$11.2 million in revenue with 33% gross margins
in Q3 2022 Doubled range with REV7 sensors, powered by the
next-generation L3 chip Planned merger of equals to strengthen
financial position
Ouster, Inc. (NYSE: OUST) (“Ouster” or the “Company”), a leading
provider of high-resolution digital lidar sensors for the
automotive, industrial, robotics, and smart infrastructure
industries, announced financial results for the three months ended
September 30, 2022.
Third Quarter 2022 Highlights
- $11.2 million in revenue, up 44% year over year.
- 33% gross margins, the highest margins in Ouster history,
compared to 24% in the third quarter of 2021.
- Sold 2,136 sensors in the third quarter, up 31% year over
year.
- Increased the number of Strategic Customer Agreements to 84, up
from 80 in the prior quarter1.
- Net loss increased to $36 million, compared to $28 million in
the second quarter of 2022 and $13 million in the third quarter of
2021.
- Adjusted EBITDA2 loss of $24 million, compared to $22 million3
in the second quarter of 2022 and $19 million in the third quarter
of 2021.
Ouster’s second-highest revenue quarter ever was driven
primarily by growth in the industrial and robotics verticals, which
accounted for 75% of revenues in the quarter. This included
substantial orders from customers for material handling, drone
inspection, and robotic security applications. Other large orders
from customers for trucks and buses in the automotive vertical, and
crowd analytics in the infrastructure vertical also meaningfully
contributed to the quarter. The Company delivered record gross
margins of 33%, up from 27% in the second quarter of 2022 due to
slightly higher average selling prices and lower purchase price
variance in the quarter.
Business Updates
Merger of Equals: Today, Ouster
announced that it has signed a definitive agreement to merge with
Velodyne in an all-stock transaction to accelerate lidar adoption
and strengthen the combined company’s financial position. The
transaction is subject to regulatory approvals, approval by the
stockholders of both companies, and other customary closing
conditions. It is expected to close in the first half of 2023. For
additional information, please refer to our joint release published
today, November 7, 2022.
Execution on Product Roadmap:
Ouster continued to execute on its product roadmap, dominated by
the October launch of its newest OS digital lidar sensors, REV7,
powered by its next-generation L3 chip. REV7 features the all-new
OSDome sensor, as well as upgraded OS0, OS1, and OS2 sensors that
deliver double the range, enhanced object detection, increased
precision and accuracy, and greater reliability. The new REV7
sensors are the highest-performing family of sensors on the market
and offer performance upgrades that more than double the Company’s
collective serviceable obtainable market (“SOM”), driven by new
opportunities for longer-range and mapping applications.
Benefits from the REV7 performance upgrades will support
Ouster’s recently released 3D industrial digital lidar sensor suite
configured to meet the unique requirements of forklift, port
equipment, and autonomous mobile robot manufacturers with high
volume pricing that enables adoption on production fleets. The
advancements in the L3 architecture pave the way for Ouster’s
upcoming Chronos chip, the automotive-grade, fully custom digital
lidar silicon receiver that will power its DF solid-state sensor
suite, and is slated to be integrated into the first Digital Flash
(DF) units in 2023.
“Ouster had a terrific quarter, and continued to see commercial
growth across key verticals where digital lidar is a critical
enabler for advanced automation and intelligence,” said Ouster CEO
Angus Pacala. “The launch of REV7, powered by the L3 chip, is our
most important yet: Ouster now offers the highest-performing family
of sensors on the market with double the range, a 50% increase in
precision, and even better reliability. We expect our new products
to drive faster growth across each of our verticals, particularly
within the submarkets for AVs, warehouse automation, mapping,
security, and crowd analytics.”
2022 Outlook
Ouster reiterated its FY 2022 revenue guidance4 of $40 million
to $55 million and its gross margin target of 25% to 30%.
“Together with Velodyne, we expect to unlock significant
synergies, creating a company with the scale and resources to
deliver stronger solutions for customers and society, while
accelerating time to profitability and enhancing value for
shareholders,” said Ouster CFO Anna Brunelle. “Through our
complementary customer base, partners, and distribution channels,
coupled with reduced product costs, we can accelerate lidar
adoption across fast-growing end markets by further expanding our
SOM, and augmenting or displacing other sensing technologies.”
Conference Call
Information
Ouster will host a conference call and live webcast for analysts
and investors at 5 p.m. EST today, November 7, 2022, to discuss its
financial results and business outlook. To access the call, please
register at https://conferencingportals.com/event/ERDXYEAl.
