Ouster, Inc.

Good afternoon and welcome everyone to Oster's third quarter 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. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. The call today is being recorded, and a replay of the call will be available on the Oster Investor Relations website an hour after the completion of this call. I'd now like to turn the conference over to Sarah Ewing, Director of Investor Relations. Please go ahead.

Thank you. Good afternoon. I'm joined today by Oster's Chief Executive Officer, Angus Bacala, and Chief Financial Officer, Ana Brunel. Before we begin with prepared remarks, we would like to remind you that Alster issued a press release announcing its third quarter 2021 financial results shortly after market closed today. The company also published an investor presentation, which is available on the investor relations section of Alster.com. The company's current report on Form 8K, including the press release, was filed at the SEC today. I'd also like to remind everyone that during the course of this conference call, Outsource Management will discuss forecasts, targets, and other forward-looking statements regarding the company, future customer orders, and the company's business outlook that are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward-looking statements. While these statements represent the management's current expectations and projections about future results and performance as of today, Oster's actual results are subject to many risks and uncertainties that could cause actual results to differ materially from those expectations. In addition to any risks highlighted during this call, important factors that may affect Oster's future results are described in his most recent filings with the SEC, including today's earnings press release. Except as required by applicable law, the company undertakes no obligation to update any of these forward-looking statements for any reason after the date of this call. Lastly, information discussed on this call concerning the company'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. Management estimates are derived from publicly available information released by the independent industry analysts and other third-party sources, as well as data from the company's internal research, and are based on assumptions made upon reviewing such data and its experience in and knowledge of such industry and markets, which it believes to be reasonable. These assumptions are subject to uncertainty and risk, which could cause results to differ materially from those expressed in the estimates. During the call, we will discuss certain non-GAAP financial measures, which exclude the effects of events and transactions we consider to be outside our core operations. These non-GAAP measures should be considered a supplement to, and not a substitute for, measures prepared in accordance with GAAP. For a reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures, please refer to today's press release. I would now like to turn the call over to our Chief Executive Officer, Angus McCullough.

