OUST Q3 2026 earnings call transcript, November 3, 2026

Hello, and welcome to OUSTR's third quarter 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After today's presentation and remarks, there will be an opportunity to ask questions. If you would like to ask a question during this time, simply press star followed by the number 11 on your telephone keypad. If you would like to withdraw your question, please press star 11 again. The call today is being recorded, and a replay of the call will be available on the OUSTR Investor Relations website an hour after the completion of this call. I'd now like to turn the conference over to Chen Gung, Senior Vice President of Strategic Finance and Treasurer. Please go ahead.

Good afternoon, everyone. Thank you for joining OUSTR's third quarter 2026 earnings call. On today's call, we have Chief Executive Officer Angus. Pakala and Chief Financial Officer Ken Gianella. After the market closed today, OUSTR issued its financial news release and Form 8K, which are available on our Investor Relations website. A webcast replay of today's call will also be available on our website. During 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 product's capabilities and performance, and our revenue guidance for the fourth 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 third 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 call,

we will discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in the financial results release. I would now like to turn the call over to Angus. Hello, everyone, and thank you for joining us today. I'll start with a brief recap of the quarter and an update on our strategic priorities before Ken covers our financial results in more detail. We delivered a strong third quarter with $59 million in revenue and

over 27,000 sensors shipped, both records for the company. We delivered over 7,000 LIDAR sensors and 20,000 cameras, cementing our evolution into the comprehensive sensing and perception platform that meets the diverse global demands of physical AI. The industrial vertical led third quarter revenue, followed by robotics, supporting customers in warehouse automation, defense, construction, and mapping. Stereo Labs cameras had a record quarter of shipments unlocked by our investments in production capacity to meet the surging growth in the robotics sector. As a leader in physical AI, OUSTR is enabling our customers to sense, think, act, and learn on their autonomy journey. This quarter is a great proof point of the progress we have made across all three of our key strategic priorities. Revolutionizing our LiDAR camera and AI compute products, extending our leadership in physical AI, AI solutions, and executing towards profitability. Starting off with our product portfolio, Rev8 has received exceptional market reception. As the world's first native color LiDAR, Rev8 is a paradigm shift that is proving to be an undeniable competitive differentiator. Hundreds of customers have already chosen Rev8 for their mission-critical applications, and they have overwhelmingly adopted native color. Customers have already chosen Rev8 for their mission-critical applications, and they have already chosen Rev8 for their mission.

Our consumer demand has been robust while we ramp initial production. We have many thousands of Rev8 sensors in our backlog, and we expect our delivery cadence to accelerate into 2027. Our expanded partnership with Benchmark is expected to support an annual LiDAR capacity of over 100,000 units by the end of 2027. We are investing in retooled, high-volume production lines, increasing precision automation, scaling testing, and accelerating We are investing in retooled, high-volume production lines, increasing precision automation, and accelerating. Inventory purchases to meet the exceptional demand for Rev8. Our customers are selecting Rev8 because no other sensor matches its native color, increased accuracy, and extreme ruggedness. Whether navigating through smoke and dust or maneuvering through complex cluttered warehouses, OUSTR delivers the precision autonomy and enhanced obstacle detection required by operators around the world. Let me now share a few Rev. 8 proof points. In industrials, we recently announced an expansion of our multi-year strategic partnership with Forterra, the leader in military eponymous ground mission systems. OUSTR provides 360-degree situational awareness with a single sensor and industry-leading reliability in the world's most challenging environments. Following the successful deployment of Rev. 7 sensors in Ukraine, Forterra plans to integrate Rev. 8

