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spk02: standards, including ASIL-B functional safety certifications. This, again, is possible because all of our sensors share a common visual architecture. Another key differentiator for Ouster is our progress towards achieving automotive readiness, not just for our products, but also for our manufacturing supply chain. We selected a manufacturing partner in Benchmark four years ago, and together with Benchmark, we started production in Thailand three years ago and passed automotive OEM audits of our IATF 15949 certified Thailand facility starting two years ago. These are critical milestones for any LIDAR manufacturer in its quest to meet automotive grade specifications and another example of Ouster's lead within the industry. We are in the B sample phase now for our OS sensors with plans to move into the C sample phase in 2023. As far as our solid state roadmap, this past quarter we defined our full product portfolio, locked in the product specs, and we're now moving into the engineering design phase. In line with past guidance, we expect to have our first solid state samples ready in the fourth quarter of 2022. While other LiDAR companies are focused on delivering a single forward-looking LiDAR, Alstra is certifying its entire lineup of short, medium, and long-range scanning sensors and true solid state sensors. We believe that there will be a real market need for both sensor types, and as far as we know, Ouster is the only company invested in offering and certifying both. Now I'd like to turn to an ongoing and important trend that is a core driver for growth for Ouster, the adoption of automation technology across the worldwide supply chain. Every aspect of the industrial economy is moving to adopt greater levels of autonomy for improved safety, efficiency, and quality of life. In automotive, the core sub-markets driving this vertical are robo-taxis, robo-trucking, consumer ADAS, and a fourth sub-vertical that we've not called out before, which is shuttles and buses. Alster is already a top player in automotive today with significant revenue in auto compared with other LiDAR companies. We have the largest publicly reported binding production win for LiDAR sensors in this industry through our deal with PLUS, and we believe our future products will only extend our market lead. Take trucking, for example. There are approximately 12 million freight trucks in the world, of which approximately 10% need to be replaced annually. Even more, there is a near-term opportunity to retrofit existing vehicles. This is a business that has historically had races and margins, and autonomous driving technology is the first opportunity in years to drive a meaningful reduction in costs across the three core buckets, labor, fuel, and capex. Companies like Plus are taking advantage of this opportunity to reduce these costs not in five to 10 years, but today by retrofitting existing fleets with marquee customers like Amazon while pursuing midterm OEM integrations on new trucks. While a long-term goal of many robot trucking companies is to reduce operating costs by around 40%, the ability to save even 5% with driver-in systems today is still a potentially significant savings opportunity for companies like Amazon. With Ouster's manufacturing scale, our affordability and performance, we believe we're in a great position to be the volume ladder supplier for this next wave of trucking fleets. The core sub-markets driving the industrial vertical are mining, agriculture, construction, port and yard logistics, factory manufacturing, and warehousing. We think there are two key drivers for ladder adoption in industrial applications. The first is task optimization through automation, and the second is safety. And there's already a billion-dollar market for legacy 2D industrial LiDAR sensors, partially addressing these needs today. We believe we offer our customers an incredibly compelling value proposition by enabling them to simplify their system with fewer digital LiDAR sensors while increasing safety and efficiency. Just looking at the forklift market, there are millions of forklifts deployed around the world today and over 1.5 million forklifts sold annually. With less than 1% having any level of automation, there is a significant potential market opportunity to retrofit and build new machines with greater levels of intelligence using CMOS digital ladder that we believe could rival an automotive series production in unit volume. Our customer, Balio, a France-based leader in autonomous forklifts, is a great example of this. They're able to increase the forklift's productivity by up to 15% and availability by up to 30% through automation. Another example is the massive potential we see to automate distribution yards. We previously announced our customer outrider, which aims to replace over 50,000 diesel yard trucks with autonomous zero emissions vehicles that could