Achieves Record Quarterly Revenues and Strong Gross Margin
Increases 2022 Guidance and Reiterates Adjusted EBITDA Breakeven Expected Exiting 2023
HOD HASHARON, ISRAEL, November 9, 2022 – Valens Semiconductor Ltd. (NYSE: VLN), a premier provider of high-speed connectivity solutions for the audio-video and automotive markets, today reported financial results for the third quarter ended September 30, 2022.
“Q3 2022 revenues were a record for Valens Semiconductor, reflecting the growing demand for our industry leading connectivity products,” said Gideon Ben-Zvi, CEO of Valens Semiconductor. “Our audio-video business continued expanding into new applications and verticals – from corporate, education, and industrial, to medical and more. In automotive, we expect to double our revenues in 2022 compared to 2021 and expect to further double in 2023 compared to 2022. Also exciting in the automotive space, we received initial RFIs for our VA7000 A-PHY chipsets, an important milestone towards the expected adoption of this advanced connectivity solution, as potential automotive OEM and Tier 1 customers make continued progress in their evaluations. We are on track for first design wins next year with mass production expected to start in 2025.
“Since going public in the third quarter last year, we have exceeded our business targets and made significant progress executing against our business targets and growth strategy, which is supported by our solid balance sheet. We believe we have sufficient resources to continue to invest in and expand our competitive advantages, enhance our product portfolio, and grow our market presence. We remain focused on the best opportunities which we believe will drive sustainable long-term growth and profitability for the company and all its stakeholders.”
Key Financial and Business Highlights
- Record quarterly revenues of $23.1 million, up 21.3% from Q3 2021 and up 2.9% from Q2 2022
- Q3 2022 GAAP gross margin was 69.7% compared to 72.4% in Q3 2021, reflecting a higher portion of revenue coming from the company’s automotive business (non-GAAP gross margin was 5% compared to 72.7% in Q3 2021)
- Q3 2022 GAAP Net Loss was $(5.3) million, compared to Net Loss of $(8.5) million in Q3 2021, and Adjusted EBITDA loss in the third quarter was $(1.7) million, compared to $(2.7) million in Q3 2021
- Working capital of $166.6 million, including $152.9 million in cash, cash equivalents and short-term deposits, with no debt, as of September 30, 2022
- The audio-video business grew on the top line and generated strong margins, with a healthy mix of customers, industries, and geographies
- Increased revenue contribution from sale of automotive products for audio-video applications
- Received initial RFIs from potential customers for the MIPI A-PHY compliant VA7000 chipset family
- The VA7000 (MIPI A-PHY) ecosystem continues to expand
- Announced a new collaboration with Intel Foundry Services to develop MIPI A-PHY-compliant automotive technologies for Intel’s customers
- Successfully completed the industry’s first multi-vendor interoperability test between a Valens Semiconductor VA7000 receiver and a Sony Semiconductor Solutions prototype of an integrated sensor and transmitter
- Partnered with Leopard Imaging to design a camera module that will enable automotive OEMs and Tier 1s to significantly reduce time to market for their next-generation systems
- Released the company’s inaugural Environmental, Social and Governance (ESG) Report
“We exceeded the high end of our revenue, gross margin, and Adjusted EBITDA guidance for Q3 2022, the main driver leading us to raise our revenue, gross margin and Adjusted EBITDA guidance for the full year 2022,” said Dror Heldenberg, CFO of Valens Semiconductor.
“For the fourth quarter of 2022, revenues are expected to range between $23.1 million and $23.2 million. Gross margin is expected to range between 66.1% and 66.5%, and Adjusted EBITDA loss is expected to be in the range of $(9.7) million to $(9.0) million. The projected increase in research and development expenses in Q4 is mainly due to our plan to tape-out our automotive VA7000 chipset family, to deliver richer feature set and better performance. This is another crucial step toward our customers’ mass production plans. For the full year 2022, the company now expects revenues to range between $90.3 million and $90.4 million, up from the prior range of between $89.1 million and $89.8 million. Gross margin for the full year 2022 is expected to range between 69.3% and 69.4%, up from the prior range of 68.0% to 68.5%, and adjusted EBITDA loss is expected to be in the range of $(20.0) million to $(19.3) million, substantially better than our previous guidance of $(25.7) million to $(24.2) million. This improvement in adjusted EBITDA is driven mainly by aligning our product roadmap to our customers’ needs and is also supported by the expected benefit from the strong USD on our Israeli shekel-based expenses.
“We remain confident in our ability to reach Adjusted EBITDA breakeven by the end of next year, and to be cashflow positive starting in 2024,” concluded Heldenberg.
