Ouster (NASDAQ:OUST) held its first-quarter earnings conference call on Tuesday. Below is the complete transcript from the call.

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The full earnings call is available at https://edge.media-server.com/mmc/p/pt46y4as/

Summary

Ouster reported strong Q1 2026 financial results with $49 million in revenue, marking a 13th consecutive quarter of product revenue growth, and achieved a 43% gross margin.

The company acquired Stereo Labs, enhancing its product portfolio with AI camera vision solutions and launched Rev8, the world's first native color LIDAR, expected to revolutionize AI perception.

Ouster's LIDAR business grew 44% year-over-year, with key deals in industrial automation and smart infrastructure, including expansions in traffic management systems.

Rev8's launch is expected to drive adoption across various sectors, including automotive and industrial safety, with significant customer interest and new applications emerging.

The company maintains a strong balance sheet with $175 million in cash and no debt, and provides Q2 2026 revenue guidance between $49.5 million and $52.5 million.

Full Transcript

OPERATOR

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 numbers 11 on your telephone keypad. If you would like to withdraw your question, press star 11 again. 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 would like to now turn the conference over to Chen Yung, Senior Vice President of Strategic Finance and Treasurer. Please go ahead.

Chen Yung (Senior Vice President of Strategic Finance and Treasurer)

Thank you Operator and good afternoon everyone. Thank you for joining our first quarter 2026 earnings call today. On the call we have Chief Executive Officer Angus Pacala and Chief Financial Officer Ken Giannella. As a reminder, after the market closed today, Ouster issued its financial results release which was also furnished on a Form 8K and is posted in the Investor Relations section of the Ouster 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, product advantages, 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 products capabilities and performance and our revenue guidance for the second 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 first 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 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 would now like to turn the call over to Angus

Angus Pacala (Chief Executive Officer)