feature our sensors. Over the road trucks wait on average one hour to pick up and drop off a trailer at human operated yards, resulting in roughly 12 million combined days waiting in distribution yards each year. If automating yard operations trims this wait time by just 10% to 20%, productivity would increase by an additional 1 to 2 million days per year. There's also potential to deploy six sensors in the distribution yards where the trucks operate, and there are over 400,000 yards in the U.S. alone. We're also working with the leading port automation customers like LASA, Kohn Cranes, and FME, which use our CMOS digital LIDAR on large crane equipment for anti-collision systems or to decrease loading times. If you take the world's 835 most active seaports and conservatively assume an average of 10 gantry cranes per port and six sensors per crane, there's an opportunity to supply over 50,000 sensors in this single use case. This type of industrial equipment can cost millions of dollars, and digital LiDAR sensors allow a more significant return on investment given the increased speed and reduced accidents after incorporating these systems. These are just a few examples of the value proposition and the market potential for digital LiDAR within industrial. And also as an opportunity to unlock even more market share through additional certifications like SIL2, which would allow us to display dedicated safety sensors on many of these systems. The core sub markets driving the robotics vertical are last mile delivery, defense, 3D mapping, and university research. While some of these applications are in pilot phase now, others are beginning to move to large scale deployments. Our customer serve robotics and other customers focused on last mile delivery are great examples of large scale opportunities in robotics. Last mile delivery is the most expensive part of the supply chain, often representing more than 50% of the overall cost. The cost per last mile delivery today is $1.60 via human drivers, but could drop to just $0.06 a mile as autonomous delivery robots proliferate. It's expected to be a quarter-billion-dollar market by 2027, with a 34% CAGR, and these delivery robots require small form factor, high reliability, and high-resolution LiDAR, with an average of one to two sensors per robot. CERV Robotics has already completed tens of thousands of contactless deliveries in major U.S. cities, with plans to scale its robotic fleet significantly over the next few years. Industry forecasts show this market could reach 200,000 units by 2035. In smart infrastructure, the core sub-markets driving this vertical are intelligent transportation systems, security, and smart places. Our CMOS digital ladder is already deployed on intersections, local streets, and highways around the world. New customers like Parafex are deploying our sensors across French roads for speed enforcement and analytics. AUSER also recently co-won the IDC Smart Cities North America Award for Transportation Infrastructure in Chattanooga, Tennessee. The project uses LIDAR to improve pedestrian safety in a way that was previously not possible using camera and radar alone. The latest data shows that there are over 1 million signalized intersections in the United States, and the top two legacy camera-based providers have installed some 600,000 units. Intersections today tend to use at least four traffic cameras at each intersection. Our CMOS digital LiDAR can reduce this number to two sensors for a lower cost than a four-camera system, in addition to providing better accuracy and durability. Per Gartner, there will be at least 85 million security surveillance systems installed in the U.S. by the end of this year, and nearly 1 billion globally. As we've said before, we believe that everywhere there is a camera or CCTV system today, there's an opportunity to augment or replace that system with a higher-performing digital LiDAR sensor, which can better preserve privacy than cameras. This past quarter, we announced that Ouster achieved Buy America and Buy American certifications for sensors manufactured in our San Francisco facility. This is a major milestone given that many U.S. state and local transportation projects depend on federal funding, which require Buy American certified products when available. These certifications further differentiate Ouster's products from other ladder companies and demonstrate our ability to scale with our federally funded customers. All of our verticals and each of their sub-markets represent significant market opportunities for digital LiDAR over the next few years. Winning just a fraction of these production deals could equate to a major automotive win each. These opportunities, coupled with our product market fit and exciting product roadmap, are why we believe so strongly in our multi-market approach. And with that, I'd like to turn it over to Ana to walk you through our financial performance for this quarter.