Upon registering, each participant will be provided with call
details and a registrant ID. The webcast and related presentation
materials will be accessible for at least 30 days on Ouster’s
investor relations website at https://investors.ouster.com. A
telephonic replay of the conference call will be available through
November 21, 2022. To access the replay, please dial (800) 770-2030
from the U.S. or (647) 362-9199 from outside the U.S. and enter the
conference ID number: 93428.
About Ouster
Ouster (NYSE: OUST) is building a safer and more sustainable
future through its high-resolution digital lidar sensors for the
automotive, industrial, smart infrastructure, and robotics
industries. Ouster’s sensors offer an excellent combination of
price and performance with the flexibility to span hundreds of
use-cases and enable revolutionary autonomy across industries. With
a global team and high-volume manufacturing, Ouster supports
approximately 700 customers in over 50 countries. Ouster is
headquartered in San Francisco, CA with offices in the Americas,
Europe, Asia-Pacific, and the Middle East. For more information,
visit www.ouster.com, or connect with us on Twitter or
LinkedIn.
_________________________
1 “Strategic Customer Agreements” or “SCAs” establish a
multi-year purchase and supply framework for Ouster and the
customer, and include details about customer programs and
applications where the customer intends to use Ouster products.
SCAs also include multi-year non-binding customer forecasts
(typically of three to five years in length) giving Ouster
visibility to the customer's long-term purchasing requirements,
mutually agreed upon pricing over the duration of the agreement,
and in certain cases include multi-year binding purchase
commitments. “Contracted revenue opportunity” represents the sum of
both binding purchase commitments and non-binding forecasts. No
assurances can be given that non-binding forecasts will mature into
binding purchase commitments, or that any contracted revenue
opportunity will result in revenue. No additional revenue
opportunity beyond the customer’s actual forecast has been imputed.
2 Adjusted EBITDA loss is a non-GAAP financial measure. See
Non-GAAP Financial Measures for additional information and a
reconciliation to Net loss, the most directly comparable financial
measure calculated in accordance with U.S. GAAP. 3 Adjusted EBITDA
for this reporting period does not include certain litigation
expenses. 4 FY 2022 guidance does not reflect any contribution from
the planned merger of equals.
Cautionary Statement Regarding
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the federal securities law. Such statements are
based upon current plans, estimates and expectations in light of
historical results and trends, current conditions and potential
future developments, and are subject to various risks and
uncertainties that could cause actual results to differ materially
from such statements. The inclusion of forward-looking statements
should not be regarded as a representation that such plans,
estimates and expectations will be achieved. Words such as
“anticipate,” “expect,” “project,” “intend,” “believe,” “may,”
“will,” “should,” “plan,” “could,” “continue,” “target,”
“contemplate,” “estimate,” “forecast,” “guidance,” “predict,”
“possible,” “potential” “pursue,” “likely,” and words and terms of
similar substance used in connection with any discussion of future
plans, actions or events identify forward-looking statements. All
statements, other than historical facts, including statements
regarding the expected timing of the closing of the merger; the
expected benefits and synergies of the merger; the competitive
position of the combined company; any assumptions underlying any of
the foregoing; the Company’s expected financial results for the
year ending December 31, 2022 and the expected financial results of
the combined company following the merger; expected growth from
technological advancements and new product offerings; expected
serviceable obtainable market (SOM); and future strategy and market
positioning; are forward-looking statements. All forward-looking
statements are subject to risks and uncertainties that may cause
actual results to differ materially from those that we expected,
including but not limited to risks related to Ouster’s limited
operating history and history of losses; the negotiating power and
product standards of its customers; fluctuations in its operating
results; supply chain constraints and challenges; cancellation or
postponement of contracts or unsuccessful implementations; the
adoption of its products and the growth of the lidar market
generally; inability of [Ouster or Velodyne] to obtain stockholder
approval required to consummate the planned merger; conditions to
the closing of the merger may not be satisfied; the merger may
involve unexpected costs, liabilities or delays; the effect of the
announcement of the merger on the ability of Ouster or Velodyne to
retain and hire key personnel and maintain relationships with
customers, suppliers and others with whom Ouster or Velodyne does
business, or on Ouster’s or Velodyne’s operating results and
business generally; Ouster’s or Velodyne’s respective businesses
