Ouster Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
March 26, 2024

There are 8 speakers on the call.

Operator

Hello, and welcome to Ouster's 4th Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After today's presentation and remarks, there will be an opportunity to ask questions. This call 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 Gang, VP of Strategic Finance and Treasurer.

Operator

Please go ahead.

Speaker 1

Good afternoon, everyone. Thank you for joining us for our Q4 2023 earnings call. I am joined today by Ouster's Chief Executive Officer, Angus Pakala and Chief Financial Officer, Mark Weinswig. Before we begin the prepared remarks, we would like to remind you that earlier today, Altair issued a press release announcing its Q4 and fiscal year 2023 results. An investor presentation was published and is available on the Investor Relations section of Ouster's website.

Speaker 1

I'd also like to remind everyone that during the course of this conference call, Ouster's management will discuss certain forward looking information, including commentary regarding our growth strategy and go forward financial framework, our Q1 2024 financial guidance and other matters described in today's press release that are intended to be covered by the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward looking statements. There is no guarantee that such plans, estimates and expectations will be achieved, and Alstair's actual results are subject to risks and uncertainties that may cause actual results to differ materially from current expectations that we may share with you today. In addition to any risks highlighted during this call, you should carefully consider other important risk factors and disclosures that may affect Alcer's future results as described in the reports filed with or furnished to the SEC, including Ouster's annual report on Form 10 ks for the year ended December 31, 2022, as will be updated in Ouster's Annual Report on Form 10 ks for the year ended December 31, 2023. Except as required by law, rule or regulation, Aster undertakes no obligation to update any of these forward looking statements for any reason after the date of this call.

Speaker 1

Information discussed on this call concerning Ouster's industry, competitive position and the markets in which it operates is based on information from independent industry and research organizations, other third party sources and management estimates, which are derived from publicly available information released by independent industry analysts and other third party sources, as well as data from OTSAR's internal research and are based on reasonable assumptions and computations made upon reviewing such data and its experience in and knowledge of such industry and markets. By definition, assumptions are subject to uncertainty and risk, which could cause results to differ materially from those expressed in the estimates. During this call, we will discuss certain non GAAP financial measures. These non GAAP financial measures should be considered as a supplement to and not a substitute for measures prepared in accordance with GAAP. For a reconciliation of non GAAP financial measures discussed during this call to the most directly comparable GAAP measures, please refer to today's press release.

Speaker 1

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

Speaker 2

Hello, everyone, and thank you for joining us today. 2023 was a transformative year for Ouster. We successfully completed the merger with Velodyne, which forged a company with a stronger balance sheet, expanded patent portfolio and streamlined cost structure. We achieved important milestones across our operations, notably scaling production and shipments of REV7, our most performance sensor yet. Additionally, we added new revenue streams with the launch of Oster Gemini and BlueCity and demoed our first DF sensors with customers, marking a significant stride forward in our product development journey.

Speaker 2

This was all accomplished while delivering record financial performance, significantly reducing our cash burn and exceeding our initial post merger annualized cost savings target by over 40%. Let's delve deeper into the 4 strategic priorities we laid out for 2023: drive new business execute on our digital ladder road map, develop a robust software ecosystem and build a financially strong business. Looking back at the past year, I believe the Ouster team successfully executed against each of these goals. First, Ouster booked a record $142,000,000 in new business and generated a record $83,000,000 in revenue, a 103% increase year over year. We closed large multimillion dollar deals across all 4 verticals, including production wins by Main Mobility and Motional to supply LiDAR sensors for their autonomous vehicles.

Speaker 2

We also saw increased demand from mapping, inspection and warehouse automation customers who benefit from Red7's dramatic improvements in range, precision and accuracy. This growth was complemented by the promotion of Cyrille Jacomet, our new Senior Vice President of Global Sales. Cyrille has been with Oster since 2018 and brings a comprehensive understanding of our market verticals, deep relationships with some of our largest customers and experience leading high performing sales teams. Turning to our second priority. This year, we made significant advancements in our road map to develop the next generation custom CMOS chips that power all of our products.

