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Business Combination and Related Transactions | 6 Months Ended
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Jun. 30, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] |
Business Combination and Related Transactions | Business Combination and Related Transactions On February 10, 2023, the Company completed the Velodyne Merger. Velodyne shares ceased trading on the Nasdaq Stock Market LLC after market close on February 10, 2023, and each Velodyne share was exchanged for 0.8204 shares of the Company’s common stock. Velodyne is treated as the acquired company for financial reporting purposes. This determination is primarily based on the Company’s senior management prior to the Velodyne Merger comprising a majority of the senior management of the Company following the Velodyne Merger, the Company being the initiator of acquiring Velodyne and the Company being the party issuing shares in the Velodyne Merger. The acquisition price for the Velodyne Merger was $306.6 million, primarily consisting of fair value of the Company’s common stock issued in exchange for Velodyne shares and fair value of the Amazon Warrant (Note 7) of $8.6 million. Under the acquisition method of accounting 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 purchase accounting, including the identification and allocation of consideration to assets acquired was completed as of the fourth quarter of 2023. The following table provides the assets acquired and liabilities assumed as of the date of acquisition (in thousands):
| Estimated Fair Value
Purchase consideration | $ | 306,602 |
Amounts of identifiable assets and liabilities assumed |
Cash and cash equivalents | $ | 32,137 |
Short-term investments | 155,031 |
Accounts receivable, net | 8,611 |
Inventory | 9,700 |
Prepaid expenses and other current assets | 4,387 |
Unbilled receivable, non-current portion | 6,657 |
Property and equipment, net | 9,900 |
Operating lease, right-of-use assets | 10,887 |
Intangible assets, net | 13,000 |
Other non-current assets | 1,047 |
Accounts payable | (3,356) |
Accrued and other current liabilities | (32,821) |
Contract liabilities, current | (5,475) |
Operating lease liability, current portion | (3,735) |
Operating lease liability, non-current portion | (11,940) |
Contract liabilities, non-current portion | (2,206) |
Other non-current liabilities | (745) |
Total identifiable net assets | $ | 191,079 |
Goodwill | 115,523 |
| $ | 306,602 |
Identified intangible assets acquired and their estimated useful lives as of February 10, 2023, were (in thousands, except years):
| Estimated Useful Life (in years) |  | Estimated Fair Value
Developed technology – Hardware | 3 |  | $ | 2,500 |
Developed technology – Software | 5 |  | 5,100 |
Customer relationships | 8 |  | 5,400 |
Intangible assets, net | 5.9 |  | $ | 13,000 |
Developed technology relates to Velodyne’s lidar sensors and BlueCity AI software used to monitor traffic networks and public spaces. The Company applied significant judgment in estimating the fair value of the developed technology, which involved significant assumptions related to the relief-from-royalty rate, the migration curve, the discount rate, and the economic life. The Company valued the hardware developed technology using the relief-from-royalty method under the income approach. Software developed technology was valued using the excess earnings method. The economic useful life was determined based on the technology cycle related to each developed technology, as well as the cash flows over the forecasted period. The estimated fair value of the customer relationships was determined using the distributor method, which involved significant assumptions related to the distributions margin. The Company estimated customer relationships useful life of 8 years that approximates the pattern in which the economic benefits are expected to be realized. The estimated fair value of the inventory was determined using the comparative sales method, which estimated the expected sales price of the product, reduced by all costs expected to be incurred to complete or dispose of the inventory, as well as a profit on the sale. The estimated fair value of property and equipment utilized a replacement cost method incorporating the age, quality and condition of the assets. 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 not deductible for tax purposes. Goodwill is primarily attributable to the assembled workforce and the anticipated operational synergies at the time of the Velodyne Merger. The unaudited supplemental pro forma information below presents the combined historical results of operations of the Company and Velodyne as if Velodyne had been acquired as of January 1, 2022 (in thousands):
|  |  | Three Months Ended June 30, |  |  |  | Six Months Ended June 30,
|  |  | 2023 |  |  |  | 2023
Revenue |  |  | $ | 19,396 |  |  |  |  | $ | 36,626 |
Net loss |  |  | $ | (122,733) |  |  |  |  | $ | (300,013) |
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 June 30, |  |  |  | Six Months Ended June 30,
|  |  | 2023 |  |  |  | 2023
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 |  |  | $ | — |  |  |  |  | $ | (277) |
A decrease in expenses related to the transaction expenses |  |  | $ | — |  |  |  |  | $ | 6,058 |
A net increase in revenue related to the impact of the acceleration of the Amazon Warrant vesting recognized by Velodyne at the close of the Velodyne Merger transaction |  |  | $ | — |  |  |  |  | $ | 3,656 |
A decrease in expenses related to the impact of the acceleration of the Amazon Warrant vesting recognized by Velodyne at the close of the Velodyne Merger transaction |  |  | $ | — |  |  |  |  | $ | 26,704 |
Represents decrease in additional stock-based compensation expense related to Ouster employee terminations due to change in control. |  |  | $ | — |  |  |  |  | $ | 6,383 |
Represents a decrease in severance expense in connection with the Velodyne Merger transaction |  |  | $ | — |  |  |  |  | 10,586 |
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 Velodyne Merger 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 Velodyne.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent + Details
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