OUST 10-K & 10-Q changes, risk factors and insider trading

Our future growth depends on penetrating new markets, adapting existing products to new applications and customer requirements, and introducing new and effective products at an opportune time that may then achieve market acceptance. To remain competitive, we continue to develop new products and expand our existing product offerings. For instance, in January 2023, we announced the release of our software, Ouster Gemini, a cloud-backed digital lidar perception platform for crowd analytics, security, and intelligent transportation systems. Since then, we have continued to improve Ouster Gemini offersand theits ability to detect, classify, and track moving objects in real-time using the 3D data from a single or multiple fused Ouster lidar sensors. In connection with the development of our products, we incur and expect to continue to incur substantial R&D costs, which may increase over time. Our R&D expenses were $58.1$65.2 million and $91.2$58.1 million during the years ended December 31, 20242025 and 2023,2024, respectively. Because we account for R&D as an operating expense, these expenditures will adversely affect our results of operations in the future.

We may require additional capital in order to execute on our business plan, and we may require additional capital to fund our R&D efforts and to respond to technological advancements, competitive dynamics or technologies, customer demands, business opportunities, challenges, acquisitions or unforeseen circumstances and we may determine to utilize ouran “at-the-market” offering program or engage in other equity or debt financings or enter into credit facilities for other reasons. In order to stay on our growth trajectory and further business relationships with current or potential customers or partners, or for other reasons, we may issue equity or equity-linked securities to such current or potential customers or partners. We may not be able to timely secure additional debt or equity financing on favorable terms, or at all, particularly in an uncertain economic environment. We maintain the majority of our cash and cash equivalents in accounts with major U.S. and multi-national financial institutions, and our deposits at these institutions exceed insured limits. Market conditions can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we would be able to access uninsured funds in a timely manner or at all. Any inability to access or delay in accessing these funds could adversely affect our business and financial position.

If we raise additional funds through the issuance of equity or convertible debt, including through ouran “at-the-market” offering program, or other equity-linked securities or if we issue equity or equity-linked securities to current or potential customers to further business relationships, our existing stockholders could experience significant dilution. Any debt financing obtained by us in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited and our business results and operations could be materially and adversely affected.

Our forecasts of market growth and estimates of total addressable market may not be accurate.

Market opportunity estimates and growth forecasts included in this Annual Report on Form 10-K and in our other public disclosures are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The forecasts and estimates relating to the expected size and growth of the markets for lidar-based technology and sensing and perception solutions may prove to be inaccurate. Even if these markets experience the forecasted growth, we may not grow our business at similar rates, or at all. Our future growth is subject to many factors, including market adoption of our products, which is subject to many risks and uncertainties. Accordingly, the forecasts and estimates of market size and growth described in this Annual Report on Form 10-K and in our other public disclosures, should not be taken as indicative of our future growth.

•uncertainty regarding the trade relationships among the United States, Canada, China,Thailand, MexicoChina and Taiwan, as well as other countries, and related impacts to our supply chain;

•stringent regulation of the autonomous or other systems or products using our products and stringent consumer protection and product compliance regulations, including but not limited to General Data Protection Regulation in the European Union, European competition law, the Restriction of Hazardous Substances Directive, the Waste Electrical and Electronic Equipment Directive and the European Ecodesign Directivefor Sustainable Products Regulation that are costly to comply with and may vary from country to country;

We have experienced, and may experience in the future, unexpected cancellations of major purchases of our products, which has affected and may adversely affect our results of operations. Prospective customers across our target markets generally must make significant commitments of resources to test and validate our products and confirm that they can be integrated with other technologies before including them in any particular system, product or model. Our products must meet customer specifications for quality, reliability and performance. Integration of our products may reveal errors, defects or incompatibilities with other sensing modalities that, if we are unable to correct them, may result in loss of customers, loss of market share, damage to our brand and reputation, increased service and replacement costs, lack of profitability, and constitute a hindrance to market acceptance. Although our agreements may contain provisions that aim at limiting our liability for damages resulting from defects in our products, such limitations and disclaimers may not be enforceable or otherwise effectively protect us from such claims, and we may have to indemnify our customers against liabilities arising from defects in our products or in their solutions that incorporate our products. These liabilities may also include costs incurred by our channel partners or end users to correct problems or replace our products, which could adversely affect our operating results and business prospects. These inherent operational risks are all the more important thatsince the development cycles of our products with new customers vary widely depending on the application, market, customer and the complexity of the product. In our four target markets, development cycles can be six months to seven or more years. These development cycles require us to invest significant resources prior to realizing any revenue from the commercialization. Our revenue growth may be impaired if the system, product or vehicle model that includes our digital lidar sensorsproducts is unsuccessful, including for reasons unrelated to our technology or software. Long development cycles and product cancellations or postponements may adversely affect our business, results of operations and financial condition.

We sell our products directly to businesses of a range of sizes, including small and mid-sized businesses and educational customers.businesses. Our outstanding trade receivables are not covered by collateral, third-party bank support or financing arrangements, or credit insurance. Our exposure to credit and collectability risk on our trade receivables is higher in certain international markets and our ability to mitigate such risks may be limited. We also have unsecured supplier non-trade receivables resulting from purchases of components by outsourcing partners and other vendors that manufacture sub-assemblies or assemble final products for us. In addition, from time to time, we may make prepayments associated with long-term supply agreements to secure supply of inventory components. While we are implementing procedures to monitor and limit exposure to credit risk on our trade and supplier non-trade receivables, there can be no assurance such procedures will effectively limit our credit risk and avoid losses.