spk09: Thank you, Angus. Before I begin, I want to reiterate the three takeaways that separate Ouster from the rest of the LiDAR industry. Our differentiated technology, our diversified business, and our proven ability to execute. These are the reasons I am such a big believer in Ouster and why I'm excited to report that Ouster ended the second quarter with a record $7.4 million in revenue. This is our highest revenue quarter to date, up 11% from last quarter and up 72% over the second quarter of 2020. We also delivered positive gross margins of 26% up from 9% in the second quarter of the prior year. We shipped over 1,460 sensors in the second quarter, a 49% increase over Q1, and a 342% increase over the second quarter of the prior year. This means we have already shipped more sensors in the first half of 2021 than we shipped all of last year. This clearly demonstrates our ability to scale production with our contract manufacturing partner benchmark and to deliver on our projection to more than triple sensor production this year. Demand for Ouster's CMOS digital LiDAR has continued to grow as we have now sold sensors to approximately 600 customers over the last 12 months. And while we grow this pipeline, we continue to both add and convert pre-production and production-level customers to our Strategic Customer Agreements, or SCAs. To date, Ouster has signed 53 SCAs representing over $422 million in contracted revenue opportunity, up from 40 SCAs and $385 million at the time of our last earnings call. SCAs are a key financial metric for us. They establish a multi-year purchase and supply framework for Ouster and the customer and include details about the customer programs and applications where Ouster products will be used. They also include multi-year, non-binding customer forecasts, giving Ouster visibility to the customer's long-term purchasing requirements, mutually agreed upon pricing for specific Ouster products over the duration of the agreement, and in some cases include multi-year binding purchase commitments. Contracted revenue opportunity represents the sum of both binding and non-binding purchase commitments. For customers that provide less than a five-year forecast, no additional revenue opportunity beyond the term of the customer's forecast has been imputed. We are excited about our customer traction as we continue to sign additional SCAs. These SCAs provide us with long-term forecast visibility, manufacturing predictability, and enable us to move down the cost curve and drive customer stickiness. That being said, we are at the very beginning of the LIDAR adoption curve, and some customers are still learning their ramp rates, which can impact the timing of purchase orders quarter to quarter. As we grow our business, We expect to improve predictability into our customers' needs and timelines and expect the timing of orders will have a less notable impact on our quarterly results. We are proud of our positive gross margins and believe that CMOS Digital LIDAR is the lowest cost platform. Because SCAs include multi-year negotiated pricing, we expect to continue to experience some temporary downward pressure on margins from signing anticipated large multi-year deals in the near term. However, over time, as sales volumes over the term of the SCAs increase, we anticipate that our cost of goods sold will continue to decline faster than our average selling prices, allowing us to meet our targeted margins. Turning to our forward-looking opportunity, we expect the total addressable market, or TAM, for LIDAR across our four target verticals to reach $8.6 billion by 2025 and nearly $48 billion by 2030. We're already seeing this TAM take shape through our existing customers' growth. In automotive, for example, it was reported that one of our marquee customers, PLUS, won a contract with Amazon to supply autonomous driving systems for 1,000 trucks in its delivery fleet. In this quarter alone, we've brought on new customers like Parafex, BlueLight Robotics, and Valyo in smart infrastructure, robotics, and industrial, respectively. We believe these customer wins not only demonstrate that we have the ability to build our customer pipeline in each vertical, but that we are also capable of penetrating diverse sub-markets. And it is our belief that each sub-market represents a significant revenue opportunity for Ouster. Our multi-market approach allows us to take advantage of near-term opportunities across each of our four verticals, which we believe sets us up to achieve a stable long-term commercial run rate ahead of other LiDAR companies. It is our belief that capturing approximately 20% of the total addressable market for digital LIDAR by 2025 would generate close to $2 billion in revenue. And remember, we see very little competition for 3D LIDAR outside of the automotive vertical. Not only does our CMOS digital LIDAR technology unlock a larger multi-market TAM for LIDAR, it has also allowed us to outsource manufacturing, lower costs, and quickly achieve positive gross margins. and while other LiDAR companies are still working to manufacture at scale and reduce costs to make their products viable for the market, Ouster has an operational business, is ramping volume, and reducing cost of goods sold. Ouster is already a low-cost leader within the LiDAR industry due to our VIXL and SPAD technology approach, and we have continued to drive