hello everyone and thank you for joining us today. Over the last four months we have seen the culmination of over 10 years of ouster innovation, strategy and execution. In February we acquired Stereo Labs, a pioneer in AI camera vision and perception solutions, creating a world leading sensing and perception company for physical AI. We are already seeing the strategic rationale transform into operational reality with a resoundingly positive customer response. And just Yesterday we launched Rev8, the world's first native color lidar and a paradigm shift in AI perception. To perceive the world in full context requires a combination of structure and color and Rev8 is the first sensor to unify both with native color. Across our entire product portfolio of cameras and lidars, we have further strengthened Ouster as a foundational sensing and perception platform physical AI as we provide unified products and solutions that accelerate customer innovation and unlock new applications that sense, think, act and learn in the physical world. Now turning to an update of our Q1 2026 results, Ouster had a strong start to the year, achieving our 13th straight quarter of product revenue growth with over 12,600 LiDAR and camera shipped, reflecting robust demand for our expanded product portfolio. With 49 million in revenue. We achieved another record product revenue quarter on a strong 43% gross margin, overcoming headwinds from a continuing constrained supply chain environment. We ended the quarter with adjusted EBITDA loss of 7 million and cash cash equivalents and restricted cash and short term investments of 175 million dollars. Our LiDAR business grew approximately 44% year over year with strong contributions from our industrial vertical where we secured several large deals to power industrial automation. We significantly expanded our long term relationship with a large European industrial company for port automation. In another key win supported by our NDAA compliance centers, we secured a deal with an autonomous earth moving company to retrofit heavy equipment to support a project with the US Department of Defense. Ouster's smart infrastructure solutions business continues to validate our end to end system strategy. We saw continued momentum from our expanded its distributor network as we won contracts to deploy Ouster Blue City across the United States, securing large million dollarsar deals to provide next generation traffic actuation systems and in Arizona, Michigan and the Northeast US we were also proud to announce the expansion of Ouster Blue City with the Georgia Department of Transportation to modernize the region's traffic infrastructure. The turnkey Ouster Blue City traffic management solution will be deployed at more than 30 intersections across the greater Atlanta area in preparation for the FIFA World cup and beyond. Blue City is bringing physical AI to smart cities around the world with over 700 contracted site deployments across intersections, mid blocks and highways, reinforcing Ouster's position as a leading solution for transportation departments seeking to transition from legacy traffic solutions into Dynamic digitally integrated 3D lidar powered traffic management solutions for actuation and analytics. We also saw strength for Ouster Gemini in the quarter, recognizing millions of dollarsars of revenue from a significant customer renewal. Leveraging our unified platform and proprietary deep learning perception model trained on over 4 million labeled objects, Gemini empowers our customers to operate more efficiently and safely at over 550 sites around the world. In the months since the acquisition, Stereo Labs has already proven to be a perfect complement. We're seeing benefits of our unified platform through the ability to immediately help customers combine multiple modalities of sensors and AI compute, easing the friction of combining disparate technologies and accelerating our customers go to market efforts. The rapid integration and commercial success of our expanded camera vision portfolio provided tailwinds during the quarter and business momentum exceeded our initial expectations. We are seeing strong demand from companies building foundational AI models and advanced robotics platforms and leading companies around the world are relying on our expanded product portfolio to train, scale and deploy the next generation of autonomous delivery, advanced manipulation and precision agriculture. We continue to see large opportunities for stereolabs to augment ouster's perception roadmap to meet physical AIs increasing demand for sophisticated multi sensor fusion. By merging our proprietary AI models with Stereolabs neural depth capabilities, we are delivering the specialized perception, logic and application specific software required to revolutionize safety and efficiency of across the global supply chain. Continuing the momentum and our leadership in cameras for physical AI, we released the Stereolab ZX Nano which is shipping this month. This product sets a new standard for wrist mount stereo vision delivering 2.3 megapixels RGB with neural depth, zero copy capture, data pipeline and ruggedized GMSL2 connectivity and a 40% smaller form factor. Like all Stereo Labs cameras, the ZX Nano comes with a purpose trained neural depth model specifically tuned for its capabilities and further highlighting Ouster's deep vertical integration from hardware to software engineered for robotic manipulation and high throughput data collection. We are helping robotics teams scale imitation and reinforcement learning for manipulation tasks, leveraging Stereo Lab's industry leading image quality and end to end capture latency. Our customers can now overcome critical bottlenecks by capturing high resolution RGB and stereo camera depth images at up to 120 frames per second for training data and manipulation learning. And now turning to yesterday's highly anticipated product announcement, I'm truly excited to introduce Rev8, the world's first native color LIDAR sensors powered by next generation L4 ouster silicon. We are redefining the meaning of LIDAR itself with native color sensing implemented directly on the silicon