Hello, welcome to Ouster's second quarter 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After today's presentation and remarks, there will be an opportunity to ask questions. If you would like to ask a question during this time, simply press star followed by 11 on your telephone keypad. If you would like to withdraw your question, press star one one again. The call today is being recorded, and a replay of the call will be available on the Ouster investor relations website an hour after the completion of this call. I'd now like to turn the conference over to Chen Geng, Senior Vice President, Strategic Finance & Treasurer. Please go ahead. Thank you, operator, good afternoon, everyone. Thank you for joining our second quarter 2026 earnings call. Today on the call, we have Chief Executive Officer Angus Pacala, and Chief Financial Officer Ken Gianella. As a reminder, after the market closed today, Ouster issued its financial news release, which was also furnished on a Form 8-K and is posted in the investor relations section of the Ouster website. Today's conference call will be available for webcast replay in the investor relations section of our website. I want to remind everyone that on this call, we will make certain forward-looking statements. These include all statements about our competitive position, product advantages and growth opportunities, anticipated industry trends, our business and strategic priorities, our operating expense targets, the impact of our recent acquisition, the development and expansion of our products, our products' capabilities and performance, and our revenue guidance for the third quarter of 2026 and long-term financial targets. Actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause actual results and trends to differ materially from those contained in or implied by these forward-looking statements are set forth in the second quarter 2026 financial results release and in the quarterly and annual reports we filed with the Securities and Exchange Commission. Any forward-looking statements that we make on this call are based on assumptions as of today. Other than as may be required by law, Ouster assumes no obligation to update any forward-looking statements, which speak only as of their respective dates. In today's conference call, we will discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures discussed today is included in the financial results release. I would now like to turn the call over to Angus. Hello, everyone, and thank you for joining us today. I'll start with a brief recap of the quarter and an update on our strategic priorities before Ken covers our financial results in more detail. We delivered exceptional results for the second quarter, generating $55 million in revenue and shipping over 17,000 sensors. This marks our 14th straight quarter of product revenue growth and is a testament to the strength of our unified sensing and perception platform. We had strong contributions from our industrial and smart infrastructure verticals for use cases in warehouse automation, yard logistics, port automation, mining, and ITS. Across the world, customers have continued to scale their investment in Physical AI. Our smart infrastructure business continues to scale, with major deployments in New Jersey and Georgia to support the 2026 FIFA World Cup. The New Jersey DOT deployed Ouster BlueCity to create a digital traffic twin across 42 highway locations around MetLife Stadium. In Georgia, we deployed BlueCity at an additional 30 intersections across the Atlanta area, including around Mercedes-Benz Stadium. Upon the conclusion of the World Cup, BlueCity will continue to provide high-fidelity traffic monitoring, automated data analytics, and real-time safety alerts designed to optimize traffic and enhance the safety of everyday residents in these locations. Ouster sensors are helping industrial customers like AIM Intelligent Machines improve safety and productivity for autonomous operations in complex, unstructured environments. AIM's autonomy kits retrofit heavy machinery into AI-powered fleets that maximize safety and productivity. We expanded our footprint in the defense industry with a strategic agreement with ARGUS Interception and announced a collaboration with FieldAI to leverage Rev8 to power the next generation of robotic autonomy in markets like construction, mining, and security. The second quarter was also a period of strategic execution and expansion for Ouster. We brought the world's first native color lidar sensors to customers with Rev8 and set a new standard for wrist-mount stereo vision with the ZED X Nano. We also deepened our partnership with NVIDIA, bringing Rev8 to the NVIDIA DRIVE and Jetson platforms. With dedicated NVIDIA toolkits supporting direct data ingestion and drivers designed to leverage Jetson Orin and Thor, Ouster is providing customers with a production-ready ecosystem that is critical to solve the most complex challenges in Physical AI. We are actively scaling our Rev8 production lines and anticipate reaching production volumes by the end of the quarter. As previously announced, we expanded our partnership with Benchmark to support Rev8, establishing manufacturing capacity that ultimately exceeds 100,000 units per year. We also achieved Build America, Buy America compliance for Rev8, which makes Rev8 and BlueCity eligible for deployment in U.S. government-funded infrastructure upgrades. Finally, we continue to bolster our strong operational execution with disciplined financial management. Building upon an already resilient balance sheet, the additional capital we raised provides us with the ability to fully fund our current