a steady reduction in cost of goods sold in line with our expectations. We reduced our cost of goods sold by 68% in 2021 as compared to the prior year quarter through reductions in our bill of materials across FPGAs, VIXILs, ASICs, and micro-optics, in addition to yield improvements and reductions in our value-added manufacturing, scrap, and overhead costs. Importantly, during this same period, our COGS have declined faster than our ASPs. And while in the near term, we may experience an impact on our gross margin for the reasons I mentioned earlier, we anticipate that as we find more SCAs and the customers already under SCA mature and ramp purchase volume, our cost of goods sold will continue to decrease and we will continue to meet our targeted margins. In spite of recent supply chain pressures due to the current macro environment, including increased lead times from suppliers related to the global material shortage, Ouster maintained positive gross margins in the second quarter at 26%. In fact, our margins would have been higher had we not experienced some unfavorable purchase price variance and situational expedite fees in order to meet production and delivery timelines. We expect the global material shortages to continue through the rest of the year, which could continue to put pressure on our margins. However, we are actively taking steps to mitigate the impact of this material shortage on our business. We closed the second quarter with approximately $240 million in cash. During our public debut, we announced a targeted capital allocation plan focused on three areas, building out our sales and marketing teams, strengthening investments in software development, and accelerating our hardware roadmap to expand Ouster's product offering. We are delivering on these goals and are proud of the progress we have made year to date. Ouster is investing to build a best-in-class and industry-leading commercial organization. Prior to our public debut, the majority of our revenue was driven by inbound interest. We are now focused on developing a mature sales organization geared toward ramping our sales pipeline through targeted outbound engagement and account expansion. To this end, we have grown our commercial team from under 30 employees at the end of 2020 to approximately 60 employees year to date across the Americas, EMEA, and Asia Pacific markets. Specifically, we have brought on experienced leaders for critical functions, including enterprise sales, sales operations, and customer success. As a result of these investments, our customer base increased by around 100 during the second quarter, with our overall customer count increasing from approximately 500 to around 600. This is all in line with our commitment to invest in building a larger multinational sales force to capture the massive opportunity we have in front of us. Additionally, we committed to invest in software. We are expanding our internal development team to build a rich software ecosystem, including taking our first steps to bring online a branch in Canada that will focus on this. The launch of our software developer kit in the second quarter was a critical first step in that direction. We are also partnering with leading solutions providers for each of our verticals to access new markets and accelerate customer adoption. We plan to continue to invest here and look forward to sharing more over time. Lastly, we're also investing significantly in our hardware roadmap. Angus highlighted some of our second quarter product developments, including our firmware update and progress on our L3 chip, which we believe will be a game changer for all of our verticals. We are fully committed to our multifaceted automotive product roadmap for both scanning and true solid-state sensors and have even more in development, which we are excited to share when the time is right. As we announced in March, we intended to use the initial proceeds of our public offering on these initiatives. And as a result, we increased OpEx to deliver on these initiatives such that our adjusted EBITDA loss increased from approximately 10 million in the first quarter of 2021 to approximately 14 million in the second quarter of 2021. In closing, I'm incredibly optimistic about our growing commercial organization, as well as our forward looking hardware and software solutions, which we expect will bring new levels of autonomy to thousands of applications over the next few years. As such, we are pleased to reiterate our full year 2021 guidance of 33 to 35 million in revenue and 25 to 27% gross margin. And with that, I'd like to turn the call back to Ingus for some closing remarks.
spk02: Thank you, Anna. Ouster is here to build a safer and more efficient world by delivering best-in-class LIDAR and software solutions that will transform industries and improve quality of life. Our digital platform is why we have a highly diversified business compared with other LIDAR companies. While others are betting on just a single application or vertical, Alster is executing on a multi-market strategy, which allows us to drive real revenue today while we continue to enhance our products, build solutions, and achieve certifications. By continuing to execute on our strategy, we expect to capitalize on our first mover advantage and lead in each of our four verticals for a long time. We now look forward to answering your questions.
