Ouster, Inc.

Hello and welcome to Alster's third quarter 2024 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 1 followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press the pound key. The call today is being recorded, and a playback of the call will be available on the Alster Investor Relations website an hour after the completion of this call. I'd now like to turn the conference over to Chin Gun, Vice President of Strategic Financial and Treasurer. Please go ahead.

Good afternoon, everyone. Thank you for joining us for our third quarter 2024 earnings call. I am joined today by OUSTR's Chief Executive Officer, Angus McCalla, and Chief Financial Officer, Mark Weinswig. Before we begin the prepared remarks, we would like to remind you that earlier today, OUSTR issued a press release announcing its third quarter 2024 results. An investor presentation was published and is available on the investor relations section of OUSTR's website. Today's earnings call and press release reflect management's views as of today only. and will include statements related to our competitive position, anticipated industry trends, our business and strategic priorities, our financial outlook, and our revenue guidance for the fourth quarter of 2024, all of which constitute forward-looking statements under the federal security laws. Actual results may differ materially from those contained in or implied by these forward-looking statements due to risks and uncertainties associated with our business. For discussion of the material risks and other important factors that could impact our actual results, please refer to the company's SEC filings and today's press release, both of which can be found on our investor relations website. Any forward-looking statements that we make on this call are based on assumptions as of today, and other than as may be required by law, we undertake no obligation to update these statements as a result of new information or future events. Information discussed on this call concerning OUSER'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's estimates. These estimates are derived from publicly available information released by independent industry analysts and other third-party sources, as well as data from OUSER's internal research. These estimates are based on reasonable assumptions and computations made upon reviewing such data, and outsource 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, 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 gap 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. I'll start with a brief recap of the quarter, an overview of the market, and an update on our strategic priorities. Mark will cover our financial results in more detail before I close with some final thoughts. AUSDA reported strong third quarter results with record revenue and gross margin, reinforcing our position as a leader in the LiDAR industry. We delivered $28 million in revenue, representing the seventh straight quarter we have met or exceeded our guidance. We built Ouster with a focus on operational efficiency, technology leadership, and product differentiation, and this is reflected in record GAAP gross margin of 38% in the third quarter. We have also built one of the industry's most resilient balance sheets. After repaying all outstanding balances on our revolving credit line, we ended the quarter with 154 million of cash. LiDAR adoption is expanding, and I'm excited to see more customers move into production. Many of our largest wins during the third quarter were production stage deals with robotics customers. These customers are accelerating and scaling deployment of autonomous solutions from the golf course to protecting our troops and solving real-world challenges with increased precision, efficiency, and safety. During the quarter, we received the largest purchase order in Oster's history with a leading global technology company. This customer is upgrading to REV7 for its autonomous mobile robots, enabling them to operate flexibly in a dynamic environment. Powered by REV7, these robots alleviate the need for employees to move carts weighing almost 1,000 pounds, helping this customer with its goal to improve workplace productivity while reducing stress and injury. We also continue to build momentum in our software business, where we are engaged with municipalities across the country to solve critical safety challenges. October was National Pedestrian Safety Month, In 2023, more than 7,000 pedestrians were killed by drivers, with nearly 80% of accidents occurring at night. Ouster's Blue City solution is the first traffic technology capable of detecting pedestrians reliably in all lighting and weather conditions. In Florida, Blue City detects pedestrians and extends crosswalk timers to allow them to cross safely. In Nashville, Blue City activates beacon flashes when pedestrians are on the street, alerting drivers of their presence, especially crucial in low lighting conditions. With , our customers are overcoming many of the shortcomings of traditional traffic control solutions, such as range, accuracy, cost, and low light performance. Blue City provides detailed safety and conflict analytics. essential data for cities to improve road safety and achieve Vision Zero goals. Ouster is making the physical world safer with Blue City. Turning to our strategic business priorities for 2024. Our first priority is to increase software sales and grow our installed base. In the third quarter, our Blue City traffic management solution successfully passed the requirements of NEMA TS2, as a detection system for traffic activation and is the first NEMA TS2 certified solution with Buy America certified LiDAR. During the quarter, we integrated our Ouster Gemini digital LiDAR perception solution with Genetech Security Center. This enables customers to fuse LiDAR and video surveillance into a single interface for seamless security operations. We also continued to increase installations of Ouster Gemini. In smart infrastructure, a global technology company is utilizing Alster Gemini to improve safety and operational efficiency at their distribution hubs. In addition to perimeter security, our solution is used to improve vehicle queuing and wait times when loading and unloading trucks. Gemini is deployed at roughly 5% of their global footprint, and this customer estimates current savings of over $1 million per week. Turning to our digital LiDAR hardware roadmap. During the third quarter, we turned on our first L4-powered OS sensor prototypes, which generated rich point clouds, a major milestone in our hardware roadmap. Development on our next generation Kronos chip also remains on track. Both L4 and Kronos are expected to unlock new verticals while significantly enhancing the performance, reliability, and manufacturability of the Alstor product family. Finally, we continue to execute on our path to profitability. Since the first quarter of 2023, we have expanded our gross margin from negative 2% to 38% and have reached our target of 35 to 40%. We are continuing to improve the execution of the business and look forward to delivering on the other two parts of our long-term framework. One, achieving 30 to 50% annual revenue growth, and two, maintaining a low-cost structure. In summary, our execution was strong in the third quarter, and we added a number of features that further strengthened our product portfolio. I'll now turn the call over to our CFO, Mark Weinswig, to provide more context on our financial results for the third quarter.