business plan while providing immense strategic flexibility. This strength gives our customers ultimate confidence in our ability to serve their needs and serve as their foundational Physical AI partner. Turning to our 2026 strategic priorities, we progressed across all three key focus areas, revolutionizing our lidar camera and AI compute products, extending our leadership in Physical AI solutions, and executing towards profitability. The launch of Rev8 was the most important product release in Ouster's history and a pivotal moment for Physical AI. Featuring the world's first native color lidar, Rev8 has set a new industry benchmark and delivers the holy grail for 3D spatial perception. Feedback from customers has been electric, calling Rev8 a massive leap in sensing capability that provides unprecedented situational awareness to scale next-generation Physical AI solutions where it matters most. Engineered for functional safety and built for scale, Rev8 is driving commercial momentum across all of our verticals. From the harsh, demanding environments of mining and construction sites to the dynamic, complex worlds of robotaxi fleets and statewide traffic networks across the country, Rev8 is cementing Ouster as a core perception partner for market leaders scaling real-world autonomy. Customer response has been immediate, highlighted by multiple million-dollar-plus orders, including the world's largest manufacturer of heavy machinery, a leading developer of autonomous agriculture equipment, and a top autonomous vehicle provider. During the quarter, we secured a significant order to provide the Utah Department of Transportation with its largest lidar deployment to date, covering several 100 intersections across the state. With native color and industry-leading performance, Rev8 is solidifying our market leadership and deepening relationships across these and other key accounts. Our acquisition of Stereolabs is already proving strategic and financial value. The ZED X Nano was the most successful launch in Stereolabs' history and expanded our reach into industrial and robotics markets, winning new sockets requiring smaller form factors. By delivering high resolution and ultra-low latency capture pipeline and millimeter accuracy, we're giving roboticists a major upgrade to their vision systems, enabling machines to sense, think, act, and learn with unprecedented precision. With a unified lidar camera and AI compute stack, Ouster is providing customers with the world's most capable perception platform. We also upgraded our Gemini and BlueCity software solutions with Rev8, opening up a new level of spatial intelligence. This breakthrough introduces the industry's first native color lidar detection system, simultaneously capturing both color and 3D depth information without the need for complex calibration. Powered by the Rev8 OS1 Max, we released advanced detection for BlueCity, delivering double the range and resolution of previous generations and achieving multimodal detection and classification up to 500 ft. By providing unmatched situational awareness and delivering precise, high-fidelity digital traffic twins, Rev8 opens up higher speed markets and allows transportation departments to further optimize signal timing based on real-time data to improve traffic flow while reducing their total cost of ownership. Privacy is paramount for this market, and we designed BlueCity with system-level privacy features at the edge to reduce the collection of identifying features. Ouster BlueCity has quickly become a premier traffic management solution, including the three largest lidar-based deployments in the U.S., and our goal is to be the number one provider of smart infrastructure solutions. Since its launch in 2023, we have established Gemini as a standard for sensing and perception, providing the real-time digital traffic twin necessary for our smart infrastructure customers to increase their efficiency and safety. We see an enormous opportunity in our other verticals to provide software solutions for everything that moves in the physical world. Similar to smart infrastructure, these customers need a less technical, turnkey solution that is easy to deploy. We will continue to invest in products and solutions that broaden our market opportunity and help accelerate our customers' development. Finally, our strong results are aligned with our long-term financial framework. We are making strategic investments to expand our addressable market while maintaining our path to profitability. With that, let me now turn the call over to Ken, who will provide more context on our second quarter financial results. Thank you, Angus. Hello, everyone. In the second quarter, we delivered a record quarter of revenue and number of sensors sold and introduced multiple new products to the market. These are important proof points in our continued execution against both our financial and operational goals. These results reinforce our confidence in the long-term financial model, supported by continued operating leverage and strong customer demand across our served markets. Turning to the second quarter financial performance. Operating results were again strong, with revenue of $55 million. This represents an increase of approximately 56% compared with the second quarter last year. The industrial vertical was the largest contributor to the second quarter revenue, followed by smart infrastructure. We shipped over 17,000 sensors, a new quarterly record, which included over 9,000 lidar and over 8,000 camera sensors. Royalty revenue in Q2 was approximately $1.9 million. For the first half of the year, royalty revenue was approximately $2.2 