Ouster (OUST) Q4 2025 Earnings Call Transcript

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Date

Monday, Mar. 2, 2026 at 5 p.m. ET

Call participants

• Chief Executive Officer — Angus Pacala
• Chief Financial Officer — Kenneth P. Gianella
• Director of Investor Relations — Chen Geng

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Takeaways

• 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.

Summary

Ouster (NASDAQ:OUST) 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. Gianella. 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. 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 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.

Kenneth P. 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, and most integrated lineup we have ever delivered to further accelerate real-world autonomy across industries.

Our second goal is to extend our leadership in physical AI solutions, including cementing our lead in smart infrastructure and deepening our presence in industrial AI. We have already established a leading position in LiDAR-powered detection for transportation, security, logistics, and crowd analytics with Ouster Blue City and Gemini. In 2026, we are leveraging the partnerships we have built to further expand Blue City across the United States, as well as launch additional pilots in Europe and the Middle East. Following recent wins, we are deploying additional Gemini pilots for perimeter security in 2026 to tap into an existing multibillion-dollar security market.

We are also aggressively targeting the industrial vertical, where we see a broad swath of opportunities that can quickly realize the benefits of the StereoLabs acquisition. StereoLabs is a perfect complement to augment Ouster, Inc.'s perception roadmap to meet physical AI's increasing demand for sophisticated multisensor fusion. By merging our proprietary AI models with StereoLabs' vision capabilities, we are delivering the specialized perception logic and application-specific software required to revolutionize safety and efficiency across the global supply chain. Finally, we will continue our operational execution as we drive towards profitability. Through a growing addressable market served by our expanded portfolio, disciplined cost management, and clear operational priorities, we have a line of sight to deliver on our long-term financial framework.

The strength of our digital LiDAR business combined with the acquisition of StereoLabs positions Ouster, Inc. as the foundational sensing and perception platform for physical AI. By expanding our capabilities across the entire stack, from sensors and software to specialized applications and AI modeling, we will continue to drive our business on a path of sustainable growth. We are uniquely equipped to accelerate customer development solutions that sense, think, act, and learn in the physical world. The era of physical AI is here, and Ouster, Inc. is powering it. With that, I would like to now open up the call for Q&A.

Chen Geng: Thank you.

Operator: As a reminder, to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Please stand by while we complete the Q&A roster. One moment for our first question. Our first question will come from the line of Colin William Rusch from Oppenheimer.

Colin William Rusch: Thanks so much, and I appreciate all the detail on the perception platform into the software side. Part of what I am interested in here is really looking at how you can quantify the pace of learning with those systems, obviously with all these sensors deployed at various places, both on traffic lights as well as some of the perimeter sites. I am just curious how quickly you can actually optimize those systems and really monetize some of that efficiency.

Angus Pacala: Thanks for the question, Colin. This is a great point. So the idea of sense, think, act, learn is really a virtuous cycle of improvement and iterative development that has been embraced by any company that is doing cutting-edge AI development. You really have to iterate to your solution because of the massive amounts of data collection and retraining that are required to achieve cutting-edge, safety-critical, capable physical AI in real-world deployments.

I can speak from experience now, having over 1,200 sites deployed with this technology over the last couple of years across Gemini and Blue City deployments, that we see the pace of improvement accelerating over these last couple of years, simply by investing in the machine that builds the machine. That iterative cycle of sense, think, act, and learn—collecting data from the field, annotating it, retraining, and building new insight into the capabilities of our system—it is an absolute acceleration. I think that you can measure it in how quickly you can deploy new versions of the product out to the field.

We probably have another order of magnitude of iteration speed that we can still build into this set of products, specifically Gemini and Blue City. Now the opportunity is both to continue that iterative speed of development on those products, but also to bring that iteration to our industrial AI and broader ecosystem. That is where the StereoLabs acquisition comes in—the ability to provide autonomous intelligent systems that are iterating very rapidly based on our core investments in machine-learning training. So an order of magnitude at least to go and a brand-new green opportunity in industrial AI to bring exactly that mentality to that product set.