Adjusted EBITDA is a non-GAAP measure. See the tables below for additional information regarding this and other non-GAAP metrics used in this release.
Conference Call Information
Valens Semiconductor will host a conference call today, Wednesday, November 9, 2022, at 8:30 a.m. Eastern Time (ET) to discuss its third quarter 2022 financial results and business outlook. To access this call, dial (at least 10 minutes before the scheduled time) +1 (888) 642-5032 (U.S.), 0 (800) 917-5108 (UK), 03 918 0609 (Israel) or +972 3 918 0609 (all other locations).
A live webcast of the conference call will be available via the investor relations section of Valens Semiconductor’s website at Valens – Financials – Quarterly Results. The live webcast can also be accessed by clicking here. A replay of the conference call will be available on Valens’ website shortly after the call concludes.
This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “estimate,” “plan,” “project,” “forecast,” “intend,” “will,” “expect,” “anticipate,” “believe,” “seek,” “target” or other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding our anticipated future results, including financial results, currency exchange rates, and contract wins, and future economic and market conditions. These statements are based on various assumptions, whether or not identified in this press release, and on the current expectations of Valens Semiconductor’s (“Valens”) management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of Valens Semiconductor.
These forward-looking statements are subject to a number of risks and uncertainties, including the cyclicality of the semiconductor industry; the effects of health epidemics, such as the recent global COVID-19 pandemic; the impact of the global pandemic caused by COVID-19 on our customers’ budgets and on economic conditions generally, as well as the length, severity of and pace of recovery following the pandemic; competition in the semiconductor industry, and the failure to introduce new technologies and products in a timely manner to compete successfully against competitors; if Valens fails to adjust its supply chain volume due to changing market conditions or fails to estimate its customers’ demand; disruptions in relationships with any one of Valens’ key customers; any difficulty selling Valens’ products if customers do not design its products into their product offerings; Valens’ dependence on winning selection processes; even if Valens succeeds in winning selection processes for its products, Valens may not generate timely or sufficient net sales or margins from those wins; sustained yield problems or other delays in the manufacturing process of products; our ability to effectively manage, invest in, grow, and retain our sales force, research and development capabilities, marketing team and other key personnel; our ability to timely adjust product prices to customers following price increase by the supply chain; our ability to adjust our inventory level due to sudden reduction in demand due to inventory buffers accrued by customers; our expectations regarding the outcome of any future litigation in which we are named as a party; our ability to adequately protect and defend our intellectual property and other proprietary rights; the market price and trading volume of the Valens ordinary shares may be volatile and could decline significantly; political, economic, governmental and tax consequences associated with our incorporation and location in Israel; and those factors discussed in Valens’ Form 20-F filed with the SEC on March 2, 2022 under the heading “Risk Factors,” and other documents of Valens filed, or to be filed, with the SEC. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that Valens does not presently know or that Valens currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect Valens’ expectations, plans or forecasts of future events and views as of the date of this press release. Valens anticipates that subsequent events and developments may cause Valens’ assessments to change. However, while Valens may elect to update these forward-looking statements at some point in the future, Valens specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Valens’ assessment as of any date subsequent to the date of this press release. Accordingly, undue reliance should not be placed upon the forward-looking statements.
About Valens Semiconductor
Valens Semiconductor pushes the boundaries of connectivity by enabling long-reach, high-speed video and data transmission for the Audio-Video and Automotive industries. Valens’ HDBaseT® technology is the leading standard in the Audio-Video market with tens of millions of Valens’ chipsets integrated into thousands of products in a wide range of applications. Valens Semiconductor’s Automotive chipsets are deployed in systems manufactured by leading customers and are on the road in vehicles around the world. Valens is a key enabler of the evolution of ADAS and autonomous driving and its advanced technology is the basis for the MIPI A-PHY industry standard for high-speed in-vehicle connectivity. For more information, visit https://www.valens.com/.
 Although we provide guidance for Adjusted EBITDA, we are not able to provide guidance for projected Net profit (loss), the most directly comparable GAAP measures. Certain elements of Net profit (loss), including share-based compensation expenses and warrant valuations, are not predictable due to the high variability and difficulty of making accurate forecasts. As a result, it is impractical for us to provide guidance on Net profit (loss) or to reconcile our Adjusted EBITDA guidance without unreasonable efforts. Consequently, no disclosure of projected Net profit (loss) is included. For the same reasons, we are unable to address the probable significance of the unavailable information.
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SOURCE Valens Semiconductor