million. We continue to estimate total royalty revenue in 2026 to be around $5 million for the full year. GAAP gross margin was 49%, up from 45% in the same quarter last year. A one-time refund was included in our cost of goods sold, which positively impacted gross margin by approximately 1,000 basis points. As a reminder, in the second quarter of 2025, we had a one-time refund, which positively impacted us by approximately 500 basis points. We do not expect these one-time benefits to reoccur in our ongoing normal operations. GAAP operating expenses were $47 million, an increase of approximately 10% from the second quarter last year. The increase was primarily due to the addition and integration of Stereolabs for a full quarter, new product introductions with the Rev8 and ZED X Nano, and recent investments in expanding our Physical AI solution portfolio. We are closely monitoring our operating expenses and anticipate the third quarter expenses to be 5%-8% higher year-over-year. Our Adjusted EBITDA in Q2 was a - $4 million, which was an improvement of approximately $1 million from the second quarter last year. Turning to our balance sheet, we ended the quarter with cash equivalents, restricted cash, and short-term investments of $263 million and no debt. This figure includes approximately $98 million raised in the second quarter through our previously discussed ATM program. At the beginning of the third quarter, we further strengthened our cash position through a successful offering of common stock, which closed on July 6th. Given the favorable market conditions at the time and corresponding strong investor demand, we closed a common stock offering that generated approximately $191 million in net proceeds. Upon completion, we had approximately 72 million shares outstanding. This strategic financing decision gives us additional capital to support our growth objectives, invest in opportunities we see across our markets, and further strengthen what is already one of the industry's strongest balance sheets. After this most recent financing, we do not expect to need additional capital to fund our current operating plan on our path to profitability. Turning to our guidance. Total revenue for the third quarter of 2026 is expected to be in the range of $54.5 million - $57.5 million, with the ramp of Rev8 to production volumes expected to occur throughout and into the latter part of the third quarter. Our full-year revenue expectations remain unchanged. The acquisition of Stereolabs, introduction of Rev8 and ZX Nano, and our expanding software and AI solutions are great proof points towards our continued investment to be a leader in sensing and perception for Physical AI. Our execution continues to build confidence in our long-term financial model. I'll now turn the call back to Angus for his closing remarks. The second quarter continued the momentum of the most transformative year in Ouster's history. With the landmark launch of Rev8 and the ZX Nano, the integration of Stereolabs, a strengthened partnership with NVIDIA, and significant strategic flexibility provided by our capital raises, Ouster is further extending its leadership as the foundational end-to-end sensing and perception platform for Physical AI. Our focus remains on providing the industry's most performant products and solutions, dramatically simplifying system integration, and accelerating time to market for the world's most innovative companies. The resounding customer feedback we received enforces our strategic path. I'd like to open the call up for Q&A. Thank you. We will conduct the question- and- answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Our first question comes from the line of Colin Rusch of Oppenheimer. Your line is now open. Thanks so much, guys. Can you give us a sense. You mentioned some of these orders that you're talking about. The bookings and kind of backlog that you guys are looking at, some order of magnitude or quantification of what you're looking at that's already been kind of put into your expectations for revenue ramp over the next couple of years. Hi, Colin. Yeah, good question. We gave a bit of color as it pertains to this year, Q3, Q4, Our revenue expectation remains on track, just given the really strong reception to Rev8. It's been one quarter with Rev8 out being sold, we've already racked up very significant wins with Fortune 500 companies, millions of dollars worth of orders, and now we're ramping the production to ship the product at volume scale this quarter. Rev8 will fuel the core of our business for my expectation the next five years. We have very strong signal on that being the case, just given the reaction that we've already had and how much better the Rev8 platform is and how expanded the Rev8 platform is with the long-range Max sensors and RGB sensing versus Rev7, which has been the core of our business for so long. Adding on top of that, Stereolabs, which is having an exceptional year. We're sitting on 50%+ year-over-year product revenue growth as a company and feeling very, very bullish about both this year and the future of Ouster. Yeah. Not giving exact bookings numbers on the full year quite yet, but feeling really great about the business, for sure. Thanks. Can you just talk about the competitive landscape a little bit? Now that you've got a couple of very differentiated capabilities in the sensors, coupled with the software capability, can you talk about how competitive some of these being efforts are and how you're thinking about pricing on a relative basis? Well, I view the lidar is not an easy business. Physical AI is not an easy business. These are new technologies that require significant