Colin William Rusch: That is super helpful. I just want to get a sense of the trend lines in terms of customer engagement in the defense sector. Obviously, you went through the Blue UAS approval last year, and it is pretty topical now in terms of thinking about automated warfare. I just want to get a sense of how those engagements have trended over the last year or so and how quickly we might start to see a real point on some of the revenue growth that seems like it is pretty available to you here.

Angus Pacala: I think here, there is a lot of interest in automation on the battlefield, but there is a big difference between what is happening today in Ukraine, which is robotics but still human-controlled, remote-operated vehicles, and fully autonomous systems. Actually, there is a really wide gap. The sphere where we play—fully automated systems—is still in the research and development phase, whether it is in defense or just looking across our broader swath of customers, whereas what is fielded on the battlefield today is glorified remote-operated vehicles with increasing intelligence, but still they are remote-operated vehicles.

I think it is going to be a number of more years before there is a significant shift in that composition, just given the development cycles in defense. They roughly resemble the development cycles that happen in the automotive industry, for instance. It is more like that versus what we just talked about with rapid iteration in something like Gemini or Blue City. So an important industry. It is one that Ouster, Inc. definitely plays in, and we have some great evidence of that, things like the Blue UAS certification for drone payloads.

But there is a big divide between what exists today and the automation that is under development, and it will be here in a couple more years for sure.

Operator: One moment for our next question. Next question comes from the line of Kevin Cassidy from Rosenblatt Securities.

Kevin Cassidy: Yes. Thanks for taking my question. Congratulations on the great year. As you are looking at your backlog and looking out to 2026, which one of the industries that you service do you think is going to grow the fastest?

Angus Pacala: That is a great question, Kevin. I think that I have been very bullish on smart infrastructure because of the full solutions that we have been bringing to the table for the past year. I think I said at the beginning of 2025 that given all the investment we have made into Gemini and Blue City—solutions for traffic management, for security, for yard logistics—I expected smart infrastructure to start to play a much more significant role in our revenue composition and our growth trajectory. I think that has definitely played out in the last year.

So I am still incredibly bullish on the success we have had there and its continued success, because these are major new opportunities for LiDAR, places where LiDAR has never played before, that are multibillion-dollar industries. We have just shown that we are able to execute in this domain. That being said, the StereoLabs acquisition is our ability to inflect the physical AI sphere for mobile robotics and for industrial robotics.

For the same reasons why smart infrastructure has taken off—basically that we are providing total solutions and speeding the time to market for our customers because they can buy something off the shelf from Ouster, Inc.—now we are doing that with StereoLabs and Ouster, Inc. combined: a unified sensing and perception platform that is a drop-in replacement for the legacy systems that have been used in the industrial and robotics sphere. Now you can come to Ouster, Inc., buy AI compute, LiDARs, and cameras, and the perception software suite that goes on top of those, and get to market quicker.

So that is the vision for where Ouster, Inc. is going: really this two-pronged approach of solutions in smart infrastructure, where it is fixed installations, and solutions in mobile autonomy for physical AI like industrial, automotive, and robotics.

Kevin Cassidy: Great. That plays into what was going to be my second question: how your trained models using both the StereoLabs and Ouster, Inc. LiDAR—whether combining those two models is going to be much more robust than what your competitors would be offering.

Angus Pacala: I think that there is so much to do with the advancements in AI in the last couple of years. There are opportunities for us to push the frontier. StereoLabs has built neural depth models that produce incredible point clouds from stereo cameras, better than the competition, and to push that domain forward. Ouster, Inc. has invested in our neural perception algorithms for Blue City and Gemini to perceive what is going on in the environment. There is a natural cross-pollination at play where we can bring the insights from each one of those core competencies to each other's customers, but also start to do multimodal AI training.

LiDAR and cameras fused and trained together is the obvious next step if you really want to build the world's most capable, machine-learning-driven perception solution. There is a ton we could talk about there, but I will leave it at that. I am definitely excited about what the future holds for our AI training.

Operator: One moment for our next question. Next question will come from the line of Timothy Paul Savageaux from Northland Capital Markets.

