OUST - Earnings call transcript Q2 2024

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Operator

Hello, and welcome to Ouster Second Quarter 2024 Earnings Conference Call. [Operator Instructions] The call today is being recorded, and a replay of the call will be available on the Ouster Investor Relations website an hour after the completion of this call.

I'd now like to turn the conference over to Chen Geng, VP of Strategic Finance and Treasurer.

Chen Geng

Good afternoon, everyone. Thank you for joining us for our second quarter 2024 earnings call. by Officer, Executive Mark today and Angus joined Financial Chief Weinswig. am Ouster's Officer, Chief Pacala; I

Before we a begin investor the to its remind Investor the quarter presentation prepared remarks, that second of is today, we was earlier Relations published Ouster available results. section issued XXXX press and announcing you release An would on like website. Ouster's

that will business and views the laws. as or only those statements outlook associated and risks forward-looking management's and under press our of due contained these to reflects include and forward-looking uncertainties release call our related federal earnings Actual with Today's differ statements statements results in are financial materially to by today securities implied may from business.

risks impact that material on to be important For our press please and refer can Relations of and our company's results, both website. a could SEC filings release, found Investor the today's the factors actual which other of discussion

Any of call forward-looking required we statements that to on undertake new may as result information no events. and update by of than today, assumptions future or be law, a obligation this as based are statements other these we make on as

call from in of as markets. from its well industry publicly on and and available upon information based derived assumptions data and such internal made concerning competitive sources discussed and independent and the other other in on as reviewing industry, third-party third-party market organizations, experience industry are research reasonable computations this by knowledge and analysts Information and research information from and estimates, Ouster's management which are which position is operates industries it Ouster's on independent sources and released based such data

estimates. results and subject risks, expressed are to the in to cause assumptions definition, materially from By those differ could which uncertainty

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

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

now the like over I to to call would turn Angus.

Charles Pacala

joining will with of Hello, for Mark update the strategic final you in close our more thoughts. our priorities. of some before results the everyone, on financial market I and today. brief thank cover a and I'll quarter, recap detail us overview with start

as Our second solid for operating quarter have record our a of gross sixth increased we quarter We exceeded revenues results the setting reported showcased to GAAP execution XX%, met margin our million, or Ouster. representing straight guidance. $XX new

efficient. more We are business making also our

resilient improved reduced over quarter inventory XXXX, the have Since in mystery's X.X. repaid turns the end Alongside have revolving improvement outstanding on under most by we sheets the first our to and XX% levels inventory balance built one our to quarter, we balance we of Subsequent cash of the models. results, line X.Xx credit continued operating with of and business diversified our over hand. our annualized the from all on

multiple Robotics, to designed planned capable on-demand X for XXXX. accessible. end robots. forward a largest of to quarter, look and second AI-powered of secured and Serve our of support are sensors REVX expansion more supporting delivery a fleet affordable that fleet makes We across the markets Level Serve's by U.S. relationship deals. which our the expanded We in leading many accounted delivery vertical, we During strength our Ouster's with robotics saw developer advanced

deployments that closer and in where immersive to games. accuracy world's with the new X fleets increased mapping their mapping leading their to experiences refresh at them Also brought precision. how REVX new to robotics, Olympics their world. fans mapping REVX took and to range, level whole a engaged Paris are These we improve explore the of users won of deals upgrade customers expanding the companies within with billions the

Reflecting our focus on software solutions.

the and in Ouster quarter objects, to highlight intelligent detect sales to attached security our threats. able conduct and analytics. transportation Gemini, crowd won as With are perimeter a deals classify secure systems customers we alerts for Software security, real-time and power were protect automate zones tracking,

