NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1 – Description of Business and Basis of Presentation
Description of Business
Ouster, Inc. (“Ouster” or the “Company”) was incorporated in the Cayman Islands on June 4, 2020 as “Colonnade Acquisition Corp.” Following the closing of a business combination between the Company and Ouster Technologies, Inc. (formerly, Ouster, Inc.) in March 2021, the Company domesticated as a Delaware corporation and changed its name to “Ouster, Inc.” Ouster is a leader in sensing and perception for Physical Artificial Intelligence (Physical AI). Ouster’s product offerings enable machines to “Sense, Think, Act, and Learn” and independently execute tasks without human intervention. Physical AI allows machines to move beyond fixed, preprogrammed behavior into adaptive, intelligent action by focusing on perception, understanding, and learning from the physical world. Ouster offers a unified sensing and perception platform that combines high-performance digital lidar, cameras, AI compute, sensor fusion and perception software, and cutting-edge AI models to our customers.
On February 4, 2026 (“Closing Date”), the Company completed the acquisition of Stereolabs SAS (“Stereolabs”), accounted for as a business combination. See Note 3.
Basis of Presentation and Principles of Consolidation
The unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries (all of which are wholly owned) and have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) applicable to interim periods. All intercompany balances and transactions have been eliminated in consolidation. The presentation of certain prior period amounts has been reclassified to conform with current period presentation.
The unaudited condensed consolidated financial statements include all adjustments (consisting of only normal recurring adjustments) necessary for a fair statement of the results of operations for the periods shown. The unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements as of and for the year ended December 31, 2025 and the notes related thereto, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 2, 2026. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. Certain information and note disclosures normally included in the audited financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from this report, as is permitted by applicable rules and regulations. The results of operations for any interim period are not necessarily indicative of the results to be expected for the year ending December 31, 2026 or for any other future years or interim periods.
Liquidity
The Company’s principal sources of liquidity are its cash and cash equivalents, short-term investments, cash generated from sales of the Company’s products, sales of common stock under its at-the-market equity offering program and debt financing.
The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis. The Company has experienced recurring losses from operations, and negative cash flows from operations. As of March 31, 2026, the Company’s existing sources of liquidity included cash, cash equivalents, restricted cash and short-term investments of $174.9 million. The Company has incurred losses and negative cash flows from operations since inception. If the Company continues to incur losses in the future, it may need to improve liquidity and raise additional capital through the issuance of equity and/or debt. There can be no assurance that the Company would be able to raise such capital. However, management believes that the Company’s existing sources of liquidity are adequate to fund its operations for at least twelve months from the date the unaudited condensed consolidated financial statements were available for issuance.
Note 2 – Summary of Significant Accounting Policies
During the three months ended March 31, 2026, except as noted below there were no significant changes to the Company’s significant accounting policies as disclosed in the Company’s Annual Report on Form 10-K filed with the SEC on March 2, 2026. The Company has consistently applied the accounting policies to all periods presented in these unaudited condensed consolidated financial statements.
Foreign Currencies
The Company reassessed the functional currency of its foreign subsidiaries and determined it was the U.S. Dollar for all its subsidiaries. The impact of this change was not material. Foreign currency transaction gains and losses are recorded in other income (expense), net in the condensed consolidated statements of operations and comprehensive loss.
Derivative Instruments and Hedging Arrangements Foreign Exchange Exposure Management
The Company’s wholly owned subsidiary, Stereolabs enters into forward foreign currency contracts to mitigate currency risk primarily related to forecasted Euro-denominated operating expenditures and assets and liabilities denominated primarily in the Euro. These foreign currency exchange contracts are entered into to support transactions made in the normal course of business, and accordingly, are not speculative in nature. The contracts are for periods consistent with the terms of the underlying transactions, generally one year or less. The fair value of our foreign currency forward contracts is determined using observable market inputs and is classified within Level 2 of the fair value hierarchy as defined by ASC 820, Fair Value Measurement. Changes in the fair value of these undesignated hedges are recognized in other income (expense), net immediately as an offset to the changes in the fair value of the asset or liability being hedged.
Recently Issued and Adopted Accounting Pronouncements
In July 2025, the FASB issued ASU 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets ("ASU 2025-05"). This standard introduces a practical expedient that companies can choose to apply when determining allowances for credit losses. Specifically, it permits companies to assume that the current conditions as of the balance sheet date remain unchanged throughout the remaining life of the assets. Effective January 1, 2026, the Company adopted the amendments in this update for the annual period beginning fiscal year 2026 and applied the new requirements prospectively to the current annual period. The implementation of ASU 2025-05 did not have a material impact on the condensed consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
The Company considers the applicability and impact of all ASUs. ASUs not referenced below were assessed and determined to be not applicable and are not expected to have a material impact on the Company’s consolidated financial statements.
In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810) ("ASU 2025-03"), which clarifies the requirements for determining the accounting acquirer in the acquisition of a variable interest entity. ASU 2025-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. The amendments in this update require that an entity apply the new guidance prospectively to any acquisition transaction that occurs after the initial application date. Early adoption is permitted as of the beginning of an interim or annual reporting period. The Company is currently evaluating the disclosure impact that ASU 2025-03 may have on its financial statement presentation and disclosures.
In May 2025, the FASB issued ASU 2025-04, Compensation - Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606) ("ASU 2025-04"), which clarifies the requirements for share-based consideration payable to a customer. The amendments in this update are effective for all entities for annual reporting periods (including interim reporting periods within annual reporting periods) beginning after December 15, 2026. Early adoption is permitted for all entities. The Company is currently evaluating the disclosure impact that ASU 2025-04 may have on its financial statement presentation and disclosures.
In November 2024, the FASB issued ASU 2024-03, “Disaggregation of Income Statement Expenses.” The new standard requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures. The guidance is effective for public business entities for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The guidance is to be applied prospectively, with the option for retrospective application. The Company is currently evaluating the impact of the ASU on the disclosures within the consolidated financial statements.
Concentrations of Credit Risk
Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash, short-term investments, accounts receivable and foreign currency forward exchange contracts. Although the Company deposits its cash, cash equivalents, restricted cash and short-term investments with financial institutions that Company believes are of high credit quality, its deposits, at times, may exceed federally insured limits. As of March 31, 2026 and December 31, 2025, the Company had cash, cash equivalents, short-term investments and restricted cash with financial institutions in the U.S. of $159.1 million and $201.3 million, respectively. As of March 31, 2026 and December 31, 2025, the Company also had cash with financial institutions in countries other than the U.S. of approximately $15.8 million and $9.9 million, respectively, that was not federally insured.
