Earnings call transcript Q2 2023

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Operator

Good afternoon, and welcome, everyone, to Ouster's Second Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After today's presentations and remarks, there will be an opportunity to ask questions. [Operator Instructions] The call today is being recorded, and a replay of the call will be available on the Ouster Investor Relation's website an hour after the conclusion of this call.

I'd now like to turn the conference over to Ms. Investor of Director Ewing, Relations. Sarah Ms. ahead. Ewing, please go

Sarah Ewing

Pacala; you Thank for us joined by Officer, Thank Weinswig. Officer, earnings you, good afternoon, today Angus Executive Chief and for Ouster's Chief our I'm Financial Mark joining call. everyone. and XXXX quarter second

Before second we like Investor quarter an The also you prepared XXXX to a press investor remarks, Ouster ouster.com. of published is section the earlier results. Relations today issued the available presentation, release we remind begin would that announcing on which its company

also new and Safe quarter Securities company’s business provisions future market products to XXXX future and of the customer potential forward-looking release, regarding statements the Velodyne, are share management certain I’d and that and of intended merger third like forward-looking of paths, traction during anticipated commercial advancements market release the manufacturing targets, benefits opportunities, potential outlook orders, company’s to remind initiatives, states, the press information this applications technological cost will from ability everyone course forward-looking and the trends, expectations, financial shipments, to that product of by anticipated future forecasts, and its covered the trajectory are Private XXXX long-term Act Ouster's company, Litigation customer revenue be including agreements, conference Reform and synergies call, statements with the and from savings near benefits for recognize discuss of opportunities, guidance customer Harbor releases, strategic statements.

performance, materially expectations today. management’s actual that that you risks subject while achieved. results expected guarantee and are may with cause uncertainties results, estimates, that be and to to Thus, actual results There share expectations statements such and current differ plans, Ouster's several is from we represent will may future these no

report to any SEC. its factors future on important to annual may should described most risks results as in consider disclosures company call, you and that files other and this the Ouster's highlighted reports risk or carefully recent addition the during furnishes Form that XX-K In other affect with

by to the industry obligation operates it on position, of as the forward-looking is in reason or call this concerning other rule, on industry discussed Information could experience reasonable the estimates, materially from regulation, as industry in By other any and any statements update derived analysts after as undertakes and for estimates. information, organizations, research released no sources, assumptions Except and call. cause and these this those data knowledge markets from required the computations made from and which sources of independent are definition, results its third-party upon publicly such date reviewing research law, independent company of subject are competitive company’s based and and by which available assumptions industry which information based to uncertainty on well internal and markets. and in third-party such are the company’s from to differ data, and management expressed risks,

not financial These discuss a should supplement with GAAP. considered substitute be During a we certain and non-GAAP call, measures will accordance as non-GAAP to measures. this in for prepared financial measures

reconciliation today’s of to a press refer release. the For measures, GAAP this call please discussed most recently measures to comparable non-GAAP financial during

I’d turn to the now call like over to Angus.

Angus Pacala

joining for you thank and everyone, afternoon, Good us today.

the growth our merger build position our serviceable expand first us would operating our financial model viably to offering catalyze Ouster that and strengthen out the product Following and across Velodyne to overall with enable set scale we an our quarter, business. in for market, broaden to

the shipments X,XXX positions $X,XXX long-term selling business, sensor the a prices That, $XXX puts of million. us the reduction product per meaningful of of and coupled Ouster in across a roadmap record increased sensors profitability. path expenditures success achievable on second on over of with an for sustainable to balance company XXXX million, our exited revenues of $XX and with million, over bookings quarter $XX record approximately average and cash cutting-edge

financially quarter, diverse sales in digital we markets. as strategic a global we one, autonomy Ouster Lidar into deliver accelerate in near-term solutions to expand a shared and for priorities to XXXX across market. ecosystem leader strong and new on roadmap through our end Lidar long-term growth. support the build for build Series Last execute adoption; software growth; the our business develop drive OS business four two, our Number and to approach targeted robust to DF Three, serviceable Lidar a four, digital our a business

sales increased quarter with a had Ouster of REVX sensors. record

account bookings. OS REVX of for now sensors majority our and the Our sensor revenue

