Ouster, Inc. Q1 FY2026 Earnings Call

Hello, and welcome to Ouster's First Quarter 2026 Earnings Conference Call. The call today is being recorded, and a replay of the call will be available on the Ouster Investor Relations website one hour after the completion of this call. I would like to now 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 first quarter 2026 earnings call. Today on the call, we have Chief Executive Officer Angus Pacala 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 8-K and is posted in the Investor Relations section of the Ouster website. Today's conference call will be available for webcast replay in the Investor Relations section of our website. I want to remind everyone that on this call, we will make certain forward-looking statements. These include all statements about our competitive position, product advantages and growth opportunities, anticipated industry trends, our business and strategic priorities, our operating expense targets, the impact of our recent acquisition, the development and expansion of our products, our products' capabilities and performance and our revenue guidance for the second quarter of 2026 and long-term financial targets. 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 first quarter 2026 financial results release and in the quarterly and annual 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 discussed today is included in the financial results release. I would now like to turn the call over to Angus.

Hello, everyone, and thank you for joining us today. Over the last four months, we have seen the culmination of over 10 years of Ouster innovation, strategy and execution. In February, we acquired Stereolabs, a pioneer in AI camera vision and perception solutions, creating a world-leading sensing and perception company for Physical AI. We are already seeing the strategic rationale transform into operational reality with a resoundingly positive customer response. And just yesterday, we launched Rev8, the world's first native color lidar and a paradigm shift in AI perception. To perceive the world in full context requires a combination of structure and color, and Rev8 is the first sensor to unify both. With native color across our entire product portfolio of cameras and lidars, we have further strengthened Ouster as the foundational sensing and perception platform for Physical AI as we provide unified products and solutions that accelerate customer innovation and unlock new applications that sense, think, act and learn in the physical world. Now turning to an update of our Q1 2026 results. Ouster had a strong start to the year, achieving our 13th straight quarter of product revenue growth with over 12,600 lidar and cameras shipped, reflecting robust demand for our expanded product portfolio. With $49 million in revenue, we achieved another record product revenue quarter on a strong 43% gross margin, overcoming headwinds from a continuing constrained supply chain environment. We ended the quarter with adjusted EBITDA loss of $7 million and cash, cash equivalents and restricted cash and short-term investments of $175 million. Our lidar business grew approximately 44% year-over-year with strong contributions from our industrial vertical, where we secured several large deals to power industrial automation. We significantly expanded our long-term relationship with a large European industrial company for port automation. In another key win supported by our NDAA-compliant sensors, we secured a deal with an autonomous earthmoving company to retrofit heavy equipment to support a project with the U.S. Department of Defense. Ouster's Smart Infrastructure Solutions business continues to validate our end-to-end system strategy. We saw continued momentum from our expanded ITS distributor network as we won contracts to deploy Ouster BlueCity across the United States, securing large million-dollar deals to provide next-generation traffic actuation systems in Arizona, Michigan and the Northeast U.S. We were also proud to announce the expansion of Ouster BlueCity with the Georgia Department of Transportation to modernize the region's traffic infrastructure. The turnkey Ouster BlueCity traffic management solution will be deployed at more than 30 intersections across the Greater Atlanta area in preparation for the FIFA World Cup and beyond. BlueCity is bringing Physical AI to smart cities around the world with over 700 contracted site deployments across intersections, mid-blocks and highways, reinforcing Ouster's position as a leading solution for transportation departments seeking to transition from legacy traffic solutions into dynamic digitally integrated 3D lidar-powered traffic management solutions for actuation and analytics. We also saw strength from Ouster Gemini in the quarter, recognizing millions of dollars of revenue from a significant customer renewal. Leveraging our unified platform and proprietary deep learning perception model trained on over four million labeled objects, Gemini empowers our customers to operate more efficiently and safely at over 550 sites around the world. In the months since the acquisition, Stereolabs has already proven to be a perfect complement. We're seeing benefits of our unified platform through the ability to immediately help customers combine multiple modalities of sensors and AI compute, easing the friction of combining disparate technologies and accelerating our customers' go-to-market efforts. The rapid integration and commercial success of our expanded camera vision portfolio provided tailwinds during the quarter, and business momentum exceeded our initial expectations. We are seeing strong demand from companies building foundational AI models and advanced robotics platforms and leading companies around the world are relying on our expanded product portfolio to train, scale and deploy the next generation of autonomous delivery, advanced manipulation and precision agriculture. We continue to see large opportunities for Stereolabs to augment Ouster's perception roadmap to meet Physical AI's increasing demand for sophisticated multi-sensor fusion. By merging our proprietary AI models with Stereolabs' neural depth capabilities, we are delivering the specialized perception logic and application-specific software required to revolutionize safety and efficiency across the global supply chain. Continuing the momentum and our leadership in cameras for Physical AI, we released the Stereolabs ZED X Nano, which is shipping this month. This product sets a new standard for wrist-mount stereo vision, delivering 2.3-megapixel RGB with neural depth, zero-copy capture data pipeline and ruggedized GMSL2 connectivity in a 40% smaller form factor. Like all Stereolabs cameras, the ZED X Nano comes with a purpose-trained neural depth model, specifically tuned for its capabilities and further highlighting Ouster's deep vertical integration from