Speaker 2

First, we taped out the L4 chip, our state of the art ASIC that will power the next iteration of our OS sensors. We also made exciting progress on the Cronos chip, our automotive grade custom silicon for the DS series. This year, we plan to integrate Cronos into the final form factor DF hardware that we've already demoed to over a dozen OEMs in Tier 1s. We also made progress on our certification road map to deliver functionally safe cybersecure products that meet ASIL B, SIL2 and NEMA TS2 standards. We achieved ISO 27,001 certification, which demonstrates our commitment to meet the highest standards of data security for our customers and partners.

Speaker 2

This is in addition to our ISO 9,001 and ISO 14,001 certifications for quality and environmental management. These achievements are key milestones that will help significantly expand our serviceable, obtainable markets within the automotive, industrial and smart infrastructure industries. Shifting to Software Solutions. Ouster bolstered its product portfolio with the launch of Ouster Gemini, our cloud backed digital lidar perception platform for crowd analytics, security and intelligent transportation systems. This was a major milestone and added a new revenue stream while lowering the barriers to LiDAR adoption and increasing stickiness with our customers.

Speaker 2

We further expanded our solutions business with the addition of BlueCity, our turnkey traffic management solution. Throughout the year, these software solutions were enhanced with new deep learning AI perception models and partner integrations. We booked 1,000,000 in software coupled sales in 2023, and we expect the contribution from this revenue stream to continue to increase. Finally, in 2023, we made significant progress to build a financially strong business. We closed the merger with Velodyne and transitioned Velodyne Products to a lower cost manufacturer in Thailand.

Speaker 2

Our efforts to optimize our cost structure surpassed our initial post merger annualized cost savings target by over 40% and significantly reduced our cash burn. Through the refinancing of our term loan, we lowered our cost of capital. We also implemented a new financial framework to guide Ouster toward profitability. This robust business model not only sets us apart from our peers but also establishes a platform that we believe will deliver long term value to our employees, customers and shareholders. Our achievements in 2023, complemented by our differentiated digitalider technology and AI powered software solutions, supports a uniquely diversified business model and will drive our near and long term revenue growth.

Speaker 2

I'm excited to continue this momentum in 2024 as we execute our plan towards profitability. I'll now turn the call over to our CFO, Mark Weinswig, to provide more context on our financial results for the Q4 and full year.

Speaker 3

Thank you, Angus, and good afternoon, everyone. Let me start off by discussing our latest quarterly results. In the Q4, we recognized a record $24,400,000 in revenue, a 10% increase over the 3rd quarter. The robotics vertical was the largest contributor to revenue followed by smart infrastructure. Both verticals had multiple customers each generating over $1,000,000 of revenue, which illustrates the evolution of our customers from pilot test to commercial deployments.

Speaker 3

In Q4, we shipped over 4,100 sensors, a record quarter for Ouster. GAAP gross margins improved approximately 800 basis points to 22% versus 14% in the prior quarter. Non GAAP gross margins improved to 35% in the 4th quarter and reached the highest levels since the merger. GAAP operating expenses of $43,000,000 were higher sequentially, driven by a litigation settlement and higher stock based compensation expenses. We expect our GAAP operating expenses to fluctuate quarter to quarter, and we remain focused on improving operating expenses atorbelow3rdquarter2023 levels.

Speaker 3

Turning to full year results. For 2023, we reported record revenues of $83,000,000 an increase of 103% year over year. Bookings were $142,000,000 and represented a book to bill ratio of 1.7 times. We expect to continue to report bookings on an annual basis. During 2023, we shipped over 13,500 sensors and achieved an average selling price of roughly $6,000 Full year GAAP gross margins were 10% and non GAAP gross margins were 30%.