VLS-XXX in the shipped expanded agreements Motional quarters. May coinciding customer Mobility, also sensors and first and multiyear to new We second and with

expanded licensing Gemini of the Ouster BlueCity solutions. and customers software we with Additionally, number the

execution Turning our product to on road map.

of will hardware ability improve Ouster Our the end silicon set to to continue sensor custom innovation CMOS performance. on and keep through our front OS chipsets scanning sensors and apart

custom over chipset LX demonstrated tape-outs the chip this last it the to We later tape-out multiple the We our have years, through chip of the this next-generation silicon, with fall. including do intend LX again year.

factor to completed The our meters manufactured automakers affordably be reflective or looking can DF solid-state digital with can integrate vehicle sample advantages the at sensors B of DF camera in XXX resolution. to integration that sensors. up are programs. and detect millimeters at solid At production XX% high-volume these final key reliable XX and for range like scale flash state, We early fully sensors all objects, form only also

in automakers. Our to in roadmap in automakers which early engagements XXXX, B quarter and critical third automotive with milestone leading sampled be a commercial of samples the our will our is

year. silicon, also expected Chronos will our next-generation tape-out to later by integrating B samples chip, our year, this the which we upgrade is Next

make offer Ouster to has BlueCity infrastructure the platform, actuation flexible the traffic our and since developed the environment software our software. Gemini array running real-time commercial strides active highly year in-house of ever-expanding Turning to set deployments an product that our major now and of made now We them. over of and solutions an of as have solution we observations control algorithms around start learning of customers. smart optimized XXX machine

provide involving to Where in governments cameras and light past, of allow and to in analytics a hardware logistics, software more cloud. solutions sensor the used challenges and environmental reliable actionable transportation. of of to objects solve manner range solutions aggregate and our time all been and low people conditions have in real and track detect line and AI-enabled companies data security These for in the

and unification are way quarter of for for smart infrastructure We vertical technology with across unified demand full driver growth a of the the Gemini faster hardware Ouster and pave will software solutions features development third in complete stack the to for in be for to platforms the a our both track future. BlueCity the over expect on I years. the the coming Lidar major business more

Department at new House or White the agency of Infrastructure, sustainability spoke can within foster for and ARPA-I, the June infrastructure. our Transportation I that the in to event transportation improve formally a Agency technologies efficiency development adoption and a Projects to the launch Research of safety, Advanced of

supply technology. we're adoption government's U.S. state technology, And demand. level, Lidar municipal transportation the to wide-scale of well The this sensors confident accelerating of deployment me of recognition make and as the that Ouster is of cusp positioned on that critical combined the at a with

further of expenditures profitability. in took This the the by our to decisive all operating is is on business. progress finally, steps this eye backed strong why quarter second reduce model an an Ouster increasingly across And with

compared quarter our the of fourth As close streamline to base-lined to additional as of third a quarter exiting well in $XXX XXXX the over now those as XXXX. are result cost merger, we million of Velodyne against original after actions over of our as structures Ouster the stand-alone and the the million steps targeting savings of operations, of $XX goal cost at

also these following VLP-XX first for XXXX Velodyne the market plan the forward to in completed outsourced on fit the execute to continued the these full year. the sensor former the next of remain to of track transition in of transition part its transition of manufacturing Fabrinet into efforts, the Thailand information VLP-XX Ouster on products. quarter. We our end VLS-XXX the providing of We the more quarter actions As on with financial look detailed the by to fully and strategy how

Mark I'll the for quarter. provide our and for third the to quarter second turn outlook CFO, financial our context on the call results over Weinswig, more to

Mark Weinswig

Thank you, everyone. and good Angus, afternoon,

quarter marked towards progress traction significant commercial and our our integration as expected completing of well as The family strong and continued second product realigning ASPs growth efforts our model merger with REVX trajectory. business Ouster's

sales XX% smart the for majority Starting off we continued closely approximately quarter. followed of quarter second quarter, in $XX robotics over a second XX% the results, a increase our revenue, first the Industrial record by infrastructure vertical. the revenue customers drive our in accounting sales to in with and million of recognized XXXX