hardware to software. Engineered for robotic manipulation and high-throughput data collection, we are helping robotics teams scale imitation and reinforcement learning from manipulation tasks. Leveraging Stereolabs' industry-leading image quality and end-to-end capture latency, our customers can now overcome critical bottlenecks by capturing high-resolution RGB and stereo camera depth images at up to 120 frames per second for training data and manipulation learning. And now turning to yesterday's highly anticipated product announcement. I'm truly excited to introduce Rev8, the world's first native color lidar sensors powered by next-generation L4 Ouster Silicon. We are redefining the meaning of lidar itself with native color sensing implemented directly on the silicon. By fusing color and 3D data through physics and leveraging Fujifilm color science, our patented native color technology unlocks megapixel resolution and stunning image quality with ultra-low latency and perfect spatial-temporal alignment. We work with industry-leading camera experts to ensure Rev8 delivers uncompromising industrial-grade imaging. Delivering an exceptional 48-bit color depth and 116 dB of dynamic range, Ouster's native color data maintains performance in lighting extremes from 1 lux to 2 million lux. We live in a world where a machine's capacity to perceive is constrained by the capability of its sensors. Rev8 is built to generate the petabytes of rich, native color 3D information necessary to build the next generation of Physical AI systems and train new world models. Now for the first time, a single lidar sensor can understand road signs, interpret brake lights or simply capture the richness of planet Earth in survey-grade colorized maps. Featuring radically upgraded OS0, OS1 and OSDome sensors and the new flagship 256-channel OS1 Max, Rev8 delivers industry-leading resolution, range and reliability designed for functional safety, affordability and scale. Rev8 represents the culmination of years of research and development, innovative design and rigorous testing. It is the most advanced family of lidar Ouster has ever developed and sets a new standard in sensing. All of this is a testament to Ouster's digital-first approach, which starts with our proprietary system-on-chip. Rev8 is powered by our breakthrough L4 Ouster Silicon with up to 256 channels of resolution honed over years of development by our in-house silicon design team. The L4 architecture features both the 128-channel L4 and the 256-channel L4 Max, each embedded with Fujifilm color science, resulting in exquisite color data and hardware-enabled high dynamic range. The L4 boasts 42.9 gigamax of processing power, detection of up to 20 trillion photons per second, a 40-kilohertz measurement rate with picosecond timing precision and is capable of processing up to 10.4 million points per second and 22.4 gigabits per second of data bandwidth off chip. And we've paired it with a completely redesigned light engine, featuring all new custom VCSEL arrays and our most advanced driver topology ever. Enhanced by picosecond timing precision, this architecture delivers unprecedented levels of range, resolution and accuracy across the entire Rev8 OS family. The cornerstone of the new Rev8 family is the flagship OS1 Max, a sensor without compromise. With double the resolution of the Rev7 OS2 and one-quarter of the size, the OS1 Max packs an incredible amount of capability into a small ruggedized form factor. The OS1 Max provides best-in-class performance with 256 channels of high-definition sensing up to 500 meters in all directions with a 45-degree vertical field of view. No other 360-degree spinning lidar comes close. Purpose-built for high-speed autonomy, smart infrastructure and heavy industrial applications, the OS1 Max is capable of resolving the smallest objects at long range. And like all Rev8 sensors, the OS1 Max offers exceptional native color imaging. We set out to build the safest family of 3D lidar sensors ever created. This took years of rigorous engineering work, testing and design validation. Rev8 is life-saving technology made right, ruggedized for the real world with automotive-grade reliability that can withstand the harshest production environments. Ouster now offers a set of products to break into the multibillion-dollar market for industrial safety sensors long dominated by legacy players by replacing outdated 2D laser scanners and cameras with high-resolution 3D native color lidars. Every sensor is auto-grade, cybersecure and designed for ASIL-B, SIL-2 and PLd functional safety certifications, ensuring continuous uptime and industry-leading reliability. Importantly, this is a platform built to scale. Rev8 was designed for low-cost, high-volume production deployments to support mass-market adoption. With a planned 10-year production life, Rev8 sensors provide the long-term program stability and scalability required for global commercial rollouts. With Rev8, we are delivering the safest, most feature-rich, secure and reliable family of 3D lidar sensors we have ever built, and we hit the ground running. Earlier today, we announced the integration of our new Rev8 family across the NVIDIA Jetson platform, bringing native color lidar to the NVIDIA robotics ecosystem for the first time. With dedicated support for Rev8 across NVIDIA JetPack, Isaac Sim and Jetson AGX Orin and Thor, we are ensuring rich high-fidelity 3D digital lidar data is fully harnessed by NVIDIA's accelerated computing and development tools. This builds on years of integration support for previous OS sensor generations as well as Stereolabs' own integrations across the entire ZED portfolio. Together, we are providing the essential building blocks for Physical AI, enabling machines to sense, think and act in the real world with more speed and precision than ever before. Rev8 is shipping today and is being adopted by some of the world's most innovative companies. This is a testament to our close collaboration with key customers over years to ensure Rev8 met their program needs. We're already seeing early traction with dozens of technology leaders across the industrial, robotics, automotive and smart infrastructure markets intending to adopt Rev8 OS sensors, including Google, Volvo Autonomous Solutions, Liebherr, Epiroc, Field AI, Flyability, Skydio, PlusAI, Constellis, Bedrock, Kassbohrer, Third Wave Automation, Burro, Seegrid, Gecko Robotics, Pratt Miller, AIM Intelligent Machines, Cyngn, Freefly Systems, ATI Robotics and SwarmForm, among others. Clearly, there is overwhelming customer pull for Rev8, and this gives us confidence in an incredibly strong back half of the year. We spent years developing these groundbreaking capabilities, and I am thrilled to finally introduce Rev8 to the world. With that, let me now turn the call over to Ken, who will provide more context on our first quarter financial results.