Speaker 3

GAAP operating expenses were $382,000,000 which included goodwill impairment charges of $167,000,000 Looking back, 2023 marked a year of transition as we successfully executed a plan to transform our cost structure, drive revenue growth and put us on a path to profitability. In each quarter since the merger, we delivered sequentially higher revenues, higher gross margins and improved adjusted EBITDA. We also made significant financial progress by cutting our cash burn rate by over 50% since Q1 of 2023, lowering our cost of debt and improving our working capital management. Overall, these accomplishments put Ouster in a strong position as we enter 2024. We believe we have the most performant family of sensors on the market, one of the broadest customer bases in the industry and a strong balance sheet with $192,000,000 in cash, cash equivalents, restricted cash and investments and short term investments as of December 31.

Speaker 3

Our cash balance at year end includes approximately $11,000,000 raised via our ATM during the quarter, reflecting our strategy to maintain a strong balance sheet to help fund our future growth. Moving to our revenue guidance. For the Q1 of 2024, Ouster is targeting between $25,000,000 $26,000,000 This represents a sequential increase in revenue for the Q1, which has historically been a seasonally weaker quarter. I'll now turn the call back to Angus to share our 2024 goals and closing remarks.

Speaker 2

Thanks, Mark. For 2024, we are focused on 3 strategic priorities for the business, which will extend our competitiveness, accelerate LiDAR adoption and advance Ouster on the path to profitability. 1st, expand our software solutions and grow our installed base. 2nd, advance the development of digital LiDAR hardware and third, make meaningful progress on our long term financial framework. Ouster's smart infrastructure solutions, Ouster Gemini and BlueCity, are enabling customers to improve operational efficiency and safety.

Speaker 2

We plan to release new subscription based software tools later this year that improve the ease of installation and provide additional statistics and analytics to customers. These tools will support expanded adoption by existing customers as well as new opportunities at global logistics companies, security integrators and transportation authorities. With millions of signalized intersections around the world and the global market for end system security cameras already estimated at $32,000,000,000 we expect software coupled sales to be a key contributor to future growth. For example, within smart infrastructure, Ouster was selected by a leading global logistics company for a multimillion dollar deal to deploy our digital LiDAR hardware coupled with Ouster Gemini at approximately 130 logistics sites. This represents approximately 5% of this customer's global footprint.

Speaker 2

We see a massive opportunity to expand companies. Turning to hardware. Ouster continues to progress on its digital LIDAR road map, developing technologies that will enhance operating performance, expand the serviceable obtainable market and provide further differentiation versus peers. Ouster's next generation custom silicon chip, the L4, has been taped out and expected to bring significant improvements in range, field of view and manufacturability, along with safety certifications to the OS sensor family. In addition, we plan to integrate the Cronos chip into our solid state digital flash sensors later this year.

Speaker 2

Finally, Ouster has set a financial framework focused on achieving 30% to 50% annual revenue growth, expanding gross margins to 35% to 40% and maintaining operating expenses at or below Q3 2023 levels. We expect 2024 results to show meaningful progress against this framework, putting Ouster on a path to profitability. In closing, Ouster was founded on the premise that LiDAR needs to be digital if it is going to be ubiquitous. Designed around a silicon CMOS architecture, the performance of digital LiDAR can scale exponentially in line with Moore's Law. Our digital approach enables low cost customization that opens up broad industry applications while maintaining a streamlined manufacturing process that is designed for scalability.

Speaker 2

Now with cloud based software solutions, we are offering even more features, simplifying adoption and expanding the use case for LiDAR. We have a proven ability to manufacture at scale with positive gross margins and have demonstrated a strong track record of growth with record revenue and bookings over the last year. Our REV7 sensors are driving increased demand from material handling, mapping and robo taxi customers. We see major opportunities to expand and replicate Ouster Gemini and BlueCity deployments to existing and new customers throughout the year. As a trusted American LiDAR provider, Ouster is poised to capture increasing market share as the adoption of LiDAR accelerates across industries, and I am as confident as ever in Ouster's future.

Speaker 2

With that, I'd like to open it for Q and A.

Operator

Thank Your first question comes from the line of Andreas Sheppard with Cantor Fitzgerald. Your line is open.

