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OI

Ouster, Inc. (OUST)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 revenue was $32.63M (up 26% YoY, 8% QoQ) with GAAP gross margin of 41% and non-GAAP gross margin of 46%; net loss per share improved to $0.42 from $0.48 in Q4 and $0.55 in Q1’24 . Management cited favorable mix, software-attached sales, and a patent royalty as drivers; the royalty contributed ~300 bps to gross margin .
  • Q2 revenue guidance: $32–$35M; management assumes no material patent royalty in Q2 and reiterated the long-term gross margin framework of 35–40% despite tariff uncertainty .
  • Strategic wins underpinning Physical AI narrative: multimillion-dollar Komatsu agreement (industrial autonomy), largest software-attached contract in Europe with LASE PeCo (smart infrastructure), and BlueCity AI milestone with NVIDIA (edge inference at scale) .
  • Stock reaction catalysts: magnitude/quality of Q2 delivery versus guide; durability of >40% GM without royalties; pace of software-attached monetization; traction from Komatsu/LASE PeCo and BlueCity deployments .

What Went Well and What Went Wrong

  • What Went Well

    • Revenue growth and margin execution: $32.63M revenue (+26% YoY, +8% QoQ) with GAAP GM 41% and non-GAAP GM 46%; management continues to trend at high end of 35–40% GM framework .
    • Strategic wins across verticals: Komatsu multimillion-dollar deal to replace legacy 2D lidar with 3D REV7; LASE PeCo multi-year, software-attached expansion; software/AI milestone for BlueCity with NVIDIA .
    • Clear “Physical AI” positioning and scaling software-attached business; CEO: “Ouster offers advanced perception solutions powered by digital lidar combined with AI software to…interact with the physical world in real time.” .

  • What Went Wrong

    • Gross margin ticked down QoQ (41% vs 44% in Q4) and benefited ~300 bps from a non-recurring patent royalty in Q1, raising questions on sustainability ex-royalty .
    • Operating expenses rose YoY (GAAP opex $37.31M, +12% YoY), with elevated litigation costs ($5.79M) impacting profitability metrics despite improving Adj. EBITDA .
    • Tariff/macro uncertainty persists; while currently manageable, management flagged difficulty predicting demand and cost impacts for the rest of the year .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$28.08 $30.09 $32.63
GAAP Gross Margin %38% 44% 41%
Non-GAAP Gross Margin %45% 44% 46%
Net Loss per Share (basic & diluted)$(0.54) $(0.48) $(0.42)
Adjusted EBITDA ($USD Millions)$(9.84) $(9.70) $(7.81)
Sensors Shipped (Units)>3,900 >4,800 ~4,700

Notes:

  • Management stated Q1 revenue included patent royalty revenue (press release “approximately $2M”; call “approximately $1.5M”); both cited ~300 bps GM benefit .
  • Q1 YoY/seq growth of 26%/8% as disclosed in the press release .

KPIs and Balance Sheet

  • Cash, cash equivalents, restricted cash, and short-term investments: $171M at 3/31/25 .
  • Operating cash flow (Q1): $(4.88)M .
  • Weighted-average shares: 52.49M (basic/diluted) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ2 2025N/A$32–$35M New
RevenueQ1 2025$30–$32M (given on Mar 20) N/A (Actual $32.63M) Beat top end of prior guidance
Gross Margin (Annual Framework)Ongoing35%–40% (framework) 35%–40% (framework) reiterated Maintained
Operating ExpensesOngoingKeep at or below Q3’23 levels Commitment reiterated Maintained
Patent Royalty AssumptionQ2 2025N/AAssume no material patent royalty in Q2 guidance New assumption

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3’24, Q4’24)Current Period (Q1’25)Trend
AI/software initiatives (BlueCity, Gemini)Q3: NEMA TS2 for BlueCity; Gemini integrated with Genetec . Q4: Launched 3D Zone Monitoring (on-sensor logic) .BlueCity DNN trained on 4M labeled objects across 800 sites; Jetson-powered edge inference; Gemini cloud portal adoption with hundreds of sites managed .Accelerating deployments and capability; stronger AI narrative.
Product roadmap (L4 & Chronos silicon)Q3: “L4” prototypes turned on; Chronos on track .On track; expected to more than double TAM; used to secure multi-year customer commitments .Confidence and customer pull increasing.
Vertical tractionQ3: Robotics/smart infrastructure wins . Q4: Robotaxis, mapping, last-mile .Industrial and automotive led Q1; Komatsu deal; robotaxis (Motional, May Mobility) progress; warehouse automation momentum .Broadening and scaling.
MarginsQ3: Reached 35–40% GM target . Q4: GAAP GM 44% .GAAP GM 41% (46% non-GAAP); ~300 bps benefit from patent royalty; framework 35–40% maintained .High end of range, watch sustainability ex-royalty.
Tariffs/macro—Tariffs manageable so far; uncertainty remains; partnering with customers to mitigate .Monitored risk; currently contained.
Legal/patent—Patent royalty recognized following legal ruling (~$1.5M call vs ~ $2M PR); litigation opex elevated .One-time tailwind; ongoing litigation costs.
Profitability pathQ3/Q4: Emphasis on path to profitability and long-term framework .Ninth straight quarter meeting/exceeding guide; reiterated path via growth, GM, and opex control .Consistent execution vs plan.