investment, and I visualize this as almost as a flywheel of investment that gains momentum slowly but considerably year in and year out for any company that's able to be consistent and focused in their strategy and investment over that long time period. I think NVIDIA is such a great example of this, sticking to their guns and investing in edge compute and we see the results. That was a strategy compounded over decades, and I view Ouster the same way. We are sticking to what we do best, cutting edge technology and sensing perception, whether it's a camera, a lidar, the compute, and the algorithms that run on them. This is a virtuous cycle that has an immense amount of institutional inertia in it that gives us an edge today, but accelerates and keeps that momentum for the next five years. In terms of competitors coming and just catching up, given that there's this amount of investment needed, I don't see anyone just kind of jumping into the mix and being able to build what Ouster has built in a year or a couple of years for that matter, given that I've been at this for 11 years straight. Yeah. I think that Ouster is yet to have any major misstep on strategy, technology, product mix, or M&A, and that can't be said for a lot of our competitors. I'm feeling very good about how we position Ouster across all of our markets for the foreseeable future. Just the only thing I'll add on to that, Angus, is the software piece of it that he discussed was taking all that infrastructure that Angus just put together and then having products like BlueCity that go end to end into the marketplace and expanding that software component with the investments that we're doing in our software. It's very hard for any company to match the investment that Ouster's done in that area. We are one of the few companies, if not only companies out there that have that end-to-end game book in play. Perfect. Thanks, guys. As a reminder, to ask a question, you will need to press star one one on your telephone. Our next question comes from the line of Kevin Cassidy of Rosenblatt Securities. Your line is now open. Yeah, thanks for taking my question, congratulations on the ramp of Rev8. Maybe just along those lines with Rev8, were there any orders that you couldn't ship for the quarter because Rev8 wasn't available, or let's say even for this quarter in the guidance, is there potential that if you could make more, you could guide for a higher revenue? You have more orders than you do product. Well, we always carry a backlog in our business. We maintain inventory and a healthy backlog for the lidar business and increasingly for the Stereolabs camera business. That's kind of a I can answer it technically, there could be more revenue to ship, but it's at the sacrifice of backlog, which we wouldn't want to do, we also want to uphold our lead time obligations and shipment schedules with our customers. What we're guiding to is what we think we can ship realistically in revenue each and every quarter. There's not that much wiggle room within that guide. Okay. Maybe on BlueCity, it seems Utah is starting to release more orders and what is the timeframe, or can we expect that in Atlanta or Stamford, Connecticut or even Northern Jersey that your foothold will expand? Is there a timeframe expected for that, or do you just sit and wait? Yeah. I see the expansion happening all the time. While I don't know exactly what will happen in Atlanta or New Jersey specifically, the trend is customers get their hands on BlueCity, they deploy POCs, then they deploy citywide scale or statewide scale. It works, then they order more and more. Utah is one of the earliest adopters, been a really strong customer of ours. They're furthest along, perhaps, in adopting the BlueCity product. When they saw the advanced detection capability that we came out with, 500-foot sensing with full RGB OS1 Max sensors, they were first in line because they knew how well it would work on Utah's big wide-open roadways. That is absolutely an indication of where this market is going and the competitiveness we bring to it with the new OS1 Max Rev8 sensors. There's a huge part of the market that we now have broader access to because they're bigger roads, bigger, wider roads with higher speed traffic, where the longer range is pretty critical. Yeah, a lot of momentum in BlueCity, and I would say that the trend is customers get their hands on it and they order more and more. Very few customers are kind of stagnant in this industry for us, given how good the product is. We gave a number at the beginning of the year, just to add to that, Kevin, of about 15% of our sales were based off of BlueCity and Gemini-based products. We expect and would like to see that continue to grow upwards as the years go on. A bigger portion of that type of BlueCity content being a larger portion of our revenue in the years to come. Okay, great. Thanks. I'll get back in the queue. Thank you. Our next question comes from the line of Suji Des ilva of Roth. Your line is now open. Hi, Angus. Hi, Ken. Congratulations on the progress here. Thank you. I want to follow up on the questions on ITS, intelligent transport. I'm curious, you have a bunch of customers already, but in the deal pipeline, are you seeing any exogenous factors that are maybe causing an inflection in the inbound interest or activity in terms of layering on deals and kind of growing this functionality out there beyond the initial customers you have? That's a great question. There's a lot going on. We've actually invested a huge amount into BlueCity this year and the go-to-market, and we're starting to see the payoff of that. Rev8, I can't stress it enough, the