Gemini detection significantly Compared of for traditional I in constraints the second labor am solutions, alarms, decrease pipeline we a opportunities false conditions. security in XXXX. range enhance and capabilities excited environmental software reduce additional can to the of the about wide intrusion half have

current the broadly. environment on Touching more demand

customers. margin We Consistent industry expanding we seen existing customer customers some macroeconomic as and with projects as deployment are with see trends, with have pushed to encouraged also well evaluation broader schedules new to to the on expense strong profitability. growth, us expect path near-term right. Despite our track we our scheduled soften on to deliver performance may keep operating which and changes, these to

our to XXXX. priorities for business strategic Turning

to is installed the deals world's sales largest base. smart Our consumer company. second global secured quarter, In Ouster our of Gemini, grow solution, the software expand our companies software priority first a supply to and to infrastructure as telecommunications as well we one technology

security our movement support which identifying optimize software requirements for quarter, deep restricted individuals to cases, the our model unauthorized team into customers, tailgating enhanced perception areas. also improved use learning software detection During and is new processing

our We for for The for material REVX addition such handling, quarter other to deployments deals helping immediate the signed Gemini We best applications. perimeter operational customers, cases our as second multiple Gemini drive safety as distribution at also attached our are crowd sales. analytics security increased optimization. and providing use ROI and marked and quarters software yards one of in

roadmap. LiDAR digital to our Turning hardware

development Both is and in next-generation the silicon into to improvements Chronos and bring flash Chronos ability from sensors of Concurrently, digital up Chronos We validation are and back custom year. have expected automotive-grade reliability integrate open our significant Ouster silicon out underway. fab manufacturer verticals chip to in our new family. sensors, and and is advanced testing LX the performance, product custom OS next DLX silicon chip. expect DF our for solid-state to DLX taped we the

path profitability. quarter our results to and execution on second progress Finally, demonstrate solid our

structure in year-over-year significant We long the financial revenue to reach provided deliver the a have range the term while financial approaching low achieving we and growth. track now are to remain profitability. margins gross necessary framework, Our on metrics cost maintained

of our and on progress our showcased all objectives. X execution In summary, business second the strategic quarter

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

Mark Weinswig

Thank we $XX XX% second second the In first of revenues. by vertical The X% this vertical XXXX, recognized robotics. Since a quarter revenue contributor you, was smart and shipping and followed in our the infrastructure our smart everyone. total infrastructure over roughly X/X increased XXXX. first Angus, launching in quarter fastest-growing closely of the largest comprised quarter, and X,XXX XXXX solutions software record quarter has been Revenue good revenue, the million to of over of the afternoon, over sensors. quarter

Our gross is highlight for a margin Ouster. improvement over the past XX months key

basis. and the XXXX GAAP the Second quarter in long-term and set record gross XX% in nearing both XX%. the GAAP to our on first was margin quarter of is gross quarter in levels, margins X% of XXXX range second of a non-GAAP negative framework to compared provided XX%

costs improved our gross factors a margin performance relatively margin quarter. operations. of growth XX% at proud REVX revenue from mix slight I streamlining same illustrates our the our ability while, benefited our time, gross in since the to margin in We of and manufacturing progress manufacturing be high-performing further second am sequentially. these normalization Gross margins and The the merger. to sensors, costs. reducing drive expect our flat expanding see of overhead adoption strong Non-GAAP to product significantly and lower favorable

year-over-year higher by In almost $XX XX% expenses operating and simultaneously million reduced increased by sequentially. our sequential have lower of increasing compensation our addition, levels stock-based capital were we by X% litigation increase The working and driven inventory million, expenses. $XX efficiency. was GAAP up

expenses remain spending litigation XXXX at We expect timing levels. or to and to a fluctuate due quarterly the basis, below operating third to R&D of activities on project and largely quarter

to balance Moving the sheet.

at short-term sheet balance equivalents, $XXX industry June cash, of cash and restricted Our XX. with cash is investments million leading

position Ouster $XX During repay ATM provides revolving sales. resilient the from received outstanding financial our our and with a on structure, the action balance we further This capital approximately consistent to we improve million $XX In August, sheet. strengthens fully with credit strategy second to utilized our our quarter, balance line. million

to moving Now guidance.