Speaker 4

Hi, good morning. Good afternoon, everyone, and congratulations on the quarter and thanks for taking our question. Angus, I wanted to maybe get your thoughts around the auto industry and kind of where that stands in terms of beginning to fully ramp up on LiDAR sensors? I obviously realize auto is not a core vertical for you guys. But just curious kind of what trends you're seeing as it pertains to the auto industry?

Speaker 4

Thank you.

Speaker 2

Thanks for the question. Well, the auto industry is an interesting beast for LiDAR because it represents huge promise, but also huge uncertainty given that there the uncertainty in time lines of adopting the technology. And for that reason, Alstair has taken a measured approach that we feel very confident in with our automotive strategy. And automotive is one of our 4 key markets. We have a well established set of automotive customers that we sell into today and we're developing our new DF products to specifically target the high volume consumer ADAS opportunity that again is a massive opportunity with an uncertain time line.

Speaker 2

Now what Ouster is doing differently is focusing on building a product that we believe can capture that market in the long run, build to the Holy Grail of what the market needs, which is a high performance, compact and affordable sensor, a sensor suite actually that can play across many different form factors, vehicle types, models and levels of autonomy. And that's represented with a DF sensor. And here, it's much more important to build the right thing and build it on a time line that actually sets us up for decades of success versus being first to the market and waiting in some cases now as we're seeing for automakers to actually adopt a product that has come before the market is really ready for it. So I'm really happy. We actually made major progress on the DF product line in 2023.

Speaker 2

I was able to personally be present demo the DF sensors with automakers in Tier 1s. In 2023, we got great feedback on the architecture. Again, small form factor, high pixel density, great range resolution field of view and fully solid state to meet the ruggedness of the automotive industry. And now we're back to executing on building the final devices and that really hinges on this Cronos chip where we have a world class team of silicon designers that are building the final Cronos silicon that's going to go into the high volume DF product. And that's something that is going to happen this year.

Speaker 4

Got it. Thanks, Angus. That was super helpful. I really appreciate that. Maybe a question for Mark next is, as you continue to improve your gross margins and as you're inching closer to that 35% to 40% target, what kind of blended ASPs what's the best way to think about those ASPs for 2024 relative to this past quarter?

Speaker 4

Just curious kind of what trends or what's the best way we can think about incorporating that into our model? Thank you.

Speaker 3

Yes. Thank you for the question. So first of all, this quarter, Ouster sold a record number of sensors. We had a great quarter in terms of shipments and meeting customer demand. A lot of demand came in at the end of the quarter, a lot of interest and that's also what led to our very high book to bill ratio.

Speaker 3

In terms of ASPs going forward, we did have a slight decline quarter to quarter on ASPs, but it was nothing more than just a product mix in the quarter between different SKUs. So the good news for us is that our margins continue to improve and that's basically because of a couple of things. One is, is obviously revenue growth. Number 2 is that we are seeing a lower amount of excess and obsolete or some of these charges associated with the merger. And third is we are seeing just overall cutting of cost internally.

Speaker 3

So we put together a structure this year to reduce our cost structure. We've been moving products overseas to for contract manufacturing and we are becoming more efficient. So those things have led for us to be able to increase our margins to basically that 35% level and obviously we're very happy by the performance in the quarter.

Speaker 1

Got it. That's helpful.

Speaker 4

And maybe just one last one, if I could. In regards to your liquidity, can you just remind us what is kind of the expected run rate now with the balance of 192,000,000

Speaker 3

dollars Yes. We have $192,000,000 in cash investment securities as of the end of December. This quarter, we reduced our adjusted EBITDA loss to $14,000,000 in cash burn. We're continuing to see opportunities to grow our revenues, reduce our costs and improve our margins. So our goal is to continue to move down that path of profitability.

Speaker 3

And one thing we did in November is we did laid out that financial framework and obviously, we're hitting on all cylinders to go to meet that framework.

Speaker 4

Got it. Great. Thanks again. Congrats on the quarter. I'll pass it on.