native color LIDAR into its future defense vehicles. Next, GUS Automation, a subsidiary of John Deere, plans to integrate our Rev. 8 sensors into its next generation autonomous orchard machine fleet. Rev. 8 delivers the precision obstacle detection and native color perception needed to scale safe autonomous agriculture worldwide. In robotics, the superior performance of Rev. 8 is establishing a new benchmark in the aerial mapping and autonomous Rev. 8. is establishing a new benchmark in the world's most challenging environment. We announced a strategic partnership with Seneca to integrate the Rev. 8 into autonomous wildfire response drones. Rev. 8 is built to operate from minus 40 to plus 85 degrees Celsius with industry-leading durability, unique capabilities that enable Seneca to navigate smoke, dust, and severe weather during critical cargo and firefighting operations. In addition, GeoQ, a premier provider of geospatial mapping, is integrating our NDAA and BABA-compliant Rev8 sensors into its TrueView drone payloads for utility and infrastructure mapping. Turning to compute, we recently expanded our AI compute portfolio with the launch of the ZBOX2 series, our next generation of industrial-edge AI supercomputers, engineered specifically to power physical AI. This series spans both NVIDIA Jet... ...platforms, the Jetson Oren for neural depth, tracking, and multi-camera fusion in real-time, and the Jetson Thor for advanced perception and generative AI models. With support for up to eight sensors, high-speed connectivity, and multi-sensor fusion, Alster is providing customers with a scalable, production-ready compute solution that eliminates extra adapters or custom carrier boards. We are also directly addressing some of our customers' largest...

...operational hurdles, compute load, memory bandwidth, and system cost. Through an updated ZSDK and expanded native support for NVIDIA Isaac-Ross across our entire Zed camera family, our customers can run high-performance spatial AI models at the edge with fewer processing bottlenecks, lowering latency and improving compute efficiency. Alster is a one-stop shop for physical AI. With our latest software and ready-to-deploy Vision AI kit... Alster delivers the platform and performance the world's leading roboticists rely on to accelerate their deployment of physical AI from prototype to the real world. Turning to our physical AI solutions, both Alster Gemini, our AI-enabled perception software, and BlueCity, our turnkey intelligent transportation platform, have made big strides this year. We are unlocking unprecedented scale with Alster Gemini through our redesign of our... ...perception pipeline. By doubling edge processing speeds, Gemini can now seamlessly fuse up to 100 LiDAR sensors on a single server, more than double our prior capacity. This expanded capability is winning enterprise Gemini deployments that require the tracking of thousands of objects across massive city-sized environments in real time. Leading DOTs across North America are rapidly adopting BlueCity advanced detection, powered by... by delivering continuous 360-degree detection of road users up to 500 feet across lighting extremes and severe weather conditions, ALSTER is providing cities with unmatched situational awareness. Advanced detection has led to several million-dollar BlueCity wins in Utah, Washington, Florida, and Ontario, Canada. In addition, we recently won an expansion with a leading DOT.

Securing a multi-million-dollar contract to expand our BlueCity solution across 100 additional intersections. Advanced detection is enabling our customer to consolidate continuous point cloud data across multiple intersections into a single unified corridor view, and unlocking advanced data for improved traffic flow and safety. Complementing these leaps in performance are improvements in our machine learning iteration cycle. By optimizing data labeling, training, and verification, we have compressed our end-to-end model training cycle by over 50% year-to-date. OUSTR is iterating faster to more rapidly deploy improved perception software across our entire customer base, extending our lead as the foundational partner in physical AI to sense, think, act, and learn. Finally, our strong results align with our long-term financial framework. We are making strategic investments in product and that we have. innovation, manufacturing capacity, and customer success as we scale toward profitability. With that, let me now turn the call over to Ken, who will provide more context on our third-quarter financial results and full-year 2026 outlook.

Thank you, Angus, and good afternoon, everyone. We delivered another record quarter of revenue while making significant progress on our strategic growth initiatives. By expanding our presence in high-growth robotics You're welcome. We're welcome.

