Monday, Mar.
2, 2026 at 5 p.m.
ET Call participants Chief Executive Officer — Angus PacalaChief Financial Officer — Kenneth P.
GianellaDirector of Investor Relations — Chen Geng Need a quote from a Motley Fool analyst? Email [email protected] Revenue -- $62 million, including $41 million of product revenue, with one-time royalty revenue of approximately $21 million reported separately.Product revenue growth -- Product revenue rose 36% year over year; full-year product revenue increased 32% excluding royalties.Shipments -- Shipped over 8,100 sensors in the quarter and more than 25,000 sensors for the year, up 48% from 2024.Book-to-bill ratio -- Full-year product bookings reached $177 million, yielding a product book-to-bill of 1.2 times.GAAP gross margin -- Achieved 60% in the quarter; royalties contributed approximately 20 percentage points.Quarterly operating expenses -- GAAP operating expense was $37 million, down 6% from a year earlier, driven mainly by a favorable employment tax refund.Adjusted EBITDA -- Reported a positive $11 million for the quarter, reflecting the impact of royalty receipts.Cash position -- Ended the period with $211 million in cash, cash equivalents, restricted cash, and short-term investments, and had no debt.Software-attached business -- Software-attached bookings more than doubled, representing over 15% of sensors shipped, up over 120% year on year.Installed AI sites -- In-house trained AI models now run at over 1,200 Gemini and Blue City sites, spanning over 65 million square feet globally.Major renewals -- Secured a seven-figure annual license renewal with a leading global technology company for Gemini, along with significant Blue City agreements across Tennessee, Utah, and New Jersey.Product portfolio advancements -- Launched four new SDK versions, including on-sensor 3D zone monitoring for collision avoidance and real-time localization with centimeter-level accuracy.AI model training -- The multi-sensor AI model powering Gemini and Blue City is trained on millions of labeled objects from hundreds of diverse sites.Large-scale installations -- Supported installations of up to 40 LiDAR sensors at single enterprise sites.Blue City intelligent signal actuation -- Advanced from prototype to commercial deployments, scaling across hundreds of intersections.Gemini cloud features -- Introduced Cloud Portal and Event Server for remote management and custom no-code application logic.Next-gen custom silicon -- Validated L4 and Kronos chips, which are expected to more than double the current addressable market for LiDAR.Royalties outlook -- 2026 royalty revenue is expected to be less than $5 million, with most recognized in the back half of the year, and future royalty revenue anticipated to be de minimis.StereoLabs acquisition -- Closed February 4, with about seven weeks of revenue included in 2026 guidance; viewed as high-growth, high-margin, and accretive.2026 revenue guidance -- Guided to $45 million to $48 million in total revenue, including StereoLabs contribution.Long-term targets -- Reiterated goals of 30%-50% annual revenue growth and 35%-40% GAAP gross margin post-acquisition.Operating expense guidance -- Expected 2026 GAAP operating expense to rise 5%-8% from 2025, reflecting integration costs.Operational discipline -- Maintained one of the strongest balance sheets in the industry, supporting multi-year customer programs and strategic flexibility.Customer response -- Management described the StereoLabs acquisition reception as "resoundingly positive," noting "Customers are asking for" combined solutions and unified platforms.Physical AI market position -- Positioned as a "foundational end-to-end sensing and perception platform for physical AI" following the acquisition, targeting expanded roles in smart infrastructure, robotics, and industrial verticals.
Ouster (OUST +6.86%) reported double-digit growth in shipments and product revenue, supplemented by substantial one-time royalty receipts and a strengthened cash position.
The StereoLabs acquisition enables immediate expansion into unified sensor solutions, with both new product launches and AI-driven features set to accelerate adoption across multiple verticals.
Management reinforced multi-year margin and growth targets, with 2026 guidance reflecting a reset baseline after the royalty outperformance and acquisition integration.
Year-ahead strategic priorities explicitly focus on broadening the product portfolio, scaling physical AI platforms, and driving toward sustained profitability at consolidated operating levels.
StereoLabs' revenue is historically weighted toward the second half of the year, with about 60% occurring then; this will influence consolidated seasonality.StereoLabs contributed a portfolio of AI camera vision solutions and high-profile customers to the combined company, adding both commercial reach and engineering capabilities.The company announced major joint pilots in perimeter security and traffic analytics, leveraging its expanded platform to accelerate deployments in the United States, Europe, and the Middle East.Expanding interoperability remains a priority, as the company invests to ensure its compute and software platforms integrate with auxiliary systems, reducing customers' time to market.Management stated, "We are actually able to tell them, “You can get started immediately.”" highlighting that unified sensing platforms are currently available for customers.Guidance for positive operating free cash flow and profitability is based on further scaling the business and realizing improved operating leverage from recent investments.The call confirmed a clear capacity for strategic M&A activity, with four to five years of cash runway after the StereoLabs transaction.Operational risk from royalties was addressed, as management asserted "the royalty piece behind us," with minimal expected contribution going forward.