may suffer as a result of uncertainty surrounding the merger and
disruption of management’s attention due to the merger; the outcome
of any legal proceedings related to the merger; Ouster’s ability to
grow its sales and marketing organization; substantial research and
development costs needed to develop and commercialize new products;
the competitive environment in which Ouster operates; selection of
Ouster’s products for inclusion in target markets; Ouster’s future
capital needs and ability to secure additional capital on favorable
terms or at all; its ability to use tax attributes; Ouster’s
dependence on key third party suppliers, in particular Benchmark
Electronics, Inc., and manufacturers; Ouster’s ability to maintain
inventory and the risk of inventory write-downs; inaccurate
forecasts of market growth; Ouster’s ability to manage growth; the
creditworthiness of Ouster’s customers; risks related to
acquisitions; risks related to international operations; risks of
product delivery problems or defects; costs associated with product
warranties; Ouster’s ability to maintain competitive average
selling prices or high sales volumes or reduce product costs;
conditions in its customers’ industries; Ouster’s ability to
recruit and retain key personnel; Ouster’s use of professional
employer organizations; Ouster’s ability to adequately protect and
enforce its intellectual property rights; Ouster’s ability to
effectively respond to evolving regulations and standards; risks
related to operating as a public company; risks related to the
COVID-19 pandemic; risks related to certain of Ouster’s warrants
being accounted for as liabilities; and other important factors
discussed in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2021, as updated by the Company’s most recent
Quarterly Report on Form 10-Q and as may be further updated from
time to time in the Company’s other filings with the SEC. Readers
are urged to consider these factors carefully and in the totality
of circumstances when evaluating these forward-looking statements,
and not to place undue reliance on any of them. Any such
forward-looking statements represent management’s reasonable
estimates and beliefs as of the date of this press release. While
Ouster may elect to update such forward-looking statements at some
point in the future, it disclaims any obligation to do so, other
than as may be required by law, even if subsequent events cause its
views to change.
The financials herein are unaudited and subject to the
finalization of year-end audit procedures. In addition, see
information below concerning non-GAAP financial measures.
Non-GAAP Financial
Measures
In addition to its results determined in accordance with
generally accepted accounting principles in the United States
(“GAAP”), Ouster believes the non‑GAAP measure of Adjusted EBITDA
is useful in evaluating its operating performance. The calculation
of Adjusted EBITDA for this reporting period does not include
litigation expenses. Ouster calculates Adjusted EBITDA as net loss
excluding interest expense (income), net, other expense (income),
net, stock-based compensation expense, provision for income tax
expense, depreciation and amortization, litigation and litigation
related expenses and other non-recurring expenses. Ouster believes
that Adjusted EBITDA may be helpful to investors because it
provides consistency and comparability with past financial
performance and may be helpful in comparison with other companies,
some of which use similar non‑GAAP information to supplement their
GAAP results. The non-GAAP financial information is presented for
supplemental informational purposes only, and should not be
considered a substitute for financial information presented in
accordance with GAAP, and may be different from similarly titled
non‑GAAP measures used by other companies. Reconciliation tables of
the most comparable GAAP financial measures to the non-GAAP
financial measures are included at the end of this press
release.
Additional Information
In connection with the proposed transaction, [Ouster and
Velodyne] plan to file with the SEC and mail or otherwise provide
to their respective stockholders a joint proxy statement/prospectus
regarding the proposed transaction. INVESTORS AND OUSTER’S AND
VELODYNE’s RESPECTIVE STOCKHOLDERS ARE URGED TO READ THE JOINT
PROXY STATEMENT/PROSPECTUS IN ITS ENTIRETY WHEN IT BECOMES
AVAILABLE AND ANY OTHER DOCUMENTS FILED BY EACH OF [Ouster AND
Velodyne] WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION
OR INCORPORATED BY REFERENCE THEREIN BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND THE
PARTIES TO THE PROPOSED TRANSACTION. Investors and stockholders
will be able to obtain a free copy of the Joint Proxy
Statement/Prospectus and other documents containing important
information about Ouster and Velodyne, once such documents are
filed with the SEC, from the SEC’s website at www.sec.gov. Ouster
and Velodyne make available free of charge at www.ouster.com and
www.velodynelidar.com, respectively (in the “Investors” section),
copies of materials they file with, or furnish to, the SEC.
No Offer or Solicitation
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the U.S.