and the quarter, revenue the sequential We year. steady third between $XX achieve of For for the expect $XX million of million anticipate we remainder growth revenue. to

turn Angus now closing his call the remarks. for back I'll to

Charles Pacala

portfolio had The in quarter. Mark. execution both revenue. and history. software second and margins time reached new expanding product our gross in This We to of are Ouster quarter for silicon straight next-generation added team quarters progressing. XX% the delivered sales, features one chips increasing first margin of solid fifth is custom Thanks, the now Non-GAAP software our our the of the for best attached

employees, exceptional Ouster as shaped technology. a differentiated is our out that LiDAR stands company customers and fundamentally by

providing best-in-class and highest are cutting-edge our focused on the to relentlessly building quality challenges. solve products We help support customers'

is the a into front see beginning infancy, in just and tremendous to of Digital expand tap the industrial use I'm the technology growth, LiDAR challenges, automating are solve as Ouster's world ever-increasing still efficiency LiDAR we increasingly to still is excited number more roads, whether to in of choice. for companies center modern deploying delivering LiDAR With or cities adoption of I see its our safer it's for opportunity cases an us.

With that, for I'd the like open Q&A. to call

Operator

comes first Kevin Rosenblatt question Cassidy Securities. [Operator Instructions] from Your with

Kevin Cassidy

and unit the one give in on understand costs results. that maybe be can most? Or volumes gross may quite doing Is is Yes, is parts to selling XX% it because you it an ranking want margin accomplishment. that. up up to gross more the of are a Congratulations affected moving the that? just with software down the the margins coming and great of I some moving you're which

Mark Weinswig

Yes. question, margin, down we manufacturer. We highlights one product our the cost took XX over of the moved more past significant past definitely We really actions. out Kevin. business. months, of the the shut the But to contract proud year. Thanks We're gross We for facilities. took of of the very

And those between at in in a framework being and knocking have allowed provided see increase us terms the our hit and term of XX% the growth XX% right revenue now, growth shift really and those able our door to actions of product gross of long we're, mix the overall levels. We margins. target significant a margin and

Kevin Cassidy

maybe to little software a more. understand the strategy And Great.

software term would feature your extra contracts the maintenance that, price, You're think. with selling for you long customers? And along a continually have it and with other as getting you if an update attach now I where an

Charles Pacala

major attached question We the quarter That's attached a solutions the as basically made hardware buying off. in We've now sales. relates success. last Blue customer and and overnight a software a place software X over had put starting to it an after stack. pay not X strategy is driving merger years revenue from record to and that's business in and City gross a of that and -- products our been this the combination on of we really well. The and margins software And a software follow-on investments for software That's investing Ouster. Gemini through year great those integrating is sales for unified really Yes.

customers And we're seeing respond.

now safety and real municipalities Blue customers we and pilot So expanding you improve congestion cities live towns City, phase the that and deployments in. that see into impact I the into could from of

smart So revenue about flywheel our in significant And revenue, that's to just vertical. gross gross adoption that. starting X/X actual this About legs that software we're specifically. sell solutions is for And That infrastructure the really show quarter our came margins. and margin revenue excited from great this that and vertical creating expanding of expansion. vertical again, and into we success drive of all

Operator

line Your with Garrigan question the Kevin from Capital. Westpark next comes of

Kevin Garrigan

guys congrats me were X-part the in? with noted pushed markets your customers agreements you Kind echo have then on And that do of question. see some you what of the pushouts progress. at customers. some to a contracts my that you Angus, right are the noncancelable? Do Let end

Charles Pacala

Yes.

to just So answer that.