by fusing color and 3D data through physics and leveraging Fujifilm Color Science, our patented Native color technology unlocks megapixel resolution and stunning image quality with ultra low latency and perfect spatial temporal alignment. We work with industry leading camera experts to ensure Rev8 delivers uncompromising industrial grade imaging delivering an exceptional 48 bit color depth and 116dB of dynamic range. Ouster's native color data maintains performance and lighting extremes from 1 lux to 2 million luxury. We live in a world where a machine's capacity to perceive is constrained by the capability of its sensors. Rev8 is built to generate the petabytes of rich native color 3D information necessary to build the next generation of physical AI systems and train new world models. Now for the first time, a single LIDAR sensor can understand road signs, interpret brake lights or simply capture the richness of planet Earth in survey grade colorized maps. Featuring radically upgraded OS Zero, OS One and OS Dome sensors and the new flagship 256 channel OS One Max, Rev 8 delivers industry leading resolution, range and reliability. Designed for functional safety, affordability and scale, Rev8 represents the culmination of years of research and development, innovative design and rigorous testing. It is the most advanced family of lidar Ouster has ever developed and sets a new standard in sensing. All of this is a testament to Ouster's digital first approach which starts with our proprietary system on chip. Rev8 is powered by our breakthrough L4 Astra silicon with up to 256 channels of resolution honed over years of development by our in house silicon design team. The L4 architecture features both the 128 channel L4 and the 256 channel L4 Max, each embedded with Fujifilm color science resulting in exquisite color data and hardware enabled high dynamic range. The L4 boasts 42.9 gigamax of processing power, detection of up to 20 trillion photons per second, a 40 kilohertz measurement rate with picosecond timing precision and is capable of processing up to 10.4 million points per second and 22.4 gigabits per second of data bandwidth off chip and we've paired it with a completely redesigned light engine featuring all new custom pixel arrays and our most advanced driver topology ever. Enhanced by picosecond timing precision, this architecture delivers unprecedented levels of range, resolution and accuracy across the entire Rev8 OS family. The cornerstone of the new Rev8 family is the flagship OS One Max, a sensor without compromise with double the resolution of the Rev 7 OS 2 and a quarter of the size, the OS 1 Max packs an incredible amount of capability into a small ruggedized form factor. The OS 1 Max provides best in class performance with 256 channels of high definition sensing up to 500 meters in all directions with a 45 degree vertical field of view. No other 360 degree spinning LiDAR comes close. Purpose built for high speed autonomy, smart infrastructure and heavy industrial applications, the OS 1 Max is capable of resolving the smallest objects at long range. And like all Rev8 sensors, the OS 1 Max offers exceptional native color imaging. But we didn't stop there. We set out to build the safest family of 3D lidar sensors ever created. This took years of rigorous engineering work, testing and design validation. The result, Rev 8 is life saving technology made right ruggedized for the real world with automotive grade reliability that can withstand the harshest production environments. Ouster now offers a set of products to break into the multi billion dollar market for industrial safety sensors long dominated by legacy players by replacing outdated 2D laser scanners and cameras with high resolution 3D native color lidars. Every sensor is auto grade, cyber secure and designed for ASIL B, SIL2 and PLD functional safety certifications, ensuring continuous uptime and industry leading reliability. Importantly, this is a platform built to scale. Rev8 was designed for low cost, high volume production deployments to support mass market adoption. With a planned 10 year production life, Rev8 sensors provide the long term program stability and scalability required for global commercial rollouts. With Rev8 we're delivering the safest, most feature rich, secure and reliable family of 3D lidar sensors we have ever built and we hit the ground running earlier today we announced the integration of our new Rev8 family across the Nvidia Jetson platform, bringing native color LIDAR to the Nvidia robotics ecosystem for the first time. With dedicated support for Rev8 across Nvidia Jetpack, Isaac Sim and Jetson AGX, Orin and 4, we're ensuring rich high fidelity 3D digital LiDAR data is fully harnessed by Nvidia's accelerated computing and development tools. This builds on years of integration support for previous OS sensor generations as well as Stereolab's own integrations across the entire Z portfolio. Together we are providing the essential building blocks for physical AI, enabling machines to sense, think and act in the real world with more speed and precision than ever before. Rev8 is shipping today and is being adopted by some of the world's most innovative companies. This is a testament to our close collaboration with key customers over years to ensure Rev8 met their program needs. We're already seeing early traction with dozens of technology leaders across the industrial robotics, automotive and smart infrastructure markets intending to adopt Rev8 OS sensors, including Google, Volvo, Autonomous Solutions, Libra, Epiroc, Field, AI, Flyability, Skydio Plus AI, Constellus, Bedrock, Caspar, Third Wave Automation, Burrows, Sea Grid, Gecko Robotics, Pratt Miller, AAM Intelligent Machines, Syngen, FreeFly Systems, ATI Robotics and Swarm Farm, among others. Clearly there is overwhelming customer pull for Rev8 and and this gives us confidence in an incredibly strong back half of the year. We spent years developing these groundbreaking capabilities and I am thrilled to finally introduce Rev8 to the world with that. Let me now turn the call over to Ken who will provide more context on our first quarter financial results.