Securities Act of 1933, as amended.
Participants in the
Solicitation
Ouster, Velodyne and their respective directors, executive
officers and certain employees and other persons may be deemed to
be participants in the solicitation of proxies from the
stockholders of [Ouster and Velodyne] in connection with the
proposed transaction. Securityholders may obtain information
regarding the names, affiliations and interests of Ouster’s
directors and executive officers in Ouster’s Annual Report on Form
10-K for the fiscal year ended December 31, 2021, which was filed
with the SEC on February 28, 2022, and its definitive proxy
statement for the 2022 annual meeting of stockholders, which was
filed with the SEC on April 27, 2022. Securityholders may obtain
information regarding the names, affiliations and interests of
Velodyne’s directors and executive officers in Velodyne’s
definitive proxy statement for the 2022 annual meeting of
stockholders, which was filed with the SEC on April 29, 2022.
Additional information regarding the interests of such individuals
in the proposed transaction will be included in the Joint Proxy
statement/Prospectus relating to the proposed transaction when it
is filed with the SEC. These documents (when available) may be
obtained free of charge from the SEC’s website at www.sec.gov,
Ouster’s website at https://investors.ouster.com/ and Velodyne’s
website at https://investors.velodynelidar.com/.
OUSTER, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited) (in thousands, except share and per share
data) September 30,2022 December 31,2021
Assets Current assets: Cash and cash equivalents
$
133,189
$
182,644
Restricted cash, current
250
977
Accounts receivable, net
10,783
10,723
Inventory
20,804
7,448
Prepaid expenses and other current assets
6,923
5,566
Total current assets
171,949
207,358
Property and equipment, net
8,594
10,054
Operating lease, right-of-use assets
13,652
15,156
Goodwill
51,151
51,076
Intangible assets, net
19,286
22,652
Restricted cash, non-current
1,088
1,035
Other non-current assets
554
371
Total assets
$
266,274
$
307,702
Liabilities, redeemable convertible preferred stock and
stockholders’ equity Current liabilities: Accounts payable
$
8,154
$
4,863
Accrued and other current liabilities
14,395
14,173
Operating lease liability, current portion
3,127
3,067
Total current liabilities
25,676
22,103
Operating lease liability, long-term portion
14,288
16,208
Warrant Liabilities
276
7,626
Debt
19,181
—
Other non-current liabilities
1,561
1,065
Total liabilities
60,982
47,002
Commitments and contingencies Redeemable convertible preferred
stock
—
—
Stockholders’ equity (deficit): Common stock
18
17
Additional paid-in capital
605,195
564,045
Accumulated deficit
(399,740
)
(303,356
)
Accumulated other comprehensive loss
(181
)
(6
)
Total stockholders’ equity
205,292
260,700
Total liabilities, redeemable convertible preferred stock, and
stockholders’ equity
$
266,274
$
307,702
OUSTER, INC. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE LOSS (unaudited) (in
thousands, except share and per share data)
Three Months Ended September 30,
Nine Months Ended September 30,
2022
2021
2022
2021
Product revenue
$
11,204
$
7,755
$
30,091
$
21,726
Cost of product
7,488
5,879
21,002
16,212
Gross (loss) profit
3,716
1,876
9,089
5,514
Operating expenses: Research and
development
17,212
8,390
49,011
19,576
Sales and marketing
8,541
6,737
23,194
14,777
General and administrative
14,008
14,073
40,306
36,177
Total operating expenses
39,761
29,200
112,511
70,530
Loss from operations
(36,045
)
(27,324
)
(103,422
)
(65,016
)
Other (expense) income: Interest income
733
165
1,231
305
Interest expense
(699
)
—
(1,143
)
(504
)
Other income (expense), net
61
14,490
7,071
(422
)
Total other expense, net
95
14,655
7,159
(621
)
Loss before income taxes
(35,950
)
(12,669
)
(96,263
)
(65,637
)
Provision for income tax expense
37
—
121
—
Net loss
$
(35,987
)
$
(12,669
)
$
(96,384
)
$
(65,637
)
Other comprehensive loss Foreign
currency translation adjustments
$
(87
)
$
—
$
(175
)
$
—
Total comprehensive loss
$
(36,074
)
$
(12,669
)
$
(96,559
)
$
(65,637
)
Net loss per common share, basic and diluted
$
(0.20
)
$
(0.08
)
$
(0.55
)
