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Ouster CEO on going public through merger with Colonnade SPAC

Yahoo Finance’s Brian Sozzi and Julie Hyman speak with Ouster CEO Angus Pacala about the company’s SPAC with Colonnade Acquisition Corp.

Video Transcript

JULIE HYMAN: It's a measure of the rising profile of the technology called Lidar that we are now about to talk to the third company in, what, the last month, that is going public through a SPAC deal that uses this technology, which effectively uses lasers as sensors on cars in order to navigate. This company called Ouster. It's going to be going public through a SPAC transaction with a company called Colonnade that will value the combined company at about $1.6 billion enterprise value.

And Angus Pacala is joining us now. He is the CEO of the company. Thanks so much for being here, Angus. So as I said, we've talked to a number of different Lidar providers over the past couple of weeks. And, admittedly, I didn't know much about this before we started talking to folks. But if you could explain to me how Ouster's Lidar technology that you're developing is different than competitors and sort of where you are at the development stage?

ANGUS PACALA: Sure. Yeah. There's enough activity here to make your head spin. But one of the benefits of going after some other competitors is just the ability to contextualize what Ouster is doing. So we really stand apart on two fronts. The first is business, and the second is technology. And the business that Ouster is here to build is one that spans markets. And this is-- we stand apart from our competitors in that we are a company going after industrial, smart infrastructure, robotics and automotive opportunities in Lidar. And that's for the simple reason that Lidar is a fundamental sensing technology that is important to automation in general. Not just to automotive automation, but to the automation revolution that is happening across the entire global economy, at this point.

And in order to go and capture that broader opportunity, Ouster has developed a digital Lidar solution, which is really the first integrated digital chip that puts all of the Lidar's capability onto that single piece of silicon sand. And we've seen that other industries in our past, notably camera technology, has transitioned from an analog to a digital technology set. And Ouster is the first company and the only company right now building high performance Lidar sensors with digital integrated technology, and then deploying that across these four key markets, instead of just focusing narrowly on automotive.

BRIAN SOZZI: Angus, Julie mentioned this. We've talked to the founder of Innoviz, we've talked to the founder of Luminar, in their big days. And they've told us their story. And it's mentioned in the investor deck, for you all, that you quote, "bootstrapped" the start of this company. Why did you find this company? And what's your hope for it over time?

ANGUS PACALA: Well, I think that Lidar is an incredibly interesting technology that has a diverse set of use cases that are meaningful. The end results of deploying ladder technology are increased safety, increased efficiency, and increased quality of life. Now, whether it's a Lidar sensor that is deployed on a car in the form of a safety system that allows you to drive to work or that will allow your car to drive you to work while you sleep, or a Lidar sensor that's deployed at a crosswalk that knows to leave the crosswalk's light going longer if an elderly person is taking more time to cross the road.

Lidar sensors have just incredibly numerous end applications that are compelling and that kind of drive towards improved quality of life. And so that was a major motivating factor for me, in starting the company, was understanding this broad applicability to Lidar, and that it can really drive change across these key industries, not just narrowly focused in one industry or the next.

BRIAN SOZZI: It's also mentioned in the presentation, Angus, that you expect to go from 19 million in sales this year to 1.6 billion by 2025. And by that point, you will have close to $570 million in operating profits from a $40 million loss this year. Aren't these projections really, really optimistic?

ANGUS PACALA: Well, no. And that's another way that Ouster's distinguishes itself, is actually by building a real business with hundreds of customers and positive gross margins today, selling thousands of sensors to over the 450 customers this year. And that speaks to the much broader opportunity for Lidar. Really actually a 10x opportunity outside of automotive as within it.

And if you look at the industrial smart infrastructure and robotics markets, there's actually 14,000 customers that we can go win in the next five years that our projections are based on. Instead of kind of 15 automakers exclusively in auto. So this is something that really sets Ouster apart. We've built a company that has traction in the market today with positive gross margins, meaning we just have to sell more of the products that we're already producing, that are already in customers' hands, and that are already winning sockets.

And we have this incredibly broad and diverse customer base to go in and now we have the capital to do it. So I think it's really important to understand that Ouster is well along that path with massive traction in the market today, versus a plan to go capture one of 15 OEMs and have volumes ramp in three or five years. We really have something to base the business and forecast the business on today.

JULIE HYMAN: And I think you are unique among those three that we've talked to that you guys have revenue. That you guys have actually shipped product. Angus Pacala, thanks so much for being here. Come back and talk to us after your deal closes, why don't you. Ouster CEO Angus Pacala, thank you so much. Appreciate it.

ANGUS PACALA: Thank you so much.