted | $(0.42) | $(0.55) | (23.6) % | Condensed Consolidated Statements of Stockholders' Equity (Unaudited) This section details changes in the company's equity, reflecting net loss and stock-based compensation Condensed Consolidated Statements of Stockholders' Equity (Unaudited) | Metric | March 31, 2025 (thousands) | December 31, 2024 (thousands) | | :-------------------------------------- | :------------------------- | :---------------------------- | | Total Stockholders' Equity (End of Period) | $167,943 | $180,911 | | Net Loss (Q1 2025) | $(22,017) | N/A | | Stock-based Compensation Expense (Q1 2025) | $8,498 | N/A | Condensed Consolidated Statements of Cash Flows (Unaudited) This section summarizes the cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Unaudited) | Cash Flow Activity | Three Months Ended March 31, 2025 (thousands) | Three Months Ended March 31, 2024 (thousands) | | :------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net cash used in operating activities | $(4,879) | $(5,722) | | Net cash provided by (used in) investing activities | $12,590 | $(469) | | Net cash provided by financing activities | $660 | $3,653 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $8,451 | $(2,708) | Notes to Condensed Consolidated Financial Statements (Unaudited) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements Note 1 – Description of Business and Basis of Presentation This note describes Ouster, Inc.'s business operations and the foundational principles used in preparing the financial statements - Ouster, Inc. is a leading provider of high-resolution digital lidar sensors for machinery, vehicles, robots, and fixed infrastructure assets, enabling advanced 3D vision and safe operation[24] - As of March 31, 2025, the company's liquidity included $170.8 million in cash, cash equivalents, restricted cash, and short-term investments[28] - Despite recurring losses and negative cash flows from operations, management believes existing liquidity is adequate to fund operations for at least twelve months[28] Note 2 – Summary of Significant Accounting Policies This note outlines the key accounting principles and methods applied in the financial reporting - No significant changes to the company's accounting policies occurred during the three months ended March 31, 2025[29] - The company is evaluating the potential impact of recently issued accounting pronouncements, ASU 2023-09 (Income Taxes) and ASU 2024-03 (Disaggregation of Income Statement Expenses), on its future financial statements[31][32] Accounts Receivable from Major Customers (as % of total accounts receivable) | Customer | March 31, 2025 | December 31, 2024 | | :--------- | :------------- | :---------------- | | Customer A | 31 % | 39 % | | Customer E | 21 % | * | *Customer accounted for less than 10% of total accounts receivable in the period. Revenue from Major Customers (as % of total revenue) | Customer | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--------- | :-------------------------------- | :-------------------------------- | | Customer E | 15 % | 11 % | | Customer F | 19 % | * | *Customer accounted for less than 10% of total revenue in the period. Purchases from Major Suppliers (as % of total purchases) | Supplier | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--------- | :-------------------------------- | :-------------------------------- | | Supplier A | 11 % | 17 % | | Supplier B | 27 % | 25 % | Note 3. Fair Value of Financial Instruments This note details the fair value measurements of the company's financial assets and liabilities Fair Value of Financial Assets (March 31, 2025, in thousands) | Asset Type | Level 1 | Level 2 | Total | | :---------------------------------------- | :------ | :--------- | :--------- | | Money market funds | $28,825 | — | $28,825 | | Commercial paper | — | $50,438 | $50,438 | | Corporate debt and U.S. government agency securities | — | $63,768 | $63,768 | | Total financial assets | $28,825 | $114,206 | $143,031 | - The value and changes in Level 3 liabilities measured at fair value on a recurring basis are immaterial[40] - Intangible assets are measured at fair value on a non-recurring basis and are categorized within the Level 3 valuation hierarchy due to subjective unobservable inputs[41] Note 4. Balance Sheet Components This note provides a detailed breakdown of specific asset and liability accounts on the balance sheet Cash and Cash Equivalents (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :---------------- | :------------- | :---------------- | | Cash | $25,159 | $20,802 | | Money market funds | $28,825 | $24,740 | | Total | $53,984 | $45,542 | Inventory (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :-------------- | :------------- | :---------------- | | Raw materials | $3,650 | $3,610 | | Work in process | $98 | $307 | | Finished goods | $11,357 | $12,500 | | Total | $15,105 | $16,417 | Property and Equipment, net (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :------------------------ | :------------- | :---------------- | | Gross Carrying amount | $30,592 | $30,182 | | Less: Accumulated depreciation | $(20,696) | $(20,018) | | Property