the have book-to-bill that in hand. is of great year, that ratio bookings with absolutely noncancelable And contracts definition X.Xx. bookings the we we a or noncancelable a are have we year, of in last PO booking That's contract customers. So a -- had

view Ouster. in the significant Ouster, of gives of a -- kind lot under are the of of number customers customers top of long-term significant confidence us with contract customers So which

positive mean, verticals. All see overall, where is of how I growth one in across Ouster. stress the to for outlook of so the to business or the back expansion, I each And our really Ouster's future are is we seeing question we for want slowdown step and

a for digital ties give flywheel across stronger each one Ouster Robotics, industries And a key created and mature lighter adopting To Serve have industries. we those with and that's automation, We over more more working been some of is in call, from customer we've examples, X mentioned X business sensors more the models. building years.

last a they've of city They've at. and a smaller starting unit the any business. business pilot in Waymo's model, X,XXX time, sniff X,XXX to a than nothing delivery bigger now leap at long novel stage That's U.S. is units their expansion been to for L.A. in and the made deployment in mile That's

seeing customers software -- moving pilot customers But some that expanding. development like robotics also our of solutions. stage we're domains stage So seeing like in and novel with or out we're of

So City, talking years. about in their players, driving solution. that We now -- core part of municipalities security as Gemini savings a tens of technology are logistics security hundreds using been intersections thing Blue in true deployed different sites. for of for across customers Same our providing Gemini have at of business, I or the pilot stage mentioned the now with couple sites hundreds where being the last we've cost

what want for So And next XX% really see annually provided to the yes, in growth we're future. to we of we -- guiding with up I we're a quarter. XX% is path long-term profitability. model Ouster growth that our Obviously, overall stress, committed to on

Kevin Garrigan

kind kind of looks large this pipeline. do like then quarter, of kind over And any as you at much line? the have your Do Kevin's a other customers can of of And And the off had software finish you to them looking you what any mean, going signed get I larger or you question. it edge? mentioned are pipeline? are in companies the on follow-up,

Charles Pacala

Yes.

logistics is part management the the security. And sale more Gemini we crowd traffic for and at outlined smart year X analytics, strategy. -- it's this or at mature have from really record vertical and was the a of software infrastructure significant a generalized And attach product. the infrastructure majority smart first vertical. with focused a So is year, We've had really that was to really and analytics sales for we're -- of City strategy as a go-to-market already vertical this in software for the there's potential where the software a that this had products solution beginning quarter attached I have infrastructure the I X/X sales crowd for of the key is of smart the quarter. we And And attached. on there. attach a be Blue sales we think us our the point a just our within revenue that Ouster's -- me, beginning. the software excuse quarter and

time. been have Again, out many these And in to under these a year. cases, adding for, products we're products all the

So new developing versus demand the frame. able a incorporate new and software value with a with it's drive can hardware we're cadence hardware on difference deliver because and the customer we time shipping base customer address software and to over air this longer features, at is hardware faster new

to as insights come So going big this things I to think here, give adopting there's continue goes are we're on. how the and to customers year into

Operator

Craig-Hallum. Your from Richard the comes of line next with Shannon question

Richard Shannon

that one asked on follow earlier. to up going was I'm

to I you about here. here, not just heard delays I to seeing and season talked companies want here. specific so think that what And this is there from pushouts surprise reporting given we've response. the you're were Angus, was be different far more other a some which perspectives

for language, the that Maybe as the characterize I you're to fourth quarter might revenue but a fourth where the industry, made that in you're corollary And kind follow-on you mean what didn't a a geography. it sound of can about flattish or this catch third. comments versus the seeing be maybe market then by expecting quarter. like specific by it

want to what clarify that just I Just means.