The Company generally does not require collateral or other security deposits for accounts receivable.
To reduce credit risk, the Company considers customer creditworthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms when determining the collectability of specific customer accounts. Past due balances over 90 days and other higher risk amounts are reviewed individually for collectability. Based on management’s assessment, the Company provides for estimated uncollectible amounts through a charge to earnings and a credit to valuation allowance. Balances that remain outstanding after the Company has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable.
Accounts receivable from the Company’s major customers representing 10% or more of total accounts receivable and unbilled receivable was as follows:
| | | | | | | | | | | |
| March 31,
2026 | | December 31,
2025 |
| Customer A | 25 | % | | 42 | % |
| Customer E | 30 | % | | * |
| Customer B | * | | 14 | % |
| | | |
| Customer D | * | | 13 | % |
| | | |
| | | |
*Customer accounted for less than 10% of total accounts receivable in the period.
Revenue from the Company’s major customers representing 10% or more of total revenue was as follows:
| | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | |
| 2026 | | 2025 | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Customer E | 31 | % | | 15 | % | | | | |
| Customer F | — | % | | 19 | % | | | | |
| Customer H | 11 | % | | * | | | | |
| | | | | | | |
| | | | | | | |
*Customer accounted for less than 10% of total revenue in the period.
Concentrations of Supplier Risk
Purchases from the Company’s suppliers and vendors representing 10% or more of total purchases were as follows:
| | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | |
| 2026 | | 2025 | | | | |
| Supplier A | * | | 11 | % | | | | |
| Supplier B | 30 | % | | 27 | % | | | | |
*Supplier accounted for less than 10% of total purchases in the period.
Accounts payable to the Company’s major suppliers and professional services vendors representing 10% or more of total accounts payable were as follows:
| | | | | | | | | | | |
| March 31, 2026 | | December 31, 2025 |
| Supplier A | * | | 13 | % |
| Supplier B | 60 | % | | 50 | % |
Supplier C | * | | 10 | % |
*Accounted for less than 10% of total accounts payable.
Note 3. Business Combination and Related Transactions
On the Closing Date, the Company acquired 100% of the outstanding share capital of Stereolabs, a privately-held developer, manufacturer and seller of vision systems headquartered in France. The acquisition expanded the Company's product portfolio, and is expected to further strengthen its software capabilities and accelerated customer development.
Shareholders of Stereolabs received cash consideration of $32.4 million and 1,847,677 newly issued shares of the Company’s common stock, of which 660,005 shares are subject to a staggered lock-up arrangement lasting through a four-year period, whereby twenty-five (25%) percent will be released upon each anniversary of the completion date contingent upon employees remaining employed by the Company. See Note 9.
The consideration paid was comprised of cash and common stock, as follows (in thousands):
| | | | | |
| Consideration: | |
| Cash consideration | $ | 32,392 | |
Fair value of common stock issued, less shares subject to continued employment requirements(1) | 22,780 | |
| $ | 55,172 | |
(1)Calculated based upon 1,187,672 shares at the stock price of $19.18 per share on the Closing Date.
The Company accounted for the acquisition of Stereolabs as a business combination under ASC 805. This accounting treatment requires that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. In accordance with ASC 805, the total purchase price was allocated to identifiable tangible and intangible assets acquired and liabilities assumed based on their respective estimated fair values using management’s best estimates and assumptions to assign fair value as of the acquisition date. The allocation of the purchase price to the assets acquired and liabilities assumed is subject to further adjustment within the measurement period which extends up to one year from the acquisition date.
The Company incurred $5.0 million in acquisition costs for Stereolabs, of which $3.9 million was incurred in the year ended December 31, 2025, and $1.2 million was incurred in three months ended March 31, 2026. These costs were expensed as incurred. Acquisition-related costs are presented within general and administrative expenses in the Company’s condensed consolidated statement of operations. In addition, the sellers incurred transaction costs of $3.0 million which were paid by the Company on the Closing Date.
The following table provides the assets acquired and liabilities assumed as of the date of acquisition (in thousands):
| | | | | |
| Estimated Fair Value |
| Purchase consideration | $ | 55,172 | |
| Amounts of identifiable assets and liabilities assumed | |
| Cash and cash equivalents | $ | 4,899 | |
| Accounts receivable, net | 1,594 | |
| Inventory | 2,159 | |
Prepaid expenses and other current assets (1) | 4,065 | |
| Property and equipment, net | 701 | |
| Operating lease, right-of-use assets | 1,233 | |
| Intangible assets, net | 23,400 | |
| Other non-current assets | 66 | |
| Accounts payable | (1,692) | |
| Accrued and other current liabilities | (10,792) | |
| Contract liabilities, current | (2,279) | |
| Operating lease liability, current portion | (197) | |
| Operating lease liability, non-current portion | (1,003) | |
| Deferred tax liability | (5,507) | |
| Total identifiable net assets | $ | 16,647 | |
| Goodwill | 38,525 | |
| $ | 55,172 | |
(1) Prepaid expenses and other current assets includes a $1.9 million indemnification asset, with the underlying indemnified liability of $6.3 million recorded within accrued and other current liabilities.
Identified intangible assets acquired and their estimated useful lives as of February 4, 2026, were (in thousands, except years):
| | | | | | | | | | | |
| Estimated Useful Life
(in years) | | Estimated Fair Value |
| Trade name | 6 | | $ | 1,500 | |
| Developed technology | 4 | | 14,000 | |
| Customer relationships | 8 | | 7,900 | |
| Intangible assets, net | | | $ | 23,400 | |
Developed technology relates to Stereolabs’ vision-based perception and Artificial Intelligence (“AI”) platform that provides real-time depth sensing, 3D mapping, and object detection in complex real-world environments. The Company valued the developed technology using the relief-from-royalty method under the income approach, which involved assumptions related to the economic life, obsolescence curve, and discount rate. The economic life was determined based on the development cycle, benchmarking analysis, and the projected cash flows over the forecasted period.
The estimated fair value of the trade name was determined using the relief-from-royalty method under the income approach, which involved assumptions related to the economic life and discount rate. The Stereolabs trade name is expected to be in use for the foreseeable future and the economic life was determined based on the branding strategy, benchmarking analysis, and the projected cash flows over the forecasted period.
The Company valued the customer relationship intangible asset using the multi-period excess earnings method under the income approach, which involved assumptions related to the economic life and discount rate. The economic life was determined based on expected attrition and existing customer revenue growth, as well the period over which the majority of discounted cash flows would be realized.
