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Lidar maker Ouster said on Thursday that it remains on track to realize more than $75 million in annual cost savings by the end of 2023, following its merger with rival Velodyne in February.
CEO Angus Pacala told CNBC in an interview following the company’s fourth-quarter report that Ouster has already begun integrating Velodyne’s people and technology into its existing business, cutting about 200 employees from the post-merger business.
Ouster is on track to achieve about $50 million of the promised $75 million in annualized cost savings by the end of the first quarter, he said, based on the two companies’ standalone costs as of the third quarter of 2022.
For its fourth quarter, which reflects Ouster’s results before the merger with Velodyne was completed, the company reported a loss of 23 cents per share on revenue of $11 million. That’s compared with a loss per share of 17 cents on revenue of $11.9 million during the same period a year ago.
For the full year, Ouster reported $41 million in revenue with a 27% gross margin, in line with its previous guidance to investors. The company shipped over 8,600 lidar sensors in 2022 – but it reported a net loss of about $139 million, or 70 cents per share, for the full year.
Shares were down about 9% in after-market trading on Thursday.
Pacala said that he would encourage Ouster’s investors to look ahead.
“We also booked $70 million in business in 2022,” he said. “And I think that number alone is a very strong indication of how this business is going. We’re carrying a large amount of backlog into this year.”
Lidar, short for “light detection and ranging,” is a sensor technology that uses invisible infrared lasers to create a detailed 3D image of the sensor’s surroundings. Ouster’s lidar units and software are tailored for several industry verticals, including automotive applications, industrial machinery, robotics and “smart infrastructure,” in which sensors and data help to manage energy networks, public water-supply systems, and even traffic signals in urban settings.
Ouster shipped over 2,900 lidar sensors in the fourth quarter, up 23% from a year ago. But its gross margins, a measure of its progress toward profitability, fell to 17% in the fourth quarter from 30% in the year-ago period. Pacala said that discounts on some large-volume sales to existing customers hurt its gross margin during the period, as did spending to ramp up production of Ouster’s new REV7 sensor platform, which launched in October.
Pacala said that early customer feedback on the REV7 has been “incredibly positive” and that while the spending to launch the new platform hurt the company’s fourth-quarter results, he expects that it will pay dividends as 2023 unfolds.
As of year-end, Ouster and Velodyne had a combined cash balance of about $315 million. The combined company expects to generate $15 million to $17 million in revenue in the first quarter, not counting the revenue that Velodyne generated before the merger was completed on Feb. 10.
Ouster hasn’t yet said when it will release its first-quarter results.