Mark Weinswig

Yes.

make not that at I mischaracterized first I -- don't just all. any I So want are that go that Richard, said sure words to because I'll

for year. So do comments going that were anticipate of remainder to revenue are is we as we steady growth sequential what the mentioned, my the And Angus grow.

that within our which We annual to are the revenue that together, the a we grow XX% focus continuing book very to It's framework growth. grow. of And got should business. XX% grow. we put to going We've strong are you to is expect

Charles Pacala

being Yes. business, having is diversified question a pushouts. there the customers where of of on hundreds single industry a really and a industry. is out by And of trend nature on there push then The isn't

of to is adopting and And industries. our broad-based are when is That's wrong of the that a resilient it that again, delay fraction have it. with nature And view the you've new business really that We customers if the there's reality actually, certain complex a built always -- at nothing look delay. I customer, incorporates technology. and that and survey you that go across delaying customers that

that technical means And that from The That validation. the software. solution. coming is total is common software of means thread their development delay integration,

is really build solutions and go more verticals. our of it so for And to Ouster across opportunity an those

And infrastructure that that nature solutions. for building vertical, the so sales we we delays And domain. started in our have as the software a attached total don't of smart for in result, customers

and immense safety-critical And an so out to address or AI these that market robotics problems, speeding in and struggling concert, working as or industrial technical there's capacity that I for the time start automotive in technology. and software a building think complex that building also hardware and kind that's software that of tail technology challenging solutions of with our result customers revenue to expanding base that's

is and It's industry-by-industry of an that trend all. having hopefully, business. some you of not the color. really at So customers gives a having nature This diversified hundreds

Richard Shannon

not activity developments. Angus? And pushouts initial but these Okay. your comments, any macroeconomic accurate, that I and to delays Is attributing in complex apologize, way misinterpreted technical but I may you're any have

Charles Pacala

of the our some plays grow is our We're with long-term There line customers. the Ouster year in growth to model. grow. to end up. and guided will always continue be some We But level expecting that of expecting of to macroeconomics through with have

and right have We for to at Ouster. to up you the takeaway the want nothing see the wrong don't revenue I but here. So

Richard Shannon

you Great. question second topic But a driven opposed seeing smart into maybe question point? within there expecting that of attached. software Okay. response now talking majority last you're about your the a future. software of vertical within to It a smart the space, infrastructure here forward-looking visibility this you in the as help maybe can space, or being XX% guess, follow-up here, is comment infrastructure My and just being something seeing some the near were the think to software maybe at on XX%, sales on I sounded in about us like hardware expand

Charles Pacala

Yes. I on words answer. that my fumbled

did the smart our for So this vertical a just to quarter software we infrastructure of revenue X/X from we And about had clarify, record attached quarter. revenue.

the we is sell software. really Now only infrastructure smart fact

we an So from quarter software the had industry. mix basis a sales smart strong overall infrastructure a attached in a basis as just and from of

or set yes, grow infrastructure And outgrow customer if under sales for early for is of of vertical like allows I reasons. attach One you said, late couple year, integrations. X to in the to -- the expectation tricky because the XX% go -- these software for us I reread from quarters faster And we're smart you that than That of capacity back comments in-house. solutions total really my It's the others. out that building some with there's -- this Why? some there. were of the and we last issues sidestep year, revenue a

billions the verticals into industry, United States is solutions, sold millions because the the solutions, XXX,XXX second tens in of of Likewise, cameras hardware are solutions security dollars, of hundreds these intersections video industry is year that billions security immense. signalized of dollars alone. IPS vertical. traffic every of are globally. The management

software, major solutions. with we're markets turnkey entering So hardware

do of that larger attached in products a goal that use majority least internal a sales has vertical just And products outgrow to smart capacity encompassing of -- So Gemini our Blue vertical. smart nature that we an the we're is have. has verticals I or of the is as infrastructure over vast -- be the software that cases and the think the I those of think infrastructure a share time. for at I see to the other become or because majority the software City, still

Operator

Itay Michaeli comes question line the with from next of Citi. Your

Itay Michaeli

X questions. Just

an and margin. kind what for think, ahead you you to increase maybe opportunity I just back secondly, First, time drive And on software-attached the decision range on prevent mentioning behind expand the the provided? the went was you're in you this for down upside, that With to gross price over company a XX% to Angus, decision? XX% hoping that And Mark. do could of pay the bit upside what and quarter, invest XX% of see some sales, opportunity the into there some be if even I could would revolver to more of non-GAAP volume? to QX