Thank you, Angus, and hello, everyone. As you heard, our excitement over the acquisition of Stereolabs and our new product launches look to keep the momentum we built in 2025 continuing into 2026. In the first quarter, we are pleased with our continued progress against both our financial and operational goals, which are the cornerstones of our path to profitability. Our results demonstrate the resilience of our operating model and the disciplined financial management across the business as we continue to execute within our long-term financial framework. Turning to the first quarter financial performance. Operating results were strong with revenue of $49 million, which included approximately seven weeks of contribution from Stereolabs. This represents an increase of 49% compared with the first quarter last year. We shipped over 12,600 sensors, which included over 8,300 lidar, a new quarterly record, and over 4,300 camera sensors. Royalty revenue in Q1 was not material. As I mentioned in our March call, this year, we expect total royalty revenue in 2026 to be less than $5 million. The majority of this amount will be recognized in the back half of this year. Smart infrastructure vertical was the largest contributor to first quarter revenue, followed by industrial. GAAP gross margin was 43%, up 200 basis points from the same quarter last year. GAAP operating expenses were $40 million, an increase of 7% from the first quarter last year. The increase was primarily due to the addition of Stereolabs operating expenses, including $2.3 million of acquisition and integration-related charges in Q1. We continue to anticipate year-over-year operating expenses to be higher 5% to 8% with the acquisition of Stereolabs. However, we continue to focus on our path to profitability and will remain diligent in managing our operating expense profile. Excluding the acquisition and integration expense of Stereolabs, our adjusted EBITDA in Q1 was negative $7 million compared with negative $8 million in the first quarter last year. Ouster remains one of the industry's strongest balance sheets, ending the quarter with cash, cash equivalents, restricted cash and short-term investments of $175 million and no debt. The strength of our balance sheet gives us the strategic and financial flexibility to operate our business and gives confidence to our customers who rely on Ouster as a key Physical AI partner on their long-term autonomy journey. Now turning to guidance. For the second quarter of 2026, we expect to achieve total revenue in the range of $49.5 million to $52.5 million. Beyond the revenue outlook for Q2, I want to reiterate the long-term financial framework I discussed last quarter, which includes revenue growth of 30% to 50%, GAAP gross margins of 35% to 40% and GAAP operating expense growth of 5% to 8% from our 2025 levels. With our acquisition of Stereolabs, the release of Rev8, our smart infrastructure solutions and our investment in foundational AI models, Ouster has one of the broadest range of perception and sensing products in the market. We remain confident that our innovation and go-to-market strategy will continue to bring us closer to positive operating free cash flow and profitability. I'll now turn the call back to Angus for his closing remarks.