我们必须有关的观点 All right. and physical AI through stereo labs increasing our inventory and manufacturing capacity and driving continuous innovation in our solutions now turning to our third quarter financial performance operating results were again strong with revenue of fifty nine million dollars this represents an increase of approximately fifty percent compared with the third quarter last year we progress we progress with five donors to determine whether에게更好幻大增itto嗯结den distributed丶络度感必须有关的观点 revenue included approximately three million of royalty revenues during the quarter industrials let our revenue mix followed by robotics as the addition of stereo labs continues to strengthen our market position in robotics manipulation humanoids and mobile industrial applications our stereo labs business had a breakout quarter shipping over twenty thousand cameras and more than doubling their product production quarter on quarter our third quarter product mix reflects the operational flexibility provided by our unified sensor platform and the ramp of our Rev 8 capacity as Angus mentioned we are extremely pleased with Rev 8 customer commitment since the launch in May in Q3 customer demand began to shift towards our Rev 8 product we expect production volumes of Rev 8 to continue to increase in the fourth quarter and grow throughout FY27 gap gross margin was 43 percent essentially flat compared with the same quarter last year sequentially our gross margin was six points lower primarily due to a one-time five million dollar tariff refund from the prior period gap operating expense was 45 million dollars an increase of approximately nine

percent from the third quarter last year we continue to anticipate full year 2026 operating expenses to be between five percent and eight percent higher year-over-year excluding the impact of favorable employment tax refund and one-time acquisition costs the increase in our 2026 operating expense includes approximately 11 months of stereo labs acquisition investments and our product roadmap and the expansion of our global go-to-market capabilities adjusted EBITDA was a loss of three million dollars a sixty percent year-over-year improvement compared with a loss of eight million in Q3 of last year we are pleased with our progress and we remain committed to disciplined investment for growth as we continue to scale towards profitability turning to our balance sheet we ended the quarter with the product approximately 421 million in cash balances which includes the net proceeds of approximately 191 million from the common stock offering we completed in early July cash usage for the quarter reflects planned investment in expanding manufacturing capacity inventory and working capital in the continued integration and scaling of stereo labs our liquidity position remains one of the which is true strongest in the industry and provides us with the strategic and financial flexibility to execute our current long-term model as we scale towards profitability we do not expect to need additional capital to achieve our operating objectives now turning to our Q4 revenue guidance total revenue for the fourth quarter of 2026 is expected to be in the range of 61 million to 64 million

and including an estimated 3 million of royalties for 2026 year-over-year revenue growth at the midpoint of guidance is expected to be approximately 48% excluding royalties in closing our outlook reflects sustained strength in our unified product portfolio that positions Alistair uniquely within the rapidly growing physical AI market we remain confident we remain confident in the strength of our customer demand the continued innovation of our products and solutions and our ability to execute against our strategic and operational objectives I'll now turn the call back to Angus for his closing remarks the third quarter marked the 15th straight quarter of product revenue growth delivering sense think act and learn capabilities the world's leading physical AI companies the standout performance of stereo labs and the

the world's leading physical AI companies the world's leading physical AI companies Overwhelming demand for rev-8 our early proof points that our vision of a unified sensing and perception platform is exactly what the market demands From farms and distribution centers to last-mile delivery the world's most innovative companies are choosing ouster We provide the complete stack of lidar vision compute and software Required to bring physical AI into the real world with that. I'd like to open up the call for Q&A

Thank you at this time. We will conduct the question-and-answer session as a reminder to ask a question You will need to press star 1 1 on your telephone and wait for your name to be announced to withdraw your question

Please press star 1 1 again. Please stand by our first question comes from Andres Shepard from Kander Fitzgerald. Please go ahead

Yeah, thanks for the question Andres. Well, I guess my answer to your question is yes, that was a good summary of many of the applications. that are exploding right now in robotics, autonomous vehicles. I mean, the thesis here is everything that moves is becoming robotic and autonomous. And certainly there are form factors that are exploding right now, like humanoids and drones. And we have a really unique set of offerings to bring to the table for both those. And, you know, humanoids, camera-centric platform, but need these powerful AI computers embedded drones. Ones are more of a LiDAR-centric platform when we're talking about surveying, kind of precision surveying applications where the REV-8 and the OS and MACs are incredibly good fits. And then that just extends into industrials. So a ton of activity in robotics. And we really are a one-stop shop for anyone that's trying to build the visual cortex of all those applications. I would note that smart infrastructure is another growth area for us. We're seeing a huge appetite for our Blue City and our Gemini offerings. And again, these are the same fundamental building blocks since Think, Act, and Learn. It just turns out that these aren't moving vehicles. They're fixed infrastructure that still needs the same type of physical intelligence. As to the question on the DoD, I think you're referring to NDAA-compliant offerings from Alistair.

