Good afternoon, and welcome, everyone, to Ouster’s Fourth Quarter Earnings call. [Operator Instructions] The call today is being recorded, and a replay of the call will be available on the Ouster Investor Relations website an hour after the completion of this call. I’d now like to turn the conference over to Sarah Ewing, Director of Investor Relations. Please go ahead.

Thank you. I’m joined today by Ouster’s Chief Executive Officer, Angus Pacala; and Chief Financial Officer, Anna Brunelle. Before we begin the prepared remarks, we would like to remind you that Ouster issued a press release announcing its fourth quarter and full year 2021 financial results shortly after market close today. The company also published an investor presentation, which is available on the Investor Relations section of ouster.com. I’d also like to remind everyone that during the course of this conference call, Ouster’s management will discuss forecasts, targets and other forward-looking statements regarding the company, future customer orders and the doubling of our contracted revenue in 2022 and the company’s business outlook that are intended to be covered by the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward-looking statements. Statement regarding the doubling of the company’s contracted revenue opportunity does not speak to expectations for any period beyond 2022. While these statements represent management’s expected future results and performance, Ouster’s actual results are subject to many risks and uncertainties that could cause actual results to differ materially from current expectations that we may share with you today. In addition to any risks highlighted during this call, you should consider important risk factors and other disclosures that may affect Ouster’s future results are described in its SEC filings that will be updated in its 10-K. Except as required by law, rule or regulation, the company undertakes no obligation to update any of these forward-looking statements for any reason after the date of this call. Lastly, information discussed on this call concerning the company’s industry competitive position and the markets in which it operates is based on information from independent industry and research organizations, other third-party sources and management estimates. Management estimates are derived from publicly available information released by the independent industry analysts and other third-party sources, as well as data from the company’s internal research and are based on reasonable assumptions made upon reviewing such data and its experiencing and knowledge of such industry and market. By definition, assumptions are subject to uncertainty and risks, which could cause results to differ materially from those expressed in the estimates. During this call, we may discuss certain non-GAAP financial measures, which exclude the effects of events and transactions we consider to be outside of our core operations. These non-GAAP measures should be considered a supplement to and not a substitute for measures prepared in accordance with GAAP. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures please refer to today’s press release. I would now like to turn the call over to our Chief Executive Officer, Angus Pacala.

Hi, everyone. The fourth quarter represented a strong end to a transformative year for Ouster, with 86% revenue growth over the fourth quarter of 2020 and continued industry-leading gross margins that clearly validate our diversified strategy of providing state-of-the-art solutions to multiple, rapidly-accelerating industry verticals. Our growth rate and strategic position reinforced our confidence that Ouster is poised for continued market share gains. We have a significant lead over earlier-stage, pre-revenue competitors and superior technology to legacy players. This is proven by our growth and ability to deliver positive and meaningful gross margin even as the industry matures. As the latter market continues to mature, we’re confident that our multi-market approach will enable Ouster to capture significant shares of the automotive, industrial, smart infrastructure and robotics verticals. These four target industries represent an aggregate addressable market of $8.6 billion by 2025, and Ouster is well positioned to deliver meaningful growth in each vertical. We’re confident in our ability to win in automotive with our multi-sensor suite as well as our advantage in the industrial, robotics and smart infrastructure verticals, which represent an even larger near-term opportunity. The first 100 days of Ouster Automotive have exceeded our expectations, and our two teams are now fully integrated with each adding highly complementary expertise. Design, development and validation work are on track with the time line we previously shared. Our automotive negotiations are progressing well, and our pipeline of deals continues to expand as we engage more OEMs. We’re excited to share more details on our progress today and over the coming months. Ouster has the most differentiated lidar technology with our OS and DF Series digital lidar platforms backed by a leading patent portfolio, scalable manufacturing and growing supplier relationships. We have the most diversified business with over 600 customers over the last 12 months across multiple markets, allowing us to build toward a stable run rate while investing in products and solutions to capture new growth opportunities. And we have a proven ability to execute nearly doubling our revenue, more than tripling the number of sensors shipped and adding 58 strategic customer agreements or SCAs year-over-year, all while operating with the highest hardware gross margin of our public peer set. In short, we’re confident that we have the team, the technology and the strategy to make Ouster the leader in lidar. As the eyes of autonomy, we’re poised to have a large-scale impact on the safety and sustainability of our society through the multitude of applications and industries that we touch. Anything that moves or that monitors moving objects has the potential to become more intelligent and efficient with digital lidar. And with that, I’d like to turn the call over to our CFO, Anna Brunelle, to provide a full update on our 2021 results and 2022 guidance before I dive into Ouster’s growth strategy.