Ken Giannella (Chief Financial Officer)

Thank you Angus and hello everyone. As you heard, our excitement over the acquisition of Stereo Labs and our new product launches look to keep the momentum we built in 2025 continuing into 2026 in the first quarter. We are pleased with our continued progress against both our financial and operational goals which are the cornerstones of our path to profitability. Our results demonstrate the resilience of our operating model and a disciplined financial management across the business as we continue to execute within our long term financial framework. Turning the first quarter financial performance Operating results were strong with revenue of $49 million which included approximately seven weeks of contribution from Stereo Labs. This represents an increase of 49% compared with the first quarter. Last year we shipped over 12,600 sensors which included over 8,300 LiDAR, a new quarterly record and over 4,300 camera sensors. Royalty revenue in Q1 was not material As I mentioned in our March call, this year we expect total royalty revenue in 2026 to be less than $5 million. The majority of this amount will be recognized in the back half of this year. The smart infrastructure vertical was the largest contributor to first quarter revenue followed by industrial GAAP. Gross margin was 43%, up 200 basis points from the same quarter last year. GAAP operating expenses were $40 million, an increase of 7% from the first quarter last year. The increase was primarily due to the addition of Stereo Labs operating expenses, including $2.3 million of acquisition and integration related charges in Q1. We continue to anticipate year over year operating expenses to be higher 5% to 8% with the acquisition of Stereo Labs. However, we continue to focus on our path to profitability and remain diligent in managing our operating expense profile. Excluding the acquisition and integration expense of Stereo Labs I, our adjusted EBITDA in Q1 was negative $7 million compared with negative $8 million in the first quarter last year. Alster remains one of the industry's strongest balance sheets ending the quarter with cash, cash equivalents, restricted cash and short term investments of $175 million and no debt. The strength of our balance sheet gives us the strategic and financial flexibility to operate our business and gives confidence to our custom rely on LSTR as a key physical AI partner on their long term autonomy journey. Now turning to guidance for the second quarter of 2026, we expect to achieve total revenue in the range of $49.5 million to $52.5 million. Beyond the revenue outlook for Q2, I want to reiterate the long term financial framework I discussed last quarter which includes revenue growth of 30% to 50%, GAAP gross margins of 35 to 40% and GAAP operating expense growth of 5 to 8% from our 2025 levels. With our acquisition of Stereo Labs, the release of Rev8, our smart infrastructure solutions and our investment in foundational AI models, Alster has one of the broadest range of perception and sensing products in the market. We remain confident that our innovation and go to market strategy will continue to bring us closer to positive operating free cash flow and profitability. I'll now turn the call back to Angus for his closing remarks.

Angus Pacala (Chief Executive Officer)

Thanks Ken. To close out, we are off to a great start executing against our 2026 strategic priorities, revolutionizing our LiDAR camera and AI compute products, extending our leadership in physical AI solutions and executing towards profitability. We kicked off the year with strong Momentum, delivering our 13th consecutive quarter of product revenue growth. We're executing on our strategy to provide physical AIs first unified sensing and perception platform and I'm excited by the transformative products we're bringing to market this year as we work to solve our customers most complex challenges. Rev8 is redefining the meaning of lidar with fundamentally new capabilities that empower our customers to simplify their perception stacks, better train next generation world models and scale their production deployments. On the heels of a successful first quarter ouster is better positioned than ever as the foundational end to end sensing and perception platform for physical AI. With that, I'd like to open up the call for Q and A.

OPERATOR

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 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q and A roster. Our first question comes from the line of Colin Rusch of Oppenheimer and Company. Your line is now open.

Colin Rusch (Equity Analyst at Oppenheimer and Company)

Thanks so much guys and congratulations on getting Rev8 out. I guess I have a two part question to start with that introduction. Obviously you've been working very closely with a lot of customers and I'm curious about two things. One, how many of them have been waiting for this product to move into series production with some of their their products, given some of the range and the functional safety pieces to this. And then the second part is really about which new applications are you seeing as material opportunities for you guys to move into, given the, you know, the functionality improvements that you're seeing with this next generation product.

Angus Pacala (Chief Executive Officer)