Timothy Paul Savageaux: Hey, good afternoon. I wanted to ask if, from a customer standpoint, CES seemed to be a pretty important show for you. A lot of focus on autonomy there for machines both large and small. I wonder if you had any takeaways from that show in terms of market opportunities coming out or specific customer developments. Thanks.

Angus Pacala: Yeah. Absolutely. Ken and I were both at CES, walking around with a number of investors and analysts, and it was a great embodiment of physical AI—literal robots, industrial machines, autonomous systems, just ubiquitous on the show floor. No matter where you went, physical AI was in your face as real hardware. I think the takeaway for me is when you actually looked at those machines, whether it was an autonomous forklift or a humanoid robot or a big industrial mining machine, what were the commonalities between those systems? They had LiDAR sensors. They had cameras. They had almost certainly an NVIDIA GPU AI computer.

There was a suite of software that was largely similar in underpinnings of robotic perception, localization, path planning, perception of objects around the vehicle. The commonality is that is the play for Ouster, Inc.—both on the hardware and on the software. We think that with the StereoLabs acquisition, we can become the one-stop shop for LiDAR, cameras, potentially other sensors in the future, AI computers, and all the software that runs the underpinning of an intelligent autonomous machine. That is where Ouster, Inc. wants to play, and that is where we have made a major step forward.

CES was just the perfect representation of where the future is going, and also a representation of Ouster, Inc.'s business model for the next ten years. I will add to it, Tim. Seeing our customer success and their time to market and getting out there quicker—that is our success. The quicker that these things get out of prototype and into production, that is the growth that we follow along with those partners.

Timothy Paul Savageaux: Great. Thanks. If I could follow up—separate topic—and that is on the royalties in the quarter. I wonder if you had any more color about whether it is a certain type of technology or application. I do not know if that has anything to do with the litigation ongoing, but any more color—and it is a pretty good number.

Angus Pacala: First off, it highlights the strength of our IP portfolio, Tim. It was predominantly one-time, as we mentioned, and we also talked about it being de minimis going forward. Strategically, we are looking to prioritize this sense-think-act-learn and driving our own product portfolio forward. We have the royalty piece behind us, and I think all those litigation items in the past are all behind us. Now it is really focused on our strategic priorities and growth.

Timothy Paul Savageaux: Thanks.

Operator: One moment for our next question. Our next question will come from the line of Andres Sheppard from Cantor Fitzgerald. Your line is open.

Andres Sheppard: Hey, everyone. I think a lot of our questions have been asked, but I was hoping to maybe have you elaborate a bit further on the opportunities that you see regarding drones and humanoids, particularly following the recent certification and the recent acquisition. Can you maybe help quantify opportunities that you see there in the near term and maybe medium term or just any granularity as to how we should be thinking about these industries translating into revenue? Thank you.

Angus Pacala: Thanks, Andres. The common thread for drones and humanoids is really the volume—generally industrial-adjacent, more robotics than industrial. There is a volume increase. The smaller, the cheaper, the more ubiquitous the technology, the more the types of payloads and sensors and AI compute that goes on those robots is different than a big mining machine. Some humanoids use LiDAR; some do not use LiDAR. Every humanoid uses cameras. So that is part of the play for Ouster, Inc. The same goes for drones. Some drones use LiDAR; all drones use cameras.

This is part of investing and becoming a combined LiDAR and camera sensing company—being able to play across all physical AI applications by providing the two most pervasive sensor modalities that are out there. Then we layer on top the fact that Ouster, Inc. is investing in things like the Blue UAS certification. It just builds more opportunity for us in the sphere. I see drones and humanoids—drones are much more of a proven technology and market opportunity for Ouster, Inc., and that is why we pursue things like a certification. Humanoids are an emerging opportunity that we are playing in today because of the StereoLabs acquisition and because of some of the LiDAR sensors and customers we have there.

But I think the timeline is a little longer for humanoids to reach market in the scale that is going to start to impact our top-line revenue. I liken this to ten years ago with the robotaxi industry. It is an emerging technology. It is an exciting technology, and it will happen. But the timeline is less known because it is pioneering research getting humanoid robotics out into the market. It is also a pioneering business model. So there are categories of things where Ouster, Inc. builds the business on today, and there are categories of pans in the fire that will hit eventually and help Ouster, Inc. build the business of the future. We are playing across both.

