Ouster, Inc. Q2 FY2024 earnings call

• Second quarter results showcased solid execution with $27 million in revenue, sixth straight quarter meeting/exceeding guidance, and GAAP gross margin at 34%.
• Inventory levels reduced by over 30% since Q1 2023, annualized inventory turns over 3.5 times. Repaid revolving credit line with cash on hand.
• Strength in robotics vertical with Serve Robotics and mapping companies; REV7 sensors used in various applications. Software attached sales were a highlight, with Gemini used in perimeter security, transportation, and crowd analytics.
• Strategic priorities: expand software sales and grow installed base; digital lidar hardware roadmap with Chronos chip to be integrated into DS sensors and L4 chip in development; progress on path to profitability with gross margins approaching long-term framework.

In the second quarter, Ouster reported revenues of $27 million, shipping over 4,000 sensors. The Smart Infrastructure vertical was the largest contributor to revenue, followed closely by robotics, comprising roughly one-third of total revenues. GAAP gross margin was 34% in the second quarter of 2024, and non-GAAP gross margin improved to 40%. Gross margin benefited from further adoption of REV7 sensors, favorable product mix, and lower manufacturing costs.

• Expected third quarter revenue between $27 million and $29 million.
• Anticipates steady sequential revenue growth for remainder of the year.

• Customer schedules pushed to the right due to technical development delays, but Ouster's business is resilient as delays are part of adopting complex technology and opportunities to build solutions across verticals.

Q: Kevin Cassidy asked about the drivers of gross margin improvement and software strategy.

A: Angus Pacala responded that moving product to contract manufacturer, cost reductions, revenue growth, and product mix shift contributed to gross margin improvement, and software strategy with attached sales is paying off with record software attached sales revenue.

Q: Kevin Garrigan asked about the pipeline and large customers.

A: Angus Pacala mentioned software attached sales are key, with a strong go-to-market strategy in smart infrastructure vertical and potential for majority of sales to be software attached.

Q: Richard Shannon asked about industry and geography of pushouts and software in smart infrastructure.

A: Angus Pacala said pushouts are broad-based due to complex technical development, and smart infrastructure vertical has potential for majority of sales to be software attached.

Q: Itay Michaeli asked about gross margin upside and balance sheet debt repayment.

A: Mark Weinswig and Angus Pacala discussed gross margin framework and balance sheet strength, with paydown of revolver due to strong working capital metrics and resilient balance sheet.

Q: Kevin Cassidy asked about L4 chip.

A: Angus Pacala explained L4 chip will deliver exponential improvement in products, reducing costs by absorbing complexity onto silicon chips, benefiting customers with improved performance and affordability.