Previously, last year, we also had a blue UAS certification for Rev 7. We're doing great on that front. These are really targeted at drone payloads for surveying applications. We're doing great in that space. Rev 8 is a perfect fit for the drone surveying market. We highlighted a couple customers there. I think there's more to come. Obviously, we want to get certifications like what we've gotten on Rev 7, on Rev 8. So there's stuff. There's plenty more to come there. Wonderful. Very helpful. Appreciate all that detail. Maybe as a quick follow-up, can you help remind us how big of a moat, would you say, is the qualification on NVIDIA's platform? What should investors be aware of here? And then maybe lastly, can you remind us what are the key catalysts that we should be aware of maybe in the near or medium term? Thank you. Yeah. In terms of the NVIDIA platform, there are a couple ways that we work and partner with NVIDIA today. Now, one of the things we mentioned on the call is the release of an expanded set of AI computers that are based on NVIDIA 4 chipsets. So there's a moat there just in terms of the investment that we've put into that hardware and the software that runs on that hardware seamlessly. So the unified sensing and perception platform that spans cameras, LIDARs, interfacing with our own purpose-built AI computers using NVIDIA chipsets. Big moat there. We also have a lot of work that we've announced previously with the NVIDIA automotive and Jetson ecosystems. So many different touch places there. I've said before, if NVIDIA is the brain of a robot, then we are the eyes and the visual cortex. And so I think that's still holding.

That's true. Wonderful. Thank you so much. Congrats again. We'll pass it on. Thank you. Thank you. Our next question comes from Colin Rush from Oppenheimer & Co. Please go ahead. Thanks so much, guys. You know, can you talk a little bit about some of the unique characteristics of Rev8 and what you can do from a software perspective that are really enabling?

It's got incredible range and resolution with the new OS1 Max. It's got this RGB capability. We actually are, it's got the front cloud quality itself with accuracy and precision is best in class in many cases. Yeah, the ruggedization, the thermal profile. So it's just kind of, if you made a spider plot of it, it would be maxed out on almost all of the features that you would care about in a LIDAR. And to do that all in one platform just means that it's useful on a John. You know, a John Deere Gus automation vehicle, it's also useful in a drone, and it's useful in a Blue City traffic infrastructure installation. So, yeah, when you do it all, it's useful everywhere. Okay, thanks. And, you know, you guys have maintained, you know, a very strict level of financial discipline here as you've grown revenue and maintained cost structure here. Can you talk a little bit about the potential to drive? Material cost out of the sensors and start driving some incremental gross margin, and how you might use some of that cost savings to expand the market? Well, I can take that first. I mean, I think there's always opportunities to drive cost out of the LiDAR technology. I mean, LiDAR is still not a mature technology from my perspective, and we expect to be marching down a cost curve for many years to come. So that is ongoing activity. It happens each and every day at Ouster. There's also a major volume component to this. You know, our volumes, LiDAR volumes, go up every year. We expect them to continue to go up every year. We're talking about 100,000 unit type of capacity at the end of 2027. Volume is still a big lever. So no question, we're really focused on that. And then, you know, just the backdrop here is the whole LiDAR technology is built on a Moore's Law curve.

Of silicon at the very fundamental level. So another way that we drive out costs is by innovating at the chip level and packing more capability into our custom silicon and saving that cost elsewhere in the system as a result. So lots of levers. In terms of gross margins, you know, we've really committed to our long term financial framework and the 35 to 40 percent gross margin is still where we're committed to for the time being. Obviously, we've come in a little. Above those for a while now. But still, that's where we see the future for now. From an investment standpoint, it's definitely taking and looking to beat that top end of the margins and then investing that. Right now, it's about capacity for us, Colin. It's how can we make sure that we can ramp capacity. We did a great job with Stereo Labs. You saw that in spades this quarter, taking them the last two quarters and building out capacity for them to hit these numbers. We're doing the same thing with Rev. 8 this quarter and next quarter and ramping that into FY27. So in the near term, the more capacity we get, we can lower overall per unit cost and start getting leverage from the rest of the business. So the goal is to continue to drive leverage both from our operational standpoint, but also from our OPEX. Thanks so much, guys.