XXXX. the of of in million the $XX business in half $XX combined $XX a quarter, total from we In book-to-bill a business, the $XX existing of have represents This up second in quarter. up year first this ratio a in new the fiscal we already quarter second million from in X% million customers, the year, XXXX. million booked In booked with and first over

first saw In selling driven X,XXX traction REVX Similar shipped we strong total, by quarter. sensors the to over quarter, sensors. second we average in our for the commercial prices demand continued improved and

as Ouster the from of We to we through move X,XXX per a XXXX. VLP a positive the the REVX of to strength strong sensor quarter, first increased and in ASPs is category. X,XXX position within the shift due believe primarily Our in remainder mix product

cash, We customer as XX. a million investments have sheet in the on most the of market, equivalents with industry the June one performant bases broadest strong balance sensors in of and the and $XXX of short-term family cash

GAAP anticipated, second in As improved the Ouster slightly saw margins quarter. gross

expenses comments gross million ordinary included excess of $X.X and certain transition the and on our including quarter sensors. losses of consolidation firm with costs, product margins lines obsolete second manufacturing and purchase to of REVX X% OS The the associated operations, of outside

XX% quarter were the second margins XXXX. in gross non-GAAP Ouster's of

Given the infrequent in our of delineation we performance. merger integration, to other of product the will provide help clear fundamentals or activity, impacts future integration-related operating the breakout and unusual ordinary transition transient continue in between a baseline to of operations effort an to outside expenses business nature

expand meet our manufacturer reduce progress a to to line costs and efforts Velodyne ultimately effort production sensor to made Thailand. gross contract long-term margins, in an transition in further customer In we demand, all

remain on transition completed year. the in We sensor the quarter, full track following the the to and VLS-XXX first full of we VLP-XX the of transition end of transition VLP-XX the by the the have

improved the second result begin realized. as these savings we expect a in efforts, completed to the and of are margins XXXX activities of to As these see half gross be

We in to cash taken already actions cost path in burn XXXX. quarter, further our additional $XX second in to implemented of rate costs the additional which an to with in the actions align off first company structure cash quarter organization, over by across the second our and reduction the reduced We annual one-time the Turning a resulted cost million. run a expense rate took cost reduce reductions of Building efforts. million $X our profitability. quarter the

now are as $XX we as in of million cuts, estimate cost on fourth track quarter baselined annualized to these million cost stand-alone increasing of XXXX the savings the our to of $XXX With structure million, to quarter $XX cost XXXX. the target exiting of of Ouster previously exceed Velodyne over our savings third against announced and

During our business leverage providing go-forward actions us combined long-term in greater call, a position The to on We our the us put we with structure difficult. we as been have present business. as plan we operating results, our expect believe improve earnings third taken a a great company grow detail quarter strong the cost they financial for as basis. on to well have

containing to are and margins. top steps necessary taking working costs Ouster success revenues We are improving long-term also to grow while line for and the position

to turning guidance. Now

the million of Ouster targeting For third quarter between revenues. is million $XX $XX in XXXX, and

wins. are over design growth couple and strong pleased past by We quarters, activities the driven bookings the our that rate of key

outsourced our more We see quarters performant over sensors business more sensors. progression of gross REVX the continued the on next of and our the as to merger margins expect integration migrate we complete manufacturing two to work, Lidar Velodyne

GAAP revenues, second number gross operating second our a improved a higher adjusted and half margins margins bookings year. margins, gross quarter As EBITDA. gross in these of the lower Overall, we we first of the to on performance progress and improvements start strong financial an converge over quarter, expenses book-to-bill, saw make and activities, including expect the continue higher the to to non-GAAP do

I to And that, call turn back the like over would with to Angus.

Angus Pacala

Thanks, Mark.

U.S. producer largest is now the Ouster XD Lidar. of

worldwide sensor to We scale proven logistics, solutions to record companies growth governments to positive a with challenges and AI-enabled ability revenue bookings involving consecutive quarters. Increasingly, solve and and gross in margins have demonstrated manufacture with provide and of have two at a we strong range transportation. security

The Law typically the our release continue performance capabilities and effectiveness latest roadmap, and silicon of devices example of digital-first have release. strategy. of Moore's substantially to our our annually sensor new our we the and is sensors the with success leveraging products By increase each REVX of

of of automotive This quarter, for and affordable, believe costs we the advancements product quiet, of to a growth, cost reduce industry. completing With the we necessary Lidar I and our our sensors sensors had another first recent extremely line actions commercial DF integration the the global major margins solutions. Lidar highly and can milestone, across achieve high-resolution tailored to low sensors, and continued business, profitable supplier revenue our targets energy, become

it open And up with for like I'd Q&A. that, to

Operator

Fitzgerald. Pacala. Mr. We'll you, [Operator Andres go Cantor Thank now at to Sheppard Instructions]