Management Commentary

  • CEO (press release): “Ouster offers advanced perception solutions powered by digital lidar combined with AI software to empower machines to perceive, understand, and interact with the physical world in real time.”
  • CEO (call): Next-gen L4 and Chronos “most transformational… roughly a doubling of our addressable market” and already influencing customer commitments .
  • CFO: “Q1 results include approximately $1.5 million in patent royalties… positive impact of approximately 300 bps on GAAP and non-GAAP gross margin… we assume no material revenue from patent royalties in Q2 guidance… 35%–40% [GM] is an appropriate range” .
  • CFO: On tariffs, “currently… not significantly impacting the business,” but uncertainty remains .
  • CEO: “We are starting off the year on solid footing… ninth consecutive quarter of meeting or exceeding our guidance” .

Q&A Highlights

  • Gross margin framework: Despite >40% recent performance (pro forma noted by analyst), management kept the 35–40% GAAP GM framework, citing mix and one-time items, and will break out software when material .
  • Product roadmap/TAM: L4 and Chronos expected to double TAM; roadmap already helping secure multi-year commitments; timing not fully disclosed but near-term releases anticipated .
  • Customer testing to awards: On-going testing of firmware/hardware/software enabling production decisions; many customers down to final feature validation (e.g., ruggedization, zone monitoring) before scaling .
  • Functional safety: A major focus for future products; unlocks new markets, timing not specified .
  • Robotaxi/region: Stronger North American focus (e.g., Motional, May Mobility); Ouster not focused on China robotaxi market .
  • Pricing/ASPs: Prices generally decline over time; Ouster aims to grow units faster than revenue while maintaining margins; REV7 value has supported ASPs; not a commoditized pricing-only discussion .
  • Competition: Auto-focused lidar peers show “fits and starts” expanding beyond automotive; Ouster sees advantage from long-term diversified focus .

Estimates Context

  • We attempted to retrieve S&P Global consensus for Q1 2025, Q2 2025, and FY 2025 (EPS, revenue, EBITDA); no data was available via our feed at this time. Therefore, we cannot provide a results vs. consensus comparison for Q1 or a consensus-based view of Q2/FY [GetEstimates returned empty].
  • Company comparison versus its own guidance: Q1 revenue of $32.63M exceeded prior guidance of $30–$32M given on Mar 20, 2025 .

Key Takeaways for Investors

  • Execution remains solid: Q1 revenue growth, improving Adj. EBITDA, and consistent guide discipline support the path toward profitability .
  • Margin sustainability is the swing factor: >40% GM for Q1 benefited from a one-time royalty (~300 bps); watch Q2 GM progression without royalty contribution .
  • Software-attached momentum strengthens the Physical AI moat: BlueCity AI milestone and Gemini portal adoption should enhance mix and stickiness across smart infrastructure deployments .
  • Commercial traction across verticals: Komatsu (industrial autonomy) and LASE PeCo (smart cities) reinforce diversified growth beyond automotive, reducing concentration risk .
  • Tariffs monitored but currently manageable; management expects to mitigate impacts, but macro ambiguity persists .
  • Watch leadership transition: New CFO with software scaling experience joins May 19; could accelerate operating rigor and software monetization .
  • Near-term trading setup: Q2 revenue guide sets a reasonable bar ($32–$35M); upside likely hinges on delivery ex-royalty and visibility into software revenue breakout and functional safety roadmap .

Additional Details and KPIs

  • Q1 revenue composition: press release/8-K cite approximately $2M patent royalty while CFO cited ~$1.5M; both indicate ~300 bps GM benefit .
  • Operating cash flow improved to $(4.88)M in Q1; cash and investments remain robust at $171M .
  • Verticals: Industrial and automotive were primary Q1 contributors (warehouse automation, yard logistics, robotaxis) .

Supporting sources:

  • Q1’25 8-K and Exhibit 99.1 press release (financials, guidance, non-GAAP reconciliations) .
  • Q1’25 earnings call (strategy, guidance assumptions, royalties, tariffs) .
  • Q4’24 and Q3’24 press releases (trend analysis) .
  • Related press releases: Komatsu (industrial), LASE PeCo (smart infrastructure), BlueCity NVIDIA milestone (AI/software) .