We rely on third-party manufacturers, including Benchmark and Fabrinet, to supply a substantial portion of our products. These arrangements are intended to lower our operating costs, but they also reduce our direct control over production and distribution. This diminished control may have an adverse effect on the quality or quantity of products or services, or our flexibility to respond to changing conditions. If Benchmark or any of our third-party component suppliers or logistics and transportation partners experience interruptions, delays or disruptions in supplying their products or services, including by natural disasters, trade restrictions, public health crises, or work stoppages or capacity constraints, our ability to ship products to distributors and customers may be delayed. Similarly, we source components from countries that mayhave bebeen impacted by tariffs under the current U.S. government, including Thailand, Canada, China,China and Mexico.Taiwan. If the cost of products sourced from these or certain other countries increase significantly due to tariffs or trade restrictions, we may not be able to change suppliers or otherwise avoid or mitigate such costs. Various tariffs enacted in 2025 have been subject to successful legal challenge, but it remains unclear whether and to whom those tariffs may be refunded, and the federal government may attempt to impose new or similar tariffs under alternative statutory mechanisms. Any prolonged uncertainty or volatility in tariff policy could disrupt supply chain planning and increase our costs. In addition, unfavorable economic conditions could result in financial distress among third-party suppliers or manufacturers upon which we rely, thereby increasing the risk of disruption of supplies necessary to fulfill our production requirements and meet customer demands. Additionally, if any of these third parties on whom we rely were to experience quality control problems in their operations and our products do not meet customer or regulatory requirements, we could be required to cover the cost of repair or replacement of any defective products. These delays or product quality issues could have an immediate and material adverse effect on our ability to fulfill orders and could have a negative effect on our operating results. In addition, such delays or issues with product quality could adversely affect our reputation and our relationship with our customers, distributors, value added software resellers, and integrators.

We believe there are a limited number of competent, high-quality suppliers in the industry that meet our strict quality and control standards, and as we seek to obtain additional or alternative supplier arrangements in the future, there can be no assurance that we would be able to do so on satisfactory terms, in a timely manner, or at all. Our suppliers could also discontinue or modify components used in our products. In some cases, the lead times associated with certain components are lengthy and preclude rapid changes in quantities and delivery schedules. We may in the future experience component shortages and price fluctuations of certain key components and materials, and the predictability of the availability and pricing of these components may be limited. Component shortages or pricing fluctuations could be material in the future. In the event of a component shortage, supply interruption or material pricing change from suppliers of these components, we may not be able to develop alternate sources in a timely manner or at all in the case of sole or limited sources. Developing alternate sources of supply for these components may be time-consuming, difficult, and costly and we may not be able to source these components on terms that are acceptable to us, or at all, which may undermine our ability to meet our requirements or to fill customer orders in a timely manner. Any interruption or delay in the supply of any of these parts or components, or the inability to obtain these parts or components from alternate sources at acceptable prices and within a reasonable amount of time, would adversely affect our ability to meet our scheduled product deliveries to our customers. This could adversely affect our relationships with customers and distributors and could cause delays in shipment of our products and adversely affect our operating results. In addition, increased component costs could result in lower gross margins. Even where we are able to pass increased component costs along to our customers, there may be a lapse of time before it is possible to do so, such that we must absorb the increased cost. If we are unable to buy these components in quantities sufficient to meet our requirements on a timely basis, we will not be able to deliver our products to our customers, and cause our customers to use competitors’ products instead of ours.

Our success depends on our ability to enhance and broaden our product offerings in response to changing customer demands, competitive pressures and advances in technologies. Failure to successfully identify, complete, manage and integrate acquisitions could materially and adversely affect our business, financial condition and results of operations and could cause our stock price to decline. We continue to search for viable acquisition candidates or strategic transactions that would expand our market sector and/or global presence, as well as additional products appropriate for current distribution channels. Accordingly, we have previously pursued and may in the future pursue the acquisition of new businesses, products or technologies instead of developing them internally. Our future success will depend, in part, upon our ability to manage the expanded business following these acquisitions, including challenges related to the management and monitoring of new operations and associated increased costs and complexity associated with such acquisitions. For example, in February 2023, we completed the Velodyne Merger and, in October 2021,2026, we completed the acquisition of Sense.Stereolabs, a company with operations outside of the United States. In connection with any acquisitions, we could issue additional equity securities, which would dilute our stockholders, incur substantial debt to fund the acquisitions or assume significant liabilities.

Acquisitions involve many and diverse risks and uncertainties, including risks associated with conductionconducting due diligence, problems integrating the purchased operations, assets, technologies or products, unanticipated costs, liabilities, and economic, political, legal and regulatory challenges due to our inexperience operating in new regions or countries, inability to achieve anticipated synergies, overpaying for acquisitions, invalid sales assumptions underlying potential acquisitions, issues maintaining uniform standards, procedures, controls and policies, diversion of management attention, adverse effects on existing business relationships or acquired company business relationships, risks associated with entering new markets, potential loss of key employees of acquired businesses, increased legal, accounting and compliance costs, and failure to successfully integrate acquired companies, or retain key personnel from the acquired company. Acquisitions may divert our attention from our core business. Acquisitions may require us to record goodwill and non-amortizable intangible assets that will be subject to testing on a regular basis and potential period impairment charges, incur amortization expenses related to certain intangible assets, and incur write offs and restructuring and other related expenses, any of which could harm our operating results and financial condition.

We have been and may in the future become involved in legal andproceedings, regulatorygovernment proceedingsinvestigations, andor commercial or contractual disputes, which could have a material adverse effect on our profitability and consolidated financial position.

We have been and may in the futurefuture, be,be from timesubject to time,various involvedclaims, legal proceedings, and government investigations that arise in litigation,the regulatoryordinary proceedingscourse andof commercial or contractual disputesbusiness and these matters may be significant. These matters may include, without limitation, disputes with our distributors, suppliers and customers, intellectual property claims, stockholder litigation, government investigations, class action lawsuits, personal injury claims, environmental issues, customs and value-added tax disputes and employment and tax issues. In addition, we have in the past and could face in the future a variety of labor and employment claims against us, which could include but is not limited to general discrimination, wage and hour, privacy, ERISA or disability claims. In such matters, government agencies or private parties may seek to recover from us large, indeterminate amounts in penalties or monetary damages (including, in some cases, treble or punitive damages) or seek to limit our operations in some way. TheseIn typesaddition, the Company enters into agreements that include indemnification provisions that can subject the Company to costs and damages in the event of lawsuitsa couldclaim requireagainst significantan managementindemnified timethird and attention or could involve substantial legal liability, adverse regulatory outcomes, or substantial expenses to defend. Often these cases raise complex factual and legal issues and create risks and uncertainties.party.