Thank you, Angus. Ouster had a breakout year, one in which we maintained and delivered on our 2021 guidance, and we will not stop there. We believe the pace of digital lidar adoption is only accelerating across each of our industry verticals: automotive, industrial, smart infrastructure and robotics. We have the right technology, CMOS digital lidar, an outstanding team and a multi-market strategy to take advantage of near- and long-term revenue opportunities and extend our market leadership throughout the upcoming year. Let me turn to our financial results. Ouster delivered record quarterly results, generating $11.9 million in revenue, up 86% over the fourth quarter of 2020 and up 53% sequentially, demonstrating the acceleration of our business. We shipped over 2,400 sensors in Q4, nearly a 200% increase over the fourth quarter of 2020. Further, we increased our total signed strategic customer agreements to 68 through the fourth quarter. Consistent feedback from these customers indicates that they chose us over other lidar companies because we offer superior performance and deliver industry-leading reliability. Our digital technology has fewer parts than our analog competitors, meaning greater reliability in real-world applications and less risk in our manufacturing process. This translates directly to our financial results. We continue to deliver industry-leading gross margins reaching 30% in the fourth quarter and continue to reduce our cost per unit sold in spite of the ongoing supply chain challenges, which resulted in temporary purchase price variance related to bulk purchases and expedited shipment fees in order to keep up with product demand. We have a phenomenal manufacturing and operations team that managed to secure our source materials, scale production of our new OS sensors powered by the L2X-chip, ship a record number of sensors with short lead times and without shipping delays and strategically drive down our cost…

Thanks, Anna. Digital lidar is permeating our roads and cities, how we manufacture goods and every link along the global supply chain. This widespread adoption is driven by three key trends that span our target verticals. First, a generational shift in what consumers and regulators expect from next-generation vehicles, including increased safety, efficiency and advanced driver assistance functionality. Second, accelerated industrial automation to improved workplace safety and productivity and counter ongoing supply chain challenges. And third, increased investments in smart infrastructure to build safer and more efficient transportation systems. We’re in the midst of a generational shift in the automotive world. Consumers and regulators are expecting more from vehicles than ever before, including new levels of safety, driver assistance and electrification. As a result, automakers are reimagining the automobile around these expectations. Camera and radar based systems work in limited scenarios and fall far short of higher levels of autonomy. Comprehensive lidar coverage around the vehicle promises to close the performance gap to deliver improved safety and drive versus consistent. Ouster’s affordable, flexible and high-performance multi-sensor lidar suite delivers exactly what OEMs need to bring safe ADAS-enabled vehicles to market. However, when it comes to passenger vehicles and series production, the best technology in the world is simply a curiosity unless it comes at a price point that allows for true massive option. This is where Ouster’s simple CMOS-based digital lidar approach truly separates from the pack. Today, Ouster can offer pricing on our DF Series sensors that makes lidar standard fit on next-generation luxury and mass market vehicles. The next five years we’ll determine the winners in automotive, and I’m confident that our technology and team is poised to make Ouster Automotive the leading lidar solution. The second macro trend driving growth across our business is the widespread automation…

Thank you. [Operator Instructions] Our first question today comes from Blayne Curtis with Barclays. Your line is open.

Hey good afternoon and thanks for taking my question. Maybe the first on the outlook for 2022. I think Anna talked about some variability for Q1. I don’t know what that meant, but then if you could just address that a little bit. And then I’m just curious, you started to break out the percent and verticals. I wonder if you’re going to continue to do that. But any color between those verticals and how you’re thinking about the growth this year?

Well, I can take the first one. This is Anna. Good to talk to you again, Blayne. On the variability in Q1, much like we saw in the prior year, we saw the Q1 number aligning closer to the Q4 number than to seeing a step-up – a significant step-up in growth. And so we were just kind of guiding that we’ll see the Q1 ramp, potentially have a little bit of variability in it rather than just a straight trajectory.