OS1 Max advanced detection, long-range detection opens up about half the market. The market, as a reminder, in North America, there are 300,000 signalized intersections in North America. We have 100s, rapidly moving to 1,000s of intersections deployed. It's still a very small fraction of the total market that we can go and capture. We're not going to be gated by the market size in the foreseeable future, and we have the best product in the market. I'm convinced of that. Yeah, I think that the first six months of this year have been a huge inflection point for our BlueCity business, given the investments we've made in the go-to-market strategy and the product development on the software side, and then integrating this new Rev8 RGB OS1 Max capability. Okay, great. Thanks, Angus. Then just on an end market that's emerging here, robotics. Just want to understand how that might play out for you guys, what you're seeing in initial sort of discussions and, are we early in this or is there contribution already or coming soon? Just an update there where robotics is as an end market for you guys. Yeah, robotics has been an incredible business for us. Q2 was the first full quarter with Stereolabs under the Ouster umbrella. Stereolabs is stereo cameras and monocular camera products, including their release of the ZED X Nano, which is a special stereo camera for wrist-mounted manipulation on humanoid and robotic arms. They have the most competitive set of products for this hypergrowth humanoid and robotic manipulation market. We've seen incredible kind of interest and uptake from that customer set. I feel like I'm in the thick of this industry, that it was kind of lidar adjacent. Now with Stereolabs under the umbrella, we are pushing every last camera we can through our manufacturing supply chain to get them to customers because of this voracious appetite for Physical AI systems in that category set. Okay. Appreciate the color. Thanks, Angus. Thanks, Ken. Thank you. Our next question comes from the line of Tim Savageaux of Northland Capital. Your line is now open. Hey, good afternoon, and congrats on the revenue growth in the quarter. I'll just start with that last question, which is going to be about kind of capacity overall. You mentioned the announcement with Benchmark and the 100,000+, I gather, for lidar sensors. My first question was going to be, running where you are, which is below 40,000 currently annualized, what prompted, I guess, that announcement? I think it's a Rev8 launch, but how long do you think till you get there, I guess, to that type of capacity metric from where you are currently? That's from a lidar perspective, and given your comments you just made about Stereolabs. Are there similar capacity dynamics there regarding what you have currently relative to what you're shipping and where you'd like to be from a capacity standpoint? Yeah. We need to be investing in the capacity plan for the lidar because if you actually look at our lidar unit volumes, they're up 70% year-over-year. They're way up, and I expect that to continue. This adoption of Physical AI systems has really caught us by storm, and we're shipping a lot more lidars year-over-year, and that compounds very quickly from 40,000 unit a year run rate on up to 100,000. We'll have to be expanding beyond 100,000 because we always want to have excess capacity to make sure that we can meet last minute, as product SKU changes in our customer set. We have a really good handle on it because of the long-term relationship we've had with BET, with Benchmark. Part of the rationale of the merger from that team was finding a partner like Ouster that knew how to scale production, and that's really playing out. We have a major focus on maturing their manufacturing strategy and their capacity because of the explosion in demand that we're seeing out of their customer base. It couldn't have come at a better time for them that we now have the entire Ouster operations team and our COO, Darien Spencer hyper-focused on this scaling effort. Yeah, there's definitely a lot of work we're doing to just meet the demand on the Stereolabs side. Sticking with that for the moment. I know it, a full quarter here, but it's a pretty big stub last quarter. Seemed to be a pretty sharp uptick in Stereolabs sensor unit shipments that goes well beyond the inclusion of a full quarter. Was that ahead of your expectations, and is it fair to tie that to humanoid robotics demand, or are there other drivers there? I think the first thing is it's within the plan that we have for the full year for them. We're really excited in how we looked at that. We anticipated this ramp up once we got a hold of them heading into the back half of the year. The capacity piece of it, and especially in this marketplace with as hot as robotics is right now, you have to have the capacity to serve as the demand comes in. You don't want that order slipping or pushing to another provider, potentially. We are investing this quarter, and we're going to continue to invest the next couple of quarters in building their capacity to ramp expectations, not just what we've already laid out for this calendar year. We guided at the beginning of the year, we expect that to grow at least at the midpoint on a year-over-year basis, 40%. We see this progressing as a multiyear thing. Having that capacity to go into 2027 and beyond is important to start driving that now. Last question from me, you mentioned, you talked about humanoid robotics more in the context of cameras, but at least certain configurations or certain units seem to have, in some cases, a couple of lidar sensors on them. Is there a lidar sensor opportunity