The excess of the purchase consideration and the fair value of identifiable assets acquired and liabilities assumed at the acquisition date over the fair value of net tangible and identified intangible assets acquired was recorded as goodwill, which is deductible for tax purposes. Goodwill is primarily attributable to the assembled workforce and the anticipated operational synergies expected from the Stereolabs acquisition.
Approximately $1.9 million of the cash consideration is held in an escrow account to cover estimated claims arising from pre-closing tax accruals related to certain historical foreign sales transactions and other taxes (“the Specific Tax Loss”). Any
remaining portion of the escrow amount that is not required to cover the Specific Tax Loss amounts will be paid to the former shareholders of Stereolabs at December 31, 2027 (the escrow release date). The indemnification of the Specific Tax Loss is capped at $1.9 million, the amount of the escrow fund balance. At the acquisition date, the associated Specific Tax Loss was recorded at the estimated fair value of $6.3 million within accrued and other current liabilities and the Company recorded an indemnification asset up to the amount of the escrow fund balance of $1.9 million.
The unaudited supplemental pro forma information below presents the combined historical results of operations of the Company and Stereolabs as if Stereolabs had been acquired as of January 1, 2025 (in thousands):
| | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| | | 2026 | | | | 2025 |
| Revenue | | | $ | 50,216 | | | | | $ | 34,371 | |
| Net loss | | | $ | (24,245) | | | | | $ | (31,848) | |
The unaudited supplemental pro forma information above includes the following adjustments to net loss in the appropriate pro forma periods (in thousands):
| | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| | | 2026 | | | | 2025 |
| An increase in amortization expense related to the fair value of acquired identifiable intangible assets, net of the amortization expense already reflected in actual historical results. | | | $ | (484) | | | | | $ | (1,184) | |
A decrease (increase) in expenses related to the transaction expenses. This amount includes $3.0 million in transaction expenses incurred by the sellers. | | | $ | 4,137 | | | | | $ | (8,022) | |
| An increase in additional stock-based compensation expense related to shares issued to key Stereolabs employees in the acquisition that are considered compensatory in the post business combination periods due to the additional service requirement, net of the stock compensation expense already reflected in actual historical results. | | | $ | (303) | | | | | $ | (780) | |
A decrease (increase) in additional stock-based compensation expense related to the impact of the acceleration of Stereolabs warrants that vested at the close of the Stereolabs acquisition. | | | $ | 207 | | | | | $ | (207) | |
The unaudited supplemental pro forma information has been presented for illustrative purposes only and is not necessarily indicative of results of operations that would have been achieved had the Stereolabs taken place on the date indicated, or of the Company’s future consolidated results of operations. The supplemental pro forma information presented above has been derived from the Company’s historical consolidated financial statements and from historical consolidated financial statements and the historical accounting records of Stereolabs.
Note 4. Fair Value of Financial Instruments
The following tables provides information by level for the Company’s assets that were measured at fair value on a recurring basis (in thousands):
| | | | | | | | | | | | | | | | | | | |
| March 31, 2026 |
| Level 1 | | Level 2 | | | | Total |
| Assets | | | | | | | |
| Cash and cash equivalents: | | | | | | | |
| Money market funds | $ | 60,427 | | | $ | — | | | | | $ | 60,427 | |
| | | | | | | |
| Short-term investments: | | | | | | | |
| Commercial paper | — | | | 30,420 | | | | | 30,420 | |
| Corporate debt securities | — | | | 63,978 | | | | | 63,978 | |
| Total short-term investments | — | | | 94,398 | | | | | 94,398 | |
| Total financial assets | $ | 60,427 | | | $ | 94,398 | | | | | $ | 154,825 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| December 31, 2025 |
| Level 1 | | Level 2 | | | | Total |
| Assets | | | | | | | |
| Cash and cash equivalents: | | | | | | | |
| Money market funds | $ | 54,475 | | | $ | — | | | | | $ | 54,475 | |
| Short-term investments: | | | | | | | |
| Commercial paper | — | | | 68,326 | | | | | 68,326 | |
| Corporate debt securities | — | | | 72,846 | | | | | 72,846 | |
| Total short-term investments | — | | | 141,172 | | | | | 141,172 | |
| Total financial assets | $ | 54,475 | | | $ | 141,172 | | | | | $ | 195,647 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Money market funds are included within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets.
The value of securities included in Level 2 are based on other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
The value and changes in Level 3 liabilities measured at fair value on a recurring basis are immaterial.
Non-Recurring Fair Value Measurements
The Company has certain assets, including intangible assets, which are measured at fair value on a non-recurring basis and are adjusted to fair value only if an impairment charge is recognized. The categorization of the framework used to measure fair value of the assets is considered to be within the Level 3 valuation hierarchy due to the subjective nature of the unobservable inputs used.
Disclosure of Fair Values
The Company’s financial instruments that are not re-measured at fair value include accounts receivable, accounts payable, accrued and other current liabilities. The carrying values of these financial instruments approximate their fair values. Unrealized gains and losses on the Company’s short-term investments were not significant as of March 31, 2026 and December 31, 2025, and therefore, the amortized cost of the Company’s short-term investments approximated its fair value.
Derivatives
Stereolabs uses foreign currency forward exchange contracts to mitigate currency risk primarily related to forecasted Euro-denominated operating expenditures and assets and liabilities denominated primarily in the Euro. These derivatives are carried at fair value with changes recorded in interest income and other, net in the condensed consolidated statements of operations. Changes in the fair value of these derivatives are largely offset by re-measurement of the underlying assets and liabilities. Cash flows from such derivatives are classified as operating activities. The derivatives have maturities from approximately 0.2 to 0.8 years.
The following table summarizes the Company’s outstanding derivative instruments on a gross basis as recorded in its condensed consolidated balance sheets as of March 31, 2026 (in thousands):
| | | | | | | | | | | | | | | | | |
| At March 31, 2026 |
| | Notional Amount | | Balance Sheet Line Item | | Derivative Liabilities Fair Value |
Undesignated hedges: Forward foreign currency exchange contracts | $ | 4,500 | | | (a) | | $ | 99 | |
(a) Other current liabilities
Note 5. Balance Sheet Components
Cash and Cash Equivalents
The Company’s cash and cash equivalents consist of the following (in thousands):
| | | | | | | | | | | |
| | March 31,
2026 | | December 31,
2025 |
| Cash | $ | 18,293 | | | $ | 12,938 | |
| Cash equivalents: | | | |
Money market funds(1) | 60,427 | | | 54,475 | |
| | | |
| Total cash and cash equivalents | $ | 78,720 | | | $ | 67,413 | |
(1)The Company maintains a cash sweep account, which is included in money market funds as of March 31, 2026 and December 31, 2025. Cash is invested in short-term money market funds that earn interest.