Andres Sheppard

asking questions. taking on gross want basis. maybe It's margins, to maybe that the particularly And on you're everyone. by thank great for see our there. in you afternoon, back positive I a territory start Good to GAAP Hi. about quarter. Congratulations

at was there, I you're us. remarks, just was commentary from we on but know expand from margins might throughout I thinking there think what the of that some expect a the Thank to least Curious it, surprise, maybe year? the the of prepared you. year. the how rest rest in to throughout about

Mark Weinswig

Gross margin passionate the for the something that product were of we're were and lines REVX our about. frequent the you and excess losses on And and the and items, from a nonrecurring margins unusual including the with These that is manufacturing the associated number very Thank included of gross commitments question. for quarter X%, mainly transition totaled obsolete sensors. costs million. consolidation and to REVX that $X.X about certain purchase

undertaken up to both second outsource our looking which we up in that GAAP with margins efforts we've gross the Our ASPs with believe our non-GAAP do expand revenues, get and margin also our traction, to sensors. should the our the year, and of revenues REVX commercial with and move the the and aligned our margins XX%, reflected sequentially half into and second non-GAAP half cost were associated reduction see was margins. forward manufacturing gross continued gross more of We higher higher that the to starting higher with year

Andres Sheppard

Got it.

Okay. maybe super just a That's quick And helpful. follow-up. then

new left? all that a us how the reported quarter In the in $XX of customers few business terms and just that of Is alluded quarters you. existing it's million combination bookings, in revenue? - you into which remind that or with the does that maybe translate to, Thank throughout are quickly is spread out

Mark Weinswig

for Andres. Yes. Thanks question, the

recognized The So for the the in. backlog in as whether binding I or book business or subsequent we year push we what years. quarters of of off it book in is - the that whether as to all say the would that we into subsequent it it's first we the good of that all, majority encompasses same bookings, business closed, in quarter we highlight. some revenue quarter, that that's vast majority

as quarter, a can that next multiyear of component this, actually years. agreement of XXXX Motional And we that that good the example but with near-term over through And in announced multiyear component, make. that book-to-bill imagine percentage certain we a that couple the is to a a booking where really over layered a highlighted But obviously this Motional. bookings of there's do with a has supply two well you of we

the $XX the following our length. two that But first again, overall, long the of tend the the million year the within $XX very closed majority far be the we takeaway to a of so year of not there bookings forward - or to not bookings the booking. XXXX. So half say for compared indicator it's of this bookings majority I'd at in are And in that million all of business. strong bookings in is years

we're start. So great to a off

Andres Sheppard

Got for you it. you. much. Thank That's helpful. on. pass That's We'll me. Thank it it super again. so Congrats

Operator

WestPark Capital. Kevin Garrigan to now next go We'll you. at Thank

Kevin Garrigan

me letting ask for Yes. Hi. me echo Good thanks And the congrats question. afternoon, guys. let my, and

came in of combination then and much you us the these you both sense with is think kind too it give still you're Gemini. - how revenue XXX active I noted BlueCity of the from minimal? a come higher with And software? of deployments Can pricing? Or from does

Angus Pacala

is think of the one interesting Kevin, really This and future business. of Thanks, believe it's us a that question. area a growth It's for the - for driver company. the the I major in

is selling infrastructure And security, focused infrastructure on vertical. It's Gemini that so smart the software with just days. smart BlueCity still we're to selling We're reiterate, into the and logistics our and transportation solutions. networks early the the -

BlueCity first compelling. of was Velodyne and early incredibly from the quarter we in this product have XXX now of But have the merger belt. We a that incorporated quarters deployments year. our the announced two is progress these Gemini that with under

going in is In business part breaking metric this that side enough the business. to kind terms the as momentum software this have we of we wait this of out, separate that until we're a out the of significant show start a to of breaking our

