Q4 2023 Summary
Published Jan 21, 2025, 4:19 PM UTC- Ouster is experiencing increased demand in its key market of robotics and automation, positioning the company to capitalize on the trend towards autonomy. "Robotics is already one of our key markets...we are extremely well poised to capture the increased focus on automation and autonomy across the diversity of end markets."
- Ouster achieved record sensor shipments in Q4 2023, contributing to improved gross margins of 35%, moving closer to its target of 35-40%, driven by revenue growth, cost reduction, and operational efficiencies. "This quarter, Ouster sold a record number of sensors...our margins continue to improve...we've been able to increase our margins to basically that 35% level."
- Strong bookings of over $140 million in 2023, including take-or-pay binding orders, provide confidence in maintaining 30%-50% annual revenue growth in 2024. "We had a great year in bookings. So we booked over $140 million...these are take-or-pay binding orders that we received from customers."
- Declining average selling prices (ASPs): Ouster experienced a slight decline in ASPs quarter-over-quarter due to a product mix shift. This could indicate potential pricing pressure or reduced demand for higher-priced products.
- Uncertainty in automotive market adoption: Ouster acknowledges that the automotive industry presents "huge uncertainty" due to timelines for adopting lidar technology. Their cautious approach might delay revenue generation from this significant market.
- Q1 guidance at lower end of growth target: Ouster's Q1 guidance implies 35% year-over-year growth, which is at the lower end of their full-year guidance of 30% to 50% growth. This raises questions about their ability to achieve higher growth rates throughout 2024.
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Liquidity and Run Rate
Q: What's the expected run rate with $192 million balance?
A: We have $192 million in cash and investments as of December. This quarter, we reduced adjusted EBITDA loss to $14 million in cash burn. We're growing revenues, reducing costs, and improving margins to move toward profitability. -
Gross Margin Improvement
Q: Outlook for blended ASPs and margins for 2024?
A: We sold a record number of sensors this quarter, meeting customer demand. ASPs had a slight quarter-to-quarter decline due to product mix, but margins improved to 35%. We're cutting costs internally, moving products overseas, and becoming more efficient, leading to higher margins. -
Growth Confidence
Q: Confidence in maintaining 30%+ growth in 2024?
A: We're focusing on expanding software solutions and advancing digital lidar hardware. Our Gemini and Blue City platforms are gaining rapid uptake, tapping into new markets. Upgrades to OS sensors remove barriers for customer adoption. We booked over $140 million in binding orders, giving us confidence to continue growing. -
Industrial Market
Q: How does the industrial market compare to automotive?
A: The industrial market offers more predictable business due to linear technology rollout. Industrial customers can bring products to market faster and expand volumes. ASPs and margins are higher since equipment tolerates higher price points. This has led to ASP resilience and solid revenue growth. -
Software Revenue
Q: Update on software revenues and expansion plans?
A: While we aren't breaking out software revenues yet, we've booked millions in software-attached business. Deployed over 300 sites with our software solutions in 2023. There's potential to expand software offerings into industrial robotics and automotive markets. -
Lidar Adoption Rate
Q: Did lidar adoption meet expectations, and will it accelerate?
A: Yes, advances in AI and affordable chips are tailwinds. We're well-positioned to capture increased focus on automation and autonomy across industries. Robotics is already a key market for us. -
Auto Industry Trends
Q: Thoughts on auto industry's lidar sensor ramp-up?
A: The auto industry offers huge promise but also uncertainty. We're taking a measured approach, focusing on building high-performance, compact, and affordable sensors for long-term success. Made major progress on our DF product line in 2023, executing on final devices with our Chronos chip this year. -
Margin Improvement Components
Q: What are components for further margin improvement?
A: We reduced costs after the merger, moved products overseas, and increased volumes. The release of the REV7 sensor improved ASPs and margins. On the software side, we're expanding margins with subscription-based business. -
Software Revenue Recognition
Q: How do you handle software revenue recognition?
A: As software grows, we'll start breaking out more information. We're refining the model with customers. Most software revenue is subscription-based.