Restricted Cash
Restricted cash consists of collateral to merchant credit card, deposit account to secure foreign entity closure costs, issuances of deposit performance guarantee issued in favor of a customer, and certificates of deposit held by a bank as security for outstanding letters of credit. The Company had a restricted cash balance of $1.7 million and $2.6 million as of March 31, 2026 and December 31, 2025, respectively, which has been excluded from the Company’s cash and cash equivalents balances. The Company presented $0.6 million and $1.5 million of the total amount of restricted cash within current assets on the unaudited condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025, respectively. The remaining restricted cash balance of $1.1 million and $1.1 million is included in non-current assets on the condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025, respectively.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the unaudited condensed consolidated balance sheets to the total of the amounts reported in the unaudited condensed consolidated statements of cash flows (in thousands):
| | | | | | | | | | | |
| March 31,
2026 | | March 31,
2025 |
| Cash and cash equivalents | $ | 78,720 | | | $ | 53,984 | |
| Restricted cash, current | 647 | | | 731 | |
| Restricted cash, non-current | 1,100 | | | 1,835 | |
| Total cash, cash equivalents and restricted cash | $ | 80,467 | | | $ | 56,550 | |
Inventory
Inventory, consisting of material, direct and indirect labor, and manufacturing overhead, consists of the following (in thousands):
| | | | | | | | | | | |
| | March 31,
2026 | | December 31,
2025 |
| Raw materials | $ | 9,041 | | | $ | 3,866 | |
| Work in process | 1,565 | | | 93 | |
| Finished goods | 19,272 | | | 19,607 | |
| Total inventory | $ | 29,878 | | | $ | 23,566 | |
Prepaid expenses and other current assets
Prepaid expenses and other current assets consist of the following (in thousands):
| | | | | | | | | | | |
| March 31,
2026 | | December 31,
2025 |
| Prepaid expenses | $ | 5,750 | | | $ | 3,529 | |
| Prepaid inventory | 3,098 | | | 2,887 | |
| Prepaid insurance | 1,745 | | | 967 | |
| Receivable from contract manufacturer | 3,926 | | | 3,497 | |
| | | |
| IRS Income tax refund receivable | — | | | 2,993 | |
| Indemnification asset (See Note 3.) | 1,855 | | | — | |
| Other current assets | 4,795 | | | 3,644 | |
| Total prepaid expenses and other current assets | $ | 21,169 | | | $ | 17,517 | |
Property and Equipment, net
Property and equipment consists of the following (in thousands):
| | | | | | | | | | | | | | | | | |
| Estimated Useful Life
(in years) | | March 31,
2026 | | December 31,
2025 |
| Land | Not depreciated | | $ | 7,798 | | | $ | 7,798 | |
| Building | 25 | | 9,453 | | | 9,453 | |
| Machinery and equipment | 3 | | 17,851 | | | 16,640 | |
| Computer equipment | 3 | | 1,373 | | | 1,140 | |
| Automotive and vehicle hardware | 5 | | 93 | | | 93 | |
| Software | 3 | | 438 | | | 160 | |
| Furniture and fixtures | 7 | | 1,129 | | | 863 | |
| Construction in progress | | | 8,231 | | | 7,326 | |
| Leasehold improvements | Shorter of useful life or lease term | | 5,134 | | | 5,097 | |
| | | 51,500 | | | 48,570 | |
| Less: Accumulated depreciation | | | (17,674) | | | (16,679) | |
| Property and equipment, net | | | $ | 33,826 | | | $ | 31,891 | |
Depreciation expense associated with property and equipment was $1.0 million and $0.7 million during the three months ended March 31, 2026 and 2025, respectively.
Goodwill and Acquired Intangible Assets, Net
The changes in the carrying amount of goodwill are as follows (in thousands):
| | | | | |
| Amount |
| Balance at December 31, 2025 | $ | — | |
| Goodwill addition related to Stereolabs acquisition | 38,525 | |
| Balance at March 31, 2026 | $ | 38,525 | |
Annually, and/or upon the identification of a triggering event, management is required to perform an assessment of fair value relative to carrying value of goodwill. Triggering events potentially warranting an interim goodwill impairment test include, among other factors, declines in historical or projected revenue, operating income or cash flows, and sustained declines in the Company’s stock price or market capitalization, considered both in absolute terms and relative to peers.
The following tables present acquired intangible assets, net as of March 31, 2026 and December 31, 2025 (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| | | March 31, 2026 |
| Estimated Useful Life
(in years) | | Gross Carrying Amount | | Accumulated Amortization | | Net Book Value |
| Trade name | 6 | | $ | 1,500 | | | $ | (37) | | | $ | 1,463 | |
| Developed technology | 3-8 | | 37,500 | | | (14,994) | | | 22,506 | |
| Vendor relationship | 3 | | 6,600 | | | (6,600) | | | — | |
| Customer relationships | 3 - 8 | | 14,200 | | | (3,162) | | | 11,038 | |
| Intangible assets, net | | | $ | 59,800 | | | $ | (24,793) | | | $ | 35,007 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | December 31, 2025 |
| Estimated Useful Life
(in years) | | Gross Carrying Amount | | Accumulated Amortization | | Net Book Value |
| Developed technology | 3-8 | | $ | 23,500 | | | $ | (13,634) | | | $ | 9,866 | |
| Vendor relationship | 3 | | 6,600 | | | (6,600) | | | — | |
| Customer relationships | 3-8 | | 6,300 | | | (2,850) | | | 3,450 | |
| Intangible assets, net | | | $ | 36,400 | | | $ | (23,084) | | | $ | 13,316 | |
Amortization expense was $1.7 million and $1.1 million during the three months ended March 31, 2026 and 2025, respectively.
The following table summarizes estimated future amortization expense of finite-lived intangible assets-net (in thousands):
| | | | | |
| Years: | Amount |
| Remainder of 2026 | $ | 6,333 | |
| 2027 | 8,416 | |
| 2028 | 7,526 | |
| 2029 | 7,065 | |
| 2030 | 2,257 | |
| Thereafter | 3,410 | |
| Total | $ | 35,007 | |
Accrued and Other Current Liabilities
Accrued and other current liabilities consist of the following (in thousands):
| | | | | | | | | | | |
| March 31,
2026 | | December 31,
2025 |
| Accrued legal fees and contingencies | $ | 2,801 | | | $ | 2,124 | |
| Uninvoiced receipts | 10,900 | | | 7,910 | |
| Accrued compensation | 8,012 | | | 7,415 | |
| Warranty reserve | 2,137 | | | 1,800 | |
Sales, use, value-added taxes, customs duties and other taxes(1) | 9,835 | | | 3,108 | |
| Other | 4,508 | | | 3,843 | |
| Total accrued and other current liabilities | $ | 38,193 | | | $ | 26,200 | |
(1) Includes indemnified Specific Tax Loss Liabilities of $6.3 million from the Stereolabs acquisition. The indemnification of the Specific Tax Loss is capped at $1.9 million. See Note 3.