$
(0.53
)
Weighted-average shares used to compute basic and diluted net loss
per share
181,361,354
156,647,259
175,795,093
123,175,390
OUSTER, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(in thousands) Nine months ended September
30,
2022
2021
CASH FLOWS FROM OPERATING ACTIVITIES Net loss
$
(96,384
)
$
(65,637
)
Adjustments to reconcile net loss to net cash used in operating
activities: Depreciation and amortization
7,070
3,428
Stock-based compensation
25,324
18,557
Change in right-of-use asset
2,075
1,292
Interest expense
290
36
Amortization of debt issuance costs and debt discount
104
250
Change in fair value of warrant liabilities
(7,350
)
406
Inventory write down
894
866
Provision for doubtful accounts
9
—
Gain from disposal of property and equipment
(100
)
—
Changes in operating assets and liabilities: Accounts
receivable
(69
)
(4,378
)
Inventory
(14,249
)
(2,551
)
Prepaid expenses and other assets
(1,540
)
42
Accounts payable
3,225
(2,707
)
Accrued and other liabilities
(158
)
7,060
Operating lease liability
(2,431
)
(1,770
)
Net cash used in operating activities
(83,290
)
(45,106
)
CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from
sale of property & equipment
275
—
Purchases of property and equipment
(2,353
)
(1,774
)
Net cash used in investing activities
(2,078
)
(1,774
)
CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from
the merger and private offering
—
291,454
Payment of offering costs
—
(27,124
)
Repayment of debt
—
(7,000
)
Proceeds from issuance of promissory notes to related parties
—
5,000
Repayment of promissory notes to related parties
—
(5,000
)
Repurchase of common stock
(46
)
(43
)
Proceeds from exercise of stock options
398
539
Proceeds from borrowings, net of debt discount and issuance costs
19,077
—
Proceeds from the issuance of common stock under at-the-market
offering, net of commissions and fees
16,322
—
At-the-market offering costs for the issuance of common stock
(278
)
—
Taxes paid related to net share settlement of restricted stock
awards
(59
)
—
Net cash provided by financing activities
35,414
257,826
Effect of exchange rates on cash and cash equivalents
(175
)
—
Net increase (decrease) in cash, cash equivalents and restricted
cash
(50,129
)
210,946
Cash, cash equivalents and restricted cash at beginning of period
184,656
12,642
Cash, cash equivalents and restricted cash at end of period
$
134,527
$
223,588
OUSTER, INC. RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES (unaudited) (in
thousands) Three
Months Ended September 30, Nine Months Ended
September 30,
2022
2021
2022
2021
GAAP net loss
$
(35,987
)
$
(12,669
)
$
(96,384
)
$
(65,637
)
Interest expense (income), net
(34
)
(165
)
(88
)
199
Other expense (income), net
(61
)
(14,490
)
(7,071
)
422
Stock-based compensation(1)
8,455
7,147
25,324
18,557
Provision for income tax expense
37
—
121
—
Non-GAAP operating loss
(27,590
)
(20,177
)
(78,098
)
(46,459
)
Depreciation and amortization expense(2)
2,331
1,174
7,070
3,428
Litigation expenses(3)
1,123
500
1,715
500
Adjusted EBITDA
$
(24,136
)
$
(18,503
)
$
(69,313
)
$
(42,531
)
(1)Includes stock-based compensation expense as follows:
Three Months Ended September 30, Nine Months Ended
September 30,
2022
2021
2022
2021
Cost of product revenue
$
207
$
206
$
570
$
457
Research and development
3,681
2,063
11,248
4,305
Sales and marketing
1,913
1,717
5,276
2,702
General and administrative
2,654
3,161
8,230
11,093
Total stock-based compensation
$
8,455
$
7,147
$
25,324
$
18,557
(2)Includes depreciation and amortization expense as follows:
Three Months Ended September 30, Nine
Months Ended September 30,
2022
2021
2022
2021
Cost of revenue
$
227
$
275
$
820
$
678
Research and development
889
231
2,600
350
Sales and marketing
75
—
225
—
General and administrative
1,140
654
3,426
1,226
Total depreciation and amortization expense
$
2,331
$
1,160
$
7,070
$
2,254
(3)Litigation expenses and litigation-related expenses outside of
the Company’s ordinary business operations
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221107005417/en/
For Investors Sarah Ewing investors@ouster.io
For Media Heather Shapiro press@ouster.io
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