And then good to talk to you, Blayne. Thanks for the question on the vertical breakdown. I hope you appreciated the breakdown at all. That’s the first time we’ve done that, given the percentage units per vertical. But now that we’ve done that, we’re committed to doing that on an annual basis, and we’re going to look to whether we do it on a quarterly basis, but I haven’t committed to that yet.

Great. I definitely appreciate it. Just any color or thoughts between those four verticals as to, what’s driving the growth this year?

Yes, absolutely. I mean so the three major catalysts that we outlined are the major growth drivers for the first three verticals. So in automotive, we have the adoption of electrification and then autonomy and increased safety in automotive and the kind of the receptiveness to that technologies to that lidar specifically. In industrial, it’s the automation of the global supply chain that we’ve seen kind of top to bottom. You can’t talk to an industrial OEM at this point and not hear about an automation strategy of some kind or another, and that’s whether it’s a legacy company or a major established company in the space like an Amazon or a John Deere or a Caterpillar of the world or a newcomer in this space like Outrider or Vecna everyone has an automation strategy. And it, far more often than that, centers around lidar or requires lidar as a component. And then the last, in smart infrastructure, I think that’s the industry where we had a huge amount of growth quarter-over-quarter, in smart infrastructure, and we mentioned that in the script. But – and we see that having huge potential upside. When you look at the potential unit, kind of sockets, where lidar could go and displace legacy sensors, whether they’re cameras or radar sensors or ground loops or just make something that was not intelligent before intelligent like a crosswalk, there’s millions of sockets that we could put digital lidar in the next five years. And there’s such a significant investment at the government level. There’s funding available and – but it’s greenfield, and so it’s a lot of new emerging applications. And so that’s why we see so much upside, it’s because it’s not fully understood yet. That’s a lot of new and emerging applications. So a lot of growth across all our verticals, robotics being the last, which is more of a catch-all and combines a number of our sub-verticals and is growing for its own reasons. A lot of emerging applications and robotics as well.

Thanks. And then just one for Anna, just I appreciate the revenue gross margin guidance for the year. I was curious how you’re thinking about managing OpEx for the year is there any color you can give, I think at one point when you gave the EBITDA guidance, but just anything in terms of OpEx growth or EBITDA would be awesome.

Yes. I mean, I think we gave some clues to what we’re going to be entering 2022 with in terms of – in my scripted remarks, we talked a little bit about that there were about $11 million of nonrecurring Sense [ph] fees that we won’t see from Q4 to Q1, and then we would see a full quarter of the Sense employees because we had a partial quarter in Q4 going into Q1. And so we talked about that we expected, OpEx then going into 2022 to look similar to the fourth quarter. And that would be net of stock-based compensation, just the baseline fees.

Appreciated. Thank you.

Your next question comes from the line of Itay Michaeli with Citi. Your line is open.

Great. Thanks, good afternoon everyone. Angus, I just want to go back to the topic of the non-auto certification and the opportunity you see there, I think the industry opportunity may be around $1 billion. And you mentioned an appetite from some of the customers there to upgrade sensors. And of course, you’ve got the L3 chip coming. Just curious roughly what the timing is on some of those certifications. And once you’re there, how quickly can you book additional revenue, this really more of a 2023, 2024 kind of revenue opportunity as you unlock some of these markets post certification?

Yes, sure. Thanks for the question, Itay. So, I think that the timeline actually that the Ouster strategy around certifications that unlock these new kind of land-and-expand opportunities with existing customers or just unlock completely new certified lidar markets to us. That is paying dividends already today to some degree, which is – it’s been a great benefit to be able to go to a customer say, a robotic forklift customer and say we can replace some of the lidar’s on your platform today with a consolidated set that’s more affordable and more performance. But you can also expect then in the future any of the certified lidar that are – that you have to keep on your platform by the law that we can replace those in the future as well, and make your system simpler and make it more cost capital efficient, lower cost for you. And that’s all because we have this clear road map that’s pretty unique in the industry because you have the unified product portfolio. We have this road map towards certifying all of our products for all of the major certifications required across our verticals. All that being said, it’s paying dividends today to some degree, but you can expect in the next year or so for that to be an even bigger catalyst as we actually achieved some of these certifications. We’re not giving an exact time line on when we’re achieving each one of the certifications basically for competitive reasons, but you don’t have to hold your breath significantly. And again, we’re already seeing some of the benefits.

