Ouster, Inc.

Good afternoon and welcome everyone to Alster's second quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After today's presentations 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. And if you would like to withdraw your question, simply press star one again. The call today is being recorded and a replay of the call will be available on the Alster Investor Relations website. an hour after the conclusion of this call. I'd now like to turn the conference over to Ms. Sarah Ewing, Director of Investor Relations. Ms. Ewing, please go ahead.

Thank you, and good afternoon, everyone. Thank you for joining us for our 2023 second quarter earnings call. I'm joined today by Oster's Chief Executive Officer, Angus Pakala, and Chief Financial Officer, Mark Weinswig. Before we begin the prepared remarks, we would like to remind you that earlier today, Oster issued a press release announcing its second quarter 2023 results. The company also published an investor presentation, which is available on the investor relations section of ouster.com. I'd also like to remind everyone that during the course of this conference call, Ouster's management will discuss certain forward-looking information regarding the company, including forecasts, targets, statements from its press release, potential future customer orders and shipments, near and long-term revenue opportunities, strategic customer agreements, market share and industry trends, anticipated synergies from the company's merger with Belladine, ability to recognize the benefits of cost savings initiatives, future products and release dates, anticipated benefits and applications of new product releases, manufacturing expectations, technological advancements and commercial paths, potential future market opportunities, customer traction, and the company's business outlook and the third quarter 2023 financial guidance and trajectory are forward-looking statements that are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward-looking statements. There is no guarantee that such plans, estimates, and expectations will be achieved. Thus, while these statements represent management's expectations, future results, and performance, ousters' actual results are subject to several risks and uncertainties that may cause actual results to differ materially from current expectations that we may share with you today. In addition to any risks highlighted during this call, you should carefully consider other important risk factors and disclosures that may affect Alster's future results as described in its most recent annual report on Form 10-K and other reports the company files with or furnishes to the SEC. Except as required by law, rule, or regulation, the company undertakes no obligation to update any of these forward-looking statements for any reason after the date of this call. Information discussed on this call concerning the company's industry, competitive position, and the markets at which it operates is based on the information from independent industry and research organizations, other third-party sources, and management estimates, which are derived from publicly available information released by independent industry analysts and other third-party sources, as well as data from the company's internal research and are based on reasonable assumptions and computations made upon reviewing such data and its experience in and knowledge of such industry and markets. By definition, assumptions are subject to uncertainty and risk, which could cause results to differ materially from those expressed in the estimates. During this call, we will discuss certain non-GAAP financial measures. These non-GAAP financial measures should be considered as a supplement to, and not a substitute for, measures prepared in accordance with GAAP. For a reconciliation of non-GAAP financial measures discussed during this call to the most directly comparable GAAP measures, please refer to today's press release. I now like to turn the call over to Inger.

Good afternoon, everyone, and thank you for joining us today. Following our merger with Belladine in the first quarter, we set out to expand our product offering to broaden our serviceable market, strengthen our overall financial position, and build an operating model for Ouster that would enable us to viably scale and catalyze growth across the business. Ouster exited the second quarter of 2023 with record revenues of over $19 million. record bookings of $43 million, increased average selling prices of approximately $6,300 per sensor on shipments of over 3,000 sensors, and a sustainable cash balance of $224 million. That, coupled with a meaningful reduction in expenditures across the business and our cutting-edge product roadmap, positions the company for long-term success and puts us on an achievable path to profitability. Last quarter, we shared our four strategic priorities for the business in 2023 as we build Alster into a global leader in autonomy solutions and digital LIDAR across our diverse end markets. Number one, drive new business through a targeted sales approach to deliver near-term growth. Two, execute on the digital LIDAR roadmap for OS and DF series to expand our service full market. Three, develop a robust software ecosystem to accelerate LIDAR adoption. And four, build a financially strong business to support our long-term growth. Ouster had a record quarter with increased sales of REV7 sensors. Our REV7 sensors now account for the majority of our OS sensor revenue and bookings. We also shipped GLS128 sensors to Motional and Maymobility, coinciding with new and expanded multi-year customer agreements in the first and second quarters. Additionally, we expanded the number of customers licensing the Ouster Gemini and Blue City software solutions. Turning to execution on our product roadmap, our ability to improve sensor hardware through custom silicon CMOS chipsets will continue to set Ouster apart and keep our OS scanning sensors on the front end of innovation and performance. We have demonstrated this through multiple chipset tape outs over the years, including the L3 chip last fall. We intend to do it again with the tape out of our next generation custom silicon, the L4 chip, later this year. We also completed the integration of our early B sample solid state digital flash, or DS, sensors. At only 40 millimeters tall and fully solid state, these final form factor sensors can detect 10% reflective objects at up to 200 meters range with camera-like resolution. The DF advantages are key for automakers looking to integrate reliable sensors that can be manufactured affordably and at scale in high-volume production vehicle programs. Our early B samples will be sampled to leading automakers in the third quarter of 2023, which is a critical milestone in our automotive roadmap and in our commercial engagements with automakers. Next year, we will upgrade our B samples by integrating our next-generation silicon, the Kronos chip. which is also expected to tape out later this year. Turning to software, Oster has made major product and commercial strides since the start of the year, as we now offer our flexible Gemini smart infrastructure platform and our highly optimized Blue City traffic actuation and control solution to an ever-expanding set of customers. We now have over 200 active deployments of our software solutions, running an array of in-house developed machine learning algorithms. that make real-time observations of the environment around them. These AI-enabled sensor solutions allow companies and governments to solve a range of challenges involving logistics, security, and transportation. Where cameras have been used in the past, our LiDAR hardware and software solutions provide more actionable and reliable data in all manner of low-light and environmental conditions to detect and track objects or people in real time and aggregate analytics in the cloud. We are on track to complete the full unification of Blue City with Ouster Gemini in the third quarter to pave the way for more features and a unified technology stack for faster development of both platforms in the future. I expect the demand for LiDAR hardware and software solutions across the smart infrastructure vertical will be a major growth driver for our business over the coming years. I spoke at a White House event in June to formally launch the Advanced Research Projects Agency for Infrastructure, or ARPA-I, a new agency within the Department of Transportation to foster the development and adoption of technologies that can improve the safety, sustainability, and efficiency of our transportation infrastructure. The U.S. government's recognition of LIDAR as a critical transportation technology, combined with accelerating the adoption of sensors at the state and municipal level, make me confident that we're on the cusp of the wide-scale deployment of this technology. And Ouster is well positioned to supply that demand. And finally, all of this progress is backed by an increasingly strong operating model with an eye on profitability. This is why Ouster took decisive steps in the second quarter to further reduce our expenditures across the business. As a result of those actions, as well as additional steps to streamline our operations, we are now targeting over $110 million in cost savings exiting the fourth quarter of 2023, compared to our original goal of over $75 million at the close of the merger, as baselined against the standalone cost structures of Ouster and Velodyne as of the third quarter of 2022. As part of these efforts, Ouster also continued to execute on its outsourced manufacturing strategy for the former Velodyne products. We completed the transition of the BLP32 sensor to FabriNet in Thailand following the full transition of the BLP16 in the first quarter of 2023 and remain on track to fully transition the BLS128 by the end of the year. We look forward to providing the market with more information on how these actions fit into our detailed financial plan next quarter. I'll turn the call over to our CFO, Mark Weinswig, to provide more context on our financial results for the second quarter and outlook for the third quarter.