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Ouster optimistic as revenues rise

02 Apr 2024

The lidar firm continues to burn through cash but also reported strong bookings; plus updates from AEye and Cepton.

Ouster, the California-based lidar company that merged with rival Velodyne a year ago, has posted sales of $24.4 million for the closing quarter of 2023 - and says that its post-merger cost-cutting efforts are well ahead of schedule.

That and an optimistic outlook for 2024 reflecting strong bookings activity appeared to prompt a sharp increase in the Nasdaq-listed firm’s stock price, which is now trading at its highest valuation since the merger.

Describing 2023 as a “transformative” year, CEO Angus Pacala reported $83 million in annual sales.

Although that was accompanied by a net loss of $374 million when including merger-related writedown costs, he also revealed bookings of $142 million and noted that production costs had been reduced by out-sourcing manufacturing to Thailand.

“We closed large multi-million dollar deals across all four verticals, including production wins by May Mobility and Motional to supply lidar sensors for their autonomous vehicles,” Pacala told an investor conference call.

“We also saw increased demand from mapping, inspection, and warehouse automation customers, who benefit from [our] REV7 [product’s] dramatic improvements in range, precision, and accuracy.”

Path to profitability
Unlike many of its peers in the lidar space, Ouster is targeting deployments across several industrial sectors alongside the emerging opportunities in automotive applications.

“Now with cloud-based software solutions, we are offering even more features, simplifying adoption, and expanding the use case for lidar,” Pacala said.

“We have a proven ability to manufacture at scale with positive gross margins, and have demonstrated a strong track record of growth with record revenue and bookings over the last year. Our REV7 sensors are driving increased demand from material handling, mapping, and robotaxi customers.”

And although the San Francisco firm’s net loss of $39 million in the closing quarter of 2023 was only slightly down on the same period in 2022, Ouster’s executive team says that its cash burn rate has halved since the start of last year.

They are targeting annual revenue growth in the 30-50 per cent range while maintaining operating expenses at or below current levels. “We expect 2024 results to show meaningful progress against this framework, putting Ouster on a path to profitability,” Pacala announced, adding that first-quarter sales would likely be just over $25 million.

Following that update, Ouster’s stock price rallied for three successive days - rising from $5 to close at $9.82 on April 1, equivalent to a market capitalization of around $400 million.

AEye of the storm
Meanwhile, recent results at two of Ouster’s Silicon Valley rivals indicate the ongoing challenges in the industry.

AEye, which has built its business around long-range sensors using 1550 nm lasers, primarily for automotive applications, reported annual sales of only $1.5 million in 2023 - down from $3.7 million in 2022 - accompanied by a slight decline in operating losses to $88 million.

On the plus side, the firm also said it had signed a letter of intent with a top-ranking provider of advanced driver assistance system (ADAS) sensors.

“[This] marks the beginning of a new relationship as part of our capital-light, automotive-first strategy,” said CEO Matt Fisch. “We are also excited to unveil Apollo, the first member of our 4Sight Flex product family that delivers ultra-long-range performance in an incredibly compact form factor.”

But AEye’s CFO Conor Tierney warned: “The next one to two years will be a challenging time for the [lidar] industry given the scarcity of capital and resources needed to bridge to commercialization.”

AEye’s plan is to weather that storm with its capital-light business model, and the team expects to burn through between $20 million and $25 million of cash in 2024.

Cepton ponders Koito offer
Over at San Jose-based Cepton, CEO Jun Pei and his team are still evaluating an offer to acquire the startup from long-term partner and shareholder Koito Manufacturing, a Japanese provider of automotive lighting.

That offer came shortly after the cancellation of an ADAS project involving Koito and General Motors that had previously been expected to move into series production.

“On December 11, 2023, Koito informed us that GM has decided to re-scope its ADAS product offerings,” reported AEye in its annual report filing with the US Securities & Exchange Commission (SEC).

As a result, all outstanding purchase orders from Koito to AEye that relate to the series production award have been cancelled. The same SEC filing added that AEye and Koito had been informed about a new series production effort, although details are yet to be finalized.

The firm’s latest figures show that Cepton posted an operating loss of nearly $51 million in 2023, as annual sales increased more than 75 per cent year-on-year, to $13.1 million.

CEO Pei also said that the recent decision by the US Department of Defense to include rival Hesai Technology on its list of “Chinese military companies” - a move disputed vociferously by Hesai - represented a significant opportunity for Cepton and other US-based lidar providers.

“This development has prompted many US corporations to reassess their supply chain strategies and partnerships, aiming to mitigate risks associated with compliance, geopolitical tensions, and national security concerns,” he told investors.

LaCroix Precision OpticsABTechTRIOPTICS GmbHHÜBNER PhotonicsBerkeley Nucleonics CorporationCHROMA TECHNOLOGY CORP.Mad City Labs, Inc.
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