Great. And then one other kind of new business question. I think the release mentioned a goal of winning at least one OEM production program this year. Anything else you can share in terms of, is it one sensor is it a surround? Is it kind of L2+ features? Maybe the region and in term of the volume whatever you can share on that would be super helpful.

Yes, absolutely. So one of the major updates that from the automotive side is that we’ve been pushing forward with the production versions of our DF center lineup. So, we announced the digital flash sensors, fully stock solid state lineup. Now, we’re moving into the design phase of the digital flash silicon that’s going to move into production and replace the Gen-1 silicon that we have in-house today. And that silicon is capable – or the digital flash product lineup is capable of being single sensor installs for like L2 and L2+ applications, and it could also be multi-sensor suites for either advanced L2+ systems that have much more capability or L3 powered systems. And regardless of application, our goal is to be the most affordable solution for either of those. I would say it’s split. A lot of the deals that we’re working on are actually multi-sensor suites that are pushing towards L3 capability, but there still is a contingent of automakers that are focused on typically near term opportunities that are just single sensor installs. And so we have the strategy and the product line and the affordability and the performance that allows for these more advanced, more feature-rich L3 multi-sensor suites. But because of that, we also are able to offer highly competitive and affordable single sensor solutions for kind of the L2, L2+ feature set. So, of the five deals that we previously announced that were working on there both of those requests are represented and one of the significant reasons why we’re in the next as because we can be so competitive on pricing for either.

Yes, that’s great. That’s all very helpful. Thank you.

Your next question comes from the line of Sam Peterman with Craig-Hallum Capital Group. Your line is open.

Hi, guys. Thanks for taking my questions. Congrats on a quarter. I just want to ask on the SCA pipeline. Curious, where you saw kind of the strength coming this quarter and increases coming. And I want to make sure, I heard you right that you saw that pipeline dollar value doubling in 2022. And if that’s the case, kind of based on the run rate you’ve been at for the average value per SCA, you need to add, probably close to 100 SCAs, obviously, that can change with one or two larger customers thrown in there. But is that kind of how you’re thinking about it for 2022?

I think that when you’re talking about the SCAs, and we talked about seeing kind of a roughly doubling in our customers’ forecast, we’re talking about not necessarily doubling the number of SCAs. We’re just talking about looking ahead to what our customers are telling us their businesses are growing at that rate, and so that’s what we were referencing. We weren’t trying to impute like a certain number of signed SCAs needed in the future. That was based off of customers that are in existence today.

Yes, I want to make sure that makes sense because it’s a really important point, and it’s a really positive sign for the business. So that doubling is when we ask a customer for a three- to five-year forecast in aggregate, our customers are roughly doubling their forecast – what they’re going to purchase from us year-over-year. So that’s the doubling. We see the doubling of growth in the established customer based on the direct information they’re providing. And then that a separate goal of ours is to increase the number of SCAs that we have every year, but we haven’t given any indication of what our expectation necessarily is there, obviously, we intend to grow the SCA count this year.

Got you. Okay thanks. Yes, thanks for clarifying that. And then I wanted to ask one on the gross margin. That guidance, obviously, you guys have industry-leading margins like you talked about, and you’d expect ASPs to come down, units to go up over time. But kind of the way you framed that as you saw units coming out faster, then ASPs are going up, but your margin guidance is pretty flat here. So, I just wanted to get some color on what’s built into the gross margin guidance. Are there other factors or maybe a mix shift to certain product lines or end markets that are affecting the guidance? Or just any color on that would be helpful.

Yes. I mean, I think we are still seeing our cost of goods sold declined at a faster rate than our ASPs. So for the annual results, it was about a 35% decline on ASPs. And a 53%, I think, decline on cost of goods sold. So, we are still meeting our initiatives to target the margins or to achieve the margins that we’ve targeted. I think going forward into next year, we’re being a little bit, perhaps, cautious related to supply chain issues and allowing ourselves a little bit of room there. But generally, we do still continue to see the margins developing and the way that we’re expecting.

Okay, thanks guys. That’s it for me.

Your next question comes from the line of Joseph Osha with Guggenheim. Your line is open.

I’m Joseph Osha now. Hello everyone.

Hi, Joe. Good to hear from you.