Hey Colin, thanks for the question. So while we don't pre announce, you know, we held on to the Rev8 announcement until it was ready to ship the quarter. Behind the scenes, we worked incredibly closely with a set of key customers for more than a year to make sure that Rev8 met their needs, both their current needs and future needs to expand business with us over time. So it's no surprise that we had a really compelling list of over 20 customers that I announced and I'm going to say spare reading through them again, but you know, it spans the gamut of existing customers doing things that they've always done, but doing them much more capably with a colorized point cloud to all new applications. So a great example of that would be high altitude drone surveying. The OS One Max is the perfect sensor for simplifying a drone payload. And you know, we have a great interest in customer skydio who is very interested in the OS One Max and gave some great comments about how the combination of payload into a single platform makes it a game changer for their type of surveying application where weight is at a premium and quality of data is at a premium. So we absolutely have new applications with the OS One Max for things like that, for high speed applications and driving on the highway or heavy machinery where you need to see small things at long range. And then obviously the multibillion dollar opportunity for functionally safe devices is brand new area for us to expand in our customer base and start to finally capture some of that significant value with these sensors. So but if you step back long term, I expect the vast majority of our customer base to adopt Rev8 over time and to be operating with native color lidar data. I think the entire industry is going through a paradigm shift with this and we're gonna end up on the other side with native color Rev8 Lidars across the vast majority of customers.

Colin Rusch (Equity Analyst at Oppenheimer and Company)

Super helpful, thank you for that. And I guess the second Question is, really now that you've got a fairly rapidly evolving portfolio of offerings including the Edge Compute, I guess I'm curious about a couple of things. One, how we should be thinking about MIX on a go forward basis and then secondly, how much leverage you're getting from that Edge Compute capability in premise, given some of the escalating data transfer expenses that we're starting to see for things like Intersections, where it can be upwards of 800,000 or a million dollars of expense just to transfer data back to a data center. If you're transferring all of it. Just curious how you're seeing that play out as well. Yeah, sure. So in terms of the product portfolio that's ever expanding, I mean, I also want to highlight we released the ZX Nano during the quarter, which is a big deal and also a brand new use case in these wrist mounted robotic manipulation. So

Angus Pacala (Chief Executive Officer)

on the question of MIX going forward, we haven't split out exactly how we see that long term unit basis or revenue basis, but we expect both of our businesses to grow very significantly. And obviously we had an incredibly strong quarter with 44% year over year growth for LiDAR only business. And overall we were up significantly year over year, especially with the Stereo Labs acquisition. So we expect to have very significant and strong growth across all of our product lines over time. And to the question around Edge Compute, I do expect that to start to contribute more to our overall business right now. I mean, we're really fresh off of acquiring Stereo Labs. The COMPUTE was something that had good traction and still has good traction within customer base. We're going to invest more into the COMPUTE line that they started. But I can't say that it's having a significant impact on the Ouster customers at this point. We're still getting our feet under us on exactly how to position that COMPUTE lineup with the other customers. But I do think it'll be a big opportunity for Ouster going forward.

Colin Rusch (Equity Analyst at Oppenheimer and Company)

Fantastic. Thanks guys.

OPERATOR

Thank you. 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. One moment while we wait for our next question. Thank you. Our next question comes from the line of Kevin Cassidy of Frozen Blast Securities. Your line is now open.

Kevin Cassidy

Thanks for taking my question and Congratulations on launching Rev8 and continuing this high growth. So maybe along those lines, questions around Rev8, you touched on it slightly, I think. Would Rev7 continue to go in production? What's the transition look like for the two different lidars?

Angus Pacala (Chief Executive Officer)

Yeah, great question. So we are fully committed to continuing to produce and support Rev7 for established customer base. I mean, Rev7 has been out for three years now, and we have a lot of customers that have fully qualified and are in active production with the Rev7 lineup. And it's a great set of products. I mean, they are. They really established ouster as a performance technology and reliability leader in the LIDAR space. And we don't want to change any of that. So while Rev8 is designed to be a seamless upgrade for any customer that wants to, we want to make sure that customers that have qualified Rev7 can continue to operate their businesses with it. So this is. We're being customer friendly here and making sure that it's their choice when they transit.

Kevin Cassidy

Oh, great. Okay. And yeah, I remember when Rev7 came out, it was an inflection point for you, especially on ASP increases. Are they similar ASPs between Rev7 and Rev8? Or maybe even talk about the manufacturing and the gross margins between the two?

