Setting aside a legal battle over patent infringement, lidar makers Ouster and Velodyne Lidar are now a merged company. They potentially have enough money to scale the critical technology for autonomous trucks and other uses.
But the “merger of equals” that closed on Monday cost 150 jobs, mostly from Velodyne. The merged company will have about 350 employees. Its headquarters will be in San Francisco with offices across the Americas, Europe and Asia-Pacific.
Despite a stock price and market value that’s a fraction of its public debut in March 2021, Ouster is showing resilience in a market that threatens the existence of other makers of laser light-bouncing technology. Lidar uses sensors that measure distance using laser light to generate highly accurate 3D maps of the world around a vehicle.
Velodyne was an early leader among a half-dozen or more lidar startups that went public through reverse mergers with blank-check entities called special purpose acquisition companies.
Despite an initial valuation of $1.8 billion and $267 million in cash received at its SPAC closing in July 2020 with Graf Industrial Corp., Velodyne fell short in customers and operating cash. Ouster and Velodyne agreed to merge in November.
The merged company had $315 million in cash and equivalents at the end of December.
Ouster name survives lidar merger
The “OUST” ticker symbol for Ouster survives on the New York Stock Exchange. Ouster CEO Angus Pacala will remain CEO of the merged company. Velodyne CEO Ted Tewksbury becomes executive chairman. Velodyne becomes an Ouster subsidiary.
“The rationale for moving forward with the Ouster name is really because the Ouster technology is where we see the industry going in the future,” Pacala told FreightWaves. “Ouster has done a good job of building revenue growth over the last five years, and so it was just natural for us to continue.
Velodyne products will continue to be sold under their native name for the “foreseeable future,” Pacala said. “We’re going to be supporting all of those Velodyne products that make up the majority of their revenue base. And this is great for customers. They don’t have to change anything, and they can have a very natural transition between product lines.”
Letting bygones be bygones
The Ouster-Velodyne merger is surprising because it was just a year ago that Velodyne sued Ouster, alleging patent infringement. That matter has been laid to rest.
“A merger like this doesn’t get done unless there’s good chemistry and alignment between the executives,” Pacala said. “Ted and I are aligned in bringing lidar into the ubiquitous future. We want to make this technology something that everybody interacts with on a daily basis.”
For its part, Ouster pursues that goal by creating products for passenger and commercial vehicles, warehouse automation, and automotive and other verticals where vision technology enables efficiency. It has contracts with autonomous startups Plus and Torc Robotics, the independent subsidiary of Daimler Truck North America.
“Historically, in robot trucking, we focused on the surround-view sensor suite, short- and medium-range sensors,” Pacala said.
Ouster’s pre-merger release of a new suite of sensors called the REV7 is powered by a new silicon chip that doubles the range of all Ouster products — 200 meters for long range, 100 meters for medium range and 35 meters for an ultrawide field of view.
“Those are [better than] you’d expect for range numbers, better in a couple of cases than anything you can get on the market,” Pacala said. “The other reason is that we are expanding our offering in robot trucking. The Velodyne merger brings some ultrahigh-range products into the portfolio.”
No SPAC regrets at lidar maker Ouster
Ouster has posted gross margins on its products of better than 25% since going public. It created an automotive division with the all-stock purchase of Sense Photonics in October 2021.
“In the year and a half since that acquisition, we’ve made major progress in releasing this new suite of sensors, the digital flash lidar sensors that are powered in large part by the Sense Photonics technology,” Pacala said. It plans to get samples to automotive OEMs this year.
As to Ouster going public when and how it did, Pacala doesn’t look back despite a stock price that has been as low as 76 cents in the past year. Ouster closed Tuesday at $1.65..
“I wouldn’t change a thing,” he said. “And I can’t stress enough, regardless of the stock price, we are thriving compared to these other players in this space. We’re growing. We have over 850 customers worldwide, growing a positive margin business with an outsourced manufacturing model.”
Others in the lidar space might disagree. Aeva Technologies (NYSE: AEVA) shares are off 69% in the last 52 weeks. Luminar (NASDAQ:LAZR), which counts Daimler Truck North America among its investors, closed Tuesday at $6.42, far off its 52-week high of $16.80.
“We entered the market right before a real downturn, and no one could have planned for that,” Pacala said. “But the fact is we’re going to make it through it and be stronger for it. I think there are going to be a lot of competitors that aren’t going to make it through this period and probably do regret going public.”
Struggling lidar firms Ouster, Velodyne announce merger
Who will survive the coming shakeout of lidar suppliers?
Cepton unveils slimmed-down lidar solution
Click for more FreightWaves articles by Alan Adler.