Results
Ouster Inc.
05/05/2026 | Press release | Distributed by Public on 05/05/2026 15:09
Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our results of operations and financial condition of Ouster, Inc. ("we," "us," "our," the "Company," "Ouster") should be read together with the information set forth in our unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report, as well as our audited consolidated financial statements and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in Ouster's Annual Report on Form 10-K (the "2025 Annual Report") filed with the SEC on March 2, 2026. This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties, including with respect to the potential future impact of tariffs and other trade measures on the Company's business and results of operations. Ouster's actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section titled "Risk Factors" in Ouster's 2025 Annual Report and as may be further updated from time to time in the Company's other filings with the SEC. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.
Overview
Ouster was founded in 2015 with the invention of its high-performance digital lidar and is headquartered in San Francisco, California. We are a leader in sensing and perception for Physical AI across industrial, robotics, automotive, and smart infrastructure. With a unified platform of high-performance digital lidar, cameras, AI compute, sensor fusion and perception software, and AI models, Ouster delivers solutions that improve quality of life by enabling machines to sense, think, act, and learn in the physical world. To grow our business, we have introduced new product lines and made several acquisitions to accelerate growth. We continue to invest in growing our hardware product portfolio, increasing the capabilities of our software solutions, and opportunistically expanding our sales and marketing efforts.
We are a leading global provider of lidar sensors and solutions. We design and manufacture high-resolution digital lidar sensors that offer advanced 3D vision to machinery, vehicles, robots, and fixed infrastructure assets, which allows each to understand and visualize the surrounding world and enable safe operation and autonomy. We believe our sensors are one of the highest-performing, lowest-cost lidar solutions available today.
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.
We believe that our extensive patent coverage creates material barriers to entry.
Products and Solutions
Ouster's hardware product offerings include a broad portfolio of digital lidar sensors, monocular and stereo cameras, and AI compute. On May 4, 2026, we announced the launch of the Rev8 OS family of digital lidar sensors. Powered by our next-generation L4 and L4 Max Ouster Silicon, the Rev8 family features upgraded OS0, OS1, and OSDome sensors and adds the flagship 256-channel OS1 Max. Rev8 introduces the world's first native color lidar sensors, provides up to double the range and resolution of the previous generation, and is designed for functional safety, reliability, affordability, and scale. Within our OS sensor models, we offer numerous customization options, all enabled by embedded software.
In addition, our portfolio has expanded to include Stereolabs's growing product line, which now includes the ZED X, ZED X Mini, and ZED X Nano stereo cameras, the ZED X One monocular camera, and the ZED Box edge compute. We are currently developing our solid-state digital flash ("DF") sensors, which is a suite of short, mid, and long-range solid-state digital lidar sensors that provide uniform precision imaging without motion blur across an entire field of view.
Ouster provides Physical AI solutions tailored for smart infrastructure applications. Our software solutions, built on proprietary AI models, enable real-time people and object detection, classification, and tracking for actionable, intuitive, and customizable insights while preserving personally identifiable information. Ouster Gemini is our digital lidar powered perception platform designed for security and crowd analytics, logistics, and intelligent transportation systems. Ouster BlueCity is our turnkey real-time traffic management solution for analytics and signal actuation to improve traffic flow, road safety, and urban planning.
Factors Affecting Our Performance
Commercialization of Lidar Applications. We 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, 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, 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.
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, 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.
Customers' Sales Volumes. Our customer base is diversified, and we aim to continue to penetrate diverse end markets to increase our sales volumes. Ultimately, widespread adoption of our customers' products that incorporate our lidar solutions will depend on many factors, including the size of our customers' end markets, market penetration of our customers' products that incorporate our digital lidar solutions, our customers' ability to sell their products, and the financial stability and reputation of our customers.
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 sold 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. We expect that these customer-specific selling price fluctuations combined with our volume-driven product costs may drive fluctuations in revenue and gross margins on a quarterly basis. 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, Taiwan or China that are used in our products. Although we are taking steps to mitigate the impacts of potential tariffs, we do not expect to be able to offset or avoid such costs in full. In addition, our contractual arrangements generally provide that our customers will pay the costs of tariffs. These costs could 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. 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, and efficiencies created by our established manufacturing partnerships and suppliers, including Benchmark and Fabrinet, we are well-positioned to scale more effectively than our competitors and can leverage this scale 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 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 digital lidar 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 digital lidar solution. 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-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 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.