Thank you. Our next question comes from Suji da Silva from Ross Capital. Please go ahead. Hi, Angus. Hi, Ken. Congratulations on the progress here. Maybe, Angus, you could talk about the robotics market and what's the framework for your content opportunity as various robot form factors come out. I know it's primarily camera today. Maybe you can help us kind of think about where that can go.

Yeah, it's a good question because there's a lot of diversity in the way that, you know, robotics companies are designing these next generation systems. But right now, I mean, the AI compute, we focused a product roadmap on common building blocks or common technology sets, I would say. Cameras, LiDAR, compute, and then focused on building a portfolio. Or a family within each one of those technology sets that absorbs the diversity of approach for each one of our customers. So if you look at one humanoid robot versus another, you know, there are some humanoid robots that have their primary sensing in their chest versus in the head. Most of them have in the head, but that's a pretty good example of how different some companies are. Some companies put a palm-mounted camera. in the palm of the robot. Others put a wrist-mounted stereo camera for doing grasping and manipulation. So there's a wide diversity of, even in cameras, what types of cameras, mono, stereo, where they go on the robot, and that dictates the resolution, the size, the power draw, and the cost of the cameras that go into something like a humanoid. Our goal is to sell every flavor of camera that is practical or So that's what we're going to do. What is going into these robots and to do it in a competitive way so that when a customer has choice, they're actually coming back to Ouster for all those different flavors. Same is true on LiDAR. That's why we have announced many different SKUs of the Rev8. And it's also true on the AI compute. There's potentially a one-size-fits-all technology, these powerful edge GPU devices, but there's not a one-size-fits-all chipset because

some things are small drones, other things are big industrial vehicles, and you need a family of products. So we're very much, you know, our product roadmap is built on these families of products, but it's still three technologies, AI compute cameras and LiDAR. That's good insight in your strategy there. And my other question is on the, you talked about an application that has 100 LiDAR, 1,000 objects you're trying to track, maybe an urban environment. It sounds intriguing. I really hadn't heard of these. Sort of large content at once opportunities. I'd be curious if you could frame that of those niche applications, or could that be sort of a unit kind of accelerator for you guys? This is definitely not a niche use case. I mean, we have been building and deploying Gemini now for almost five years. I think four years at this point. And, you know, we're achieving a level of maturity with some of our long-term. Customers that, you know, is now scaling to 100 LIDAR sites, thousands of objects being tracked in real time. But it's also maturity on the breadth of deployment. So we have some customers operating, you know, over 500 sites in North America right now. So the scale on the Gemini front, you know, this is a part, again, from Blue City. Blue City is a whole other story of success. But, yeah, we're seeing a lot of really positive trends. And the uptick of physical AI technology for fixed infrastructure.

Okay. Thanks, Angus.

Thank you. Our next question comes from Kevin Cassidy from Rosenblatt Securities. Please go ahead.

Our next question comes from Tim Savajo from Northland Capital Markets. Please go ahead.

And the company's, you know, near future? Absolutely. We grow our unit volumes every year and we expect to continue to do so. Yeah, and you've heard the diversity that he talked about on the earlier question. You know, we are really proud of ourselves on ramping stereo labs and what we could ship. They have a very robust portfolio. Being able to ship at, you know, the increased volumes that they did. Quarter over quarter was a big accomplishment. That's through all of our manufacturing partners. But then the LIDAR side of it is we grow our portfolio. We're still shipping some REV6 and REV7s. So there is going to be a continuation of all of our portfolio, you know, on this good, better, best approach to the marketplace, being able to offer the diversity of product and pricing to meet the market demands. You need that capacity.