Thanks, Ken. To close out, we are off to a great start executing against our 2026 strategic priorities: revolutionizing our lidar, camera and AI compute products, extending our leadership in Physical AI solutions and executing towards profitability. We kicked off the year with strong momentum, delivering our 13th consecutive quarter of product revenue growth. We're executing on our strategy to provide Physical AI's first unified sensing and perception platform, and I'm excited by the transformative products we are bringing to market this year as we work to solve our customers' most complex challenges. Rev8 is redefining the meaning of lidar with fundamentally new capabilities that empower our customers to simplify their perception stacks, better train next-generation world models and scale their production deployments. On the heels of a successful first quarter, Ouster is better positioned than ever as the foundational end-to-end sensing and perception platform for Physical AI. With that, I'd like to open up the call for Q&A.

Our first question comes from the line of Colin Rusch of Oppenheimer & Co.

Congratulations on getting Rev8 out. I have a two-part question to start with following that introduction. You've been working closely with many customers. First, how many of them have been waiting for this product to move into series production with some of their products given some of the range and the functional safety pieces? And second, which new applications are you seeing as material opportunities for you to move into, given the functionality improvements you're seeing with this next-generation product?

Colin, thanks for the question. While we don't preannounce, we held on to the Rev8 announcement until it was ready to ship this quarter. Behind the scenes, we worked incredibly closely with a set of key customers for more than one year to make sure that Rev8 met their needs, both current and future, to expand business with us over time. It's no surprise that we had a compelling list of over 20 customers that I announced. It spans the gamut of existing customers doing things they've always done, but doing them much more capably with a colorized point cloud, to entirely new applications. A great example is high-altitude drone surveying. The OS1 Max is well suited to simplify a drone payload, and we have an interested customer, Skydio, that sees the combination of payload into a single platform as a game changer for surveying where weight and data quality are at a premium. We absolutely have new applications for the OS1 Max such as high-speed highway driving and heavy machinery where you need to see small objects at long range. The multibillion-dollar opportunity for functionally safe devices is a brand-new area for us to expand our customer base and capture significant value with these sensors. Long term, I expect the majority of our customer base to adopt Rev8 over time and operate with native color lidar data. The entire industry is going through a paradigm shift, and I expect native color Rev8 lidars to be widely adopted across our customers.

Super helpful. Now that you have a rapidly evolving portfolio of offerings, including edge compute, how should we think about mix going forward? And how much leverage are you getting from that edge compute capability given escalating data transfer expenses, for example at intersections where transfer costs can be very high?

On the product portfolio, it's ever expanding. We also released the ZED X Nano during the quarter, which is a new use case in wrist-mounted robotic manipulation. Regarding mix going forward, we haven't split out exactly how that will look on a long-term unit or revenue basis, but we expect both of our businesses to grow significantly. We had an incredibly strong quarter with 44% year-over-year growth for the lidar-only business, and overall we were up substantially year-over-year, especially with the Stereolabs acquisition. I expect very strong growth across all product lines over time. On edge compute, I expect it to contribute more to the overall business. We are fresh off acquiring Stereolabs; their compute line had good traction and still does with customers. We're going to invest more into that compute line and determine how to position it with our other offerings. At this point, I can't say it's having a significant impact on Ouster customers yet—we're still getting our feet under us on positioning. But we do see it as a big opportunity going forward.

Our next question comes from the line of Kevin Cassidy of Rosenblatt Securities.

Congratulations on launching Rev8 and continuing the high growth. Will Rev7 continue to go into production? What's the transition look like between the two lidars?

Great question. We are fully committed to producing and supporting Rev7 for our established customer base. Rev7 has been out for three years and many customers have qualified it and are in active production. It's a strong product set that established Ouster as a performance, technology and reliability leader, and we do not want to disrupt that. Rev8 is designed to be a seamless upgrade for any customer that wants it, but customers that have qualified Rev7 can continue to operate their businesses with it. We want customer choice in the timing of their transition.

I remember Rev7 was an inflection point, especially on ASP increases. Are ASPs similar between Rev7 and Rev8? And maybe comment on manufacturing and gross margins between the two?

Rev8 was designed to be more affordable and more scalable than Rev7. We want to enable customers to scale and bring this technology to a broader Physical AI ecosystem. Rev7 introduced a new capability and ASPs rose; with Rev8, the mix will be more varied because we have many more customers in production and we do not want to disrupt their economics. Some new products, like the OS1 Max, will command premium ASPs in certain domains, but we also want customers to upgrade without significant commercial disruption. Overall, Rev8 is built to be more scalable and more affordable than Rev7.