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 taxes, tariff and trade policy actions of foreign governments, legal obligations, geopolitical conflict, including war in the Middle East, export/import regulations and additional operational costs. These risks and challenges 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.
Components of Results of Operations
Revenue
The majority of our revenue comes from the sale of our lidar sensors, cameras, and AI compute systems both directly to end users and through distributors both domestically and internationally. We recognize revenue from product sales when the performance obligation of transferring control of the product to the customer has been met, generally when the product is shipped. We also recognize revenue by performing services or obligations related to product development, validation, IP license agreements, maintenance under our extended warranty contracts, and shipping. We do not expect these services to be material components of revenue, cost of revenue or gross margin in the near future. Performance obligations related to services are generally recognized over time, based on cost-to-cost input basis or straight-line over time. Amounts billed to customers related to shipping and handling are classified as revenue, and we have elected to recognize the cost of shipping activities that occur after control has transferred to the customer as a fulfillment cost rather than a separate performance obligation. All related costs are accrued and recognized within cost of revenue when the related revenue is recognized.
Most of our customers are innovators and early technology adopters incorporating our products into their solutions. Currently, our product revenue consists of both customers ordering small volumes of our products that are in an evaluation phase and customers that order larger volumes of our products and have more predictable long-term production schedules. However, we believe we are still at the very beginning of the adoption curve, and some customers are still learning their growth and demand rates which can impact the timing of purchase orders quarter to quarter. As we grow our business, we expect to continue to improve our own understanding of our customers' needs and timelines, and expect the timing of orders will have a less notable impact on our quarterly results.
Cost of Revenue
Cost of revenue consists of the manufacturing cost components, personnel-related expenses, including salaries, benefits, and stock-based compensation directly associated with our manufacturing organization, and amounts paid to our third-party contract manufacturer and vendors. Our cost of revenue also includes depreciation of manufacturing equipment, amortization of intangible assets, an allocated portion of overhead, facility and information technology ("IT") costs, warranty expenses, excess and obsolete inventory, tariffs, shipping costs and merchant fees.
Gross Profit and Gross Margin
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.
Operating Expenses
Research and Development Expenses
Research and development ("R&D") activities are primarily conducted at our San Francisco headquarters and our additional R&D facilities in France, Scotland and Canada and consist of the following activities:
•Design, prototyping, and testing of proprietary electrical, optical, and mechanical subsystems for our products;
•Robust testing for safety certifications;
•Development of new products and enhancements to existing products in response to customer requirements including firmware and software development of lidar and camera integration products;
•Custom SoC design for Ouster's digital lidar products; and
•Development of custom manufacturing equipment.
R&D expenses consist of personnel-related expenses, including salaries, benefits, and stock-based compensation, for all personnel directly involved in R&D activities, third-party engineering and contractor costs, prototype expenses, amortization of intangible assets, and an allocated portion of overhead, facility and information technology ("IT") costs that support R&D activities.
R&D costs are expensed as they are incurred. Our investment in R&D will continue to grow as we invest in new lidar technology and related software. Our absolute amount of R&D expenses is expected to grow over time; however, we expect R&D as a percentage of revenue to decrease as our business grows.
Sales and Marketing Expenses
Our business development, customer support and marketing teams are located in offices worldwide. Selling and marketing expenses consist of personnel-related expenses, including salaries, commissions, benefits, and stock-based compensation, for all personnel directly involved in business development, customer support, and marketing activities, and marketing expenses including trade shows, advertising, and demonstration equipment. Sales and marketing expenses also include amortization expense of intangible assets related to customer relationships and a trade name associated with the acquisitions and an allocated portion of facility and IT costs that support sales and marketing activities. We expect sales and marketing expenses as a percentage of revenue to decrease over time as our business grows.
General and Administrative Expenses
General and administrative expenses consist of personnel-related expenses, including salaries, benefits, and stock-based compensation, of our executives and members of the board of directors, finance, human resources, an allocated portion of facility and IT costs that support general and administrative activities, as well as amortization of intangible assets, legal fees, patent prosecution, accounting, finance and professional services, as well as insurance and bank fees. We have experienced and may in the near-term experience additional increases in general and administrative expenses related to legal, accounting, finance and professional services costs associated with acquisition-related transaction and integration costs, litigation activities, hiring more personnel and consultants to support our international expansion and compliance with the applicable provisions of the Sarbanes-Oxley Act and other SEC rules and regulations as a result of being a public company. Our absolute amount of general and administrative expenses will grow over time; however, we expect general and administrative expenses as a percentage of revenue to decrease as our business grows.