Note 6. Amazon Warrant
On February 10, 2023, as part of the Velodyne Merger, the Company assumed a warrant agreement and a transaction agreement, pursuant to which Velodyne agreed to issue to Amazon.com NV Investment Holdings LLC, a wholly-owned subsidiary of Amazon.com Inc. (“Amazon”), a warrant to acquire, following customary antidilution adjustments, up to an aggregate of 3,263,898 shares of the Company’s common stock at an exercise price of $50.71 per share (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 the Company makes certain sales of common stock (or securities exercisable or convertible into or exchangeable for shares of the Company’s common stock) at a price less than the exercise price of the Amazon Warrant. During the three months ended March 31, 2026, the Company issued an additional 1,847,677 shares of common stock pursuant to the Stereolabs acquisition at effective prices below the exercise price of the Amazon Warrant, resulting in an antidilution adjustment to the terms of the Amazon Warrant with an increase in the number of shares issuable under the Amazon Warrant by 5,185 shares of common stock and a reduction to the original strike price of the Amazon Warrant to $50.49 per share. As of March 31, 2026, there were 3,277,155 shares of common stock issuable under the Amazon Warrant.
The Amazon Warrant shares vest in multiple tranches over time based on payments of up to $100.0 million by Amazon or its affiliates (directly or indirectly through third parties) to the Company in connection with Amazon’s purchase of goods and services. The fair value of the unvested Amazon Warrant will be recognized as a non-cash stock-based reduction to revenue when Amazon makes payments and vesting conditions become probable of being achieved.
The fair value of the Amazon Warrant shares was estimated on February 10, 2023, the date of completion of the Velodyne Merger, using the Black-Scholes option pricing model on the remaining contractual term of 6.98 years, an expected volatility of 53.7%, a 3.86% risk-free interest rate and a 0% expected dividend yield.
The right to exercise the Amazon Warrant and receive the warrant shares that have vested expires February 4, 2030.
In the three months ended March 31, 2026, 142,890 Amazon Warrant shares vested. As of March 31, 2026, there were 2,871,875 Amazon Warrant shares vested.
Note 7. Commitments and Contingencies
Letters of Credit
In connection with certain office leasehold interests in real property located in San Francisco (350 Treat Ave. and 2741 16th Street), the Company obtained letters of credit from certain banks as required by the lease agreements. If the Company defaults under the terms of the applicable lease, the lessor will be entitled to draw upon the letters of credit in the amount necessary to cure the default. The amounts covered by the letters of credit are collateralized by certificates of deposit, which are included in restricted cash on the condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025. The amount collateralizing the 2741 16th Street lease letter of credit following the purchase of the property and the termination of the 2741 16th Street lease was released during the first fiscal quarter of 2026. The outstanding amount of the letters of credit was $0.3 million and $1.4 million as of March 31, 2026 and December 31, 2025, respectively.
Non-cancelable purchase commitments
As of March 31, 2026, the Company had non-cancelable purchase commitments to third-party contract manufacturers for approximately $13.0 million and other vendors for approximately $26.3 million.
Contingencies
From time to time, the Company may be involved in legal and administrative proceedings arising in the ordinary course of business. The Company records a liability in its consolidated financial statements for these matters when a loss is known or considered probable and the amount can be reasonably estimated. Management reviews these estimates in each accounting period as additional information becomes known and adjusts the loss provision when appropriate. If the loss is not probable or cannot be reasonably estimated, a liability is not recorded in the consolidated financial statements. If a loss is probable but the amount of loss cannot be reasonably estimated, the Company discloses the loss contingency and an estimate of possible loss or range of loss (unless such an estimate cannot be made). Legal costs incurred in connection with loss contingencies are expensed as incurred.
Litigation
The Company is involved in various legal proceedings arising in the ordinary course of business. Significant judgment is required in both the determination of probability and the determination as to whether any exposure is reasonably estimable. Actual outcomes of these legal and regulatory proceedings may materially differ from our current estimates.
Velodyne Legacy Litigation
In 2022, David and Marta Hall filed a lawsuit against current and former officers and directors of Velodyne, which proceeded through arbitration. In addition, in 2023, David and Marta Hall filed a separate complaint against Velodyne seeking indemnification for legal fees. The parties agreed to a confidential settlement, without any admission or concession of wrongdoing or liability, for both matters and executed the definitive agreement on April 16, 2025. As of December 31, 2024, the Company accrued the settlement expenses associated with these actions, and paid an immaterial amount in settlement expenses in the second quarter of fiscal 2025. An insurance receivable allowed the Company to recover the majority of the settlement expenses, resulting in a net charge that was immaterial to its consolidated statement of operations
In 2023, a putative shareholder class action suit was filed in Delaware against former officers and directors of Graf Acquisition LLC (Velodyne was not named as a defendant). The parties agreed to a settlement without any admission or concession of wrongdoing or liability. As of June 30, 2025, the Company accrued the expected settlement expenses associated with this action. An insurance receivable allowed the Company to recover the majority of the expected settlement expenses, resulting in a net charge that was immaterial to its consolidated statement of operations. The court approved the settlement and entered final judgment on October 8, 2025.
Ouster Litigation
On April 11, 2023, the Company filed a complaint in the District of Delaware alleging patent infringement of certain claims of the Company’s U.S. Patent Nos. 11,175,405, 11,178,381, 11,190,750, 11,287,515, and/or 11,422,236 against Hesai Group and Hesai Technology Co., Ltd. Subject to the terms of a confidential decision in the arbitration described below, the Company dismissed without prejudice this case on April 11, 2025.
