Ouster(US:OUST)2022-11-08 22:11Business Operations - Ouster shipped sensors to approximately 680 customers in the twelve months ended September 30, 2022[152]. - Ouster's manufacturing partner, Benchmark Electronics, is expected to reduce product costs and allow rapid scaling of production[155]. - Ouster announced the launch of the REV7 sensors, which deliver double the range and enhanced object detection capabilities[163]. - The company completed the acquisition of Sense Photonics for approximately $63.0 million in equity value[169]. - The Velodyne Merger is expected to result in existing stockholders each owning approximately 50% of the combined company[159]. - Ouster plans to expand sales and marketing efforts, software development capabilities, and accelerate sensor development[158]. Financial Performance - Product revenue for Q3 2022 was $11,204,000, up 44.5% from $7,755,000 in Q3 2021[195]. - Gross profit for Q3 2022 was $3,716,000, compared to $1,876,000 in Q3 2021, representing a 97.9% increase[195]. - Net loss for Q3 2022 was $35,987,000, compared to a net loss of $12,669,000 in Q3 2021, reflecting a significant increase in losses[195]. - Product revenue increased by $3.4 million, or 44%, to $11.2 million for the three months ended September 30, 2022, compared to $7.8 million for the same period in the prior year[198]. - Interest income rose to $0.7 million for the three months ended September 30, 2022, compared to $0.2 million in the prior year, reflecting improved cash management[206]. - Product revenue for the nine months ended September 30, 2022, increased by $8.4 million, or 39%, to $30.1 million from $21.7 million in the prior year[212]. - The company recorded a net income of $7.1 million for other income (expense) for the nine months ended September 30, 2022, compared to a net expense of $0.4 million in the prior year[222]. Cost and Expenses - Research and development expenses increased to $17,212,000 in Q3 2022 from $8,390,000 in Q3 2021, a 105.1% rise[195]. - Operating expenses for Q3 2022 totaled $39,761,000, up from $29,200,000 in Q3 2021, indicating a 36.2% increase[195]. - The company experienced a 30% increase in cost of product revenue for the nine months ended September 30, 2022, totaling $21.0 million, primarily due to supply chain issues and increased material costs[214]. - Research and development expenses increased by $29.4 million, or 150%, to $49.0 million for the nine months ended September 30, 2022, compared to $19.6 million for the same period in 2021[217]. - Sales and marketing expenses rose by $8.4 million, or 57%, to $23.2 million for the nine months ended September 30, 2022, from $14.8 million in the prior year[218]. - General and administrative expenses increased by $4.1 million, or 11%, to $40.3 million for the nine months ended September 30, 2022, compared to $36.2 million for the same period in 2021[219]. Market Conditions - Supply chain disruptions due to the COVID-19 pandemic have led to unfavorable purchase price variances and delayed customer orders[170]. - A global chip shortage is impacting the industry, with estimates suggesting it may continue through the end of 2023[173]. - The average selling prices (ASPs) are expected to face downward pressure due to competition and market dynamics, particularly in the Asia and Pacific region[178]. - The company expects fluctuations in revenue and gross margins to continue as customers reach commercialization phases with lidar technology[174]. - The total addressable market (TAM) for the company's solutions is estimated to be multibillion-dollar, focusing on automation applications in various end markets[181]. Internal Controls and Risks - The company identified material weaknesses in its internal control over financial reporting, which could result in misstatements of financial statements[253]. - The company is committed to continuous improvement in its internal controls and has taken measures to remediate identified weaknesses[255]. - The company’s market risk exposure is primarily due to fluctuations in interest rates and foreign currency exchange rates[244]. - The company does not believe inflation has had a material effect on its business, but significant inflationary pressures could harm its financial condition[245]. - The company is exposed to interest rate risk, with $19.2 million of variable rate debt outstanding under its Loan Agreement; a 1% change in effective interest rate would impact interest expense by approximately $0.2 million over the next 12 months[248]. Cash Flow and Financing - Cash provided by financing activities was $35.4 million for the nine months ended September 30, 2022, primarily from borrowings and common stock issuance[237]. - Operating activities used $83.3 million in cash during the nine months ended September 30, 2022, primarily due to a net loss of $96.4 million[234]. - The company had an accumulated deficit of $399.7 million and cash and cash equivalents of $133.2 million as of September 30, 2022[228]. - The company entered into a loan agreement with Hercules Capital, Inc., providing a term loan facility of up to $50.0 million, with $20.0 million drawn as of September 30, 2022[229].