Hi. Yes. Just a couple of questions. First on your comments on L2X and the L3, just looking at the L2X and the picture of it. It kind of looks like you’ve got three pieces of big pieces of silicon there, the digital logic, the detectors and the emitters. And then I look at the sort of little picture of L3 and that’s sort of a gray square. I’m wondering is the idea, as you go to L3 that we might see greater integration of these different pieces of silicon. Can you comment on that?

I can’t really give more details on the L3. I mean the reason we have a grade out is because there are since you can figure out about chip by looking at it and we want to keep the surprise for when we announced all the products. But the general idea is that, and we mentioned this, we’re taking advantage of a really significant advancement in semiconductor technology, backside illumination for the very first time with L3, and that increases both the key kind of role of sensing metrics, like how well it can perceive light. And then we’re also combining that with architectural improvements in the digital logic. And we have – as you pointed out, we have over 100 million transistors of digital logic that’s running the lidar sensor co-located with that pixel array, and improving both is the goal every time that we take out a chip. So it’s a really significant advancement. It really is the most significant advancement we’ve ever had in a chipset, but we’re going to save some of the improvements for when we release the products that are powered by the L3 later this year.

Okay. And that – okay, and so we’ll get a more detailed look at L3 architecture later this year.

Absolutely.

Okay. Now completely different question. Just thinking much longer term, obviously, we’re talking about the margin outlook this year. But just thinking about as you look out to 2025, and we’ve been having a lot of these conversations, it seems as if the industrial part of this business with the software ramps and so forth, really possibly could to get to a 55%, 60% gross margin someday. But at the same time, all the conversations I and the other people just call it had on automotive that we should probably think about that still as may be a, kind of mid-30s percent gross margin business looking at the way automotive is. Is that still a reasonable long-term set of expectations they have?

Yes. I think, Joe, like we’ve been giving guidance for the next year. And I think what’s really important here is that with our guidance, we’re going to do what we say we’re going to do and really build trust with the investor community in the Street. And I think if you look out further, it is an immense multi-market opportunity, and we are very excited about our four verticals and the growth in both the near-term and the long-term. And I do agree with you, there’s going to be some variability in margins across verticals. But overall, I think it’s going to be a great business. And we do agree with you, we think probably auto is going to be the lowest margin vertical. We’ve said before, maybe around 25% is probably accurate for automotive, while the other verticals we see as higher margin opportunities. But I think it’s an immense multi-market opportunity, and we’re really excited about our customers’ growth and the visibility that, that’s giving us into the future. Greater visibility, greater predictability, greater stickiness in our business. So, we’re really excited about the growth that’s we’re seeing in the margins, that we’re seeing to date.

Okay. Thank you. And then just one final quick one. If you can comment, is Shauna McIntyre is still running automotive? Or has there been some kind of change there?

Yes, actually Shauna has moved on to a new CEO role as of just last month. And on that note, I actually want to thank her for a role in the acquisition. She was integral and the successful integration of the two teams. And so now Ouster Automotive is in great hands with the kind of the established team that was under her, and there’s no change to our outlook or strategy or any commitment we have to our automotive partners or customers.

Okay, thank you for that.

Thanks, Joe.

And this does conclude our question-and-answer session. I’d like to turn the conference back over to Angus Pacala for any closing remarks.

Yes, absolutely. I mean, I just want to highlight, 2021 was a fantastic year for us. We’ve doubled revenue. We built a world-class commercial and auto teams like we said we would. We accelerated our hardware and software roadmaps and three extra unit shipments, dropped COGS faster than ASPs, signed 58 SCAs, grew our customers to over 600 and over 10,000 units shipped worldwide. And we delivered on our full year 2021 year guidance, and we did all of that in the midst of a global pandemic and a disruption in the semiconductor supply chain that’s pretty unprecedented. So to say, I’m proud of our team and what we’ve accomplished is a complete understatement. I’m incredibly proud, and we’re not stopping there. We’ve aligned, Ouster with these big catalysts in the global economy, shifts in autonomy or in the automotive, automation in the global supply chain and industrial and investment and safety and efficiency of our world in smart infrastructure. And so Ouster’s products address those trends head-on, we have this digital technology and diversification across industries, and we’ve proven that we’re able to execute and do what we say and say what we do. So, I think Ouster’s future in 2022 and beyond is incredibly bright. And I wanted to thank everybody for tuning in and everyone that asked questions, and have a great rest of your day.

Ladies and gentlemen, the conference has now concluded. Thank you for attending today’s presentation. You may now disconnect your lines at this time.