Industry glossary Book-to-bill ratio: A metric reflecting the ratio of orders received (bookings) to orders shipped (billings) within a certain period, used to gauge real-time demand and future revenue visibility.Physical AI: A term used by Ouster to describe intelligent, real-world autonomous systems integrating hardware sensors, AI compute, perception software, and advanced modeling to enable sense-think-act-learn cycles in machines.Software-attached bookings: Sensor sales in which proprietary software or recurring licensing is bundled with the hardware; a key strategic focus to increase software-derived revenue share.Blue City: Ouster's smart infrastructure solution leveraging LiDAR and AI for real-time analytics and automated signal actuation at traffic intersections and roadways.Gemini: Ouster's physical AI platform for enterprise deployment, integrating LiDAR sensing, AI models, and remote management tools (including Cloud Portal and Event Server features).L4 and Kronos chips: Next-generation custom silicon designed by Ouster to support high-performance, scalable, and reliable digital LiDAR sensors for diverse autonomous applications.Adjusted EBITDA: Earnings before interest, taxes, depreciation, amortization, and other adjustments, as defined and reconciled by Ouster in its reported financial results.SDK (Software Development Kit): A collection of software tools and libraries enabling integration and development of applications leveraging Ouster's hardware and AI capabilities.StereoLabs: An AI camera vision and perception company acquired by Ouster, complementing its existing lidar portfolio to deliver unified sensing and perception solutions.
Full Conference Call Transcript Chen Geng: Thank you, operator, and good afternoon, everyone.
Thank you for joining our fourth quarter 2025 earnings call.
Today on the call, we have Chief Executive Officer, Angus Pacala, and Chief Financial Officer, Kenneth P.
As a reminder, after the market closed today, Ouster, Inc.
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, Inc.
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 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, and our revenue guidance for 2026.
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 fourth quarter 2025 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 the assumptions as of today and, other than as may be required by law, Ouster, Inc.
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 will now turn the call over to Angus.
Angus Pacala: Hello, everyone, and thank you for joining.
I will start with a brief recap of the quarter and review of our strategic priorities for 2025.
Ken will cover our financial results in more detail before I close with our goals for 2026.
The fourth quarter capped off a year of exceptional execution for Ouster, Inc.
Our fourth quarter revenue of $62 million, including $41 million of product revenue, reflects the continued demand we see across our LiDAR business and represents our twelfth straight quarter of product revenue growth.
GAAP gross margin was strong at 60%.
We set a new quarterly record with over 8,100 sensors shipped, bringing physical AI to life across multiple applications including warehouse automation, robotaxis, and mapping.
Our strong results are a testament to disciplined execution across our business.
This is supported by durable global growth drivers for increasing automation, efficiency, and safety.
These secular themes strengthened during 2025, a year where we set and executed on three strategic priorities: scaling the software-attached business, transforming the product portfolio, and executing towards profitability.
First, we committed to scaling our software-attached business.
Software-attached bookings more than doubled in 2025 and represented over 15% of our sensors shipped, which is up over 120% year on year.
In addition, I am excited to share that today, our in-house trained AI models are now running 24 hours a day at over 1,200 Gemini and Blue City sites, spanning over 65 million square feet of roadways and facilities around the world.
We are delivering physical AI at enterprise scale.
We drove significant Gemini renewals, including a seven-figure annual license with a leading global technology company, and secured landmark Blue City agreements to accelerate the adoption of AI-powered LiDAR detection across Tennessee, Utah, and New Jersey.
This growth was driven by the increased capabilities of our Gemini and Blue City, validating our continued investments in proprietary AI model training, as well as the expansion of distribution partnerships across nearly the entirety of North America.
Second, we set out to further transform our product portfolio.
In 2025, we introduced powerful new features, unlocked greater performance, and reshaped how our customers integrate, manage, and utilize LiDAR data through a series of major software releases.
We launched four new versions of our SDK, which included revolutionary new features.
This included on-sensor 3D zone monitoring, which is the first time perception logic has been embedded directly into 3D digital LiDAR.
This feature supports collision avoidance warnings, deceleration, and emergency stops and was the result of significant demand from customers.
Many of the world's largest material handling companies are using this as a critical aspect in their collision avoidance technology.
We also released real-time localization, empowering customers to track the position of their assets with centimeter-level accuracy and implement features like geofencing and automatic speed limit enforcement without requiring the installation of expensive and complex infrastructure.
We continue to strategically invest in our proprietary AI model training, leveraging real-world data to iterate, retrain, improve, and deliver increased capabilities to our customers.