and equipment, net | $9,896 | $10,164 | Intangible Assets, net (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :-------------------- | :------------- | :---------------- | | Developed technology | $12,751 | $13,705 | | Vendor relationship | — | — | | Customer relationships | $3,959 | $4,125 | | Intangible assets, net | $16,710 | $17,830 | Accrued and Other Current Liabilities (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :--------------------------------- | :------------- | :---------------- | | Accrued legal fees and contingencies | $17,025 | $8,493 | | Uninvoiced receipts | $4,990 | $4,368 | | Accrued compensation | $6,371 | $6,115 | | Sales and use tax | $1,375 | $2,215 | | Other | $10,224 | $9,400 | | Total | $39,985 | $30,591 | Note 5. Debt This note describes the company's debt obligations and related financing activities - The company's $44.0 million revolving credit line with UBS Bank USA was fully repaid and terminated on August 12, 2024[60] Note 6. Amazon Warrant This note details the terms and status of the warrant issued to Amazon - The Amazon Warrant allows Amazon to acquire up to 3,263,898 shares of common stock at an exercise price of $50.71 per share[61] - During the three months ended March 31, 2025, 28,400 Amazon Warrant shares vested, bringing the total vested shares to 2,188,704 as of March 31, 2025[64] Note 7. Commitments and Contingencies This note outlines the company's contractual commitments and potential liabilities from legal proceedings - Outstanding letters of credit totaled $1.4 million as of March 31, 2025, collateralized by restricted cash[65] - The Velodyne securities class action lawsuit was preliminarily settled for $27.5 million in April 2024, with $23.4 million funded by insurance proceeds[69] - A confidential settlement was reached on April 16, 2025, for the David and Marta Hall arbitration and related lawsuits, resulting in an immaterial net charge after insurance recovery[70][71] - The company accrued $17.0 million in connection with Velodyne Legacy and Ouster legal proceedings during the three months ended March 31, 2025[76] - An arbitration tribunal issued a confidential interim decision on March 28, 2025, finding Ouster subject to the Velodyne-Hesai Photonics Settlement Agreement, with pending issues that may impact future revenue and damages[74] Note 8. Common Stock This note provides information on the company's common stock, including issuance and related agreements - The company's At-Market-Issuance Sales Agreement (ATM Agreement) was terminated in April 2025[81] - No shares of common stock were sold under the ATM Agreement during the three months ended March 31, 2025[81] - From the ATM Agreement's inception through March 31, 2025, the company sold 9,707,674 shares, generating cumulative net proceeds of approximately $88.7 million[82] Note 9. Stock-based Compensation This note details the expenses and accounting for stock-based compensation plans Stock-based Compensation Expense by Operating Expense (in thousands) | Category | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------ | :-------------------------------- | :-------------------------------- | | Cost of revenue | $1,137 | $913 | | Research and development | $4,305 | $4,188 | | Sales and marketing | $1,106 | $1,400 | | General and administrative | $1,950 | $2,903 | | Total | $8,498 | $9,404 | Stock-based Compensation Expense by Award Type (in thousands) | Award Type | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------ | :-------------------------------- | :-------------------------------- | | RSUs | $7,333 | $6,809 | | Stock Options | — | $1,530 | | Employee stock purchase plan | $340 | $505 | | RSAs | $825 | $560 | | Total | $8,498 | $9,404 | - As of March 31, 2025, total unrecognized compensation expense related to unvested RSUs was $53.6 million, with a weighted-average remaining vesting period of 1.9 years[90] Note 10. Net Loss Per Common Share This note explains the calculation of net loss per common share, both basic and diluted Net Loss Per Common Share (Basic and Diluted) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss per common share—basic and diluted | $(0.42) | $(0.55) | | Weighted average shares used | 52,488,199 | 43,454,127 | Potentially Dilutive Securities Excluded from Diluted EPS (March 31, 2025) | Security Type | Number of Shares | | :---------------------------------- | :--------------- | | Options to purchase common stock | 1,741,440 | | Public and private common stock warrants | 5,235,409 | | Restricted Stock Units | 5,426,805 | | ESPP shares pending issuance | 549,260 | | Restricted Stock Awards | 388,626 | | Total | 13,341,540 | Note 11. Income Taxes This note describes the company's income tax provision and deferred tax assets - The income tax provision for the three months ended March 31, 2025, and 2024, was immaterial due to tax losses and a full valuation allowance against net deferred tax assets[95] Note 12. Revenue This note provides a detailed breakdown of the company's revenue recognition policies and sources - The majority of revenue is recognized at the point in time when the customer obtains control of the