Interest Income and Other Income (Expense), Net
Interest income consists primarily of income earned on our cash and cash equivalents and short-term investments. These amounts will vary based on our respective balances and market rates. Other income (expense), net consists primarily of change in fair value with foreign currency forward contracts, realized and unrealized gains and losses on foreign currency transactions and balances, realized gains and losses related to sales of our available-for-sale investments.
Income Taxes
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 due 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 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.
Results of Operations:
The results of operations presented below should be reviewed in conjunction with the unaudited condensed consolidated financial statements and notes included elsewhere in this Quarterly Report. The following table sets forth our unaudited condensed consolidated results of operations data for the periods presented:
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (dollars in thousands) | |||||||||||
| Revenue: | |||||||||||
| Product revenue | $ | 48,231 | $ | 31,105 | |||||||
| Royalties | 347 | 1,527 | |||||||||
| Total revenue | 48,578 | 32,632 | |||||||||
|
Cost of revenue(1)
|
27,740 | 19,149 | |||||||||
| Gross profit | 20,838 | 13,483 | |||||||||
|
Operating expenses(1):
|
|||||||||||
| Research and development | 16,082 | 14,985 | |||||||||
| Sales and marketing | 7,840 | 6,423 | |||||||||
| General and administrative | 16,128 | 15,905 | |||||||||
| Total operating expenses | 40,050 | 37,313 | |||||||||
| Loss from operations | (19,212) | (23,830) | |||||||||
| Other income (expense): | |||||||||||
| Interest income | 2,474 | 1,705 | |||||||||
| Other income (expense), net | (175) | 303 | |||||||||
| Total other income, net | 2,299 | 2,008 | |||||||||
| Loss before income taxes | (16,913) | (21,822) | |||||||||
| Provision for income tax expense | 552 | 195 | |||||||||
| Net loss | $ | (17,465) | $ | (22,017) | |||||||
The following table sets forth the components of our unaudited condensed consolidated statements of operations and comprehensive loss data as a percentage of total revenue for the periods presented:
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (% of total revenue) | |||||||||||
| Revenue: | |||||||||||
| Product revenue | 99 | % | 95 | % | |||||||
| Royalties | 1 | 5 | |||||||||
| Total revenue | 100 | 100 | |||||||||
|
Cost of revenue(1)
|
57 | 59 | |||||||||
| Gross profit | 43 | 41 | |||||||||
|
Operating expenses (1)
|
|||||||||||
| Research and development | 33 | 46 | |||||||||
| Sales and marketing | 16 | 20 | |||||||||
| General and administrative | 33 | 49 | |||||||||
| Total operating expenses | 82 | 114 | |||||||||
| Loss from operations | (39) | (73) | |||||||||
| Other income (expense): | |||||||||||
| Interest income | 5 | 5 | |||||||||
| Other income (expense), net | - | 1 | |||||||||
| Total other income, net | 5 | 6 | |||||||||
| Loss before income taxes | (34) | (67) | |||||||||
| Provision for income tax expense | 1 | 1 | |||||||||
| Net loss | (35) | % | (68) | % | |||||||
(1) Includes stock-based compensation expense as follows:
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (in thousands) | |||||||||||
| Cost of revenue | $ | 826 | $ | 1,137 | |||||||
| Research and development | 2,616 | 4,305 | |||||||||
| Sales and marketing | 766 | 1,106 | |||||||||
| General and administrative | 3,286 | 1,950 | |||||||||
| Total stock-based compensation | $ | 7,494 | $ | 8,498 | |||||||
Comparison of the three months ended March 31, 2026 and 2025
Revenue
| Three Months Ended March 31, | Change | Change | |||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Revenue by geographic location: | |||||||||||||||||||||||
| Americas | $ | 32,798 | $ | 15,528 | $ | 17,270 | 111 | % | |||||||||||||||
| Asia and Pacific | 7,990 | 12,464 | (4,474) | (36) | |||||||||||||||||||
| Europe, Middle East and Africa | 7,790 | 4,640 | 3,150 | 68 | |||||||||||||||||||
| Total | $ | 48,578 | $ | 32,632 | $ | 15,946 | 49 | % | |||||||||||||||
Revenue
Revenue increased by $15.9 million or 49%, to $48.6 million for the three months ended March 31, 2026 from $32.6 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.