spk00: Thank you. and we will now begin the question and answer session. To ask a question, you may press star, then one on your phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. When called upon, please limit yourself to two questions. Our first question comes from the line of Blaine Curtis from Barclays. Please go ahead.
spk03: Good afternoon. Thanks for taking my question. Maybe first, Angus, you made a point to highlight auto in your traction with Plus, and you even talked about leadership in that category. I wanted to ask you, when you look at the performance of your digital LiDAR solution, particularly the solution that Plus is using, I think in-auto distance and looking at a metric like 10% reflectivity and getting over 200 meters is important, or at least that's the beauty pageant that's going on with a lot of companies pursuing auto. Just kind of curious, your view, you obviously got a win in autonomous trucking, so just kind of how your solution fits in when you talk about leadership, and maybe if you could talk about your roadmap to getting your performance maybe to those specs that the auto market seems to be circling in on?
spk02: Yeah, sure. So keep in mind, auto needs all types of LIDAR. It needs short-range LIDAR, long-range LIDAR, midfield LIDAR, you name it. And core to our product strategy is offering every single type of LIDAR that an automaker could conceivably need, And one thing that we've highlighted in this earnings call is just the fact that we are investing in automotive certification, not only of that multi-product suite of true solid state ladder sensors, but also from the beginning, we've been auto-certifying all of our scanning systems as well. So our goal is to provide the complete suite of scanning and solid state sensors, short, medium, and long range, wide field of view and narrow field of view sensors, and allow the auto market to come to us with exactly the application they need. Because the reality is that there are different needs for different types of systems. Some automakers are working on parking systems. Some automakers are working on highway autopilot systems. And one sensor is not good. It cannot be used for both. That's just the reality. And of course, we're doing this all with digital technology as the underpinning. The same exact LIDAR architecture is applicable to all. And so what we are offering customers is the ability to come, we're a one-stop shop for all of those options. And automakers, they understand that there may be a roadmap to achieve the exact spec that they need. Literally, no automaker ever comes to us and says, exactly what you have is what we're going to put in a car in four years. And whether that's us or whether that's one of our competitors, automakers need a somewhat customized solution. so we have our standard product roadmap and then we're able to customize that somewhat to each automaker's requirement and so but they understand that there's this roadmap and we can achieve all of the requirements whether it's long range or short range scanning or solid state um it depends on the automaker what they need and um and we can be that one-stop shop and so a customer likes like uh like plus has started with wide field of view LIDAR sensors. And they, you know, we're able to provide under NDA, one of the things that we're doing through our SEAs and our confidential relationships is providing much more insight into our longer term or even medium term roadmap for our expanded product suite. This is something we're not releasing the exact specs of all of our solid state and scanning products one, two, three years out. But the reality is that they completely encompass every possible spec that is required by an automaker for any conceivable application they're using that they need it for. And so we have that credibility. We can share that information with automakers and kind of be the one-stop shop and the only LIDAR company that an automaker ever needs to work with. And so that's what we're providing. We think that's unique in the industry. Really, we don't see any other company that's providing such a broad swath of products into the market.
spk03: Thanks. And then maybe just one for Amit on the OpEx line. You mentioned investing in a few areas, roadmap and software, et cetera. Just any thoughts on OpEx for the year? That would be helpful.
spk09: Yeah, I mean, I think – You know, we, at the beginning of the year, we gave some guidance on, um, you know, what we thought our hiring would be when we kind of came out and said that we plan to use the proceeds for those three areas that I just addressed in my prior remarks. And so, you know, we really haven't changed from that and we're right on track to where we said we would be. So, you know, I think, uh, looking into the back half of the year, we, we, uh, kind of intend to continue to hire at a similar rate.
spk06: Thanks.
spk00: Our next question comes from the line of . Your line is now open.