Speaker 4

Thank you.

Operator

Your next question comes from the line of Brian Dobson with Chardan Capital Markets. Your line is open.

Speaker 5

Thanks. Good evening. Angus, do you think you could perhaps give a little bit of color on what you're seeing in the industrial market right now and kind of how you view that business in comparison with automotive vis a vis margin and time spent with clients in order to execute deals?

Speaker 2

Sure. Thanks for the question, Brian. The there are many corollaries in terms of time to market between the industrial market and the automotive market. But the rollout of the technology can happen more linearly, which allows for industrial customers to kind of track to a more expected time line for the rollout of the technology. So what we've seen is that by engaging with a large number of industrial players, we're able to identify the industrial companies that can create a set of parameters that allows them to get their product out quickly and really invest in those players.

Speaker 2

And each and every year, a new set of industrial companies has a mature enough product that they can bring that to market and start to expand their purchasing with us and bring expanding volumes to market. And so that's much more of a predictable cadence because there are a lot of customers in this space and because industrial players are able to constrain the problem that they're embarking on much better than the automotive players, where it's kind of all or nothing. And so that's led to a much more predictable business for Alster. There are still many benefits for Alster in the industrial space versus consumer automotive in terms of gross margins and ASP expectations. And that really just falls to the type of end customer.

Speaker 2

It's not a consumer. Generally, industrial players are selling B2B to other industrial players. And the equipment costs that they're putting our LiDAR on are much more expensive. So multimillion dollar pieces of industrial machinery, construction equipment, mining equipment can tolerate a higher price point, higher ASPs than the consumer automotive industry. So that just has led to again, it's kind of reflected in our results, our ASP resilience over the last year and the solid kind of quarter on quarter revenue build that we've shown for 4 quarters now since the merger is really because of the dynamics I just laid out in the industrial sector.

Speaker 5

Excellent. Thanks very much.

Operator

Your next question comes from the line of Kevin Cassidy with Rosenblatt Securities. Your line is open.

Speaker 6

Yes. Thanks for taking my question and congratulations on the great results and great progress. But along those lines on the gross margin, you're at 35%, so you're getting very close to your target. But can you say what the moving parts are for potential improvement from here? Is it lower material costs as revenues or units increase Or is software the larger component of lifting gross margin?

Speaker 1

Yes. So I'll hit on

Speaker 3

the couple of items that led to the kind of improvements this over the last couple of quarters, and I'm sure Angus will want to talk a little bit about kind of the software opportunity. After we did the merger, the most important thing was really reducing the cost structure of the organization. The operations and manufacturing group put a huge effort in terms of that. We're able to move almost all the Velodyne sensors overseas over the in the 1st few months. And now we're actually 100 percent outsourced over to our partner over in Thailand.

Speaker 3

That's led to a significant reduction in our overall cost. We've also seen a big increase in our volumes. That's also given us additional opportunities in terms of operating leverage. So those are the two main factors that we've seen really in the last since the beginning of this year. And then obviously, the release of the REV7 sensor, which has just it's the most performance sensor in the market.

Speaker 3

We get a we have a higher ASP, a lot of customer interest in that and that's really led to us to see overall improvements in our gross margins. Now going forward, I'll leave it to Angus to kind

Speaker 5

of walk through some of

Speaker 3

the go forward opportunities from the software side.

Speaker 2

Yes, absolutely. And I would highlight that there's further opportunity to produce unique features and capabilities in our next generation of OS sensors. So REV7 has shown that kind of immense success that we can tap by iterating on our silicon and driving new capability in the LiDAR hardware. We're going to continue that with the L4 chip and the next generation of OS and DF sensors. But on the software side, with the solutions business that we've developed in the last year with Ouster Gemini and BlueCity, we see an opportunity to expand our margin in that business and potentially expand that the rate of adoption of LiDAR technology for the smart infrastructure use cases as kind of an added benefit to the software play that we're making there.