On May 17, 2023, Hesai Photonics Technology Co. Ltd. and Hesai Group (collectively “Hesai Photonics”) filed a request for arbitration with JAMS against the Company, Velodyne Lidar, Inc., Velodyne, LLC, and Oban Merger Sub II LLC. Hesai Photonics alleges that the Company is bound as a result of the Company’s 2023 merger with Velodyne Lidar, Inc. by the terms and conditions, including an obligation to arbitrate disputes, of a long-term, global cross-licensing settlement agreement signed in 2020 between Hesai Photonics and Velodyne Lidar, Inc. (“Velodyne-Hesai Settlement Agreement”). On June 13, 2023, the Company responded to the arbitration demand and denied all allegations. On March 28, 2025, the tribunal issued a confidential interim decision, finding that the Company was subject to the Velodyne-Hesai Photonics Settlement Agreement. On September 15, 2025, the tribunal issued a confidential final decision, affirming the earlier finding of a global licensing settlement agreement that requires Hesai Photonics to pay royalties and deciding on fees in the amount of approximately $6.4 million, which the Company paid in the fourth quarter of fiscal 2025.
On September 14, September 25, and September 26, 2023, Hesai filed Petitions for Inter Partes Review with the Patent Trial and Appeal Board (“PTAB”) challenging the validity of the Company’s patents asserted in the ITC and Delaware patent actions. The Company provided preliminary responses to those petitions in late December 2023 and early January 2024. On March 19, 2024, March 28, 2024, and April 1, 2024, the PTAB issued decisions to institute inter partes review for four patents: IPR2023-01421 (Patent No. 11,175,405), hearing date of December 17, 2024; IPR2023-01422 (Patent No. 11,287,515), hearing date of December 17, 2024; IPR2023-01456 (Patent No. 11,178,381), hearing date of January 13, 2025; and IPR2023-01457 (Patent No. 11,190,750), hearing date of January 13, 2025. On March 13, 2025, the PTAB issued final written decisions upholding the patentability of all challenged claims in IPR2023-01422, and finding unpatentable all challenged claims in IPR2023-01421 and IPR2023-01457. On March 17, 2025, the PTAB issued a final written decision finding unpatentable all challenged claims of IPR2023-01456. On June 2 and 3, 2025, the Company filed notices of appeal for IPR2023-01421, IPR 2023-01426, and IPR 2023-01457, but the parties dismissed all but IPR2023-01421, which is awaiting hearing. Regarding the fifth patent (Patent No. 11,422,236), the PTAB declined to institute on March 28, 2024, (see IPR2023-01458). Hesai requested review to the Director of the United States Patent and Trademark Office (“Director Review”), who remanded to the PTAB for further review of its decision not to institute. On January 21, 2025, the PTAB again denied institution, to which Hesai again requested Director Review, and the Company objected. On March 20, 2025, the Director again denied review.
Indemnification
From time to time, the Company enters into agreements in the ordinary course of business that include indemnification provisions. Generally, in these provisions the Company agrees to defend, indemnify, and hold harmless the indemnified parties for claims and losses suffered or incurred by such indemnified parties for which the Company is responsible under the applicable indemnification provisions. The terms of the indemnification provisions vary depending upon negotiations between the Company and its counterpart; however, typically, these indemnification obligations survive the term of the contract and the maximum potential amount of future payments the Company could be required to make pursuant to these provisions are uncapped.
The Company has also entered into indemnity agreements pursuant to which it has indemnified its directors and officers, to the extent legally permissible, against all liabilities reasonably incurred in connection with any action in which such individual may be involved by reason of such individual being or having been a director or executive officer, other than liabilities arising from willful misconduct of the individual. To date, the Company is indemnifying and has incurred costs to defend lawsuits or settle claims described above under the heading “Litigation” pursuant to the indemnity agreements of former directors and officers.
Note 8. Common Stock
Pursuant to the terms of the Second Amended and Restated Certificate of Incorporation, the Company is authorized to issue the following shares and classes of capital stock, each with a par value of $0.0001 per share: (i) 100,000,000 shares of common stock; (ii) 100,000,000 shares of preferred stock. The holder of each share of common stock is entitled to one vote.
On May 12, 2025, the Company 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.
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.
On November 9, 2025, the Company agreed to issue shares of common stock for the acquisition of Stereolabs. See Note 3. Upon the closing of the Stereolabs transaction on February 4, 2026, the Company issued 1,847,677 shares, inclusive of 660,005 shares which will be released over a four-year period. The Company sold the foregoing securities in transactions not involving an underwriter and not requiring registration under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”) in reliance on the exemptions afforded by Section 4(a)(2) and/or Regulation S of the Securities Act and the rules and regulations promulgated thereunder.
Note 9. Stock-based Compensation
As of March 31, 2026, the Company maintains five equity incentive plans: its Amended and Restated 2015 Stock Plan (the “2015 Plan”), the Sense Photonics, Inc. 2017 Equity Incentive Plan (the “Sense Plan”), the Velodyne Lidar, Inc. 2020 Equity Incentive Plan (the “Velodyne Plan”), its 2021 Incentive Award Plan (the “2021 Plan”) and its Amended and Restated 2022 Employee Stock Purchase Plan (the “2022 ESPP” and, collectively with the 2015 Plan, the Sense Plan, the Velodyne Plan and the 2021 Plan, the “Plans”).
The Plans, other than the 2022 ESPP, provide for the grant of stock options, stock appreciation rights, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), performance stock unit awards and other forms of equity compensation (collectively, “equity awards”). In addition, the 2021 Plan provides for the grant of performance bonus awards. New equity awards may only be granted under the 2021 Plan and Velodyne Plan. Awards under the 2021 Plan and Velodyne Plan can be granted to employees, including officers, directors and consultants of the Company and its subsidiaries, in each case, within the limits provided in the 2021 Plan and Velodyne Plan, respectively.
The Company’s 2022 ESPP has been offered to all eligible employees since August 2022 and generally permits certain employees to purchase shares of our common stock at a discount through payroll deductions of up to 15% of their compensation during each offering period, subject to certain limitations.
The 2022 ESPP provides offering periods that have a duration of 24 months in length and are comprised of purchase periods of six months in length. The offering periods are scheduled to start on the first trading day on or after May 16 and November 16 of each year. Under the 2022 ESPP, the purchase price of a share equals 85% of the lesser of the fair market value of a share of common stock on either the first or last day of the applicable offering period or the last day of the applicable purchase period.
During the three months ended March 31, 2026, there were no shares of common stock issued under the 2022 ESPP.
The stock-based compensation expense for the 2022 ESPP is based on the estimated grant date fair value utilizing the Black-Scholes option valuation model of the 2022 ESPP shares and the number of shares that can be purchased as of the grant date, which is recognized as expense on a straight line expense attribution method over the length of an offering period.