WeThe have in the past and could in the future be forced to expend significant resources in the defenseoutcome of these lawsuitslitigation or futuregovernment ones,investigation andis weinherently may not prevail.uncertain. No assurances can be given that any proceedings and claims will not have a material adverse impact on our operating results and consolidated financial position or that our available insurance will mitigate this impact.

We are subject to, and must remain in compliance with, numerous complex and changing laws and governmental regulations concerning the manufacturing, use, distribution and sale of our products. Some of our customers also require that we comply with their own unique requirements relating to these matters.

Environmental pollution and climate change have been the subject of significant legislative and regulatory efforts on a global basis, and we believe this will continue both in scope and in the number of countries participating. In addition, as climate change issues become more prevalent, foreign, federal, state and local governments and our customers have increasedhad theiran evolving focus on environmental sustainability, which has resulted in, and may result in new, regulations and customer requirements, which could materially adversely impact our business, results of operations and financial condition. If we are unable to effectively address concerns about environmental impact, our reputation could be negatively impacted, and our business, results of operations or financial condition could suffer. These regulations and requirements apply to our vendors and suppliers, as well. To the extent compliance with, or the effect of, these regulations and requirements on vendors and suppliers result in their inability to deliver their products to us on time or at all, this could materially adversely impact our business, results of operations and financial condition. For example, the State of California has enacted a number of laws that require reporting on carbon neutrality claims and use of carbon removal credits and direct and indirect greenhouse gas emissions and climate-related financial risks. The SEC also adopted and then stayed rules that would require companies to provide certain climate-related disclosures. Additional local, state, federal and international laws and rules with respect to sustainability and environmental matters which have been passed or proposed and may be enacted in the future and the extent and scope of their requirements and impact on our business are unknown. Such rules, as well as other ESG and sustainability-related regulation and legislation, may require us to incur significant additional costs to comply, including the implementation of significant additional internal controls and impose increased oversight obligations on our management and board of directors.

We experience pressure to make commitments or set goals or targets relating to ESG matters that affect companies in our industry, including the design and implementation of specific risk mitigation strategic initiatives relating to environmental sustainability. If we are not effective in addressing ESG matters affecting our industry, such as greenhouse gas emissions and climate-related risks, renewable energy, water stewardship, waste management, diversityresponsible andartificial inclusion,intelligence, human capital matters, responsible sourcing and supply chain, human rights, and social responsibility, among other issues, or setting and meeting relevant sustainability commitments, goals, or targets, our reputation may suffer. As we continue to develop our voluntary ESG program and disclosures, there can be no assurance that regulators, customers, investors, employees, and other stakeholders will determine that these programs and disclosures are sufficiently robust, and we cannot assure that our stakeholders will agree with our ESG strategies. In addition, there can be no assurance that we will be able to attain any announced goals related to our sustainability program, as statements regarding ourany sustainability goals reflect our current plans and aspirations and are not guarantees that we will be able to achieve them within the timelines we announce or at all. Furthermore, both advocates and opponents of such ESG matters are increasingly resorting to a range of activism forms, including media campaigns, shareholder proposals, and litigation to advance their perspectives. There has similarly been an increase in activism and litigation in opposition to certain ESG or human capital initiatives, such as alleging that corporate diversity, equity and inclusion programs may discriminate against certain groups. To the extent we are subject to such activism or challenges, it may require us to incur costs or otherwise adversely impact or business. Changing stakeholder expectations, changing laws, evolving voluntary and regulatory disclosure standards, and our efforts to manage and report on ESG issues present operational, regulatory, reputational, financial, legal, and other risks, any of which could have a material adverse impact on our business, including on our reputation and stock price.

Although we are evaluating and, where we believe appropriate, incorporating the use of AI tools into our operations, such as the use of generative AI tools to assist in the development of code, our use of such tools may subject us to significant competitive, legal, regulatory and other risks, and there can be no assurance that our use of AI tools will enhance our business operations or result in a benefit to us. Our competitors may be more successful in their use of AI tools, including by developing superior products or improving their operations with the assistance of AI. Additionally, there could be adverse impacts from inaccurate or flawed algorithms. Our use of AI tools could also result in the loss of confidential information or intellectual property or an inability to claim or enforce intellectual property rights, as well as subject us to risks related to intellectual property infringement or misappropriation, data privacy, cybersecurity, and the unauthorized use of Company data. The jurisdictions in which we conduct business have adopted and may adopt laws and regulations related to AI, which could cause us to incur greater compliance costs, limit our use of AI tools, or subject us to regulatory investigations and actions or legal liabilities.

We have filed for patents and trademarks in the United States and in certain international jurisdictions, but such protections may not be available, and we may not have applied for protections in all countries in which we operate or sell our products. Though we may have obtained intellectual property and related proprietary rights in various jurisdictions, it may prove difficult to enforce our intellectual property rights in practice. Discovering and protecting against unauthorized use of our intellectual property, products and other proprietary rights is expensive and difficult, particularly internationally. We believe that our patents are foundational in the area of lidar products, and intend to enforce our intellectual property rights. Competitors and other unauthorized parties may attempt to copy or reverse engineer our lidar technology and other aspects of our solutions that we consider proprietary. Litigation may be necessary in the future to enforce or defend our intellectual property rights, to prevent unauthorized parties from copying or reverse engineering our products, to determine the validity and scope of the proprietary rights of others or to block the importation of infringing products into the United States or other markets. Failure to adequately protect our intellectual property rights could result in our competitors offering infringing products, potentially resulting in the loss of some of our competitive advantage, market share and a decrease in our revenue, which would adversely affect our business, operating results, financial condition and prospects.

We have previously identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain effective internal control over financial reporting,reporting in the future, which may result in material misstatements of our consolidated financial statements, cause us to fail to meet our periodic reporting obligations, or cause our access to the capital markets to be impaired.

