Ouster, Inc. (OUST) DCF Valuation & Fundamental Primer
Ouster, Inc. (OUST) currently trades at $24.80 with an enterprise value of $1.95B. Our proprietary institutional model rates Ouster, Inc. at 82/100 (Grade: A · High-Quality Compounder). The current market price prices in an implied 5-year revenue CAGR of 12.8% vs. historical growth of 21.5% (Substantial Margin of Safety).
Institutional fundamental teardown of Ouster, Inc. (OUST) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
Ouster, Inc. (OUST) 3-Scenario DCF Valuation Range
Stress-test OUST's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.
Split between 5-Year Explicit Cash Flows and Discounted Terminal Value
2D Institutional Valuation Sensitivity Heatmap
Implied share price & upside/downside spread across 25 valuation states (Current Price: $24.80).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $37.92 +53% | $40.26 +62% | $42.99 +73% | $46.21 +86% | $50.07 +102% |
| 9.3% | $34.13 +38% | $35.97 +45% | $38.09 +54% | $40.54 +63% | $43.41 +75% |
| 10.0% | $31.02 +25% | $32.50 +31% | $34.17 +38% | $36.09 +46% | $38.30 +54% |
| 10.8% | $28.41 +15% | $29.62 +19% | $30.98 +25% | $32.51 +31% | $34.25 +38% |
| 11.5% | $26.20 +6% | $27.21 +10% | $28.32 +14% | $29.57 +19% | $30.97 +25% |
Institutional Software Quality Scorecard (82/100 · Grade A)
Strong fundamentals, above-average cash generation, and robust competitive positioning.
Elite deferred revenue float; FCF exceeds operating income by >20%
Elevated equity dilution; SBC consumes substantial operating cash flow
Elite Tier-1 SaaS compounder with high gross margin and superior Rule of 40
Positive net cash cushion; self-funding operations with zero insolvency risk
Core Investment Strengths & Moats
- High-grade cash conversion: FCF is 187% of EBIT driven by upfront annual collections
- Top-quartile software unit economics: 83.2% gross margin and 55.6% Rule of 40 score
- Net cash positive: $95.9M balance sheet buffer
Key Operational & Dilution Risks
- Substantial SBC dilution drag: SBC is 21.0% of revenue ($41.1M)
Reverse-DCF Solver: What Growth is Priced Into OUST?
The current share price only requires 12.8% 5-year CAGR (24.8% dilution-adjusted), well below historical growth of 21.5%. If the company maintains baseline execution, there is asymmetric upside.
Headline Reverse-DCF ignores Stock-Based Compensation (21.0% of revenue) and annual share dilution (1.8%/yr). Accounting for both requires 24.8% 5-year revenue CAGR to justify $24.80/sh on a true per-share economic cash flow basis.
Ouster, Inc. (OUST) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $195.8M | $195.8M | $237.9M | $289.1M | $351.2M | $426.7M | $518.4M |
| Gross Profit | $162.9M | $162.9M | $197.9M | $240.5M | $292.2M | $355.0M | $431.3M |
| Operating Income (EBIT) | $35.6M | $35.6M | $43.3M | $52.6M | $63.9M | $77.7M | $94.4M |
| Stock-Based Compensation (SBC) | $41.1M | $41.1M | $50.0M | $60.7M | $73.8M | $89.6M | $108.9M |
| Unlevered Free Cash Flow (FCF) | $66.8M | $66.8M | $81.1M | $98.6M | $119.8M | $145.5M | $176.8M |
| SBC-Adjusted True Cash Flow | $25.7M | $25.7M | $31.2M | $37.9M | $46.0M | $55.9M | $67.9M |
Software & Cloud Services Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = -25.0 + 0.70 × (Rule of 40) · R² = 55%Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.
| Company | Ticker | Market Cap | TTM Revenue | Gross Margin | FCF Margin | Rule of 40 | SBC % Rev | EV / Rev |
|---|---|---|---|---|---|---|---|---|
| Ouster, Inc. | OUST | $1.49B | $195.8M | 83.2% | 34.1% | 55.6% | 21.0% | 7.1× |
| ServiceNow | NOW | $152.61B | $10.98B | 79.2% | 31.1% | 54.2% | 15.9% | 13.9× |
| Workday, Inc. | WDAY | $50.35B | $8.00B | 75.0% | 27.4% | 43.9% | 19.0% | 6.4× |
| Salesforce | CRM | $217.10B | $37.90B | 77.2% | 32.8% | 42.8% | 8.4% | 5.8× |
| Datadog | DDOG | $46.05B | $2.68B | 80.8% | 31.1% | 57.7% | 21.3% | 17.4× |
| Snowflake Inc. | SNOW | $71.79B | $3.63B | 66.5% | 25.2% | 57.7% | 40.8% | 20.0× |
| Hubspot | HUBS | $19.89B | $2.63B | 85.0% | 21.3% | 52.7% | 19.2% | 7.7× |
| Peer Cohort Median Benchmark (N=6) | 78.2% | 29.2% | 53.5% | 19.1% | 10.8× | |||
EV / Revenue Multiple Compression Stress Test
| Multiple Scenario | EV / Revenue | Implied Enterprise Value | Implied Equity Value | Implied Share Price | Delta vs Current |
|---|---|---|---|---|---|
| Current Multiple | 7.1× | $1.39B | $1.49B | $24.80 | 0.0% |
| -20% Multiple Compression | 5.7× | $1.11B | $1.21B | $20.16 | -20.0% |
| -35% Multiple Compression | 4.6× | $904.9M | $1.00B | $16.68 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $979.0M | $1.07B | $17.91 | -29.7% |
Frequently Asked Questions: Ouster, Inc. (OUST) Valuation
What is Ouster, Inc. (OUST)'s intrinsic DCF valuation and implied share price?
Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, Ouster, Inc. (OUST) has a Base Case implied value of $34.17 per share (with a Bear Case of $15.30 and a Bull Case of $60.88), compared to its current price of $24.80. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is Ouster, Inc. (OUST)'s Rule of 40 score and Free Cash Flow margin?
Ouster, Inc. achieves a Rule of 40 score of 55.6%, combining a 21.5% revenue growth run-rate with a 34.1% TTM free cash flow margin on $195.8M in trailing twelve-month revenue. In the Software & Cloud Services peer cohort, the median Rule of 40 benchmark is 53.5%.
What revenue growth rate is priced into OUST stock according to Reverse-DCF analysis?
At $24.80 per share (Enterprise Value of $1.39B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 12.8%, compared to Ouster, Inc.'s historical CAGR of 21.5%. Overall market expectations are rated as "Substantial Margin of Safety".
How does Ouster, Inc. compare to Software & Cloud Services software peers?
Ouster, Inc. (OUST) earns an institutional Software Quality Score of 82/100 (Grade A — High-Quality Compounder). Across its Software & Cloud Services peer group (NOW, WDAY, CRM, DDOG, SNOW), the cohort trades at a median EV/TTM Revenue multiple of 10.8× and a median gross margin of 78.2%.
How does Stock-Based Compensation (SBC) impact Ouster, Inc. (OUST)'s valuation?
Ouster, Inc. recorded $41.1M in TTM stock-based compensation (21.0% of revenue). When treating SBC as a cash-equivalent compensation expense, Ouster, Inc.'s SBC-adjusted free cash flow yield is 1.7%, scoring 10/25 on our Shareholder Dilution Friction pillar.