Our next question comes from the line of Andres Sheppard of Cantor Fitzgerald.

This is Anand on for Andres. Congrats on the quarter. It's great to hear about the L4 chip with the Rev8 announcement. Based on customer interest, what opportunities do you see in automotive, especially with robotaxis ramping up with Motional as a customer? Who do you see interested there and what types of opportunities?

Rev8 is a significant development for automotive because Rev8 sensors are auto-grade and designed for functional safety. The ASIL-B functional safety spec is very important whether the lidar goes into a consumer car, a robotaxi or a robo truck. Rev8 sensors, including the OS1 Max and OS0, are purpose-built for that market. I expect significant opportunities because it's the first time we'll have a full suite of lidars that can blanket a vehicle and allow customers to source from a single supplier. We work confidentially with a number of customers on automotive domain requirements, and the long-range, high-resolution aspect of the OS1 Max combined with colorized point clouds is game changing for automotive. Advanced AI algorithms and flexible Physical AI progress in ADAS go hand-in-hand with these sensors. We think Rev8 sensors are excellent for that domain and I look forward to getting them into customers' hands.

Got it. A question for Ken: as you think about margin and EBITDA improvement, what are the most important remaining steps to hit breakeven? Is it revenue scale, gross margins, OpEx management, or a mix of these?

The continued innovation we've shown is a strong stepping stone to our long-term model. The consistency we've delivered over the last three years is another proof point. The long-term model of 30% to 50% growth, coupled with gross margins in the 35% to 40% range, and disciplined OpEx growth are the components. We had another strong GAAP gross margin quarter despite supply challenges. Our plan expects GAAP operating expense growth of 5% to 8% from 2025 levels, driven by Stereolabs. When you do the math on the growth rate and maintain our gross margins and OpEx discipline, we believe we are on a strong path to hit profitability within 2027. Continued innovation, revenue scale, margin improvement and disciplined OpEx together will drive us to breakeven.

Our next question comes from the line of Richard Shannon of Craig-Hallum.

Apologies, I just joined. The Rev8 product is interesting, especially the ability to do color. How did you achieve that? Is it something in the detector? Is this technology exclusive to Ouster or are others attempting this? Also, which applications do you expect to adopt it first?

The Rev8 native color point clouds are a genuine world-first invention and a significant milestone for the lidar industry. This is a first-of-its-kind technology. The core innovation happens at the silicon level—and it builds on Ouster's history of inventing digital lidar. We've continued to innovate at the silicon architecture level by fusing in-silicon color and lidar data so customers receive unified results without having to integrate disparate sensor streams. This is the result of 10 years of pushing silicon innovation at Ouster and building it into the L4 and L4 Max chips. In terms of applications, the clearest opportunity is better context for training next-generation Physical AI models. The world cannot be described by only 3D information or only color; the combination lets you both sense the position of a street sign and read it, or detect a vehicle and interpret brake lights. Training AI models with colorized point cloud datasets is what many customers have been seeking—it's the 'holy grail' for unified, labeled perception data. Other applications include 3D surveying, where both structure and color are needed to assess things like bridge degradation; color helps identify concrete cracking as well as structural issues. The benefits span nearly every customer use case, and it's difficult to identify a customer that would not benefit from this, which is why I expect broad adoption of Rev8 over time.

To add to Angus' point, the RGB colorization alone is covered by nearly a dozen patents, and Rev8 builds on almost 200 underlying patents that support this family of products. The technology effort is substantial and protected by real innovation and intellectual property.

As you add color to applications that previously used lidar, how should we think about the upsize in value and the price you will be able to charge?

That depends on the application. We price products to enable customers' commercial applications—it's central to our strategy to maintain strong gross margins while ensuring pricing works for customers at scale. Rev8 pricing will vary by customer and application. Importantly, Rev8 is a drop-in compatible replacement for Rev7, so adoption can be quick and seamless without necessarily disrupting a customer's economics. That makes it easier for customers to get the value, which is a key part of our approach.

This concludes the question-and-answer session. I will now turn the call back to Angus for closing remarks.

I want to thank everyone for joining the call and really want to thank the Ouster team for pushing to get Rev8 out. This is a paradigm shift for the industry. We have incredible customer demand for the Rev8 product, and I look forward to updating everyone on Rev8's adoption through the year. Thank you all.

Thank you for your participation in today's conference. This concludes the program. You may now disconnect.