We recorded $0.3 million and $1.5 million, respectively in patent royalty revenue for the three months ended March 31, 2026 and three months ended March 31, 2025.
Cost of Revenue
| Three Months Ended March 31, | Change | Change | |||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Cost of revenue | $ | 27,740 | $ | 19,149 | $ | 8,591 | 45 | % | |||||||||||||||
Cost of revenue increased by $8.6 million, or 45%, to $27.7 million for the three months ended March 31, 2026 from $19.1 million for the comparable period in the prior year. The increase in cost of revenue was primarily attributable to higher product manufacturing costs, the inclusion of manufacturing costs from our recently-acquired subsidiary, Stereolabs, higher amortization costs from acquired intangible assets and tariffs.
Gross margin rose to 43% for the three months ended March 31, 2026 from 41% in the prior year period primarily due to increased sensor volumes, offset in part by lower ASPs and the inclusion of production costs from our recently-acquired subsidiary, Stereolabs.
Operating Expenses
| Three Months Ended March 31, | Change | Change | |||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development | $ | 16,082 | $ | 14,985 | $ | 1,097 | 7 | % | |||||||||||||||
| Sales and marketing | 7,840 | 6,423 | 1,417 | 22 | |||||||||||||||||||
| General and administrative | 16,128 | 15,905 | 223 | 1 | |||||||||||||||||||
| Total operating expenses | $ | 40,050 | $ | 37,313 | $ | 2,737 | 7 | % | |||||||||||||||
Research and Development
Research and development expenses increased by $1.1 million, or 7%, to $16.1 million for the three months ended March 31, 2026 from $15.0 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.
Sales and Marketing
Sales and marketing expenses increased by $1.4 million, or 22%, to $7.8 million for the three months ended March 31, 2026 from $6.4 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.
General and Administrative
General and administrative expenses increased by $0.2 million, or 1%, to $16.1 million for the three months ended March 31, 2026 from $15.9 million for the comparable period in the prior year. The increase was primarily attributable to transaction and integration costs associated with the Stereolabs acquisition, offset in part by lower litigation and settlement activities.
Interest Income and Other Expense, Net
| Three Months Ended March 31, | Change | Change | |||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Interest income | $ | 2,474 | $ | 1,705 | $ | 769 | 45 | % | |||||||||||||||
|
Other income (expense), net
|
(175) | 303 | (478) | (158) | |||||||||||||||||||
| Total interest income and other income (expense), net | $ | 2,299 | $ | 2,008 | $ | 291 | 14 | ||||||||||||||||
The year-over-year increase in interest income was due primarily to $0.6 million in interest income earned on an IRS income tax refund received during the three months ended March 31, 2026.
Other income (expense), net was not material for the three months ended March 31, 2026 and 2025.
Income Taxes
We were subject to income taxes in the United States and miscellaneous foreign jurisdictions for the three months ended March 31, 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.
Liquidity and Capital Resources
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.
Our primary requirements for liquidity and capital are to finance working capital, inventory management, capital expenditures and general corporate purposes. We expect these needs to continue as we develop and grow our business.
As of March 31, 2026, we had an accumulated deficit of $990.9 million and cash, cash equivalents, restricted cash and short-term investments of $174.9 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.
We manage our cash and cash equivalents with financial institutions that we believe have high credit quality and, at times, such amounts exceed federally insured limits. The failure of any bank with which we maintain a commercial relationship could cause us to lose our deposits in excess of the federally insured or protected amounts. We have experienced recurring losses from operations, and negative cash flows from operations, and we expect to continue operating at a loss and to have negative cash flows from operations for the foreseeable future. Because we are in the growth stage of our business and operate in an emerging field of technology, we expect to continue to invest in research and development and opportunistically expand our sales and marketing teams worldwide. We may require additional capital to respond to technological advancements, competitive dynamics or technologies, customer demands, business opportunities, challenges, acquisitions, or unforeseen circumstances and in either the short-term or long-term may determine to engage in equity or debt financings, or may choose to raise additional capital opportunistically if we believe market conditions are favorable. 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. In particular, current macroeconomic conditions, including elevated inflation rates and high interest rates, have resulted in, and may continue to result in, significant disruption of global financial markets, reducing our ability to access capital. If we are unable to raise additional funds when or on the terms desired, our business, financial condition and results of operations could be adversely affected.