spk04: Great. Thanks. Good afternoon, everyone. Maybe just two quick ones, first on the gross margin. Ana, you mentioned that you incurred some premium freight and other supply chain inefficiency costs in Q2. I was hoping you could perhaps quantify what those were. And then maybe the second half of the year, it looks like you're guiding for revenue to grow sequentially, gross margin about flat. I think you alluded to some of the factors there. Maybe could you provide a little bit more on the assumptions around ASPs in particular in the second half of the year?
spk09: Yeah, I mean, I think to address your first question on margins, you know, first of all, I just I can't let a margin question go by without reiterating how proud I am that as far as I know, we're the only lighter company out there with positive gross margins on our hardware. And we're very proud of that. And so we managed to keep those flat this year. I'm sorry, this quarter versus the prior quarter. And and that was in spite of the pressures that we mentioned, which, you know, would have added a handful of additional percentage points to margin had we not incurred the global semiconductor shortage or had to expedite some shipping fees and things of that nature. And so, obviously, we expect that those pressures will continue for a little while longer, but we feel we have a plan in place to mitigate them and ensure that our customers, you know, receive product timely.
spk04: I think you're... On the kind of walk and maybe ASPs?
spk09: Well, as you know, we reiterated our margin guidance, so that's what we're aiming towards.
spk07: And then on ASPs, I think what's really important to keep reiterating here is that our cost of goods sold are declining faster than our ASPs. So we think of ASPs and really these SCAs that we're signing as a business initiative that we have to get a lot of know that as we are able to grow our volumes, that our cogs will continue to decline at a very steady rate as we improve, have more units over which to spread our fixed costs. And so, you know, that's very predictable for us since we're already working with Benchmark. It's a way for us to work with customers to better and gather forecasts from them such that we are driving negotiated pricing that ensures or that we believe allows us to predict both our COGS and our revenue and ensure that our revenue, our ASPs are not declining faster than our COGS.
spk09: And so as an example, If you look at our ASP, 40%, but our COGS declined, our average COGS per unit over the same period declined about 68%.
spk07: And so we expect that there may be some variability in that.
spk09: We have in the 600 customers that we mentioned, we have many customers who are progressing variability in margins. Over the long term, we have a lot of visibility and are quite confident that we'll meet our mid- and long-term margin goals.
spk04: That's super helpful. Thanks for all that detail. I think you kind of alluded to it a little bit in your prepared remarks, but the growth that you saw, what particular end markets drove that incremental growth?
spk07: And then also, in terms of demand,
spk04: from existing customers as well as sort of new customers.
spk07: Yeah, I mean, I think across end markets, you know, we continue to sign SCAs across all of our four verticals, so we're really excited about that. And I'm sorry, what was your second question? You said demand across
spk04: It's kind of a split between existing customers as well as sort of new customers coming in.
spk09: Well, obviously, we're getting both, really, because you can tell by the rate that we're signing SCAs and it's coming from both.
spk07: Perfect.
spk04: That's very helpful.
spk07: Thank you.
spk00: Our next question comes from the line of Tristan Guerra up there. Please go ahead.
spk06: Yeah, quarter of 22.
spk07: Because of the market timing choice for rotational lighters, you have made thus far versus solid state in terms of end market applications.
spk02: Sure.
spk07: So the, you know, we're, We've said that we'll release the prototypes and solid-state sensors in Q4 2022.
spk02: And the reason for that is simply just the design cycles for introducing new products. So it's no specific delay. There's no new technology that has to be created because it's the same fundamental VIXL SPAT architecture. The digital LiDAR architecture powers all our products. And if you were to pull apart one of our scanning systems, you would see a true solid-state digital LiDAR module that looks very, very similar, almost identical to the fully solid-state devices that we're developing to have prototypes ready by the end of next year. um so it's just it's just the inertia in designing um new products but and then the systems um is really just a it's more strategic one and it's this goes back to the the realization that there is an immense market today for wide field of view scanning systems and that's essentially the entire market for lidar today is for either um you know the the sensors that the scanning sensors the analog sensors from companies like belladine or industrial ladder sensors, which are also mostly still scanning systems produced by industrial ladder companies for the last 20 to 30 years. And so there's this immense established market that we don't need to re-educate. We just need to out-compete. and we can do that very effectively both on affordability and performance with scanning digital ladder sensors so we want to go out provide those sensors and we were able to do that simultaneously developing true solid state sensors and to be frank it doesn't matter to ouster particularly which customers decide that they want true solid sensors and which ones scanning sensors we're so and automotive and other specifications so that customers from any vertical can come and choose from the entire product portfolio.