We previously identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. OurWhile we have remediated our prior material weaknesses, our failure to implement and maintain effective internal control over financial reporting in the future could result in errors in our consolidated financial statements that could result in a restatement of our financial statements and could cause us to fail to meet our reporting obligations, any of which could diminish investor confidence in us and cause a decline in the price of our common stock. Additionally, ineffective internal control could expose us to an increased risk of financial reporting fraud and the misappropriation of assets and subject us to potential delisting from the stock exchange on which we list or to other regulatory investigations and civil or criminal sanctions.

As a public company, we are required pursuant to Section 404(a) of the Sarbanes-Oxley Act of 2022 (the “Sarbanes Oxley Act”) to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting for each annual report on Form 10-K filed with the SEC. This assessment includes disclosure of any material weaknesses identified by our management in internal control over financial reporting. In the future, to the extent we are considered an accelerated filer or a large accelerated filer, our independent registered public accounting firm will also be required pursuant to Section 404(b) of the Sarbanes-Oxley Act to attest to the effectiveness of our internal control over financial reporting in each annual report on Form 10-K to be filed with the SEC. Additionally, any company that Ouster acquires will, subject to certain grace periods in the period immediately following an acquisition, be required to be included in the Company’s assessment as well as the auditors’ attestation, where applicable. We are also required to disclose material changes made in our internal control over financial reporting on a quarterly basis. Failure to comply with the Sarbanes-Oxley Act could potentially subject us to sanctions or investigations by the SEC, the stock exchange on which our securities are listed or other regulatory authorities, which would require additional financial and management resources.

The product offerings we acquired through the Velodyne Merger include the VLP-16, VLP-16 Lite, VLP-16 Hi-Res, VLP-32 and VLS-128. These product offerings are in the final stages of their product life cyclecycle, and we plan to discontinueceased manufacturing them in 2025.

Amazon.com NV Investment Holdings LLC, a wholly-owned subsidiary of Amazon.com, Inc. (“Amazon”), holds a warrant (“Amazon Warrant”) to acquire shares of our common stock. We assumed the Amazon Warrant as part of the Velodyne Merger. As a result of the issuance and sale by usthe Company of an additional 6,045,4284,671,406 shares of common stock in the yeartwelve months ended December 31, 20242025 pursuantin to“at-the-market the At-Market-Issuance Sales Agreementofferings” at prices below the exercise price of the Amazon Warrant, an antidilution adjustment towas made in accordance with the terms of the Amazon Warrant occurred,Warrant, resulting in the increase in the number of shares issuable under the Amazon Warrant by 3,3744,077 shares of common stock and a reduction to the original strike price of the Amazon Warrant to $50.64$50.57 per share. As of December 31, 2024,2025, there were 3,267,8903,271,970 shares of common stock issuable under the Amazon Warrant. The exercise price and the warrant shares issuable upon exercise of the Amazon Warrant are subject to further antidilution adjustments, including in the event we make certain sales of common stock (or securities exercisable or convertible into or exchangeable for shares of our common stock) at a price less than the exercise price of the Amazon Warrant. The Amazon Warrant is subject to vesting; 50% of the unvested Amazon Warrant as of the date of the Velodyne Merger vested as a result of the Velodyne Merger and the remainder will vest over time based on payments by Amazon or its affiliates to us in connection with Amazon’s purchase of goods and services from us.

Commercialization of Lidar Applications. We believe that our lidar solutions are approaching an inflection point of adoption across our target end market applications,applications and that we are well-positioned to capitalize on this market adoption.opportunity. However, as our customers continue research and development projects that rely on lidar technology, it is difficult to estimate the timing of ultimate end market and customer adoption. As a result, we expect that our results of operations, including revenue and gross margins, will improve over time but may fluctuate on a quarterly and annual basis for the foreseeable future. As the market for lidar solutions matures and more customers reach a commercialization phase with solutions that rely on our technology,phase, the fluctuations in our operating results may become less pronounced. In 2025, our strategic business objectives includeincluded growing the software-attached business, transforming the product portfolio, and executing towards profitability.

Number of Customers in Production. For certain strategic customers and markets, our products must be integrated into a broader platform, which then must be tested and validated to achieve system-level performance and reliability thresholds that enable commercial production and sales. The time necessary to reach commercial production varies from six months to several years, based on the market and application. For example, the production cycle in the automotive market tends to be substantially longer than in our other target markets. It is critical to our future success in each of our target end markets that our customers reach commercial production and select our products in their commercial production applications,products, and that we avoid unexpected cancellations of major purchases of our products. Because the timelines to reach production vary significantly and the revenue generated by each customer in connection with commercial production is unpredictable, it is difficult for us to reliably predict our financial performance.

Average Selling Prices (“ASPs”), Product Costs and Margins. Our product costs and gross margins depend largely on the volumes of sensors shipped, the mix of existing and new products soldsold, and the number and variety of solutions we provide to our customers. We expect that our selling prices will vary by target end market and application due to market-specific supply and demand dynamics. We expect to continue to experience some downward pressure on prices from signing anticipated large multi-year agreements in the near term with multi-year negotiated pricing.term. We expect that these customer-specific selling price fluctuationsfluctuations, combined with our volume-driven product costscosts, may drive fluctuations in revenue and gross margins on a quarterly basis. However, notwithstanding any short-term price surcharges on our components, we expect that our volume-driven product costs will decrease over time. In addition, we expect that the current uncertainty surrounding U.S. trade relationships may impact our future product costs and margins, particularly to the extent there are significant tariffs or trade restrictions imposed on goods imported from Thailand, Canada, China or ChinaTaiwan that are used in our products. Our contractual arrangements generally provide that our customers will pay the costs of tariffs. Although we are taking steps to mitigate the impacts of potential tariffs, we do not expect to be able to fully offset or avoid such costs. These costs could also impact customer demand and adoption as described above under “Customers’ Sales Volumes.”