respective lidar sensor kits[96] - The company recognized $1.5 million in patent royalty revenue from a long-term IP license agreement in the first quarter of 2025[97] Total Revenues by Geographic Area (in thousands) | Region | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change ($) | Change (%) | | :-------------------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Americas | $15,528 | $10,624 | $4,904 | 46 % | | Asia and Pacific | $12,464 | $6,149 | $6,315 | 103 % | | Europe, Middle East and Africa | $4,640 | $9,171 | $(4,531) | (49) % | | Total | $32,632 | $25,944 | $6,688 | 26 % | Countries with >10% of Total Revenue | Country | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------ | :-------------------------------- | :-------------------------------- | | United States | 45 % | 36 % | | Thailand | 23 % | * | *Country accounted for less than 10% of total revenue in the period. Contract Liabilities (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :------------------------------------ | :------------- | :---------------- | | Contract liabilities, current | $27,374 | $34,351 | | Contract liabilities, non-current portion | $2,999 | $2,538 | | Total contract liabilities | $30,373 | $36,889 | Note 13. Segments This note describes the company's operating segments and how performance is evaluated - The company operates as one reportable and operating segment, focused on the sale and production of lidar sensor kits[107] - The Chief Executive Officer serves as the Chief Operating Decision Maker (CODM), reviewing consolidated financial information for resource allocation and performance evaluation[107] Note 14. Subsequent Events This note discloses significant events that occurred after the balance sheet date - The At-Market-Issuance Sales Agreement (ATM Agreement) was terminated in April 2025[109] - A new registration statement on Form S-3 was filed on May 2, 2025, but has not yet been declared effective by the SEC[109] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Ouster, Inc.'s financial condition and results of operations for the three months ended March 31, 2025. It highlights a 26% increase in revenue and a significant improvement in gross margin to 41%, leading to a reduced net loss. The discussion covers strategic investments in product development and market expansion, factors affecting performance, and the company's liquidity position, including the termination of its ATM Agreement and improved cash flow from operations - Revenue increased by 26% year-over-year to $32.6 million for the three months ended March 31, 2025[141] - Gross margin improved to 41% for the three months ended March 31, 2025, up from 29% in the prior year period[144] - Net loss decreased by 7.7% year-over-year to $(22.0) million for the three months ended March 31, 2025[138] - Cash used in operating activities improved to $(4.9) million in Q1 2025 from $(5.7) million in Q1 2024[160] Overview This section provides a general description of Ouster, Inc.'s business, products, and strategic direction - Ouster is a leading global provider of high-resolution digital lidar sensors and solutions for automotive, industrial, robotics, and smart infrastructure markets[112] - The company's product offerings include the OS product line (OSDome, OS0, OS1, OS2) with various resolution options, and it is developing solid-state digital flash (DF) sensors[113] - Ouster also provides perception software platforms like Ouster Gemini and BlueCity for smart infrastructure deployments[114] - Products acquired through the Velodyne Merger are in their final life cycle stages and are planned for discontinuation in 2025[117] Factors Affecting Our Performance This section discusses key internal and external elements that influence the company's financial and operational results - The commercialization of lidar applications is approaching an inflection point, but the timing of end-market and customer adoption is difficult to estimate, leading to potential fluctuations in operating results[118] - Average Selling Prices (ASPs) are expected to experience downward pressure due to competition and large multi-year agreements, but manufacturing costs per unit are anticipated to decrease with increased production volumes[121] - Continued investment in research and development is essential for maintaining a leading market position, including progressing the digital lidar roadmap and developing new technologies like L4 sensor prototypes and the Chronos chip[122] - Supply chain continuity is a risk due to reliance on limited or single-source suppliers, and the company is monitoring and mitigating the impact of potential tariffs and trade policy actions[123] - International expansion is a key strategy for revenue growth and profitability, but it exposes the company to foreign currency risk, international taxes, tariffs, and additional operational costs[126] Components of Results of Operations This section details the primary revenue and expense categories that constitute the company's financial performance - Revenue primarily stems from the sale of lidar sensors and accessories, recognized when control of the product is transferred