Hi, everyone. We've accomplished a lot in the recent months, highlighted by the strategic acquisition of Sense Photonics, which bolsters our position in the automotive market, and our continued technology advancements and commercial traction in the non-automotive market. In the third quarter, Ouster continued to gain market share across each of our four verticals, automotive, industrial, smart infrastructure, and robotics. We generated $7.8 million in revenue and gross margins of 24%. We continued to ramp production, shipping over 1,630 sensors. We added over 80 new customers and increased our total number of strategic customer agreements, or SCAs, from 53 to 62. Collectively, these SCAs represent roughly $470 million in contracted revenue opportunity through 2025, which give us confidence that we are well-positioned to meaningfully grow our revenue over the coming years. Turning to leadership and governance, Ouster recently announced the appointment of global automotive leader Karen Radstrom to our board of directors. Karen is an invaluable addition that further solidifies Ouster's automotive expertise. She brings over 15 years of automotive experience through her current role as CEO of Mercedes-Benz Trucks and board member at Daimler Trucks and past roles leading sales and marketing at Scania. Earlier today, Ouster announced the formation of an advisory board made up of industry luminaries with deep knowledge and expertise across our addressable markets and decades of combined experience building and leading global enterprises. Our founding advisory board members are current and former executive leaders from companies spanning the industrial, automotive, and smart infrastructure sectors, including Siemens, Amgeneral, FLIR, Honda and Acura, ABB, GE, Porsche, Cummins, Vitesco, Morelli, ZF Group, and Ford. We're moving quickly to enable automation in multiple industries, and our advisory board and board of directors have decades of combined experience at some of the most innovative companies in the industries we serve. This experience will be invaluable, shaping our strategy and technology offering as we aim to capture our multi-billion dollar TAM. Since its inception, Ouster is committed to building a safer and more efficient future through the mass adoption of digital LiDAR across our four industry verticals. To do so, we focused on developing a wide array of LIDAR products spanning scanning and solid state product families, all based on our performant and affordable digital LIDAR technology to meet a wide range of customer applications from port and yard logistics to consumer vehicles. With the acquisition of Sense Photonics, we formed Ouster Automotives, a new functional division of the company focused on driving mass market adoption of digital LiDAR in consumer and commercial vehicles, led by former Sense CEO Shauna McIntyre. As a result, we've accelerated our automotive product roadmap and commercial engagements by over a year. Furthermore, we increased our IP portfolio to over 50 granted and 200 pending patents and 250 exclusively licensed patents. It has been and is our belief that the LIDAR industry will be dominated by digital technology, and it has been critical for Alstra to expand its IP in this space. We also grew our team to over 300 full-time and contracted employees. We're building a digital LIDAR powerhouse to win across verticals and maintain our competitive lead for years to come. Ouster Automotive is building the short, medium, and long-range sensor suite that automakers are asking for and offering it at the performance and price points that automakers need. And we believe that CMOS Digital LiDAR is the only technology that can deliver on all of this together. Last week, we introduced our digital flash DF series of short, medium, and long-range solid-state LiDAR sensors. With absolutely no moving parts, the DF series is built for best-in-class performance, reliability, and affordability, and is designed to meet automaker requirements for advanced ADAS while seamlessly integrating into the vehicle architecture and design. Combining the best of Ouster's previous solid-state roadmap with the core technology of our recently acquired solid-state platform, Ouster Automotive is developing the DS series for high-volume automotive programs with an anticipated start of production in 2025. Automakers are looking for multi-sensor LiDAR suites for a combined price of roughly $1,000, and we believe digital LiDAR is the only technology that can realistically meet that requirement. But this is just the beginning. Over time, we believe that the cost of automotive LiDAR has the potential to follow a similar trajectory to that of modern radar and automotive camera systems, reaching below hundreds of dollars. Like radar and digital cameras, digital LiDAR technology is moving down the cost curve to meet automotive requirements to one day become a standard offering in on-road vehicles. Ouster Automotive is a one-stop shop that is uniquely positioned to deliver on OEM requirements with a single supplier offering, reducing overall costs, and making us an ideal partner for automotive OEMs and Tier 1s alike. Based on the exceptional performance of our functional prototype DF sensors, Ouster anticipates that it will achieve automotive readiness for the entire platform, including automotive quality and ASIL-B functional safety certification in time for series production programs with a start of production in 2025. While we'll continue to ship functional prototypes to automotive OEMs today, we expect to have A samples available by Q2 2022 and B samples by Q4 2023. We're excited about AUSTR's ability to deliver on our flagship development deal with the Global Automotive OEM, awarded to CENTS earlier this year. In October, we shipped functional solid-state sensors and progressed on-site testing of the LiDAR in collaboration with our OEM partner, achieving another major milestone in the strategic development agreement. Foster Automotive has also continued to advance negotiations for five different series production programs, collectively worth over $1 billion in potential revenue, with an aggregate demand of up to 1.5 million vehicles. These potential customers are sourcing a multi-sensor ladder suite for L3 systems for start of production in the 2025 to 2026 timeframe. This is further proof of the market need for multi-sensor LiDAR suites, and the value that Alster brings is a single company position to meet that need. We expect these programs to be determined within the next 24 months, and we feel well-positioned to win one or more in the next year. I look forward to updating the market on our progress over subsequent quarters. Hauser has also continued to drive progress across the rest of the business, delivering on our product roadmap for our OS scanning sensors and signing new customers across all of our industry verticals. A couple weeks ago, we introduced our most powerful CMOS chip yet, the L2X, which will power Oster's newest OS sensors. The L2X is capable of delivering double the data rate of the prior chip while maintaining the same small size and low power draw, and providing even richer point cloud data to improve all weather performance of our sensors. Last quarter, we completed our L3 chip tape-out, which will deliver another massive boost in performance, and we're looking forward to our Foundry partner completing the chip fabrication. Both the L2X and forthcoming L3 chip demonstrate our ability to rapidly improve performance through the digital roadmap. We also partnered with NVIDIA to develop a dedicated NVIDIA DriveWorks plugin to further simplify integration of our complete OS sensor suite onto autonomous vehicle platforms. With now over 30 Perception software partners and system integrators across our major markets, we intend to further accelerate the adoption of digital LiDAR across industrial, smart infrastructure, and robotics applications. We're also seeing fantastic engagement with Outsource Software Development Kit, or SDK. And in the last month alone, we saw hundreds of external downloads. A few weeks ago, we released a new version of our SDK to support our new L2X chip, and I'm incredibly happy with the response from the development community so far. With that, I'd like to turn the call over to Ana Brunel to provide an update on our quarterly financial results, customer traction, and business outlook.