Competition. Lidar is an emerging technology, and there are many competitors for this growing market which has created downward pressure on our ASPs.market. Absent the introduction of new technology, we expect this pressurecompetition to continue to push our ASPs lower in the coming years. However, we believe that because of the simplicity of our digital lidar technology,technology and the value proposition of our lidar solutions, we are well-positioned to scale more effectively than our competitors and canto leverage this scalecontinue to deliver positive gross margins.

Continued Investment and Innovation. We believe that we are a leading lidar provider. Our financial performance is significantly dependent on our ability to maintain this leading positionposition, which is further dependent on the investments we make in researchgrowing our digital lidar product portfolio and development.increasing the capabilities of our software solutions. We believe it is essential that we continue to identify and respond to rapidly evolving customer requirements, including successfully progressing our digital lidar roadmap and developing technologies that will enhance the operating performance of our products. Our “L4” sensor prototypes are generating rich point clouds and have moved into validation testing. Our “Chronos” chip has been fabricated by our foundry partner and is now undergoing in-house testing. If we fail to continue our innovation, our market position and revenue may be adversely affected, and our investments in that area will not be recovered.

Supply Chain Continuity. Some of the key components in the products we have designed or are currently designing come from limited or single source suppliers. If these third parties experience financial, operational, manufacturing capacity or other difficulties, or experience shortages in required components, or if they are otherwise unable or unwilling to continue to manufacture these components in required volumes or at all, our supply may be disrupted or be on less favorable terms. For example, we may be required to seek alternate manufacturers or suppliers for our products. It would be time-consuming, and could be costly and impracticable, to begin to use and qualify new manufacturers, components or designs, and suchSuch changes could cause significant interruptions in supply and could have an adverse effect on our ability to meet our scheduled product deliveries and may subsequently lead to the loss of sales. In addition, we are continuing to monitor the impact of the recent tariff and trade policy actions taken by the United States and foreign governments on our supply chain. We are continuously considering ways to mitigate the impact of these evolving tariff and trade policy actions and the uncertainties arising from the rapidly changing global trade environment on our supply chain; however, there can be no assurances that our current or future mitigation efforts will be successful.

Market Trends and Uncertainties. We anticipate increasing demand for our digital lidar solution.solutions We estimatewithin a multi-billion dollar total addressable market (“TAM”) for our solutions in the future.. We define our TAM as applications in the automotive, industrial, robotics, and smart infrastructure end markets where we actively engage and maintain customer relationships. Each of our target markets is potentially a significant global opportunity, and these markets have historically been underserved by limited or inferior technology or not served at all. We believe we are well positionedwell-positioned in our market as a leading provider of high-resolution lidar sensors.

We may not be able to take advantage of demand if we are unable to anticipate regulatory changes and adapt quickly enough to meet such new regulatory standards or requirements applicable to us or to our customers’ products in which our lidar sensors are used. Market acceptance of lidar technology and active safety technology depend upon many factors, including cost, performance, safety performance, regulatory requirementsrequirements, international taxes, and internationaltariff taxesand ortrade tariffspolicy actions of governments related to such technologies. These factors may impact the ultimate market acceptance of our lidar technology.

International Expansion. We view international expansion as an important element of our strategy to increase revenue and achieve profitability. We continue to position ourselves in geographic markets that we expect to serve as important sources of future growth. We have an existing presence in three regions: Americas; Asia and Pacific; and Europe, Middle East and Africa. We intend to expand our presence in these regions over time including through distribution partnerships. Expanded global reach will require continued investment and may expose us to additional foreign currency risk, international taxestaxes, tariff and tariffs,trade policy actions of foreign governments, legal obligations, export/import regulations and additional operational costs. These risks and challenges that may impact our ability to meet our projected sales volumes, revenues, and gross margins. In addition, the current uncertainty surrounding U.S. trade relationships may impact our future international sales, particularly to the extent there are significant tariffs or trade restrictions imposed on goods imported from the United States.

Our gross profit equals total revenues less our total cost of revenues, and our gross margin is our gross profit expressed as a percentage of total revenue. Our gross margin is subject to quarterly fluctuations in product mix, price and volume. Because revenue from royalties from long-term IP license contracts is recorded without any associated cost of revenue, our gross profit and gross margin are favorably impacted by royalties from long-term IP license contracts, particularly in the year ended December 31, 2025.

Our income tax provision consists of federal, state and foreign current and deferred income taxes. Our income tax provision for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items arising in the quarter. Our effective tax rate differs from the U.S. statutory tax rate primarily due to valuation allowances on deferred tax assets as it is more likely than not that some, or all, of our deferred tax assets will not be realized. We continue to maintain a full valuation allowance against our U.S. Federal and state deferred tax assets, excluding specific balances due to the Velodyne Merger.assets. The income tax provision (benefit) for the years ended December 31, 20242025, and 2023,2024, respectively, was not material to the Company’s consolidated financial statements. For the year ended December 31, 2025, the Company recorded an income tax benefit of $2.9 million primarily related to the resolution of the Company’s IRS examination of its 2017 and 2018 tax years offset in part by income taxes for its foreign operations.

Revenue increased across the geographic regions of the Americas,Americas and Asia and Pacific, andoffset in part by decreased revenue in Europe, the Middle East and Africa as compared to the comparable period in the prior year. The revenue increasesincrease in thosethe geographicAmericas regions werewas primarily attributable to higher sales of the REV7 sensor. The revenue increase in Asia and Pacific was primarily attributable to the recognition of $22.8 million of revenue on royalties from long-term IP license contracts.

Cost of revenue decreasedincreased by $4.3$15.3 million, or 6%,22%, to $70.6$85.9 million for the year ended December 31, 20242025 from $75.0$70.6 million for the prior year. The decreaseincrease in cost of revenue was primarily attributable to higher volume of sensor shipments, higher product manufacturing, stock based compensation and tariff related costs, partially offset by lower excess and obsolete inventory charges and compensation-relateda expenses,$2.4 partiallymillion offsetcost byreduction increasedassociated shipments overwith the period.ERC that was received in the year ended December 31, 2025.

Gross margin rose to 36%49% for the year ended December 31, 20242025 from 10%36% in the prior year primarily as a result of the recognition of revenue on royalties from long-term IP license contracts for which there is no associated cost of revenue as well as the factors described above related to the increased sales of REV7 sensor.