to the customer, and also includes IP license agreements[127] - Cost of revenue includes manufacturing costs, personnel expenses, third-party contract manufacturer costs, depreciation, amortization of intangible assets, warranty expenses, and inventory write-downs[129] - Research and development expenses are expected to grow in absolute terms but decrease as a percentage of revenue over time as the business scales[132] - General and administrative expenses are expected to grow in absolute terms but decrease as a percentage of revenue, with recent increases attributed to litigation activities and international expansion[134] Results of Operations: Comparison of the three months ended March 31, 2025 and 2024 This section analyzes the financial performance of the company by comparing key metrics for the specified periods Revenue Comparison (in thousands) | Geographic Location | 2025 | 2024 | Change ($) | Change (%) | | :------------------------- | :------ | :------ | :--------- | :--------- | | Americas | $15,528 | $10,624 | $4,904 | 46 % | | Asia and Pacific | $12,464 | $6,149 | $6,315 | 103 % | | Europe, Middle East and Africa | $4,640 | $9,171 | $(4,531) | (49) % | | Total Revenue | $32,632 | $25,944 | $6,688 | 26 % | - The increase in revenue was primarily driven by increased Average Selling Prices (ASPs), higher sensor volumes, and patent royalties from a long-term IP license agreement[141] Cost of Revenue and Gross Margin (in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :------------ | :------ | :------ | :--------- | :--------- | | Cost of revenue | $19,149 | $18,519 | $630 | 3 % | | Gross margin | 41 % | 29 % | 12 pp | 41.4 % | Operating Expenses (in thousands) | Expense Category | 2025 | 2024 | Change ($) | Change (%) | | :------------------------ | :------ | :------ | :--------- | :--------- | | Research and development | $14,985 | $13,806 | $1,179 | 9 % | | Sales and marketing | $6,423 | $6,860 | $(437) | (6) % | | General and administrative | $15,905 | $12,580 | $3,325 | 26 % | | Total Operating Expenses | $37,313 | $33,246 | $4,067 | 12 % | - The increase in general and administrative expenses was primarily attributable to higher litigation and settlement activities[148] Liquidity and Capital Resources This section assesses the company's ability to meet its short-term and long-term financial obligations and fund operations - As of March 31, 2025, the company had an accumulated deficit of $935.1 million and $170.8 million in cash, cash equivalents, restricted cash, and short-term investments[154] - Management believes existing liquidity is sufficient to fund operations for at least twelve months, but additional capital may be required for future growth[154][155] - The At-Market-Issuance Sales Agreement (ATM Agreement) was terminated in April 2025, and a new registration statement on Form S-3 was filed[157] Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------- | :-------------------------------- | :-------------------------------- | | Operating activities | $(4,879) | $(5,722) | | Investing activities | $12,590 | $(469) | | Financing activities | $660 | $3,653 | - Cash provided by investing activities significantly increased to $12.6 million in Q1 2025, primarily from proceeds from short-term investments[162] Critical Accounting Policies and Estimates This section highlights the accounting policies and judgments that significantly impact the company's financial reporting - There have been no significant changes to the company's critical accounting policies and estimates since the filing of its 2024 Annual Report[163] - The preparation of financial statements requires estimates and assumptions based on subjective or complex judgments, which could materially impact financial condition and operating results[164] Item 3. Quantitative and Qualitative Disclosures About Market Risk Ouster, Inc. is exposed to market risks from fluctuations in interest rates, foreign currency exchange rates, and inflation. The company reports no material impact from inflation to date, no interest rate risk from debt after repaying its UBS loan in August 2024, and no material impact from foreign currency exchange rates historically, though it continues to monitor these risks - The company's market risk exposure primarily stems from fluctuations in interest rates, foreign currency exchange rates, and inflation[165] - Inflation has not had a material effect on the business, financial condition, or results of operations to date, but the company is monitoring the current inflationary environment[166] - As of March 31, 2025, the company had no debt outstanding after repaying the UBS loan in August 2024, eliminating interest rate risk with respect to debt[169] - Foreign currency exchange rate fluctuations have not had a material impact on historical consolidated financial statements, and the company has not engaged in hedging strategies to date[170] Item 4. Controls and Procedures Management concluded that Ouster, Inc.'s disclosure controls and procedures were not effective as of March 31, 2025, due to material weaknesses. These weaknesses include an ineffective control environment from insufficient