And absolutely, are in sensors that of piece as software selling ASPs license, Because we sell higher gross I be hardware, mind, expect we're also or combined Lidar margins driving kind or selling well. we of every that every higher software our attached software keep we'll with in sales.

built performance, the into sale attached from this really product software the from to great the start. customer positive every feedback just off a new we've that is to response is this So really, business. a dynamic government to we've seen indication And raw

Kevin Garrigan

of head the congrats give growth of kind that typical of there. QX? we And you into ASPs think Great. half how kind you the color. expect And in effects second kind I appreciate should the Can on the sense we seasonal Okay. of a year? ASPs, on us strong then as on about

Angus Pacala

go. ASPs to we've the is upward as seen what hard And exactly it's will But for a where trend it's anticipate in the main very REVX release. positive one so reason, far direction. Well,

-- the performance had a for release. recall, a $X,XXX having in commanding fundamentally rebound from performance Why ASPs impact the of outsized that entire and and really if boosted last commanding LX fourth quarter built kind more the went capability we and devices, the ASPs driven started was of it So we is premium we this REVX ASPs Ouster, as XXXX chip result you because of higher business. those is and into That was the quarter. by on sensor it

$XXX that versus last $X,XXX continue this with quarter. quarter We ASPs saw

So the that announced is the while the all that of REVX, of I'd for the our of in And trend now right But majority doesn't that mean sales are. now for direction. sensors. REVX we them our say sales OS are sensor majority

going. So, we're of second plays customer year, the the still see lot with but ASPs the seeing for have from we'll confidence where of more And we're base. out the in half uptake how that I a

Kevin Garrigan

appreciate guys. Perfect. Okay. Thanks the I detail.

Operator

Thank now you. to We'll go Greg at Chardan. next Pendy

Greg Pendy

Brian It's Pendy Thanks guys. taking for in Greg Hi for question. Dobson. my

quick, real to transitioning gross trying the from upside to how on Just Thailand. margin much is frame left

help a understand an So second to just this about VLS-XXX assuming as and your non-GAAP will be gross impact could how tailwind were of quarter in you how just the maybe of basis in half? have much should that kind on us we thinking margins XX% a

Mark Weinswig

the you question. thank Yes, for

over manufacturer. the opportunity manufacturing reductions gross for We we're transition quarters is margins put we've due executing contract our our and of that in also amount So were next that the couple a place of do the expansion over quarter cost both significant believe the non-GAAP to to of on the XX%. there that

on those disclose we In and individual what terms either, lines margins typically the not are. do product of

as gross through to ASPs can in I the obviously, additional that right our you, continue us line. leverage that, and be flow But And robust, expect the increase the should our would to give ASPs. margins to tell have we seen operating bottom you as down

Greg Pendy

That's Thanks. Okay. helpful.

Operator

at you. Thank now We'll Rosenblatt. Kevin go next Cassidy to

Unidentified Analyst

bookings? Hi. my from a for Cassidy. breakdown questions. taking you for me Could Securities Rosenblatt give This Thanks Palette] is end [Madison Kevin calling De of markets the for

Angus Pacala

But had the And thanks breakdown And a really the revenue breakdown from for see the Mark the become and of give majority Weinswig can question. point given a a we Hi Madison. breakdown the the I a in of sector. and our don't that mentioned for business That's Ouster. business. bookings revenue to We we where that the have by side side vertical. trend for strength driven of lot industrial of robotics never

the drive and success and forklifts industrial of warehousing products cost where things the ground manufacturing businesses to Our centers automated much one in vehicles like logistic and warehouses of and we've operating why are our customers. that reasons so automated really It's facilities. had in

my of this how traction right driven lot now majority the business smart we're but and call of for robotics, in on yes, also infrastructure industrial So expectations I've made about comments seeing. and a much

in we adoption to that space Now that mature have some of of technology. spur kind software the that offerings

Unidentified Analyst

you Thank much. Great. Okay. so

Operator

you. We'll Richard go Shannon to Craig-Hallum. next now at Thank

Richard Shannon

here. a of if shift that. other of Mark, number follow-up Hi the certainly mix on can I'll And quantify guys. REVX a you've you a upside where of us cost Clearly, I specifically assuming, taking or got well. may Thanks automotive some mix transitions, my understanding obviously, and towards some happening But change for kind ask this reductions potential questions from I the give as a can margin see of manufacturing you some different may think question. course, go gross year, same you guess factors. range