Angus Pacala (Chief Executive Officer)

Yeah, that's another great question about. So Rev8 was designed to be more affordable than Rev7 and more scalable than. Than Rev7. We want to make sure that we're enabling our customers to continue to scale and to bring this technology to the broader physical AI ecosystem. So the Rev7 was a different scenario where we were introducing a fundamentally new capability and ASPs went up here. It will be a little bit bit more of a mix because we have vastly more customers in production and we can't disrupt the economics of their production. So, yes, we have new products that are incredible, like the OS 1 Max, that probably will command premium ASPs in certain domains. But we also want to make sure that a customer that wants to upgrade the Rev 8 can do so without having a significant economic disruption or commercial disruption to the end business that they've created around a Rev7 product. And just going back again, highlighting Rev8 was built to be more scalable and

Kevin Cassidy

more affordable than Rev7. Great. Okay. Sounds like a good strategy. Thank you.

OPERATOR

Thank you. One moment for our next question. Thank you. Our next question comes from the line of Andres Shepard of Kantor Fitzgerald. Your line is now open.

Anandan

Hey guys, this is Anandan for Andres. Congrats on the quarter and thanks for taking our questions. It's really great to see an Update on the L4 chip with the Rev8 announcement. And, you know, based on the customer interest, as I know you disclosed a really long list of prospects on the call. Maybe. What type of opportunities there do you see in automotive especially with robo taxis ramping up with motional as your customer etc. Who do you see interested there? What type of opportunities? Thank you.

Angus Pacala (Chief Executive Officer)

So Rev8 is a big deal when it comes to the Automotive World because Rev8 is an autograde sensor. They're designed for functional safety. So the ASL B functional safety spec in automotive is incredibly important whether you're, whether it's lidar coordination a consumer car or into robo taxi or robo truck. So Rev 8, the OS 1 Max, the OS 0 purpose designed to be ideal sensors for that market. I'm expecting some pretty significant things there just because it's the first time that we'll have a full suite of lidars that blankets, you know, you can out rig an entire car in ouster digital lidars and, and be a one stop shop. And we obviously we worked in the background with a number of customers, many which I couldn't Name around the Rev8 spec for the automotive domain. But yeah, so a lot of things to come there. I think that just highlighting the long range high resolution aspect of the OS 1 Max and combining that with the colorized point clouds is pretty game changing in the automotive domain where advanced AI algorithms go hand in hand with the kind of flexible physical AI progress that's been made in the ADAS sector. So we think these are really good sensors for that domain and I can't wait to get them in customers hands.

Anandan

Got it, thanks. Appreciate the color and I guess maybe a question for Ken as we think about the gross margins and the EBITDA improving that and as we go through the financials, what's the most important remaining steps to hit breakeven? Is it the revenue scale, the gross margins opex or is it a mix of these things to improve the ebitda?

Ken Giannella (Chief Financial Officer)

Thank you. Well I think number one, the continued innovation that we've been doing is a great stepping stone to showing how our long term model, the consistency that we've brought over the last three years, it's just another proof point of us as a company, Elster continuing to hit those proof points year after year after year. And that long term model, the 30 to 50% growth, you know, obviously with the acquisition it was high but you know, even with xx acquisition, 44% growth year on year, that's just the proof point of our underlying innovation continuing to that long term model. If you do the math on that and you look at our gross margins even staying, we had another strong tailwind that we overcame some economic challenges and constraints in the quarter for a strong GAAP gross margin quarter that 35 to 40%. Coupled with the growth rate and our discipline on the opex, the innovation we've done with with little to no OPEX growth, you know, that 5 to 8% with stereolabs and the $2.3 million acquisition in the Q1, that combined together shows that we're on a strong path for, you know, somewhere within 27, starting to hit that profitability stride. So the model is holding true. We're going to continue to execute towards that. It's a very important milestone for us to get to that. But this innovation is key to unlocking that continued long term growth.

Anandan

Gotcha. Thanks for all the color. Congrats again on the Progress and on Rev8. I'll pass it on. Thank you.

OPERATOR

Thank you. One moment for our next question. Thank you. Our next question comes from the line of Richard Shannon of Cray column. Your line is now open.