Speaker 2

So you can imagine that the majority of customers that are buying Ouster LiDAR have some significant investment in software that they are making to build a complete solution. And that investment is something that we are now able to sell and provide value ourselves through these complete solutions that we're providing in Smart Infrastructure. So I think that there's more to come there on the margin side.

Speaker 6

Okay, great. Yes, and that was I was going to go into that question with the L4 if you expected ASPs to go up further. And maybe as long as I'm asking the question, how do you handle software revenue? Is it going to be folded into the average selling price amortized over the number of sensors? Or is it going to be a separate line item?

Speaker 3

Yes, it's a great question. And we are as software does grow, you will start to see that we will start to break out more information on that and that will probably start to happen over the next year or so. But we are really excited about the amount of deployments that we've already done today and what that looks like. We are still refining the model as we work with customers, and that will change over time as more customers come into the fold and start seeing the opportunity for the Oster product line.

Speaker 2

Yes. And I would add, I mean, the majority of our software revenue is a subscription based software business. So we're already seeing customer willingness to adopt that model into the smart infrastructure sector.

Speaker 6

Okay, great. Thanks and congratulations

Speaker 5

again. Thank

Operator

Your next question comes from the line of Shadi Midwali with Craig Hallum. Your line is open.

Speaker 7

Hey, this is Shadi Midwali on for Richard Shannon. Congrats on Assad, you guys. My first question is on your Q1 guidance. Q1 guidance implies 35% growth year over year, which is on the lower end of your full year guidance of 30% to 50% growth. So maybe here, what is giving you the confidence that you'll be able to maintain that 30% plus growth throughout 2024?

Speaker 2

Yes. Thanks for the questions. I mean, the we really highlighted 3 strategic priorities for Alstair. And the first two are focused on growth. So those being the software solutions expanded business, the advancement in our digital LiDAR hardware, both OS and DF.

Speaker 2

And the 3rd priority, just executing more generally on the financial framework briefly we've laid out. But focusing on the first two, we've seen incredible kind of uptake and rapid uptake in the Gemini platform and the BlueCity platform. And I have a really kind of positive outlook on how we're going to be able to expand that line of business more quickly with customers than our traditional LiDAR hardware business alone. And that's really because we're providing the full solution for the first time in the smart with these software solutions. Generally, the time from first revenue to kind of meaningful revenue with a customer in something like the automotive or industrial space is because the customer themselves is developing a full software solution on top of the hardware that they're purchasing.

Speaker 2

By circumventing that and selling them the complete solution day 1, it's allowed us to build a much faster revenue base for partners that are willing to purchase that complete solution from us. It's also allowing us to tap completely new markets. So Gemini is poised is positioned to be sold into the security and crowd analytics space. The security industry, all told, dollars 32,000,000,000 of security systems sold every year globally. So a massive market with well established customer base and a clear value proposition from Aster Gemini to provide the next level of performance from a complete solution.

Speaker 2

So going after big markets, there are new opportunities for Oster and they're also sped to adoption by the fact that it's a complete solution. Something a little different is happening, but on the hardware side itself. But each time we upgrade the OS sensors is an opportunity to remove barriers for a customer to adopt LiDAR technology. We're able to provide more features, more performance, more environmental robustness to a customer that allows them to circumvent some of the challenging scenarios that they might get into. Good example, a mining machine that's used to operating in a dusty environment with the Rev 7 sensors, those sensors can pierce through dust in a way that previous generations of LiDAR can't.

Speaker 2

That allows a customer to just remove a whole set of problems from the scope of their entire system design. So things like that give us confidence that we're going to continue on this trajectory of building to the long term model and hitting within those bounds that we established on revenue growth 30% to 50%.

Speaker 3

And obviously, one key thing is that we had a great year in bookings. So we booked over $140,000,000 So when you ask kind of what gives us the confidence that we can continue to grow, we've just shown that we've been able to see huge interest. And by the way, these are take or pay binding orders that we've received from customers.

Operator

Kevin Garrigan with Westpark Capital. Your line is open.