It is definitely exciting times, and the StereoLabs acquisition is a key to making sure that we can go to both those use cases and provide something valuable to those customers.

Kenneth P. Gianella: Wrapping numbers around it, if you look at the prior three quarters coming off 40% year-over-year growth—this quarter, just our core product line with the digital LiDAR growing 36% year over year—we continue to see that core underlying business continuing to trend in that 36% range plus. We are really proud of what the core business is doing. Now you combine in the tailwinds of a really high-growth, high-margin business such as StereoLabs; that makes us really excited for the future.

Andres Sheppard: Wonderful. That is super helpful. Really appreciate all that color. Maybe just as a quick follow-up, Ken, maybe a quick one for you. Can you just remind us on liquidity, capital needs, cash burn? Are you still targeting to remain active in the M&A market? How are you thinking about future capital needs and cash runway? Thank you.

Kenneth P. Gianella: We ended the year at $211 million before the StereoLabs acquisition. We gave the number out there—roughly around $35 million in cash for that. On a strict operating basis, we talked on prior calls about having the dry powder to be strategic. That was very important in this current marketplace. I think this acquisition demonstrated having that dry powder on hand allowed us to act quickly and take advantage of a very unique strategic situation. Even after that strategic acquisition, we still have plenty of runway until we are operating cash flow positive. If you look at the numbers out there, it is somewhere in the four- to five-year range.

From continuing in the marketplace, we are going to take it day by day and see what results with it. But our current cash position, we feel, is strategically right where it needs to be. As I mentioned, for our customers—because these customers that we work with are running three- to five-year programs—they want a partner that can be out there operating with them in that space. We feel really good about our capitalization and always continue to look for what the future brings. From M&A, answering your last question, if the right strategic opportunity comes along like it did with StereoLabs, we are really happy to be in a place that we can act on it.

Andres Sheppard: Wonderful. Thanks again, and congrats on the quarter. We will pass it on.

Operator: Thank you. As a reminder, to ask a question, that is 11. One moment for our next question. Next question will come from the line of Richard Cutts Shannon from Craig-Hallum. Your line is open.

Tyler Perry Anderson: Hi, everyone. This is Tyler on for Richard. I am just wondering how the customer conversation shifted since the acquisition. Are you getting new customers or existing customers looking for new opportunities to either combine the sensors or thinking of other use cases to get their hands on the sensor that they do not have? Any color on that would be helpful.

Angus Pacala: I can say, having been on a number of customer calls since acquiring StereoLabs, that the reception to this acquisition has been resoundingly positive. I cannot stress that enough. Ouster, Inc. and StereoLabs have each built incredible brands built on quality, trust, and performance of the products and the support that they provide. When you have two great companies combining, and it allows a customer to then purchase from one even more dependable and well-resourced company, that is music to their ears. There is the ability to work with one great company sourcing critical technology like we are, and then there is all the building to the future.

We are taking more of the feedback from customers around their total sensing needs and actually building the software and system capabilities that they have this enormous appetite for. I think that is probably the most surprising thing for me—how much appetite there has been for buying combined systems now that we are positioned and capable of selling combined systems: compute, software, the sensors. Customers are asking for it, and that is just a great place to be. It is one thing to say we are going to do it. It is another for there to be a pull from the end customer now that they are aware we are capable of doing it.

As customers literally ask us, “When can we just start buying the whole suite of hardware and software from you?”—it could not happen soon enough. I am really pleased with how this has gone, and it has been extremely well received by customers.

Kenneth P. Gianella: And, by the way, it is available today. They are not waiting, because one of the great things that we announced at the launch was that our platforms are already unified, and people can buy our unified sensing platform today.

Angus Pacala: Absolutely. We are actually able to tell them, “You can get started immediately.”

Tyler Perry Anderson: That is great to hear. You mentioned enhanced connectivity features. Could you expand on that and specifically what that enables for customers?