ATM Agreement
On May 12, 2025, we entered into an At Market Issuance Sales Agreement (the "ATM Agreement") with Oppenheimer & Co. Inc., pursuant to which the Company may offer and sell, from time to time, through or to the agent, acting as agent or principal, 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 the ATM Agreement to March 31, 2026, the Company sold 4,671,406 shares at a weighted-average sales price of $20.88 per share under the ATM Agreement, 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.
During the three months ended March 31, 2026, no shares of common stock were sold under the ATM Agreement.
The remaining availability under the ATM Agreement as of March 31, 2026 is approximately $2.5 million.
Material Cash Requirements
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 March 31, 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. 8. Commitments and Contingencies Part II, Item 8 of our 2025 Annual Report.
Cash Flow Summary
The following table summarizes our cash flows from continuing operations for the periods presented:
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (in thousands) | |||||||||||
| Net cash (used in) provided by: | |||||||||||
| Operating activities | $ | (7,281) | $ | (4,879) | |||||||
| Investing activities | $ | 17,063 | $ | 12,590 | |||||||
| Financing activities | $ | 705 | $ | 660 | |||||||
Operating Activities
During the three months ended March 31, 2026, operating activities used $7.3 million in cash. The primary factors affecting our operating cash flows during this period were our net loss of $17.5 million, offset by our non-cash charges of $10.8 million, primarily consisting of depreciation and amortization of $2.7 million, stock-based compensation of $7.5 million, amortization of right-of-use asset of $0.8 million offset by accretion on short-term investments of $0.5 million. The changes in our operating assets and liabilities of $0.6 million were primarily due to a decrease in accounts receivable of $6.5 million, increase in inventory of $3.7 million, an increase in prepaid expenses and other assets of $0.2 million, a decrease in accounts payable of $3.5 million, an increase in accrued and other liabilities of $0.1 million, an increase in contract liabilities of $1.0 million and decrease in operating lease liability of $0.9 million.
During the three months ended March 31, 2025, operating activities used $4.9 million in cash. The primary factors affecting our operating cash flows during this period were our net loss of $22.0 million, offset by our non-cash charges of $11.2 million, primarily consisting of depreciation and amortization of $1.8 million, stock-based compensation of $8.5 million, amortization of right-of-use asset of $1.2 million offset by accretion on short-term investments of $0.8 million. The changes in our operating assets and liabilities of $5.9 million were primarily due to a decrease in accounts receivable of $4.1 million, decrease in inventory of $1.1 million, an increase in prepaid expenses and other assets of $3.9 million, an increase in accounts payable of $4.1 million, an increase in accrued and other liabilities of $8.7 million, a decrease in contract liabilities of $6.5 million and decrease in operating lease liability of $1.7 million.
Investing Activities
During the three months ended March 31, 2026, cash provided by investing activities was $17.1 million, consisting primarily of $57.9 million in proceeds from the sale and maturities of short-term investments, offset in part by $10.8 million purchases of short-term investments and $27.5 million used for the acquisition of Stereolabs, net of cash acquired.
During the three months ended March 31, 2025, cash provided by investing activities was $12.6 million, consisting primarily of $27.0 million in proceeds from the sale and maturities of short-term investments, offset in part by $13.9 million of purchases of short-term investments.
Financing Activities
During both the three months ended March 31, 2026 and the three months ended March 31, 2025, cash provided by financing activities was $0.7 million, primarily due to proceeds received to fund employees tax obligation for vested RSUs.
Critical Accounting Policies and Estimates
Our critical accounting estimates are described in Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2025 Annual Report. There have been no significant changes to our critical accounting policies and estimates since the filing of our 2025 Annual Report.
The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions. Certain of these policies require the application of subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. These estimates and assumptions are based on historical experience, changes in the business environment and other factors that we believe to be reasonable under the circumstances. Different estimates that could have been applied in the current period or changes in the accounting estimates that are reasonably likely can result in a material impact on our financial condition and operating results in the current and future periods.
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