Velodyne and Ouster have merged to create what could be described as a “lidar giant” at a time when interest in lidar – light detection and ranging – sensors are at an all-time high because of their applications in so many robotic and automated machines.
Ouster and Velodyne describe their successful deal as a “merger of equals”. The combined company will keep the name Ouster and continue to trade on New York Stock Exchange under the ticker “OUST”. The two companies have a combined market capitalization of more than $550 million.
The merger creates a lidar powerhouse with over 850 customers spanning the automotive, industrial, robotics, and smart infrastructure industries supported by a robust product portfolio of innovative hardware and software solutions in addition to top-tier engineering and commercial teams.
Following integration, the combined Ouster expects to retain approximately 350 employees with its headquarters in San Francisco and key offices across the Americas, Europe, and Asia-Pacific.
The merger is expected to drive significant cost synergies and value creation for the combined company and its stakeholders.
Key strengths of the combined company:
- Robust product portfolio to serve current and prospective customers, including Ouster OS and DF series sensors, Velodyne Lidar sensors, and Ouster Gemini and Bluecity software;
- Expanded partner ecosystem and distribution channels to accelerate market penetration;
- Innovative digital lidar roadmap and software strategy to drive product adoption and new high-margin revenue streams;
- Extensive intellectual property portfolio with 173 granted and 504 pending patents, backed by over 20 years of combined experience in lidar technology innovation;
- Strong financial position with a combined cash balance of over $315 million as of December 31, 2022; and
- On track to exceed previously projected annualized operating expenditure synergies of $75 million, compared to standalone cost structures as of September 30, 2022, within 9 months.
Angus Pacala, CEO of Ouster, says: “We’re thrilled to have completed the merger with Velodyne so quickly, further boosting our financial position and our ability to accelerate lidar adoption.
“Together, we have an even stronger team backed by a healthy balance sheet, new channel partners, and a wide selection of positive-margin products to serve a diverse set of customers and win more deals than ever before.
“We expect our innovative digital lidar roadmap, amplified by exciting new software solutions, to further expand our serviceable market and catalyze growth across the business.”
Ouster will provide a comprehensive update on its integration plans, including its product offering, technology roadmap, manufacturing and operations footprint, commercial strategy, and additional synergies across the business, on its fourth quarter 2022 earnings call.
Dr Ted Tewksbury, executive chair of Ouster’s board, says: “The combined Ouster is stronger than ever, led by an esteemed executive leadership team and Board with deep company, industry, and financial expertise.
“Ouster is well positioned as a global leader in lidar backed by the talent, products, and technology roadmap to make performant and affordable lidar solutions pervasive, while accelerating time to profitability and enhancing value for stockholders.”
Transaction details
Velodyne shares ceased trading on the NASDAQ after market close on February 10, 2023, and each Velodyne share was exchanged for 0.8204 shares of Ouster common stock.
Barclays served as financial advisor and Latham & Watkins served as legal advisor to Ouster. BofA Securities served as financial advisor and Skadden, Arps, Slate, Meagher & Flom served as legal advisor to Velodyne.
Fourth quarter and fiscal year 2022 earnings
Ouster expects to report its financial results for the fiscal year and fourth quarter ended December 31, 2022 after the market closes on Thursday, March 23, 2023 and will host a conference call that day at 5 pm ET to discuss its results.
As previously announced, Ouster achieved its fiscal year 2022 guidance of $40 to $55 million in revenue and 25 percent to 30 percent in gross margins.
Additionally, Velodyne exceeded its fourth quarter 2022 guidance of $13 million and $15 million in billings and $12 million to $14 million in revenue.