Angus Pacala: The connectivity features are all about building an ecosystem that is interoperable with many different subcomponents of a physical AI system. While we are today positioned to provide LiDAR, cameras, and AI compute—and the software that runs them—we also want to make sure that the AI compute and the software on it are interoperable with all manner of other sensors. Maybe GPS, maybe inertial measurement units, maybe something as simple as radio connectivity or RTK systems or wheel encoders.

There are so many auxiliary systems that are required to build a domain-specific robot that we want to make sure we are really providing all those in our software—that we can be that platform that you can build your entire solution on. We do not want to have caveats when we are selling, saying, “You cannot go and use that existing GPS receiver that you have already selected and qualified.” Quite the opposite. We are focused on saying, “You can use it; we are implementing the low-level drivers for you.” That is the vision—speeding time to market.

The biggest thing holding back a lot of these customers in robotics and industrial is their development time to bring products to market, and we are cutting that down significantly by doing the work for them.

Tyler Perry Anderson: That begets another question real quick for me. When you are adding these different sensors, are these drivers something that are universal such that you can develop the drivers in your system for one type of GPS, but that works with any of the GPS providers or the inertial providers?

Angus Pacala: No. This is all hard work. Every single implementation is unique, and that is where the value comes in. Someone has to do the work, and the companies that do that well and provide high-quality interoperability is where the value comes in.

Operator: Awesome. Thank you. One moment for our next question. Next question will come from the line of Casey Ryan from WestPark Capital. Your line is open.

Casey Ryan: Good evening, everybody. It is a great quarterly update. I just want to follow up a little more on this software component you are laying out. It sounds like you are starting to move into being the operating system for any industrial manufacturer of physical AI systems. Does this change the competitive matrix? Do we start competing with OpenMind and the Google Intrinsyc thing and other operating system physical AI companies?

Angus Pacala: There is so much right now that I would not call it changing the competitive landscape. There are a lot of companies pushing the frontier of this technology in new and unexpected ways. Ouster, Inc. is focused on being a unified sensing and perception platform, which could eventually become a complete operating system for these robots. That is definitely a possibility. But I could not tell you today that there is immediate overlap of our eventual success with some of the companies that you mentioned because there are so many different ways to approach these problems that are being researched right now, let alone deployed.

Ouster, Inc. has always done a good job of finding the line between research and real deployed solutions that can generate revenue and grow a business today. That is what we are doing right now. We have narrowed down the solution to sensing and perception, but that gives us opportunity. Certainly, with success, it gives us the opportunity to become more of the operating system of these robots in the future.

Casey Ryan: Maybe being more modest, I think the company's vision of what it could accomplish has been expanded in some sense with what you are sharing with us today.

Angus Pacala: No question. The same way that LiDAR was our opening to build strong relationships with our customers, this is the next step in building an even stronger cohesive relationship, and that may be a jumping-off point for a future where we are even more deeply embedded.

Casey Ryan: Terrific. Then, simply on the hardware, it sounds like what you are saying is you want to work with all and make it easy to use any kind of hardware components ultimately. Is it part of your vision that Ouster, Inc. would want to provide at least one version of that, say, GPS or something? Or are cameras kind of unique in terms of their importance to combined solutions?

Angus Pacala: The answer is yes to both things you asked. We want to work well with peripheral components, but there is a good reason why LiDAR and cameras have a special place. They really are the most important, most capable sensor inputs to these robots, and they are also the most unique and difficult to develop to the quality standard required by physical AI. We are focused on making sure that we have the best-in-class LiDAR and camera combined sensing systems, and there is a lot of detailed work to be interoperable with other things. But they are secondary in these systems to the LiDAR and the cameras.

The fusing of the two together to operate simultaneously—that is one of the toughest problems that all of our customers have today. Being able to offer that unified platform with those two sensors together is a game changer.

Casey Ryan: That clarification is helpful, but I think putting a stake in the ground feels like the vision has gotten a little bit bigger, which is exciting. Looking forward to 2026, and great job in Q4 and looking forward.

Operator: Thanks, Casey. I am not showing any further questions in the queue at this moment. I would like to turn it over to Angus Pacala for any closing remarks.

Angus Pacala: Thank you all for joining the call. We look forward to speaking with you again when we report our first quarter earnings. Have a good day.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.

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