here as well in humanoid robotics, or should we think of that more focused on cameras? I'm just looking at the humanoid platforms, there's upwards of 100 - 200 of them that I've seen. Every one of them has six to 12 cameras, sometimes more, then a small subset have lidar. Yes, there is absolutely an opportunity for lidar, as we continue to build different form factors of our lidars, there could be better fits in terms of form fit and function for the humanoid market. Right now, that's a solidly camera-first market. The broader question, we have seen a lot of cross-selling opportunities within the customer set outside of just humanoids. Stereolabs has a lot of industrial customers, a lot of heavy equipment customers. There, we're getting inbound saying, "Hey, we're already buying a Stereolabs camera. We are looking at layering in lidar or safety lidar of some kind. Can we just buy Ouster?" Vice versa. Huge number of customers in the lidar domain, traditional Ouster customers that have been sourcing cameras somewhere and now they're coming to us saying, "Hey, we'd much rather source this all from one reputable partner, can we buy these stereo cameras now?" The cross-selling has emerged organically, which is great to see. It's just part of the thesis that customers would prefer a business combination of two companies like Stereolabs and Ouster. There's obviously some inorganic outbound stuff that we're doing with the sales teams to cross-sell. Thanks very much. Thank you. Our next question comes from the line of Andres Sheppard of Cantor Fitzgerald. Your line is now open. Hey, everyone. Good afternoon. Congratulations on the quarter and all the great progress. Thank you for taking our questions. I think a lot of the things we wanted to touch on have been asked, but maybe a two-part question Angus Pacala, are you able to share how should we be thinking about cadence and unit mix going forward between lidars and cameras? Not looking for a specific number, but just maybe percentage-wise or just how are you thinking about that and how we should be thinking about that going forward in terms of the split. Then the second part of that question is if you could maybe highlight what you see as the key upcoming catalyst that investors should be aware of. Thank you. Yeah. Thanks for the question, Andres. The unit mix expectation somewhat follows the ASP difference between these technologies. Cameras at much lower ASPs than the lidar sensors. They're also, cameras are directional versus our lidars are 360, so you need more of them to cover the field of view of a robot. Right now, Stereolabs is a smaller company that's now becoming a mid-size kind of entity within Ouster, and I see their unit volumes increasing and outpacing the unit volume increase of lidar just because of the dynamics. More cameras are deployed on these robots because they're at lower ASPs and they need to be positioned to cover the field of view of the robot differently than a lidar. That's good news for us. It doesn't mean we're going to sell fewer lidars. We see our lidar unit demand also accelerating, but just accelerating at a slightly slower pace than the cameras. Then in terms of catalysts for the business, there's so many things that we're doing right, and we're just starting to feel the positive effects of the Rev8 release across all of our verticals. I've talked a ton about that, but native color is such a big deal to this customer base. It really blew away my expectations, the customer reaction to native color lidar. We have almost universal adoption of native color in the Rev8 customer set. Then you layer on that the stereo cameras and the ZED X Nano that was released and the future roadmap that we have there. Finally, the unified sensing and perception stack that we're building has resonated with customers. If we talk about a catalyst that's a little further in the future, it's the ability to bundle all of this technology, compute cameras and lidars and the software that runs it together in a way that speeds customers' time to market. Gets practical Physical AI that's safe, efficient, capable in the hands of the thousands of customers that we're already serving today with just hardware. That's the mission of the company, or one of the big missions of the company going forward for the next couple of years is transitioning from a fantastic ecosystem supplier of these parts to a solutions provider that's providing the full stack software that underlies all of Physical AI. That's going to be a big catalyst for us in the next five years. Excellent. Thank you very much, Angus. Maybe just as a quick follow-up, I think we talked a lot about robotics and humanoids. I wanted to come back maybe to drones following your previous certification there. Just curious if you could maybe give us some color, what kind of near term or medium term opportunities you might be pursuing as it pertains to drones, and maybe how material do you expect this segment to be going forward? Thank you. Drones are very interesting for us. I think Rev8, we have a couple capabilities in Rev8, native color, improved accuracy, precision, and range that are very specific or useful in the drone surveying market and drone navigation market. I've been talking with a lot of drone customers lately, just getting Rev8 in their hands, and there's been an extremely positive reaction to what Rev8 can do, either as a surveying payload or as a navigation payload on drones. Obviously things like a Buy American, Build American certification is helping immensely in that market. We previously have the Blue UAS certification on REV7 products. You can anticipate maybe that's where we could