spk07: And so it's, yeah.
spk08: Hopefully that answers the question.
spk06: Yeah, great. Thanks. And as a follow-up, how should we look at the unit ramp for rotational lighters versus ASP declines? Maybe one of the two of them intersects.
spk09: Well, I mean, I guess I can jump in and start, and maybe, Angus, if you have something to add.
spk07: But, you know, our units are ramping.
spk09: So Q2 of last year we sold about 330 units, and then Q2 of this year we sold – So our units are definitely ramping. And as I mentioned on the last question I asked, our cost of goods sold are declining much faster than our ASPs. So it's always been our goal to see our ASPs decline to really widen adoption by customers. over time um and and to do that while meeting our margin goals as we grow the business and so we've taken a very kind of thoughtful approach to how we price our product our products as we are ramping volume and we'll continue to do that into the future great thank you so much our next question comes from the line of richard shannon
spk00: Craig Helen Capital, please go ahead.
spk01: Thanks. During the quarter, the average on those was a fair amount more. I suspect there was one or two large deals in that number you quoted for us last quarter. Maybe, Angus, can you give us some perspective on how should we see the size of deals, and maybe if you want to couch it in terms of on markets, that would probably be an interesting perspective to offer.
spk02: Yeah, and so the entire goal of SEAs is to provide credible visibility into our long-term pipeline with customers.
spk07: That is the status. It's kind of our stated goal with SEAs.
spk02: And so if anything, we want to be underestimating or under-communicating the size of the opportunities with our customers. Um, and also we want to run a diversified business, a highly diversified business with hundreds of thousands of customers and hopefully hundreds and hundreds of customers under SCA in the relatively near, near term, the next couple of years. And so, you know, I'm kind of, I'm extremely pleased that we're seeing, you know, if we have several hundred SCA customers that are each $5 million opportunities, that's a fantastic kind of foundation for the business. while we also will be winning certain customers that have much larger, multi $10 million to $100 million opportunities. And so I think that's the right way to build a business. Some are $5 million opportunities, and that's just great, and I'm really happy about it. But we also will have some that have much larger opportunities. And what I'm looking for in those deals with larger opportunities, I'm always looking to make sure that the customer has a reputable end customer that's supporting those larger volumes, right?
spk07: We don't want to, because we're reporting on their report to the street, and we do not want to be, you know, a lot of volatility in these SBA numbers. So,
spk02: And for that reason, we're really making sure that the larger opportunities here have reputable kind of end customers associated with them wherever possible.
spk07: And I could just add to that a little bit of additional perspective of how I think about it, if you don't mind, Richard, which is, you know, as Inge said, my goal is to find
spk09: you know, quite a few SEAs over the near term.
spk07: You know, I'd like to see us find, you know, one or two billion.
spk09: And in that way, because the SEAs, you know, many of them cover a three-year time period, some cover a five-year time period, you start to get to a very predictable business for, you know, considerably less than a year, 22 million mark. You know, we're nearly kind of 25% there. And I think that we'll just continue add new customers into the funnel, convert them through the pipeline, and build that very predictable business.
spk07: We're ramping those SCA agreements. Very good.
spk01: Angus, my second question is looking at your markets here outside of our industry, what have been kind of the positives and negatives of the flows of the markets? Where have you seen the most increase? Increasing tension, have you seen any of it slow down? Just any broader perceptively, please.
