Ouster, Inc. (OUST) Earnings Call Transcript & Summary

Market on close. I'm Alex Coffee, now joined by the CEO and Co-Founder of Ouster, Angus Pacala. Angus, thanks for joining me here on this Monday. Happy Monday to you. Congratulations on another successful quarter.

For those who aren't familiar with Ouster, do you want to give us sort of your elevator pitch of the technologies that you guys are working on?

Yes, absolutely. Thanks for having me, Alex. So Ouster is the largest Western provider of lidar technology. Now lidar is light detection and ranging. It's a type of sensor that gives eyesight to machines, and it's a critical component of this new wave of physical AI, where we're connecting physical systems with AI and sensors and bringing real-world improvements to everyone that's watching. So some examples of how lidar sensors are used. If you want to build an autonomous car, a robotaxi, a truck that drives itself, lidar sensors are the eyesight that senses the environment, gives rich 3D data, day or night, rain or shine and allows that vehicle to drive. Likewise, an agricultural tractor or a mining machine needs that eyesight, lidar sensors are used. It's the next generation, the new frontier beyond cameras to give these physical AI systems, the eyesight that they need to actually do great work in the real world. So again, Ouster, a 10-year-old company. I co-founded the company in Silicon Valley, and we are now the largest provider of this lidar technology in the Western world.

Yes. And if the numbers that I'm seeing, I mean, are accurate as of the end of last year, still a really lean company in terms of headcount. So you're doing things still with that start-up mindset in many ways, but growing ever so quickly. Talk to us about the most recent quarter and some of the things that you'd want to highlight.

That's right. So Ouster is still a young public company. We've been putting together a strong set of earnings reports. We've done 9 consecutive quarters of revenue growth, 9 consecutive quarters of meeting or beating guidance. We're on track to 30% to 50% revenue growth and 35% to 40% margins on a path to profitability. So we are still a very lean company with tight OpEx controls. That's what it takes to build the next generation of sensor technologies like Ouster in the public market. We've shown in the last 9 quarters that we put together quarter after quarter of record revenue growth and expecting to continue that trend. But it takes a combination of this great technology and really good cost control to get there. But Ouster is a 10-year-old company. And the first 10 years was all about building the core technology and building a customer base. But in the last 2 quarters, we've now seen important customers start to announce with our technology and move into high-volume production. So just this last quarter, we announced Komatsu as a major customer moving into kind of future automation production. John Deere has announced using Ouster lidar products. We had a major announcement with NVIDIA and how we're partnering with their physical AI systems to bring physical traffic technology with lidar to cities like Chattanooga. So this technology in the next 10 years is going to go from something that's allowed research and development to happen in this core physical AI and autonomy space to being a ubiquitous technology that every last person on this planet is going to interact with each and every day to keep them safer and to keep them more efficient.

Yes, it's a really exciting time, I'm sure, for the industry and the greater world that we're living through here is how quickly this stuff is advancing your company included in terms of the technologies you're working on. You mentioned the path to profitability. Do you got a road map on when you're going to turn that corner maybe on an adjusted EBITDA metric or even all in all, adjusted EPS?

Yes, that's right. So a couple of years ago, as a young public company in this space, we felt it was important to communicate to customers about that real path to profitability. Not every company in the lidar space or in this physical AI and autonomy space has a concrete plan on how they're going to be a profitable, self-sustaining public company. We did that. It's a combination of 30% to 50% revenue growth, which we've shown, 35% to 40% gross margins and tight OpEx controls, actually keeping our OpEx at the levels that we were at 2 years ago. So we've done all 3. That puts us on a trajectory to be profitable in the next couple of years.

For those that are at home, as you mentioned, we're going to be, as time goes forward, interacting with this technology more and more to the point where perhaps it's going to be a regular occurrence sooner than later. You mentioned autonomous vehicles, of course, that's, I think, the first thing that many think of when it comes to lidar. What are some of the other applications that you see taking hold in an increasing fashion in the future here?

Well, I'll give you one example, Google Maps. So Google Maps uses our lidars as part of their street view fleet. Everybody knows that you get this rich kind of street view information and other geospatial information right in the map. Those maps have gotten richer and richer over time, giving you more information about where crosswalks and traffic lights and storefronts are and the lidar sensors that are on those vehicles now being produced by Ouster are part of that equation. Another example that we just announced a major deployment of intelligent traffic system technology, all built internally by Ouster with partnership with NVIDIA in the city of Chattanooga. We have over 100 intersections going into downtown Chattanooga to run their traffic system more efficiently and more safely. What that means for the driver is you're going to be waiting at traffic lights less often because the traffic lights themselves can sense the number of cars and the number of road users at an intersection more -- better than ever before using lidar sensors. And as a pedestrian, you're going to have more time to walk through that crosswalk if you're having trouble or your wheelchair user or something like that or a bicyclist, crosswalks for the very first time are going to be able to sense bicyclists and not just vehicles. So safety, efficiency, quality of life improvements that each and every one of us are going to see and also a lot of industrial use cases. I mentioned agriculture, mining, Komatsu, John Deere being customers of ours that we've mentioned before. So this technology is ubiquitous because it's giving eyesight to this next frontier of physical systems and physical AI that we've heard so much about.

Yes. It's really impressive and to see how far it's come in such -- I mean, 10 years, but really accelerating over the last couple. What excites you? I mean this is an exciting business to work in, seeing how quickly it's moving. But what are you excited about in maybe the next 6 months to a year that you can share with some of our viewers?

Well, I'm excited to see we have over 1,000 end customers at this point. We've been working with many of them for 5-plus years. And like I said, it's been a research and development environment for these customers. But with the breakthroughs recently in physical AI systems, algorithms and affordable chipsets from companies like NVIDIA, combined with the maturing of lidar technology driven by companies like Ouster, we're now at the tipping point where these customers can take R&D systems and deploy them at real scale in the real world and give the benefits to end customers and people like you and me. So we're seeing this happen each and every day with the examples I gave. Another one, Serve Robotics. Serve Robotics is a last-mile delivery company that's operating in L.A. and Miami, thousands of autonomous robots being deployed in these cities to deliver you goods, to deliver you dinner. These are real-world benefits for people, and it's starting to grow into the thousands and tens of thousands of units, finally into this production domain that we've all been hoping for, for the last 10 years.

Angus, I appreciate you taking the time. And I know that I'm not alone in saying that congratulations, one, on the impressive growth and the trajectory you guys are on, but just also excited to see where this technology takes us. So thanks for the work you're doing, and we look forward to seeing where it all goes. That's Angus Pacala, CEO and Co-Founder of Ouster.