Research and development expenses decreasedincreased by $33.1$7.1 million, or 36%,12%, to $58.1$65.2 million for the year ended December 31, 20242025 from $91.2$58.1 million in the prior year. The decreaseincrease wasis primarily attributable to the reductionCompany’s continuing investment in compensationthe expensesresearch and otherdevelopment of new product offerings and higher annual incentive compensation costs fromfor employees engaged in the restructuringresearch and costproduct development function, offset in part by $3.3 million in ERC benefits recognized as a reduction initiativesto afterresearch and development expense in the closingyear ofended theDecember Velodyne31, Merger.2025.

Sales and marketing expenses decreased by $13.8$0.2 million, or 33%,1%, to $27.9$27.6 million for the year ended December 31, 20242025 from $41.6$27.9 million in the prior year. The decrease was primarily attributabledue to the reduction$1.1 million in compensationERC expensesbenefits recognized as a reduction to sales and othermarketing costsexpense fromin the restructuringyear ended December 31, 2025, offset in part by an increase in sales and costmarketing reductioncompensation initiativesand afterpersonnel therelated closing of the Velodyne Merger.expenses.

General and administrative expenses decreasedincreased by $23.3$5.9 million, or 28%,10%, to $58.7$64.6 million for the year ended December 31, 20242025 from $82.0$58.7 million in the prior year. The decreaseincrease was primarily attributable to thehigher legal and professional fees to support an acquisition transaction and other corporate initiatives, partially offset by $1.2 million in ERC benefits recognized as a reduction in compensation expensesgeneral and otheradministrative costsexpense fromin the restructuringyear andended costDecember reduction31, initiatives after the closing of the Velodyne Merger.2025.

The year-over-year decrease in interest incomeexpense was primarily attributabledue to lowerthe averagefull cashpay andoff cashof equivalentour balances.debt facility in August 2024.

Other income (expense), net was not material for the years ended December 31, 20242025 and December 31, 2023.2024. The year-over-year increase in other income (expense), net was due to a R&D tax credit refund of $0.7 million from a foreign jurisdiction.

Our effective tax rate was (0.56)%4.64% for the year ended December 31, 20242025 compared to our effective tax rate of (0.140.56)% for the prior year. Our tax expense changed during the year ended December 31, 2024, compared to the prior year, primarily due to income tax expense from profitable foreign jurisdictions.

Our principal sources of liquidity are our cash and cash equivalents and short-term investments, cash generated from sales of our products, and sales of common stock under our at-the market equity offering program.programs.

The remaining availability under the ATM Agreement as of December 31, 20242025 is approximately $58.6$2.5 million. We currently intend to use the net proceeds from the sale of shares pursuant to the ATM Agreement for working capital and general corporate purposes.

During the year ended December 31, 2024,2025, operating activities used $33.7$40.0 million in cash. The primary factors affecting our operating cash flows during this period were our net loss of $97.0$60.4 million, offset by our non-cash charges of $51.9$52.5 million primarily consisting of depreciation and amortization of $9.8$7.8 million, stock-based compensation of $40.5$40.8 million, amortization of right-of-use asset of $4.9$5.1 million and inventory write-down of $2.1$0.4 million. The changes in our operating assets and liabilities of $11.5$32.1 million waswere primarily due to aan decreaseincrease in accounts receivable of $1.7$8.0 million, decreasean increase in inventory of $4.7$6.8 million, an increase in prepaid expenses and other assets of $21.3$3.6 million, an increase in accounts payable of $2.5$13.2 million, ana increasedecrease in contract liabilities of $19.0$14.3 million, a decrease in operating lease liability of $6.3$6.7 million, and a decrease in accrued and other liabilities of $28.1$5.9 million.

During the year ended December 31, 2023,2024, operating activities used $137.9$33.7 million in cash. The primary factors affecting our operating cash flows during this period were our net loss of $374.1$97.0 million, impactedoffset by our non-cash charges of $257.7$51.9 million primarily consisting of inventory write-down of $10.0 million, interest expense and loss on extinguishment of debt of $4.0 million, goodwill impairment charges of $166.7 million, depreciation and amortization of $17.1$9.8 million, stock-based compensation of $57.7$40.5 million, loss on write-off of construction in-progress and right-of-use asset impairment of $1.7 million, and amortization of right-of-use asset of $4.5$4.9 million and inventory write-down of $2.1 million. The cash used in changes in our operating assets and liabilities of $21.5$11.5 million was primarily due to an increase in inventoriesaccounts receivable of $4.0$1.7 million, decrease in inventory of $4.7 million, a decrease in prepaid expenses and other assets of $21.3 million, an increase in accounts payable of $8.5$2.5 million, an increase in contract liabilities of $19.0 million, a decrease in operating lease liability of $6.3 million, and a decrease in accrued and other liabilities of $8.1$28.1 million.

During the year ended December 31, 2024, cash provided by investing activities was $14.7 million, consisting primarily of $162.3 million proceeds from sales and maturities of short-term investments andoffset in part by purchases of short-term investments of $144.6 million.

During the year ended December 31, 2023,2025, cash provided by financing activities was $15.7$97.6 million, consisting primarily of $14.6$95.6 million of proceeds from the issuance of common stock under the ATM Agreement and proceeds from employee stock purchase program of $1.2 million.Agreement.

Revenue is recognized when a customer obtains control of promised products or services. The amount of revenue recognized reflects the consideration that the Company expects to be entitled to receive in exchange for these products or services. Significant judgment is applied when the Company determines the amount and timing of revenue from the intellectual property (“IP”) royalties when Company contracts with customers to license rights to its IP.

