29 Mar 2023
Lidar firm eliminates 200 jobs as part of effort to reduce costs dramatically following recent merger with Velodyne.
Ouster, the San Francisco-based lidar startup, has posted an operating loss of $145 million on sales revenues of $41 million for its fiscal year 2022, with the company stressing the need for significant cost-cutting measures following its recent merger with Velodyne.
Covering the closing quarter of 2022, before that merger was completed, the latest financial results highlight the challenges currently facing many of the lidar startups that have raised money through special-purpose acquisition company (SPAC) listings on US stock markets.
At $41 million, Ouster’s sales in 2022 were up 22 per cent on the figure it posted in 2021, but over the same period operating losses ballooned from just under $100 million to $145 million - with research and development costs nearly doubling.
“Across its target markets in 2022, Ouster saw the most traction in the industrial and robotics verticals, with 35 per cent and 34 per cent of sensors shipped in 2022, respectively, due to continued demand for automation across the supply chain,” stated the firm in its release, adding that automotive applications accounted for just over one-fifth of sales in the year.
200 jobs cut
Discussing the latest developments in an investor conference call, Ouster’s CEO Angus Pacala added that the firm was now focused on “immediate initiatives” to cut costs - partly through out-sourcing production of Velodyne’s components to Fabrinet’s Thailand operations, something that had been initiated prior to the merger.
“We have accelerated these efforts as a result of the merger and are on track to complete the transition of all maintained product lines this year,” Pacala said.
Other measures under way include integration of the two firms’ sales and engineering teams, and streamlining administrative and IT operations. “Following the integration, we expect to retain approximately 350 employees,” added the CEO.
According to new CFO Mark Weinswig, the cost-cutting efforts completed so far are expected to reduce annual run-rate spending by $50 million, with a further $25 million reduction anticipated by the end of this year.
“These implemented cost reductions primarily focused on duplicative research and development programs, general and administrative activities, and the creation of a joint operations team,” he said.
“These activities include a headcount reduction of approximately 200 employees along with the closing of Velodyne’s facility in India.”
Aeva sales hit by ‘contract modification’
Looking ahead, the Ouster executives pointed to order intake of $70 million in 2022 as a strong positive sign of future business, and said that they expect the firm to post sales of around $16 million for the opening quarter of this year - up from $11 million in the December quarter, and reflecting the addition of Velodyne revenues since the mid-February merger.
They also reported strong customer feedback following the release of the firm’s “REV7” sensors last October. Based on a system-on-chip design featuring back-side illumination, REV7 is said to offer double the range of previous sensors, reaching 200 meters for 10 per cent reflectivity objects.
• Meanwhile, rival lidar firm Aeva - another to complete a SPAC listing in recent years - has posted an operating loss of $152 million on sales of just $4.2 million in 2022.
Reporting the latest developments shortly before Ouster, Aeva’s CEO Soroush Salehian said that fourth-quarter sales had almost been wiped out by a “contract modification” costing the firm $3.9 million.
Unlike Ouster, Aeva offers more complex frequency-modulated continuous-wave (FMCW) lidar technology, which is able to measure both the distance and velocity of objects using a frequency-chirped laser source.
On the plus side, Salehian said that the company’s technology had now been selected by a top-ten global auto manufacturer for its vehicle development program - with a production ramp anticipated in two years’ time.
“We are starting to deploy Aeva 4D lidar as the long-range lidar on this OEM on-road development fleet, where a new dimension of velocity will be used to define the specifications for production vehicles with a targeted 2025 start of production,” the CEO told investors.
“We have been engaged for some time with this OEM and now they can start to incorporate Aeva's unique velocity data and the perception software to achieve their high standards for safety.”