Okay, great. Appreciate that. And you mentioned Stereo Labs, obviously a big uptick here in the quarter. I know you'd had a target for calendar 26 revenue that you might have already hit. I wonder if you expect that type of elevated level of business to continue in the Q4 at Stereo Labs. What do you have a an increased view of where you might be able to come in this year in terms of revenue? Yeah, but I think we're we gave guidance for the quarter for the company 61 to 64 million in expected revenue in Q4. And I think I'm incredibly happy with the performance from Stereo Labs. I do think that there's, you know, just a fundamental shift in the demand for these types of camera products and Stereo Labs. Stereo Labs is a leading brand in stereo camera and monocular camera products for these industries. So, there's definitely a step change in demand versus if you look back, you know, a year or two in what the company was doing. So, that holds. But when you get into the details of the ins and outs of each quarter, I think we're not going to go there.

Okay. Thanks very much.

Thank you. Our next question comes from Casey Ryan from Amerx. Please go ahead.

we get that kind of thing all the time. And it's, you know, we know why, because we put in the years of effort to make these things ultra reliable.

Okay. That's great to hear. And then, you know, would that sort of be fair to sort of assign that to Stereolab, that sort of trait, that sort of Alistair trait to those sensors as well? Yeah, I think that's one of the, you know, one of the places where there's synergy. We have a lot of learning in those kind of use cases, and we're bringing that to bear into their engineering road. map. You know, it'll trickle into everything that we do with them for the future. Okay. All right. Terrific. And then on Red 8, you know, I think there's a lot of excitement about the capabilities. Sort of globally, at least from our perspective, right, we've sort of bifurcated the sensor market, sort of China and then ROW, sort of ex-China. But can the capabilities that start to let you win, even if there is, you know, some price, you know, sort of a value price difference when customers start to think about how much value is sort of contained in the Rev8 feature set? Yeah, I mean, yes, on the margin, absolutely. And actually, we have a business in China that we maintain. We have some great customers there today. And just anecdote, we were on the podium for the Beijing Robotic Olympics many, many times without sensors. So I think that, but it's important to separate out the automotive industry in China from everything else. You know, we really don't expect to be a player in the Chinese automotive market.

But on in the other verticals, industrials and robotics, especially, you know, we're a player today and I expect to continue to be. And we've proven that we can win head to head. I mean, I'm answering your other question on the margin. Yeah. Head to head, we have no problem going there. Because not only all the attributes that Angus listed earlier, the people were choosing us for the longevity, the ruggedness, you know, the differentiation with what we bring with the colorized LIDAR to bear. You know, we actually get a premium on that for many of our customers because of the technological differentiation. But now you add in that we're getting the volumes and we can be competitive on a margin standpoint, too. So we have no problem taking the Chinese on head to head. And Western markets. OK, good. That's actually a terrific answer. Both pieces are very encouraging. And then the last thing, a little philosophical, but Angus, you did just separate automotive from, say, robotics and humanoids. But from a selling to a customer and a solution sale, do those markets look that different, you know, forever, long term in your. And maybe there's some connection to, like, the vision system software piece of this. But do you start to treat them the same? And like, you know, I'm thinking about Hyundai's Boston Dynamics, they're building humanoids, they're building cars, you know, Tesla's building humanoids, they're building cars. Do those segments always stay separate because of what they want from you? Or do you think of them as being, someday being the same segment, I guess?

I, you know, it's an interesting question. I'm not sure I have. An answer for you, but I would say today the automotive customers are fundamentally different in how they behave. And we have a lot of them today versus everyone else. And I'm not sure that there's going to be much convergence there. There's a hundred years of learnings in auto that maybe, maybe don't all apply to the new industries in robotics. But that said, we have a portfolio that is ready and willing to go meet that automotive segment. We have no problems participating within the robo-taxi segment, especially with the new Rev-8 and the products that we have coming out. We are geared and ready when the automotive industry in the Western world is ready to go tackle that problem. We will be there for it. Okay, great. Well, terrific quarter, terrific outlook, and thanks for taking my questions.

As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by.

If there's no additional questions, operator, we can turn it back. Okay. Sounds good. I am showing no further questions at this time. I would now like to turn it back to Angus for closing remarks.

All right. Well, thank you all for joining the call. We look forward to speaking with you again during our fourth quarter. Have a good day. Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.