Our wholly-owned subsidiary, Stereolabs, which we acquired on February 4, 2026, is a pioneer in AI vision and perception solutions that has developed a leading portfolio of industrial-grade ZED-cameras, AI compute powered by NVIDIA’s platform, and in-house AI vision software to power solutions across robotics, industrials, and smart infrastructure. Its high-performance ZED cameras provide best-in-class 2D and 3D color data with ultra-low latency, and its embedded AI compute hardware facilitates native, real-time sensor fusion at the edge. We believe Stereolabs’s perception software, built on proprietary AI models, is the foundation for thousands of developers’ autonomy workflows. The Stereolabs acquisition positions Ouster as the foundational end-to-end sensing and perception platform for Physical AI. We have invested heavily in patents since our inception, pursuing comprehensive coverage of invention families and use cases, with broad international coverage.

Commercialization of LidarOur Applications.Product WeOfferings. believe that our lidar solutions are approaching an inflection point of adoption across our target end market applications and that we are well-positioned to capitalize on this market adoption. However, asAs our customers continue research and development projects that rely on lidarlidar, technology,or a combination of lidar, camera, and AI compute for Physical AI, it is difficult to estimate the timing of ultimate end market and customer adoption. As a result, we expect that our results of operations, including revenue and gross margins, will improve over time but may fluctuate on a quarterly and annual basis for the foreseeable future. As the market for lidar solutions matures and more customers reach a commercialization phase with solutions that rely on our technology, the fluctuations in our operating results may become less pronounced. Our strategic business objectives also include growing the software-attached business, transforming the product portfolio, and executing towards profitability.

Competition. Lidar is an emerging technology, and there are many competitors for this growing market which has created downward pressure on our ASPs. Absent the introduction of new technology, we expect this pressure to continue to push our ASPs lower in the coming years. However, we believe that because of the simplicity of our digital lidar technology, the increasing capabilities of our software solutions, the value of a complete end-to-end sensing and perception platform, and efficiencies created by our established manufacturing partnerships and suppliers, including Benchmark and Fabrinet,Fabrinet. weWe are well-positioned to scale morea effectivelyset thanof differentiated offerings that allows us to sustain and potentially increase our competitorsgross margins and canmitigate leveragepricing thispressure scaleover to deliver positive gross margins.time.

Continued Investment and Innovation. We believe that we are a leading lidar3D sensing provider. Our financial performance is significantly dependent on our ability to maintain this leading position, which is further dependent on the investments we make in research and development. We believe it is essential that we continue to identify and respond to rapidly evolving customer requirements, including successfully progressing our digitalsensing lidarand perception platform roadmap and developing technologies that will enhance the operating performance of our products. We announced our Rev8 family of products. Our “Chronos” chip has been fabricated by our foundry partner and is now undergoing in-house testing. If we fail to continue our innovation, our market position and revenue may be adversely affected, and our investments in that area will not be recovered.

Supply Chain Continuity. Some of the key components in the products we have designed or are currently designing come from limited or single source suppliers. If these third parties experience financial, operational, manufacturing capacity or other difficulties, or experience shortages in required components, or if they are otherwise unable or unwilling to continue to manufacture these components in required volumes or at all, our supply may be disrupted or be on less favorable terms. For example, we may be required to seek alternate manufacturers or suppliers for our products. It would be time-consuming, and could be costly and impracticable, to begin to use and qualify new manufacturers, components or designs, and such changes could cause significant interruptions in supply and could have an adverse effect on our ability to meet our scheduled product deliveries and may subsequently lead to the loss of sales. In addition, we are monitoring impact of the recent tariff and trade policy actions taken by the United States and foreign governments on our supply chain. We are considering ways to mitigate the impact of these tariff and trade policy actions and the uncertainties arising from the rapidly changing global trade environment on our supply chain; however, there can be no assurances that such mitigation efforts will be successful.

Market Trends and Uncertainties. We anticipate increasing demand for our digitalsensing lidarand solution.perception platform. We estimate a multi-billion dollar total addressable market (“TAM”) for our solutions in the future. We define our TAM as applications in the automotive, industrial, robotics, and smart infrastructure end markets where we actively engage and maintain customer relationships. Each of our target markets is potentially a significant global opportunity, and these markets have historically been underserved by limited or inferior technology or not served at all. We believe we are well-positioned in our market as a leading provider of high-resolutionhigh-performance lidardigital sensors.lidar, cameras, AI compute, sensor fusion and perception software, and AI models.

We may not be able to take advantage of demand if we are unable to anticipate regulatory changes and adapt quickly enough to meet such new regulatory standards or requirements applicable to us or to our customers’ products in which our lidar sensors are used. Market acceptance of lidar technology and active safety technology depend upon many factors, including cost, performance, quality and reliability, safety performance, regulatory requirements and international taxes or tariff and trade policy actions of governments related to such technologies. These factors may impact the ultimate market acceptance of our lidar technology.

Our income tax provision consists of federal, state and foreign current and deferred income taxes. Our income tax provision for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items arising in the quarter. Our effective tax rate differs from the U.S. statutory tax rate primarily due to valuation allowances on deferred tax assets as it is more likely than not that some, or all, of our deferred tax assets will not be realized. We continue to maintain a full valuation allowance against our U.S. Federal, state and certain foreign deferred tax assets, excluding specific balances duerelated to the Stereolabs acquisition. The Company’s income tax provision for interim periods is determined using an estimate of the Company’s annual effective tax rate, adjusted for discrete items arising in the quarter. The tax provision for the three and six months ended MarchJune 31,30, 2026 was $0.6$0.1 million and $0.7 million, whichrespectively. The income tax provision for the six months ended June 30, 2026 includes $0.9 million of discrete items primarily related to withholding taxes on sales to customers. OurDiscrete income tax expenseitems for the three months ended MarchJune 31,30, 2026, were not significant. The income tax benefit for the three and six months ended June 30, 2025 was not$3.6 materialmillion and $3.4 million, respectively and is primarily related to ourthe unauditedresolution condensedof consolidatedan financialIRS statements.examination of the Company’s 2017 and 2018 tax years offset by income taxes for its foreign operations.