spk02: If you look at the, I mean, going back to the FCA signs, the unit shifts are up, and the revenue is up. We're going to continue to be signing and announcing customers. What I see is a momentum in our non-auto markets, you know, to the question asked. And I'm incredibly pleased. I mean, I think that it's such a different industry to be working in when there's a market that's been established. That is a customer base that's incredibly receptive to LiDAR technology.
spk07: It's currently using LiDAR technology, and we're trying to make them a product that's, you know, capable and is a drop-in replacement to what they currently are purchasing.
spk02: And that's large swath of the industrial market and the smart infrastructure market and the robotics market, that is all through the day. And so we just feel we have fantastic product market fit in all of those verticals, and it's certainly paying off in kind of the results.
spk07: Perfect. That's all from me.
spk01: Thank you.
spk00: Our last question comes from the line of Joseph Asha of Guggenheim. Please go ahead.
spk05: Hi, Joe. How's it going? Very well. I wanted first a topic that it's like, say, gantry cranes or materials handling robots are a complete suite of products. Are those markets likely to end up having rotating scanners, or do you think you need a lower price point to really penetrate those opportunities? And then I have one other question.
spk02: I think a lot of those will continue to be scanning systems for the next decade or more.
spk05: Is that because you think that the price points are coming down a lot, or it's just if it's a $400,000 robot, a spinning ladder doesn't matter that much. Can you amplify your thinking there?
spk02: The investor ladder market, the ASPs are already quite high. It's fundamentally different price points than consumer automotive. um the second is that the platforms that they're going on are much you know commonly multi-million dollar platforms like cancer cranes or uh or or you know warehousing robots or something like that and then or not you know heavy construction mining vehicles um and then the customers understand the roi much better you know it's they can model the roi for and the investment in capital uh equipment um much better than that consumer can And so for – and then there are safety certifications that, you know, make it hard for incumbents to come in and for this to come out of the industry – excuse me, for certifications. So, you know, for all those reasons, the price points are already – we're already able to hit competitive price points. Scanning systems have set the precedent in the last 20 to 30 years. So – I think that Ouster will be able to shift the industry towards true solid state with our products long term, but it's going to take a long time, which is a good thing for us now that we're a major entrant. And for that reason alone, it will take a better part of a decade for there to be any significant shift from the scanning systems. Yeah, that's interesting.
spk05: Makes sense. Secondly, just, you know, a more technology-oriented question. Obviously, you've gotten a great deal done with, you know, integrating the STAT and, you know, other attributes of the product and CMOS. I'm just wondering, as you look forward, what other potential exists there? I mean, could you ever see, you know, emitters and sensors on the same? What's on the roadmap here?
spk02: yeah there is so much potential in the digital ladder roadmap i mean the l3 chip is incredibly exciting it really is the biggest jump in product performance we'll have ever seen and we've already driven huge jumps in product performance um to date But this is as though everyone in the analog world is playing with the hand of cards that they were dealt at the start of the game. And Alistair is being handed trump cards every round in the form of new chipsets, new semiconductor improvements that our partners are literally handing to us and giving us access to. And so it's just a paradigm shift in the capacity we have to move this technology forward long term. And so the L3 chip gets the L4, the L5, the L6, and this just keeps going. And it is, you're right, it's not just on the silicon side. It's on the Vixel side as well, the laser side. And there's immense investment there, and we're being handed new technology. through deep partnerships with our supplier base for that side of the equation as well. And so this is very much the beginning for this technology, and despite all that, we're already in this market-leading position across most relevant metrics. And so, yeah, I'm incredibly excited for the future, and there's just huge opportunity to push the technology forward.
spk05: Okay. Thank you very much.
spk00: And this does conclude our question and answer session. I'd like to turn the conference back over to Mr. Angus Bacala for any closing remarks.
spk02: Well, great. I just want to thank everyone for tuning in today, and everyone have a great day.
spk00: Ladies and gentlemen, the conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.
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