Richard Shannon

Well, hi guys. Thanks for getting me here in the queue here. Apologies, I just jumped on the call. I've got like four or five earnings calls here tonight since I had no idea if this question was asked, but I wanted to ask it anyway. The new Rev8 product is quite interesting in many ways. A lot of performance improvements here. But the interesting one here is the ability to do color. I'm curious Angus, if you can tell us a little bit more about that, how you did that. I assume this is something in the detector. Wondering if this is technology that's exclusive inherent to Ouster or are you the first one to try to implement this? Just any ideas that help us understand how you're doing this and then maybe if you want to follow on what applications do you expect to be adopting that first?

Angus Pacala (Chief Executive Officer)

Absolutely. Thanks, Richard. So I mean the Rev8 native colorpoint clouds are a genuine world first invention. This is a really significant milestone for the lidar industry in general and it's a first of its kind technology, no question. So the core innovation happens at the silicon level and this just goes back to Ouster inventing digital lidar. And we've continued to innovate at the silicon architecture level now by fusing in silicon color and lidar data so that customers don't have to think about this and getting an absolutely incredible result for the end customer. So absolutely this is a world first direct innovation. Basically the result of 10 years of pushing on silicon innovation at Ouster and building it into the L4 and L4 Max chips. In terms of the applications, I mean the most the clearest opportunity here is simply more context to train the Next generation of physical AI models. The world truly cannot be described with just 3D information or just color. It really is a combination of those two appertains attributes allows you to both sense the position of a street sign and read what it's saying or sense the location of a car and knowing that it's just slammed on its brakes with brake lights. So training AI models with a colorized point cloud data set is the final frontier that so many of our customers have been trying to reach. It's literally, they call it the holy grail. I've heard that many times from our customers base. This is the holy grail. Colorized point clouds unified and trained in the new AI algorithms. So that's the most obvious use case and that just gives better, safer, more capable AI systems. There's also 1 in 3D surveying. So almost all surveying applications require a combination of structure and color or texture to assess the quality and status of a bridge. Right. If a bridge is degrading, you want to know that it's structurally sagging, but you also want to see that the concrete has cracked. And so color and LIDAR data give you that. So there are obvious applications with a customer set that really span every single customer use case. It's hard to identify any customer that won't benefit from. Which is why I said I think every customer effectively will adopt the Rev8 colorize capability eventually. So again, this just comes back to 10 years pushing silicon innovation into our products and this is the end result.

Ken Giannella (Chief Financial Officer)

Yeah. And Richard, I just want to point out to the last piece of it, you know, this is over almost a dozen patents just on the RGB colorization alone. And then the underlying Rev8 technology building not just from the Rev7, but it's almost 200 patents underneath supporting the Rev8. So that technology and effort that we put in to bring out there is also covered with real innovation with those patents for the company.

Richard Shannon

Okay, that's helpful perspective. And one quick follow up again on this topic here. As you add in color to applications or previously using LiDAR, how do we think about the upsides in value and price that you're able to charge for these sorts of things?

Angus Pacala (Chief Executive Officer)

Thank you. Well, I think that goes back to another question that was asked around ASPs and how this filters down into costs and value capture. And this here really depends on the application. We over try to price our products to enable our customers commercial application. It's one of the key strategies that we've done really well with maintaining strong gross margins, but also working with customers to make sure that the pricing works for their business at scale. And so I'm giving you an unsatisfying answer. Rev8, the technology and getting color into our customers hands. The pricing depends on the customer application. We do want to make sure that customers don't have price as an impediment to adopting an incredible capability that actually enables their long term viability as a company. So I think the key takeaway is Rev 8 is a drop in compatible replacement for Rev 7 so the adoption can be quick and seamless to getting that value. And that's a huge, you know, that's a huge benefit to these customers.

Richard Shannon

Okay, great perspective. I will jump on the line guys. Thank you.

OPERATOR

Thank you. This concludes the question and answer session. I would now like to turn it back to Angus for closing remarks.

Angus Pacala (Chief Executive Officer)

Well, I want to thank everyone for joining the call and really want to thank the ouster team for the push that they made to get Rev8 out. This is a paradigm shift for the industry. We have incredible customer Demand for the Rev8 product. And I can't wait to continue to update everyone that joined the call for the rest of the year on Rev8's adoption through the year. Thank you all.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.