Comparison of the three months ended MarchJune 31,30, 2026 and 2025

Revenue increased by $15.9$19.6 million or 49%,56%, to $48.6$54.6 million for the three months ended MarchJune 31,30, 2026 from $32.6$35.0 million for the comparable period in the prior year. The increase in revenue was primarily driven by increased sensor volumes as customers increased their purchase levels compared to the prior year period, offset in part by decreased ASPs. The increase was also attributable, in part, to the inclusion of revenue from products acquired through the Stereolabs acquisition, for which there was no comparable revenue contribution in the prior-year period.

We recorded $0.3$1.9 million and $1.5 million, respectively in patent royalty revenue for the three months ended MarchJune 31,30, 20262026. andPatent royalty revenue for the three months ended MarchJune 31,30, 2025.2025, was not significant.

Cost of revenue increased by $8.6$8.7 million, or 45%, to $27.7$27.9 million for the three months ended MarchJune 31,30, 2026 from $19.1$19.2 million for the comparable period in the prior year. The increase in cost of revenue was primarily attributable to higher product manufacturing costs,shipments, the inclusion of manufacturing costs from our recently-acquired subsidiary, Stereolabs, higher amortization costs from acquired intangible assets and tariffs.higher excess and obsolete inventory charges, offset in part by IEEPA import duty refunds. Cost of revenue for the three months ended June 30, 2026 included a $5.4 million cost reduction associated with the IEEPA import duty refunds. Cost of revenue for the three months ended June 30, 2025 included a $1.7 million cost reduction associated with the ERC that was received during the period.

Gross margin rose to 43%49% for the three months ended MarchJune 31,30, 2026 from 41%45% in the prior year period primarily due to increased sensor volumes, offset in part by lower ASPsvolumes and theIEEPA inclusionimport ofduty production costs from our recently-acquired subsidiary, Stereolabs.refunds.

Research and development expenses increased by $1.1$2.2 million, or 7%,13%, to $16.1$19.3 million for the three months ended MarchJune 31,30, 2026 from $15.0$17.1 million for the comparable period in the prior year. The increase was primarily attributable to the inclusion of Stereolabs and the increase in compensation expenses for employees engaged in research and product development function.function, offset in part by lower prototype materials and lower stock compensation expense. Additionally, in the three months ended June 30, 2025, the Company recognized $2.2 million in benefits resulting from an ERC as a reduction to research and development expenses.

Sales and marketing expenses increased by $1.4$2.2 million, or 22%,32%, to $7.8$9.2 million for the three months ended MarchJune 31,30, 2026 from $6.4$7.0 million for the comparable period in the prior year. The increase was primarily attributable to the inclusion of Stereolabs and the increase in the amortization of acquisition-related intangible assets.assets, offset in part by lower stock compensation expense. Additionally, in the three months ended June 30, 2025, the Company recognized $0.7 million benefits that were received resulting from an ERC as a reduction to the sales and marketing expenses.

General and administrative expenses increaseddecreased by $0.2$0.3 million, or 1%,2%, to $16.1$18.2 million for the three months ended MarchJune 31,30, 2026 from $15.9$18.5 million for the comparable period in the prior year. The increasedecrease was primarily attributable to lower litigation and settlement activities, offset in part by transaction and integration costs associated with the Stereolabs acquisition, offsetand increased stock compensation expense. Additionally, in partthe bythree lowermonths litigationended June 30, 2025, the Company recognized $0.8 million ERC benefits, that were received as a reduction to the general and settlementadministrative activities.expenses.

Interest Income and Other Expense,Income (Expense), Net

The year-over-year increasechange in interest income wasis primarily due primarily to $0.6the millionreceipt inof interest income earned on an IRS income tax refund receivedpayment during the three months ended MarchJune 31,30, 2025 that did not reoccur, partially offset by a higher average investment balance during the three months ended June 30, 2026.

We were subject to income taxes in the United States and miscellaneous foreign jurisdictions for the three months ended MarchJune 31,30, 2026 and 2025. The Company’s income tax provision for interim periods is determined using an estimate of the Company’s annual effective tax rate, adjusted for discrete items arising in the quarter. The tax provision for the three months ended March 31, 2026 was $0.6 million, which includes $0.9 million of discrete items primarily related to withholding taxes on sales to customers. Our income tax expense for the three months ended March 31, 2025 was not material to our unaudited condensed consolidated financial statements.

As of MarchJune 31,30, 2026, we had an accumulated deficit of $990.9$1.0 millionbillion and cash, cash equivalents, restricted cash and short-term investments of $174.9$262.5 million. Management believes that our existing sources of liquidity will be sufficient to fund our operations for at least twelve months from the date of this Quarterly Report. However, we may need to raise, or may choose to raise additional capital in the future to support our operations.

On May 12, 2025, wethe Company entered into an At Market IssuanceAt-Market-Issuance Sales Agreement (the “Former ATM Agreement”) with Oppenheimer & Co. Inc., pursuant to which the Company maycould offer and sell, from time to time, through or to the agent, acting as agent or principal,sell shares of the Company’s common stock, having an aggregate offering price of up to $100.0 million.

From the date of the inception of theFormer ATM Agreement to Marchits 31, 2026,termination, the Company sold 4,671,406 shares at a weighted-average sales price of $20.88 per share under the ATM Agreement,share, resulting in cumulative gross proceeds to the Company totaling approximately $97.5 million before deducting offering costs, sales commissions and fees. Cumulative net proceeds to the Company totaled approximately $95.6 million after deducting offering costs, sales commissions and fees. The Company plans to use the net proceeds from sales under the ATM Agreement for working capital and general corporate purposes.

We are a party to many contractual obligations involving commitments to make payments to third parties. These obligations impact our short-term and long-term liquidity and capital resource needs. Certain contractual obligations are reflected on the unaudited condensed consolidated balance sheet as of MarchJune 31,30, 2026, while others are considered future commitments. Our contractual obligations primarily consist of non-cancelable purchase commitments with various parties to purchase goods or services, primarily inventory, entered into in the normal course of business and operating leases. For information regarding our other contractual obligations, refer to Note 7. Commitments and Contingencies to our unaudited condensed consolidated financial statements included in this Quarterly Report as well as Note 7. Leases and Note.Note 8. Commitments and Contingencies Part II, Item 8 of our 2025 Annual Report.