Stock Options
Stock option activity for the three months ended March 31, 2026 was as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Number of
Shares
Underlying
Outstanding
Options | | Weighted-
Average Exercise
Price | | Weighted-
Average
Remaining
Contractual
Term (in years) | | Aggregate
Intrinsic
Value |
| Outstanding—December 31, 2025 | 1,710,622 | | | $ | 7.69 | | | 4.72 | | $ | 24,142 | |
| Options exercised | (44,548) | | | 2.10 | | | | | |
| | | | | | | |
| Outstanding—March 31, 2026 | 1,666,074 | | | $ | 7.84 | | | 4.47 | | $ | 17,854 | |
| Vested —March 31, 2026 | 1,666,074 | | | $ | 7.84 | | | 4.47 | | $ | 17,854 | |
| Exercisable—March 31, 2026 | 1,666,074 | | | $ | 7.84 | | | 4.47 | | $ | 17,854 | |
The following table summarizes information about stock options outstanding and exercisable at March 31, 2026.
| | | | | | | | | | | | | | | | | | | | |
| | Options Outstanding | | Options
Exercisable |
Exercise
Price | | Options
Outstanding | | Weighted
Average
Remaining
Contractual
Life (Years) | |
| $ | 1.85 | | | 163,315 | | | 4.29 | | 163,315 | |
| 2.13 | | | 741,142 | | | 4.50 | | 741,142 | |
| 14.22 | | | 752,408 | | | 4.50 | | 752,408 | |
| 52.40 | | | 9,209 | | | 3.50 | | 9,209 | |
| | 1,666,074 | | | | | 1,666,074 | |
As of March 31, 2026, there was no remaining unamortized stock-based compensation expense related to unvested stock options.
Restricted Stock Units
A summary of RSU activity for the three months ended March 31, 2026 was as follows:
| | | | | | | | | | | |
| Number of
Shares | | Weighted Average
Grant Date Fair
Value (per share) |
| Unvested—December 31, 2025 | 4,085,075 | | | $ | 12.02 | |
| Granted | 149,677 | | | 24.96 | |
| Canceled | (56,253) | | | 10.51 | |
| Vested | (621,109) | | | 10.76 | |
| Unvested—March 31, 2026 | 3,557,390 | | | $ | 12.81 | |
Stock-based compensation expense is recognized on a straight-line basis over the vesting period of each award of RSUs. As of March 31, 2026, total compensation expense related to unvested RSUs granted to employees, but not yet recognized, was $36.2 million, with a weighted-average remaining vesting period of 1.7 years. RSUs settle into shares of common stock upon vesting.
Stereolabs acquisition
In connection with the acquisition of Stereolabs (Note 3), several Stereolabs key employees entered into agreements with the Company whereby these key employees are eligible to receive an aggregate of 660,005 shares of common stock subject to their continued employment with the Company. These shares are excluded from the above restricted stock units table. These shares are considered compensatory in the post-business combination periods due to the additional service requirement for these key employees. These shares are subject to a staggered lock-up arrangement lasting through a four-year period, whereby twenty-five (25%) percent will be released upon each anniversary of the completion date as long as the key employees are still
employees of the Company. As of March 31, 2026, there were 660,005 unvested shares outstanding with a grant date fair value of $19.18 per share subject to future service periods. The Company recognized stock-based compensation expense of $0.5 million during the three months ended March 31, 2026 related to the 660,005 shares. As of March 31, 2026, there is $12.2 million remaining unamortized compensation expense that will be recognized over a weighted average remaining period of 3.9 years.
Stock-Based Compensation Expense
The Company recognized stock-based compensation expense for all share-based awards in the unaudited condensed consolidated statements of operations and comprehensive loss as follows (in thousands):
| | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | |
| 2026 | | 2025 | | | | |
| 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 | | | | | |
The following table summarizes stock-based compensation expense by award type (in thousands):
| | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | |
| 2026 | | 2025 | | | | |
| RSUs | $ | 6,449 | | | $ | 7,333 | | | | | |
| | | | | | | |
| Employee stock purchase plan | 361 | | | 340 | | | | | |
| RSAs | — | | | 825 | | | | | |
| Stereolabs post‑combination compensation expense | 684 | | | — | | | | | |
| Total stock-based compensation | $ | 7,494 | | | $ | 8,498 | | | | | |
Note 10. Net Loss Per Common Share
The following table sets forth the computation of basic and diluted net loss per common share attributable to common stockholders (in thousands, except share and per share data):
| | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | | | |
| 2026 | | 2025 | | | | | | | | |
| Numerator: | | | | | | | | | | | |
| Net loss | $ | (17,465) | | | $ | (22,017) | | | | | | | | | |
| Denominator: | | | | | | | | | | | |
| Weighted average shares used to compute basic and diluted net loss per share | 61,824,843 | | | 52,488,199 | | | | | | | | | |
| Net loss per common share—basic and diluted | $ | (0.28) | | | $ | (0.42) | | | | | | | | | |
The weighted average number of shares used to compute basic and diluted net loss per share excludes unvested early exercised common stock options subject to repurchase.
The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been antidilutive:
| | | | | | | | | | | |
| March 31, |
| 2026 | | 2025 |
| Options to purchase common stock | 1,666,074 | | | 1,741,440 | |
| Public and private common stock warrants | 3,277,155 | | | 5,235,409 | |
| Restricted Stock Units | 3,557,390 | | | 5,426,805 | |
| Shares issued to Stereolabs employees and subject to vesting | 660,005 | | | — | |
| Share purchase rights under the ESPP | 267,175 | | | 549,260 | |
| Unvested RSAs | — | | | 388,626 | |
| | | |
| Total | 9,427,799 | | | 13,341,540 | |
Note 11. Income Taxes
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.
The Company’s effective tax rate was (3.3)% for the three months ended March 31, 2026 and (0.9)% for the three months ended March 31, 2025. The Company’s effective tax rate differs from the U.S. statutory tax rate primarily due to valuation allowances on the deferred tax assets as it is more likely than not that some, or all, of the Company’s deferred tax assets will not be realized. The Company continues to maintain a full valuation allowance against its net deferred tax assets. Due to tax losses and the offsetting valuation allowance, the income tax provision for the three months ended March 31, 2025 was immaterial to the Company’s unaudited condensed consolidated financial statements.
Note 12. Revenue
The majority of the Company’s revenue is recognized at the point in time when the customer obtains control of the respective lidar sensors, cameras and AI compute systems. Revenue recognized over time is immaterial to total revenue recognized for any given period.
Revenue for the three months ended March 31, 2026 and 2025, respectively, includes patent royalty revenues generated from a long-term intellectual property (“IP”) license agreement in the amount of $0.3 million and $1.5 million. The Company also expects to record future revenue from this agreement as it satisfies its performance obligations.