invest more in Rev8 as well. There's a lot of things that are going to be tailwinds in that market, the customer reaction to Rev8 has been really, really good in the drone market. I definitely see it as a growth area for us through the end of the year. Well said. Thank you so much, everyone, and congrats again on the quarter. We'll pass it on. Thank you. Our next question comes from the line of Richard Shannon of Craig-Hallum. Your line is now open. Well, thanks, Angus and Ken, let me ask a couple questions. Apologies for potentially asking questions that have already been asked. I got on the call a little bit late here. I did want to follow up on Rev8. We've heard a couple of questions and answers so far, and it sounds like the reaction's been at least as strong as you were hoping for when you announced it last quarter here. Angus, I'd love to get a sense from you of what kind of pace of adoption we're seeing here. Can you talk about, as an example, how much of your revenue base was Rev8 in the second quarter? I know it's early, but I'd love to get a sense. Do you have any idea of how long of a timeframe to look for when Rev8 crosses over REV7? I have an expectation. Well, I guess we've done this now, this will be the eighth or seventh product transition that we've done at Ouster, right? Rev8, seven times we've transitioned the customer base across revisions. We do have really good information on how quickly customers transition. REV7 has been a product out in the market for three years, homologated into customer designs, certified by end customers. There are going to be reasons completely unrelated to the benefits of Rev8 why customers may stick with REV7. It's core to our strategy that we actually remain a dependable source of REV7 sensors for years and years to come. That's good for our customers because, again, they've spent money homologating into REV7. There are also new customers that see Rev8 as the solution to a problem they could never solve before and are rapidly adopting it, or totally new customers that we've never served before that now that we're capturing because of Rev8's unique capabilities, et cetera. This will be a two-year transition, is my expectation for the entire customer base, but it rapidly becomes a critical part of our revenue. We're entering volume production because it is. At that point, it's a critical part of our revenue. That's happening in the second half of this year, no question. I think it's less important to track the exact mix of Rev7 to Rev8 over the next 18 months, so long as the adoption is in the direction of Rev8, which I'm absolutely confident it will be, just given all the value it brings. Yeah, managing a customer's transition in this kind of market is really critical, and it's one of the additional benefits we bring to the table. We spend a lot of time in the background making sure Rev8 is backwards compatible with a lot of Rev7 capabilities for the customers that need that so they can adopt. I won't bore you with all the details, but there's a lot of work that goes on here. Yeah, I'll answer your other part of the question real quick. It was minor prototype sales that we had in Q2 that were in our numbers, but we expect that with production ramp to increase quarter-over-quarter into the back half. Okay. Angus, that was great perspective. Thanks for that help there with Ken as well. Second question is on gross margins here. I missed some of the prepared remarks here, and I know there's some amount of non-product revenues in here that probably has a different gross margin to it, but how do we think about the product gross margins in the quarter that makes it comparable with the last few here? They've been very healthy, well above or notably above your range for a while here, so I want to get a sense of trend here. Do you still think that 35%-40% is the right range, or can we see it consistently above there? Thank you. Yeah, we think it's the right range in the near term. I know it may not feel like it with the last so many quarters being 40% and plus. A lot of that's come from revisions and cost downs that was very aggressive. A couple bluebirds that we've gotten into there. On a normalized basis, the reason why I called out the last this year and then prior year numbers was both of them had one-time elements that pushed us well into the north 40s. We want to be in the high 30s to 40s. We do see potential that you could go higher than that. We want to keep everyone's expectations in check as we start getting into more production orders in the out years for the models. We would see that to come back into that 35%-40% range, like on a normalized basis. This quarter would've been in the high 30s, right? We just want to keep the overall models, realizing that we know production and different competitive market dynamics with supply chain are always going to be things that we're going to be fighting against year-on-year. As we get more of a mix into our software strategy and more into our solutions like BlueCity, those definitely are higher than that range that we gave, and that's going to help bolster that into the future and potentially pull us higher as those mix of solutions come more of a play in the out years. All right. Appreciate that detail, congratulations on your great results, guys. That's all for me. This does conclude the question- and- answer session. I would now like to turn it back to Angus for closing remarks. All right. Thank you all for joining the call. We look forward to speaking with you again during the third quarter, and have a good day. For your participation in today's conference, this does conclude the program. You may now disconnect.