personnel with adequate internal controls and accounting knowledge, and a lack of effective controls over segregation of duties in the period-end financial reporting process. Remediation efforts are ongoing, focusing on improving SOD controls, recruiting skilled personnel, and providing internal control training - Disclosure controls and procedures were not effective as of March 31, 2025[173] - Material weaknesses identified include an ineffective control environment due to insufficient personnel with appropriate internal controls and accounting knowledge, and a failure to design and maintain effective controls over segregation of duties (SOD) in the period-end financial reporting process[176][177] - Remediation measures are ongoing, including improving SOD conflict identification and mitigation, recruiting personnel with relevant expertise, and providing internal control training[178] - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2025, that materially affected or are reasonably likely to materially affect internal control[179] Part II - Other Information This section covers additional disclosures not included in the financial statements, such as legal proceedings, risk factors, and equity sales Item 1. Legal Proceedings This section refers to Note 7 of the unaudited condensed consolidated financial statements for a detailed discussion of Ouster, Inc.'s material legal proceedings, indicating the company is involved in various claims and legal actions in the ordinary course of business - The company is party to various claims and legal proceedings arising in the ordinary course of business[182] - Material legal proceedings are discussed in detail in Note 7. Commitments and Contingencies of the financial statements[182] Item 1A. Risk Factors This section directs readers to the 2024 Annual Report for a comprehensive list of risk factors, noting that there have been no material changes other than the potential adverse impact of political events, trade disputes, geopolitical tensions, and new tariffs (e.g., U.S. Tariffs on imports from Thailand, Canada, China, and Mexico) on the company's business and supply chain - Investors should carefully consider the risk factors described in the 2024 Annual Report[183] - A new material risk factor highlights the potential adverse impact of political events, trade and other international disputes, geopolitical tensions, and new tariffs (e.g., U.S. Tariffs on imports from Thailand, Canada, China, and Mexico) on the company's business and supply chain[184] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Ouster, Inc. reported the issuance of 164,394 shares of common stock in January 2025 to BlueCity Holders. These shares were issued without registration under the Securities Act, in reliance on Section 4(a)(2) and/or Regulation S, as part of an exchange for subsidiary shares acquired during Velodyne's acquisition of BlueCity Technology, Inc - In January 2025, 164,394 shares of common stock were issued to BlueCity Holders[185] - These shares were issued without registration under the Securities Act, relying on Section 4(a)(2) and/or Regulation S[185] - The issuance was in connection with the exercise of exchange rights for shares in a Velodyne subsidiary, acquired during Velodyne's acquisition of BlueCity Technology, Inc[185] Item 3. Defaults Upon Senior Securities This section states that Ouster, Inc. has no defaults upon senior securities - There are no defaults upon senior securities[186] Item 4. Mine Safety Disclosures This section indicates that the disclosure requirements for mine safety are not applicable to Ouster, Inc.'s operations - This item is not applicable to the registrant[187] Item 5. Other Information This section reports that Ouster, Inc. had no disclosures in lieu of a Current Report on Form 8-K, no material changes to procedures for recommending board nominees, and no Rule 10b5-1 trading arrangements adopted or terminated by directors or officers during the three months ended March 31, 2025 - No disclosures were made in lieu of reporting on a Current Report on Form 8-K[188] - There were no material changes to the procedures by which security holders may recommend nominees to the board of directors[189] - No Rule 10b5-1 trading arrangements were adopted or terminated by any director or officer during the three months ended March 31, 2025[189] Item 6. Exhibits This section provides a comprehensive list of exhibits filed with the Form 10-Q, including various agreements (e.g., merger, warrant, offer letter), corporate governance documents (e.g., Certificate of Incorporation, Bylaws), and certifications (e.g., CEO/CFO certifications pursuant to Exchange Act and Sarbanes-Oxley Act) - The exhibits include key corporate documents such as the Agreement and Plan of Merger, Certificate of Incorporation, and Second Amended and Restated Bylaws[190] - Certifications from the Chief Executive Officer and Chief Financial Officer, as required by the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of 2002, are filed/furnished[190] - Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase Documents) are included for interactive data filing[190]