The following table presents total revenues by geographic area based on the location products were shipped to and services provided (in thousands):
| | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | |
| 2026 | | 2025 | | | | |
| Americas | $ | 32,798 | | | $ | 15,528 | | | | | |
Asia and Pacific(1) | 7,990 | | | 12,464 | | | | | |
| Europe, Middle East and Africa | 7,790 | | | 4,640 | | | | | |
| Total | $ | 48,578 | | | $ | 32,632 | | | | | |
(1)In the three months ended March 31, 2026 and 2025, respectively, the Company recognized $0.3 million and $1.5 million of patent royalty revenue from a long-term IP license agreement.
Countries that accounted for more than 10% of total revenue were as follows:
| | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | |
| 2026 | | 2025 | | | | |
| United States | 66 | % | | 45 | % | | | | |
| Austria | 11 | % | | * | | | | |
| Thailand | * | | 23 | % | | | | |
*Country accounted for less than 10% of total revenue in the period.
Revenue contract balances
Timing of revenue recognition may differ from the timing of invoicing to customers. An unbilled receivable is recorded in instances when revenue is recognized prior to invoicing, and amounts collected in advance of services being provided are recorded as deferred revenue. Contract assets and liabilities are generated when contractual billing schedules differ from revenue recognition timing.
Unbilled receivables
A receivable for multi-year licensing services is generally recorded upon invoicing. A receivable for multi-year license agreements is recorded upon delivery, whether or not invoiced, to the extent the Company has an unconditional right to receive payment in the future related to those licenses. As of March 31, 2026, the current portion of these unbilled receivables in the amount of $3.4 million, primarily consisting of unbilled receivables from multi-year license contracts, is included in “Accounts receivable, net” on the unaudited condensed consolidated balance sheet.
Contract Assets
Contract assets arise when revenue is recognized prior to billing customers and payment is contingent upon a future event, other than the passage of time. Contract assets primarily relate to the Company’s rights to consideration under a long-term IP license agreement when the licenses have been transferred to the customers, but payment is conditional on factors other than the passage of time.
Contract Liabilities
Contract liabilities consist of deferred revenue, advanced payments and deposits from customers for goods and services that are yet to be provided. Deferred revenue includes billings in excess of revenue recognized related to product sales, licenses, extended warranty and other services revenue, and is recognized as revenue when the Company performs under the contract. The long-term portion of deferred revenue, mostly related to obligations under license arrangements and extended warranty, is classified as non-current contract liabilities and is included in other non-current liabilities in the Company’s unaudited condensed consolidated balance sheets. Customer advanced payments represent required customer payments in advance of product shipments according to customer’s payment term. Customer advance payments are recognized as revenue when control of the performance obligation is transferred to the customer. Customer deposits represent consideration received from a customer which can be applied to future product or service purchases, or refunded.
Contract assets and liabilities are presented net at the individual contract level in the unaudited condensed consolidated balance sheet and are classified as current or non-current based on the nature of the underlying contractual rights and obligations.
| | | | | | | | | | | | | |
| March 31,
2026 | | December 31,
2025 | | |
| | | | | |
| Contract assets, current | $ | 1,011 | | | $ | 937 | | | |
| Contract assets, non-current portion | 281 | | | 281 | | | |
| Total contract assets | $ | 1,292 | | | $ | 1,218 | | | |
| | | | | |
| Contract liabilities, current | | | | | |
| Deferred revenues from multi-year licensing agreements | $ | 133 | | | $ | 133 | | | |
| Other contract liabilities | 24,026 | | | 20,572 | | | |
| | | | | |
| Contract liabilities, non-current portion | | | | | |
| Deferred revenues from multi-year licensing agreements | $ | 391 | | | $ | 429 | | | |
| Other contract liabilities | 2,560 | | | 2,677 | | | |
| Total contract liabilities | $ | 27,110 | | | $ | 23,811 | | | |
Deferred revenues from multi-year licensing agreements mainly represent minimum royalty payments received from licensees relating to long-term IP license agreements for which the Company has future obligations. Royalties from the IP license agreements are recognized at the later of the period the sales occur or the satisfaction of the performance obligations to which some or all of the royalties have been allocated.
Other contract liabilities primarily relate to a multi-year contract entered in 2023 with a customer to sell the Company’s products. During the three months ended March 31, 2026, the Company recognized no revenue associated with this contract. As of March 31, 2026, $12.5 million remained deferred until a future product delivery date.
The following table provides information about contract liabilities (remaining performance obligations) and the significant changes in the balances (in thousands):
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2026 | | 2025 |
| Beginning balance | $ | 23,811 | | | $ | 36,889 | |
| Net revenue deferred in the period | 1,730 | | | 587 | |
| Contract liabilities acquired in the Stereolabs acquisition | 2,279 | | | — | |
| Revenue recognized that was included in the contract liability balance at the beginning of the period | (710) | | | (7,103) | |
| Ending balance | $ | 27,110 | | | $ | 30,373 | |
Note 13. Segment
The Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer. The Chief Executive Officer reviews financial information including revenue, expenses and net loss presented on a consolidated basis, accompanied by certain supplemental information about significant expense categories for purposes of allocating resources and evaluating the Company’s financial performance. The Company operates as one reportable and operating segment, which relates to the sale and production of lidar sensors, cameras and AI compute systems and there are no segment managers who are held accountable for operations, operating results and plans for levels or components below the consolidated unit level. The CODM assesses financial performance of the reportable segment and decides how to allocate resources based on the net loss that also is reported as the net loss attributable to the Company on the unaudited condensed consolidated statements of operations. The net loss is also used by our CODM to monitor actual results versus budget and prior periods amounts of our reportable segment and decide how to expand business or to return value to shareholders. The measure of the segment assets is reported on the unaudited condensed consolidated balance sheet as total assets.
The following table reflects the significant expenses of our reportable segment (in thousands):
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2026 | | 2025 |
| Total revenue | $ | 48,578 | | | $ | 32,632 | |
Less(1): | | | |
| Product manufacturing costs | 22,499 | | | 15,731 | |
| Stock based compensation and amortization expense | 1,689 | | | 1,593 | |
Other costs(2) | 3,552 | | | 1,825 | |
| Research and development | 16,082 | | | 14,985 | |
| Sales and marketing | 7,840 | | | 6,423 | |
| General and administrative | 16,128 | | | 15,905 | |
| Total other income, net | (2,299) | | | (2,008) | |
| Provision for income tax expense | 552 | | | 195 | |
| Net loss | $ | (17,465) | | | $ | (22,017) | |
(1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.
(2) Other costs primarily includes inventory excess and obsolescence, scrap, warranty, freight and other cost of revenue items.