X if out? Just peak possibly would you a wonder us it range please? a be where you start of can higher? And going I or sense number any quantify is this with So a way great, to give can can that's a that

Mark Weinswig

that And obviously, Yes. merger attain revenue and Ouster One of you, us north to of levers I we are to thing. to goal prior higher key question obviously hearing as Richard. our had is appreciate that able from is be through There the the been even year. margins even were go a couple -- the that. do to forward for strive XX%. for is even a to great

news is heard that remarks. you going prepared we're great Angus The We in need from as to grow. have - - our to to

just - that The been lot the the a being over X%. The grow bookings strong. And very bookings actually us whole fiscal year can been have the give we through have business. book-to-bill of confidence

So obviously, one is increasing revenue aspect.

one the other higher cost the some gross line. of those to down higher and margin ability getting reduction. just ASPs ASPs And The it's is an actually having bring to finally,

Angus previously overall the in over call quarter in additional also are talked products the transition just So, mentioned should given actually to and this not probably that become terms that, the reductions, of be to first time important us is we cost of part providing enough on smart addition revenue. that both But to the second one that part we've give we in the those higher a have at think contract point efforts we our our an that software-enabled is quarter. leverage and infrastructure taken, manufacturing. the as to as the in And aspect going of that I

there. start That's we to but That's very, making not this quarter, probably be good breakout, not but progress that we going see going tomorrow. are be to very to

this So, I gross margins able we this think to XXXX. something where that be year of hopefully start expansion we some of seeing and throughout should is quarter-on-quarter type into hope that

Richard Shannon

automotive Okay. follow-up is question market. And on Helpful, for my guess thanks I that. Mark the

probably progress might the expect of by decision looking to get X.XX%, engagements and assume there? that targeting there? can just really in the your SOP you the want Maybe the flash products. it is sense sort which that quantify have at You're I but you of timeframes number digital some your ultimately, you of you're

Angus Pacala

of And together the Thanks work going bring update. fulsome It's for because I Yes. of this to hoping technology DF, to sensor. lot driving looking couple we're providing there. been doing for were ask about question. I'm special incredible the some really a to more a that's hard was you a years forward

this on the in of so Lidar first And long-range quarter, integration solid-state digital this based we flash sensor technology. world's truly finished the

nothing world we're device. an like really the other quarter. And putting it There's in automaker's this hand this than

to of road with I'm So be number automakers. out on meeting a going the

a getting of technology things. the industry building customers very majority we're the - think time. special this that in first this we worldwide win the of makes team But first We hands tour doing of OEM have a all, is a What of worldwide it long-term. can at couple

And right? the self-state you're be long we're meet that's the And building technology. to to thing - to It's don't integrated sustainable building long-term. need as be you first market, digital that's as going an

low multi-sensor into cost, it's a that to digital, the this get saturated vehicle that is platform there's make all state, all it's And so a it's because really makes the DF required technology. shines models and

performance. And it's high

So, And we're we're physicist hitting in [ph] that's done. XXX-meter flash ago five XX This is couldn't thing only tall. form slims years a that millimeters said Lidar. range be is a it something at with XX% factor incredibly this doing

quarter, on a we update it. So next tracking We yes, hands more progress. we'll quarter, thing we're doing we're be providing this but our and fulsome said get this out automakers into

So I more pleased. be couldn't

Richard Shannon

Angus, update. for me. the that's for Thanks great. Well, all Okay.

Operator

it further to to this afternoon like Pacala, you Instructions] for closing Thank I'd you. we turn And no Mr. back appears questions comments. [Operator have things

Angus Pacala

pleased it's companies. I since that so call Well, of on joining for we we been incredibly the thesis today. highlight, the I everyone merger two Velodyne. want the the completed did of delivered the thank to far want have I'm a to with quarter combination

significantly and have the growing product to We on expanding the portfolio, margin really revenues, speaking company. for that bookings bright is future record trajectory the and cost, bookings

call. again So for joining thanks the

Operator

gentlemen, the concluded. has and today's Thank Ladies presentation. for you. conference attending now Thank you

now disconnect. may You

Ouster (OUST) 10 Aug 232023 Q2 Earnings call transcript