Our breakthrough multi-sensor AI model powering Ouster Gemini and Blue City is trained on millions of labeled objects collected from hundreds of sites around the world, spanning diverse environments and weather conditions.
By dramatically improving detection accuracy, efficiency, and long-term object identity persistence, we have unlocked new use cases, allowing us to support large-scale installations of 40 LiDAR sensors at a single site.
We also advanced Blue City features from prototype to real-world deployments with the addition of intelligent signal actuation, which catalyzes Ouster, Inc.
scaling across hundreds of intersections in 2025.
Within Ouster Gemini, we released new features like Cloud Portal and Event Server.
Gemini Cloud Portal allows customers to securely configure and manage deployments from any location, while Gemini Event Server creates a no-code environment that enables customers to build custom logic for applications like intrusion detection and zone occupancy without requiring heavy engineering.
Finally, we made major progress in validating our next generation L4 and Kronos custom silicon, as we look to redefine what is possible with digital LiDAR.
Our digital LiDAR roadmap continues to drive dramatic improvements in performance and reliability, reinforcing the core advantages of our architecture.
Importantly, these breakthrough chips will power our next generation sensors and represent a major step forward in capability, scalability, and value for our customers.
These advancements are expected to more than double our current addressable market for LiDAR, unlocking new applications and expanding opportunities across each of our industry verticals.
We are excited to share much more on this front soon.
Our execution in 2025 aligned with our long-term financial framework, progressing us further on our path towards profitability.
Our core business delivered on all target metrics for 2025.
Excluding the benefit of royalties, full-year product revenue increased by 32% year over year, and we successfully navigated a volatile macroeconomic environment and the headwind of tariffs to deliver 41% gross margin.
We maintained our operating expense discipline even as we absorbed the operational and compliance requirements of a growing global business.
We continue to have one of the strongest balance sheets in the industry, demonstrating our ability to achieve both high growth and financial prudence.
I will now turn the call over to Ken to discuss our financial results in detail.
Gianella: Thank you, Angus, and hello, everyone.
As Angus mentioned, we closed fiscal 2025 with a strong finish, underscoring our continued operational execution.
Our results demonstrate the resilience of our operating model and the disciplined financial management across the business as we continue to perform within our long-term financial framework, keeping us firmly on the path to profitability.
To the fourth quarter financial performance, operating results were strong: revenue of $62 million, GAAP gross margin of 60%, and shipments of over 8,100 sensors.
During the quarter, we recorded royalties of approximately $21 million that were primarily one-time and related to long-term IP license contracts.
These royalties demonstrate the strength of our IP portfolio.
For 2026, total royalty revenue is expected to be less than $5 million, with the majority of that amount expected to be recognized in the back half of the year.
Looking ahead, we expect additional royalty revenue to be relatively de minimis, and it will be included in our revenue guidance.
Turning back to our fourth quarter results, absent the impact of royalties, our fourth quarter product revenue was $41 million, representing an increase of 36% compared to the same quarter a year ago.
The industrial vertical was the largest contributor to fourth quarter revenue, followed by robotics and smart infrastructure.
Demand for our Gemini and Blue City solutions remained strong and were important contributors to our quarterly results.
GAAP gross margin of 60% reflected the impact of royalties, continued revenue growth in our digital LiDAR business, and improvements in our operational performance.
Royalties impacted our fourth quarter GAAP gross margin by approximately 20 percentage points.
GAAP operating expenses were $37 million in the fourth quarter, a decrease of 6% from the same quarter last year.
The decline was primarily due to a favorable employment tax refund received during the quarter.
As we continue to focus on our path to profitability, we will remain diligent on managing our operating expenses.
Adjusted EBITDA was a positive $11 million, which reflects the impact of the royalty payments.
Next, our balance sheet continues to be one of the strongest in the industry, ending the quarter with cash, cash equivalents, restricted cash, and short-term investments of $211 million and no debt.
The strength of our balance sheet gives Ouster, Inc.
the strategic and financial flexibility to operate our business.
It is also vitally important to our customers, who rely on Ouster, Inc.
as a key physical AI partner on their long-term autonomy journey.
Turning to our full-year results, we generated revenue of $169 million, of which approximately $23 million was attributable to royalty revenue that were primarily one-time and related to long-term IP license contracts.
This represents growth of 52% year over year, or 32% excluding the impact of royalties.
We shipped over 25,000 sensors, an increase of 48% compared to 2024, with help from record bookings of $177 million, delivering a robust product book-to-bill of 1.2 times in 2025.
GAAP gross margin was 49%, up 13 points year over year.
Royalties contributed eight points of gross margin.
GAAP operating expense was $157 million, up 9% from $145 million in 2024.
This reflects increased investment to support our product roadmap, expenses related to the StereoLabs acquisition, and the implementation of operational and compliance tools that support our growing business.
These expenses were partially offset by proceeds received from a favorable employment tax refund.
