We came across a bullish thesis on Ouster, Inc. on Daniel Romero’s Substack. In this article, we will summarize the bulls’ thesis on OUST. Ouster, Inc.'s share was trading at $28.97 as of September 15th. Mobileye Global (MBLY) Tumbles 6.8% as EU Free Trade Deal Pause With Israel Photo by Samuele Errico Piccarini on Unsplash Automation is poised to transform industries on a global scale, and Ouster stands at the forefront of this shift as a Physical AI company. The firm specializes in digital lidar senso ...

Financial Data and Key Metrics Changes - Ouster reported revenue of just over $35 million for Q2 2025, exceeding the high end of guidance, with a gross margin of 45% [6][20] - Revenue growth was 30% year-over-year and 7% sequentially, with a 13% sequential growth when adjusted for the impact of patent royalty in Q1 [20] - The company finished the quarter with a cash position of $229 million and no debt, indicating strong financial health [7][22] Business Line Data and Key Metrics Changes - The industrial vertical was the largest contributor to revenue, followed by automotive, with significant shipments supporting applications in warehouse autonomy, robotaxi, yard logistics, and defense [20] - Record sensor shipments surpassed 5,500 units in the quarter, reflecting strong demand across various sectors [6][19] Market Data and Key Metrics Changes - Ouster's OS1 became the first and only 3D LiDAR sensor approved for Blue UAS and certified by the US Department of Defense, enhancing its competitive position in government applications [10] - The company is witnessing increased adoption of its technology in Europe and the Indo-Pacific regions, particularly for defense and infrastructure applications [11] Company Strategy and Development Direction - Ouster is focused on scaling its software-attached business, transforming its product portfolio, and executing towards profitability as part of its 2025 strategic priorities [11] - The company is expanding its distribution channels and has signed exclusive partnerships to enhance its market presence in smart infrastructure and security solutions [13] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued momentum driven by federal funding for autonomous and intelligent systems across various sectors [11] - The company is well-positioned to capture demand from government, defense, and civil infrastructure institutions worldwide [11] Other Important Information - The company is committed to maintaining a gross margin target of 35% to 40% while managing operating expenses, which increased by 24% year-over-year due to higher stock-based compensation and litigation expenses [21][22] - Ouster's technology roadmap is expected to bring significant transformations to its product portfolio, potentially doubling its addressable market [16][26] Q&A Session Summary Question: Transition to L4 platform and customer movement - Management indicated that transitioning customers to the L4 platform is expected to be smooth, with many customers historically taking about a year to transition between product iterations [31][32] Question: Production volumes and prototypes - Management noted that a limited number of customers moving into production could significantly impact revenue growth, emphasizing that even a few customers can drive substantial volume increases [34][36] Question: Defense market opportunities - The Blue UAS certification has opened new opportunities in the defense sector, with ongoing projects with the US Navy and Army [42][43] Question: Automotive market and ADAS - Management highlighted that while the automotive sector is growing, predicting the timing for mass adoption of consumer ADAS remains challenging [82] Question: Pricing strategy for new products - The pricing strategy is flexible, focusing on maintaining strong gross margins while enabling customer business models through measured pricing adjustments [64][66]

Q2 2025 Performance Highlights - Ouster reported revenue of $35 million, a 30% increase compared to Q2 2024[9, 25] - The company shipped over 5,500 sensors, a 33% increase compared to Q2 2024[9, 27] - GAAP gross margin was 45%[9, 26] - Non-GAAP gross margin reached 52%, up from 40% in Q2 2024[25, 33] - Ouster finished the quarter with $229 million in cash and equivalents and no debt[9] Strategic Priorities - Ouster aims to scale the software-attached business, targeting a potential $19 billion smart infrastructure opportunity[14, 15] - The company is focused on transforming its product portfolio with new hardware and software capabilities[14, 20] - Ouster plans to execute towards profitability by achieving 30-50% annual revenue growth and maintaining gross margin at 35-40%[14, 22] Q3 2025 Guidance - Ouster anticipates revenue between $35 million and $38 million for Q3 2025[28]