Ouster, Inc.

Hello and welcome to Alster's second quarter 2025 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. And if you would like to withdraw your question, press the pound key. 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 completion of this call. I would now like to turn the conference over to Chen Geng, Senior Vice President of Strategic Finance and Treasurer. Please go ahead.

Thank you, Operator, and good afternoon, everyone. Thank you for joining our second quarter 2025 earnings call. Today on the call, we have Chief Executive Officer Angus Pakala and Chief Financial Officer Ken Gianella. As a reminder, after the market closed today, Ouster issued its financial news release, which was also furnished on a Form 8K, and it's posted in the investor relations section of the Alster website. Today's conference call will be available for webcast replay in the investor relations section of our website. Before I pass the call over to Angus for his opening remarks, I want to remind everyone that on this call, we will make certain forward-looking statements. These include all statements about our competitive position, anticipated industry trends, our business and strategic priorities, and our revenue guidance for the third quarter of 2025. Actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause actual results and trends to differ materially from those contained in or implied by these forward-looking statements are set forth in the second quarter 2025 financial results release and in the annual and quarterly reports we file with the Securities and Exchange Commission. 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, Ouster assumes no obligation to update any forward-looking statements which speak only as of their respective dates. In today's conference call, we will discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in the financial results release that was issued today. 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. Ken will cover our financial results in more detail before I close with some final thoughts. Oster delivered strong second quarter results with revenue just over $35 million, above the high end of guidance, with a solid gross margin of 45%. This performance was driven by record sensor shipments, which surpassed 5,500 units in the quarter, bringing physical AI to life across logistics, industrial, and smart infrastructure sites around the world. We finished the second quarter with a robust balance sheet of 229 million of cash and equivalents and no debt, underscoring our continued financial strength. Proven in the field, our LiDAR solutions are enabling intelligent real-world autonomy across industries and driving tangible improvements in safety, efficiency, and sustainability. Our strategic investments in AI algorithms and data training infrastructure are enabling new capabilities to unlock significant commercial opportunities. One of our longtime customers has deployed the Ouster Gemini at hundreds of facilities, And driven by performance improvements from new Gemini AI algorithms, this customer is now testing new high-value use cases, which require more than quadruple the number of sensors per site. Our ability to land and expand deals was a highlight during the quarter, as we continued to convert customer pilots into large volume orders as they roll out deployments or move into production. In smart infrastructure, we successfully converted a pilot program with a Fortune 500 technology company into a multimillion-dollar global deployment. We are installing OS Dome sensors in their retail locations worldwide to provide powerful analytics while ensuring personal privacy. With over 500 locations in more than two dozen countries, we see tremendous potential for future growth. In our industrial vertical, we are partnering with an ag tech company to power autonomous mowing and precision application of crop protectants. We have worked with this customer for multiple years, helping them transition from prototypes equipped with Velodyne sensors to larger volumes powered by the OS0. In Asia, we are installing our OS1 sensors on smart cranes to increase throughput at one of the continent's busiest container terminals. We also continue to solidify our competitive mode. During the quarter, Ouster's OS1 became the first and the only 3D LiDAR sensor to be approved for Blue UAS, and certified by the U.S. Department of Defense for use in unmanned aerial systems. This sets Oster apart as a trusted solution for government applications and positions us well to benefit from the U.S. government's efforts to strengthen the domestic industrial base for critical technologies and promote trustworthy supply chains. For example, we recently won a pilot program for the OS-1, OS Dome, and Oster Gemini to provide perimeter security for a U.S. Army base and our technology is already deployed in systems used by the United States Navy, NASA, and national labs. Looking ahead, we anticipate continued momentum driven by powerful secular tailwinds. Recent legislation has unlocked billions in federal funding dedicated to accelerating the deployment of autonomous and intelligent systems across defense, transportation, and industrial sectors. We are uniquely positioned to capture this demand to enhance critical systems for government, defense, and civil infrastructure institutions worldwide. We are seeing similar trends play out in Europe and Indo-Pacific with increased adoption of our technology for US allied defense and infrastructure applications. Turning to our 2025 strategic priorities, we progressed across all three key focus areas. Scaling software attached business, transforming the product portfolio, and executing towards profitability, starting with software-attached business. In 2026, the world's most watched sporting event is coming to the United States, the FIFA World Cup. We won an award to deploy Alfa Rev7 and Blue City across dozens of sites at a World Cup host city to bring real-time, on-demand traffic data to reduce congestion and improve safety for visiting fans. We also recently expanded an agreement to meet demand from Utah Department of Transportation to bring Ouster Blue City to nearly 100 intersections across the state to enhance traffic flow, safety, and operational efficiencies. A key focus this quarter was to expand our distribution channels, and we made significant progress for both our smart infrastructure and security solutions. We signed three exclusive partnerships to bring Blue City to major markets such as Texas, Michigan, New York, and Pennsylvania. With these key additions, our Blue City partnership network now spans 39 states and gives us a direct line of sight to capture the vast nationwide market of over 300,000 signalized intersections. For Ouster Gemini, we formalized a partnership with one of the world's largest security integrators. This agreement will support deployments into some of the world's most critical and high-value security sites where the global market for end-system security cameras is already in the tens of billions. Moving to product development, Ouster Gemini and BlueCity are delivering AI solutions to solve our customers' most complex challenges through powerful new software features and major performance improvements. We implemented advanced actuation for Ouster BlueCity that enables filtering for additional subclasses and objects, allowing our customers to control their traffic systems with additional rule-based nuances. We also added 3D event recording, which allows customers to automatically record and review safety incidents without disclosing personally identifiable information. These features leverage Blue City's proprietary deep neural network that has been trained on more than 4 million labeled objects collected from 800 sites and runs on NVIDIA Jetson and Oren system-on modules for real-time inference at the edge. Turning to our Gemini platform, we made significant improvements in core perception and ease of deployment. One of the most complex challenges in perception is maintaining stable object tracking over long periods of time. To solve this, Ouster Gemini now features a breakthrough multi-sensor AI model that fuses point clouds together in the early stages of the perception pipeline for improved accuracy. Ouster Gemini now delivers significantly improved long-term object identity persistence a critical requirement for many customer applications. We also launched the Gemini event server to accelerate customer adoption and reduce deployment time and cost. This is a powerful no-code environment with built-in logic modules, enabling our customers to easily build and deploy their own automated solutions for applications like intrusion detection, proximity monitoring, and zone occupancy, tailored to their business needs. During the quarter, we progressed on engineering bring-up of our next generation L4 and Chronos custom silicon. These investments will unlock a new era for our products, including major performance, security, and reliability gains for the OS product family and the introduction of the solid-state digital flash or DF line. Early customer feedback reinforces our belief that these innovations will more than double our current addressable market, and represent the most significant product cycle in Oster's history. Finally, our excellent second quarter results keep us on path to meet our long-term framework of 30 to 50% annual revenue growth, maintaining gross margin of 35 to 40%, and operating expenses at or below third quarter 2023 levels. Before turning to our financial results, I'm delighted to welcome Ken Gianella as our new Chief Financial Officer. Ken brings a wealth of experience and a proven track record of financial leadership to Alster, and is already instrumental in driving our financial strategy and supporting our growth initiatives. Ken, welcome, and please go ahead.