Speaker 5

Yes. Hey, good afternoon, Angus and Mark. And thanks for taking my questions and congrats on the results. I think I asked you this last quarter, but any update on what software revenues were this quarter? Or is it too small?

Speaker 5

Or is it still too small? And any plans to kind of expand software into other end markets?

Speaker 2

Yes. So we aren't breaking software revenues out at this point. We have mentioned that we've booked 1,000,000 of dollars in software attached business, software coupled business. That's the combination of the software solution with the LiDAR hardware that we're selling. We put out a pretty fulsome press release in Q3 around the traction that we've seen over 300 sites deployed with our software solutions in 2023 to date in 2023.

Speaker 2

And so I think we're happy with the rate of deployment, but we'll be breaking out software metrics specifically when we feel that they've grown to a degree where it's relevant. And then I'm sorry, what was the second part of the question?

Speaker 5

Just whether you guys have any plans to expand into other end markets?

Speaker 2

Yes. I think that there is absolutely an opportunity to bring autonomy solutions into the industrial robotics and automotive markets, potentially in that order. We've started with smart infrastructure first because it has some of the largest existing preexisting established markets, for instance, the security market, the traffic systems market and some of the lowest technical challenges to solve because it's fixed infrastructure versus safety critical moving assets. But that being said, I think that there's a potential for us to continue to build these software offerings in other businesses. So stay tuned.

Speaker 2

I think the ouster of 5 to 10 years from now will look very different on what kind of software we're providing than the ouster of today.

Speaker 5

Yes. No, that makes a ton of sense. Okay, perfect. And just as a follow-up, as you kind of look back at 20 23 and then looking forward to 2024, did the rate of customers looking to become more autonomous and adopt LiDAR and whether it's a smart infrastructure or warehouses or robotics, did that kind of play out as you thought it would in 2023? And you see that rate kind of accelerating in 2024?

Speaker 2

Absolutely. And I was going to save this remark for the end, but I think it's appropriate now. For those of you that tuned into, Jensen Huang, CEO of NVIDIA's presentation at GTC last week, he said it extremely well. He said everything that moves in the future will be robotic. And increasingly, LiDAR sensors are what's giving those machines the eyesight.

Speaker 2

And that is an immense tailwind for our business in 2024 and beyond. Robotics is already one of our key markets. And so we think that we are extremely well poised to capture the increased focus on automation and autonomy across the diversity of end markets. And things like the advancements in AI, the availability of performance and affordable AI chips and co processors is the perfect complement to our business. So we absolutely think that we're taking advantage of those trends given that we focus from the start on being a diversified customer that is playing in these adjacent industries to automotive.

Speaker 5

Yes. No, that makes a ton of sense. Yes, I completely agree. Okay, perfect. I appreciate the detail.

Speaker 5

Thanks, guys.

Operator

This concludes the question and answer session. I'll turn the call to Angus Pakala for closing remarks.

Speaker 2

Well, I want to thank all of Ouster's employees for delivering on a record 2023 and thank everyone that joined the call and asked questions today. And I look forward to an incredibly strong 2024.

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Key Takeaways

  • In 2023 Ouster completed its merger with Velodyne, surpassed initial annualized cost-savings targets by over 40%, and strengthened its balance sheet and patent portfolio.
  • Ouster delivered record financial results with $83 million in full-year revenue (+103% YoY), $142 million in bookings (book-to-bill of 1.7×), and Q4 revenue of $24.4 million while shipping 4,100 sensors.
  • The company scaled production of its REV7 sensor, taped out the next-gen L4 custom silicon, advanced the automotive-grade Cronos chip for DF sensors, and achieved ISO 27001 certification.
  • Ouster launched two software solutions—Ouster Gemini and BlueCity—booking over $1 million in software-coupled sales and opening a new subscription-based revenue stream.
  • For Q1 2024, Ouster guided revenue of $25–26 million and set targets for 30–50% annual growth, 35–40% gross margins, and operating expenses at or below Q3 2023 levels on its path to profitability.
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Earnings Conference Call
Ouster Q4 2023
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