Ouster, Inc.

Hello and welcome to Ouster's fourth quarter 2023 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, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again. This call 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 Chen Geng, VP of Strategic Finance and Treasurer. Please go ahead.

Good afternoon, everyone. Thank you for joining us for our fourth quarter 2023 earnings call. I am joined today by Oster's Chief Executive Officer, Angus McCollum, and Chief Financial Officer, Mark Weinswigs. Before we begin the prepared remarks, we would like to remind you that earlier today, Outser issued a press release announcing its fourth quarter and fiscal year 2023 results. An investor presentation was published and is available on the investor relations section of Outser's website. I'd also like to remind everyone that during the course of this conference call, Outser's management will discuss certain forward-looking information, including commentary regarding our growth strategy and go-forward financial framework, our first quarter 2024 financial guidance, and other matters described in today's press release 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, and Alster's actual results are subject to 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 OUTSER's future results as described in the reports filed with or furnished to the SEC, including OUTSER's annual report on Form 10-K for the year ended December 31, 2022, as will be updated in OUSTR's annual report on Form 10-K for the year ended December 31, 2023. Except as required by law, rule, or regulation, OUSTR 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 OUSTR'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, which are derived from publicly available information released by independent industry analysts and other third-party sources, as well as data from outsourced internal research and are based on reasonable assumptions and computations made upon reviewing such data and its experience 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, the most directly comparable GAAP measures, please refer to today's press release. I would now like to turn the call over to Angus.

Hello, everyone, and thank you for joining us today. 2023 was a transformative year for Ouster. We successfully completed the merger with Velodyne, which forged a company with a stronger balance sheet, expanded patent portfolio, and streamlined cost structure. We achieved important milestones across our operations, notably scaling production and shipments of REV7, our most performed sensor yet. Additionally, we added new revenue streams with the launch of Ouster Gemini and Blue City and demoed our first DF sensors with customers, marking a significant stride forward in our product development journey. This was all accomplished while delivering record financial performance, significantly reducing our cash burn, and exceeding our initial post-merger annualized cost savings target by over 40%. Let's delve deeper into the four strategic priorities we laid out for 2023. Drive new business, execute on our digital ladder roadmap, develop a robust software ecosystem, and build a financially strong business. Looking back at the past year, I believe the Ouster team successfully executed against each of these goals. First, Ouster booked a record $142 million in new business, and generated a record $83 million in revenue, a 103% increase year over year. We closed large multi-million dollar deals across all four verticals, including production wins by May Mobility and Motional to supply LiDAR sensors for their autonomous vehicles. We also saw increased demand from mapping, inspection, and warehouse automation customers who benefit from Red 7's dramatic improvements in range, precision, and accuracy. This growth was complemented by the promotion of Cyril Jacomet, our new Senior Vice President of Global Sales. Cyril has been with Alster since 2018 and brings a comprehensive understanding of our market verticals, deep relationships with some of our largest customers, and experience leading high-performing sales teams. Turning to our second priority, this year we made significant advancements in our roadmap to develop the next generation custom CMOS chips that power all of our products. First, we taped out the L4 chip, our state-of-the-art ASIC that will power the next iteration of our OS sensors. We also made exciting progress on the Chronos chip, our automotive-grade custom silicon for the DF series. This year, we plan to integrate Chronos into the final form factor DF hardware that we've already demoed to over a dozen OEMs and Tier 1s. We also made progress on our certification roadmap to deliver functionally safe, cyber secure products that meet ASIL B, SIL 2, and NEMA TS2 standards. We achieved ISO 27001 certification, which demonstrates our commitment to meet the highest standards of data security for our customers and partners. This is in addition to our ISO 9001 and ISO 14001 certifications for quality and environmental management. These achievements are key milestones that will help significantly expand our serviceable, obtainable markets within the automotive, industrial, and smart infrastructure industries. Shifting to software solutions, Ouster bolstered its product portfolio with the launch of Ouster Gemini, our cloud-backed digital LiDAR perception platform for crowd analytics, security, and intelligent transportation systems. This was a major milestone and added a new revenue stream. while lowering the barriers to LIDAR adoption and increasing stickiness with our customers. We further expanded our solutions business with the addition of Blue City, our turnkey traffic management solution. Throughout the year, these software solutions were enhanced with new deep learning AI perception models and partner integrations. We booked millions in software coupled sales in 2023, and we expect the contribution from this revenue stream to continue to increase. Finally, in 2023, we made significant progress to build a financially strong business. We closed the merger with Velodyne and transitioned Velodyne products to a lower cost manufacturer in Thailand. Our efforts to optimize our cost structure surpassed our initial post-merger annualized cost savings target by over 40% and significantly reduced our cash burn. Through the refinancing of our term loan, we lowered our cost of capital. We also implemented a new financial framework to guide Ouster toward profitability. This robust business model not only sets us apart from our peers, but also establishes a platform that we believe will deliver long-term value to our employees, customers, and shareholders. Our achievements in 2023, complemented by our differentiated digital ladder technology and AI-powered software solutions, supports a uniquely diversified business model and will drive our near and long-term revenue growth. I'm excited to continue this momentum in 2024 as we execute our plan towards profitability. I'll now turn the call over to our CFO, Mark Weinswig, to provide more context on our financial results for the fourth quarter and full year.