Adjusted EBITDA was a loss of $12 million, compared to a loss of $42 million in 2024.
This reflects the benefit of royalty revenue combined with the continued operational improvement of the business.
Now turning to guidance.
Our outlook for 2026: we expect to achieve total revenue between $45 million and $48 million.
This will include approximately seven weeks of revenue from StereoLabs following the close of the transaction on February 4.
Next, I would like to add some color to our long-term financial framework following the acquisition of StereoLabs.
While StereoLabs is currently a small portion of our overall revenue mix, we expect this high-growth, high-margin business to be accretive to our consolidated results and anticipate it will have a positive impact on our long-term financial framework.
With the combined companies, we are reiterating our long-term targets of 30% to 50% annual revenue growth and 35% to 40% GAAP gross margin.
This outlook reflects the continued strong demand from our digital LiDAR products layered with the accretive growth profile of our new vision and compute portfolio.
Our focus remains on driving towards profitability.
By pairing sustained top-line growth, strong margins, and disciplined cost management, we remain firmly on our path to profitability.
Finally, applying the long-term framework, let me give some color to the full year 2026.
Excluding the revenue and gross margin impact of royalties in 2025, we remain confident in the combined Ouster, Inc.
and StereoLabs 2026 revenue and margin profile to be in line with our long-term financial framework when measured against a consolidated pro forma baseline in 2025.
Going forward, we will be reporting revenues on a combined basis.
However, for some additional context, I would note that StereoLabs' historical revenue has tended to be seasonally stronger in the second half of the year, with approximately 60% of the revenue occurring during this period.
Next, turning to GAAP operating expense for 2026, factoring in StereoLabs' operating and integration expenses, we anticipate GAAP operating expense growth at 5% to 8% from our full-year 2025 levels.
We also expect our 2026 quarterly operating expenses to follow a similar quarterly profile as 2025.
This outlook underscores the strength and durability of our digital LiDAR business, which remains firmly on track.
As we scale the combined business, we anticipate growth combined with improved operating leverage provides a clear path to achieving positive operating free cash flow and profitability.
Thank you for your continued interest in Ouster, Inc.
I will now turn the call back to Angus to discuss our goals for 2026.
Angus Pacala: Thank you, Ken.
Our execution on our 2025 goals has been further complemented by our recent acquisition of StereoLabs, a pioneer in AI camera vision and perception solutions.
As we start the year, Ouster, Inc.
now offers physical AI's first unified sensing and perception, combining high-performance digital LiDAR with cameras, AI compute, sensor fusion, perception software, and cutting-edge AI models.
Our customers can harness the precision of LiDAR along with the richness of vision, powered by our combined investments in AI training.
By delivering seamlessly synchronized and calibrated data out of the box, we simplify and accelerate customer development and reduce costs.
StereoLabs also brings deep expertise in foundational AI model training and core perception functions, along with immediate commercial scale, adding top-tier OEMs, Fortune 500 companies, and high-growth technology firms to our customer base.
This acquisition strategically positions Ouster, Inc.
as the foundational end-to-end sensing and perception platform for physical AI.
Initial feedback from our customer base has been resoundingly positive.
Our expanded portfolio is resonating with the demands of the market, and customers are excited by the strength, support, and operational capacity of the combined company.
For 2026, our roadmap is built on three strategic priorities designed to compound our combined competitive advantages and accelerate our financial performance: one, revolutionize our LiDAR, camera, and AI compute products; two, extend our leadership in physical AI solutions; and three, execute to profitability.
Our first goal for 2026 is clear: to revolutionize our LiDAR, camera, and AI compute products.
This year, we will commercialize the most significant product overhaul in our company's history and release more products than ever before.
Ouster, Inc.
invented digital LiDAR, and we will continue to advance the industry with next generation sensors built on our custom silicon.
This powerful digital LiDAR roadmap is built on silicon architecture that drives exponential improvements that compound over time, delivering industry-leading performance, reliability, and scalability.
Building on StereoLabs' legacy as a pioneer in AI vision, we will continue to develop leading-edge products designed to support customers building the future of physical AI.
Our next generation AI compute will support real-time reasoning at the edge for larger workloads that were previously too slow to run in dynamic real-world environments.
We will also bring expanded connectivity features to our industry-leading camera portfolio to align with the market demands of our customers.
Simultaneously, we will further unify our products to support plug-and-play sensor fusion.
With the industry's first unified sensing and perception platform for physical AI, we are creating a one-stop shop for customers to deploy tightly integrated perception solutions out of the box.
These product launches are expected to bring unprecedented new features to our portfolio, help us gain market share in billion-dollar brownfield markets, and support new use cases across industrial, robotics, automotive, and smart infrastructure.
2026 marks the beginning of a new era for our product portfolio: the broadest, most capable,....