Mark Weinswig

for questions, Thanks the Itay.

strong the We So gross favorable growth. the impacted just a guided performance we very revenue moving product We're very, first have long-term to noted We've us. happy of quarter. this We did We tailwinds or this mix. have cost. lower side. We to by XX% saw margin we've couple XX%. had that a of saw that framework

to We made changes not that. have any

to other look that see your certain opportunities this move verticals the which margins might fact higher in to the and we more At framework out. from of laid verticals. future. And that we've there of at verticals, point, the back that business may other we to sticking opportunities that with kind As update we we're have may going higher-margin point, be potentially is in that

have something at. So are we that and we something that discussed looking it's it's

Charles Pacala

is the that with kind back Yes, into question of investing some volume of margin on being customers. certain

set apt could in I of a per we question. think that's to se that major customers that opportunity. observation some built an I think that's that a into And in There's see -- degree, certainly long-term if invest volume model. our that's we

margins. make I the to do want committed we're to XX% to XX% clear, it

makes regime type if order in we've of need couple in in in we and of certainly We're a move reach business term sense, might more an vertical for profitability that for how the and position are much particular long business. made in determined -- directions, of pricing to with up that and different the progress balance by end scale. have the of a investing we that could order a where be the we to aggressively Now magnitude the a sheet

Mark Weinswig

down And the might then decision and really not at be -- the of the sheet, focusing looking moving working outstanding, of debt. million the flashy, management. enjoy, that balance but had pay on as debt we over to business, to the which the $XX efficiency is which balance capital I sheet Part

Over cycle. last inventory XX%. our years, DSOs X.X reduce We've the year, reduced by conversion inventory our million, Xx, our we've lowered the $XX increasing cash turns by significantly

every gave of we just of So with looking the of ending the us metrics, our that competitive pay is think a resilient we that we capital debt one about of working sheet that's million cash have very, the anybody to amount very down to we end advantage. the the confidence positive. it in of fact very $XXX what That, balance believe strong a so industry. be that most along as able June, had And

Operator

Rosenblatt your line from And with next of Kevin question Cassidy the Securities. comes

Kevin Cassidy

that. do out came product? with to with game it was out. more think you or of the and you're end benefiting do addressing markets are with What it you that? Or real a higher less markets a be cannibalization from different or changer coming When you REVX, still LX The expect current this LX,

Charles Pacala

the question. for a waiting for question. Thanks was I product

chips. map our around the based of digital Ouster LiDAR silicon core So still and road our technology is

better So recently the seen that we've -- Law of based on multiple LX and the to going chip improvement swapping products is most be here Ouster's the exponentially chip are and become projects doubling the of silicon. And all to -- technologies. the with Moore's to products generations really, across of promise our that semiconductor just -- by that range out underlying continue

is exponential the on from again. improvement just going also about So not coming system our into the simultaneously benefit our will to expect it's -- that and out promise silicon in to of cost And deliver but chip, can the taped can reduce products. the products. We incorporation more onto but which customers end to higher in has LX for the be system the continued that chips. absorbing DF LX, even Chronos sensors. applies by complexity also notably back to And producing

promise Chronos. both result that is and And that affordability and in the performance the as customers So map with benefit digital investment. the silicon-based continuing improvements will LX a LiDAR road has from Ouster features immensely and of of the

Operator

are There for hand Pacala to further questions closing back it over no I time, at will this remarks. so Mr.

Charles Pacala

for joining a Ouster Well, thank hope for another call. has everyone And the to quarter Great. great want I great Cheers. and everyone evening. thank team I the

Operator

Thank you. does This conclude call. today's conference

now may disconnect. You

Ouster (OUST) 13 Aug 242024 Q2 Earnings call transcript