Valens Semiconductor (VLN) 6-K 2022 Q2 Current report (foreign)

Exhibit 99.3

Q2 2022 - Key Financial and Business Highlights

• Record quarterly revenues of $22.5 million, up 28.4% from Q2 2021 and up 4.0% from Q1 2022

• Q2 2022 GAAP gross margin was 70.2% compared to 71.2% in Q2 2021 (non-GAAP gross margin was 71.0% compared to 71.1% in Q2 2021)

• Q2 2022 GAAP Net Loss was $(10.0) million, which included net financial expenses of $3.6 million, primarily from devaluation of Israeli-shekel related cash balance, compared to Net Loss of $(3.7) million in Q2 2021, and Adjusted EBITDA loss in the second quarter was $(4.5) million, compared to $(2.1) million in Q2 2021

• Strong balance sheet with working capital of $168.3 million, and $156.8 million in cash, cash equivalents and short-term deposits as of June 30, 2022

• Automotive:

• Continue to make progress with the evaluation of the company’s MIPI A-PHY new VA7000 chipsets, as over 30 OEMs, Tier 1s and Tier 2s are evaluating this product for ADAS and surround view applications

• Audio-video:

• Received substantial demand for VS3000, Valens Semiconductor’s newest audio-video product family, from Tier 1 customers across many geographies

• Crestron Electronics announced full suite of more than 24 Professional Audio-Video (ProAV) products powered by the VS3000 for use by enterprises, in education and more. This adds to the multiple VS3000-based products already introduced by Crestron

• Interest in the company’s technology in the medical space continues to grow. Introduced a connectivity solution with Würth Elektronik for medical imaging in unprecedented resolution that complies with the strict medical isolation specifications

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VALENS SEMICONDUCTOR LTD.

SUMMARY OF FINANCIAL RESULTS

(U.S. Dollars in thousands, except per share amounts)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Revenues		22,481			17,510			44,101			30,874
Gross Profit		15,784			12,467			31,224			21,999
Gross Margin		70.2	%		71.2	%		70.8	%		71.3	%
Net loss		(9,995	)		(3,698	)		(15,045	)		(10,074	)
Working Capital1		168,283			56,133			168,283			56,133
Cash, cash equivalents and short-term deposits2		156,754			51,873			156,754			51,873
Net cash used in operating activities		(4,251	)		(6,443	)		(12,654	)		(9,651	)
Non-GAAP Financial Data
Non-GAAP Gross Margin3		71.0	%		71.1	%		71.5	%		71.4	%
Adjusted EBITDA4		(4,469	)		(2,116	)		(8,555	)		(6,419	)
Non-GAAP Loss per share5 (in U.S. Dollars)	$	(0.08	)	$	(0.16	)	$	(0.13	)	$	(0.57	)

¹ Working Capital is calculated as Total Current Assets, less Total Current Liabilities, as of the last day of the period.

² As of the last day of the period.

³ GAAP Gross Profit excluding share-based compensation and depreciation expenses, divided by revenue. For the three months ended June 30, 2022, and 2021, share-based compensation and depreciation expenses were $181 thousand and $(10) thousand respectively. For the six months ended June 30, 2022, and 2021, share-based compensation and depreciation expenses were $321 thousand and $47 thousand respectively.

⁴ Adjusted EBITDA is defined as Net profit (loss) before financial income (expense), net, income taxes, equity in earnings of investee and depreciation and amortization, further adjusted to exclude share-based compensation and change in fair value of Forfeiture Shares, which may vary from period-to-period. We caution investors that amounts presented in accordance with our definition of Adjusted EBITDA may not be comparable to similar measures disclosed by other issuers, because not all issuers calculate Adjusted EBITDA in the same manner. Adjusted EBITDA should not be considered as an alternative to Net loss or any other performance measures derived in accordance with GAAP or as an alternative to cash flows from operating activities as a measure of our liquidity. Please refer to the appendix at the end of this report for a reconciliation to the most directly comparable measure in accordance with GAAP.

⁵ See reconciliation of GAAP to non-GAAP financial measures.

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VALENS SEMICONDUCTOR LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. Dollars in thousands, except share and per share amounts)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
REVENUES		22,481			17,510			44,101			30,874
COST OF REVENUES		(6,697	)		(5,043	)		(12,877	)		(8,875	)
GROSS PROFIT		15,784			12,467			31,224			21,999
OPERATING EXPENSES:
Research and development expenses		(14,904	)		(10,956	)		(29,031	)		(21,354	)
Sales and marketing expenses		(4,473	)		(3,222	)		(8,682	)		(6,332	)
General and administrative expenses		(4,340	)		(2,366	)		(8,641	)		(4,544	)
TOTAL OPERATING EXPENSES		(23,717	)		(16,544	)		(46,354	)		(32,230	)
OPERATING LOSS		(7,933	)		(4,077	)		(15,130	)		(10,231	)
Change in fair value of Forfeiture Shares		1,538			—			4,142			—
Financial income (expenses), net		(3,560	)		503			(3,675	)		336
LOSS BEFORE INCOME TAXES		(9,955	)		(3,574	)		(14,663	)		(9,895	)
INCOME TAXES		(43	)		(124	)		(389	)		(179	)
LOSS AFTER INCOME TAXES		(9,998	)		(3,698	)		(15,052	)		(10,074	)
Equity in earnings of investee		3			—			7			—
NET LOSS		(9,995	)		(3,698	)		(15,045	)		(10,074	)
EARNINGS PER SHARE DATA:
BASIC AND DILUTED NET LOSS PER ORDINARY SHARE6 (in U.S. Dollars)	$	(0.10	)	$	(0.68	)	$	(0.15	)	$	(1.61	)
WEIGHTED AVERAGE NUMBER OF SHARES USED IN CALCULATION OF NET LOSS PER ORDINARY		97,442,359			11,020,299			97,296,206			10,927,357

⁶ See note 5.

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VALENS SEMICONDUCTOR LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. Dollars in thousands)

(Unaudited)

	June 30, 2022		December 31, 2021
ASSETS
CURRENT ASSETS
Cash and cash equivalents		46,577		56,791
Short-term deposits		110,177		117,568
Trade accounts receivable		10,047		7,095
Inventories		17,318		9,322
Prepaid expenses and other current assets		4,492		8,255
TOTAL CURRENT ASSETS		188,611		199,031
LONG-TERM ASSETS:
Property and equipment, net		2,571		2,741
Operating lease Right-Of-Use (ROU) assets7		4,408		—
Other assets		638		828
TOTAL LONG-TERM ASSETS		7,617		3,569
TOTAL ASSETS		196,228		202,600
LIABILITIES AND EQUITY
CURRENT LIABILITIES8		20,328		15,699
LONG-TERM LIABILITIES:
Forfeiture shares		516		4,658
Non-current operating leases liabilities9		2,126		—
Other long-term liabilities		48		46
TOTAL LONG-TERM LIABILITIES		2,690		4,704
TOTAL LIABILITIES		23,018		20,403
SHAREHOLDERS’ EQUITY		173,210		182,197
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		196,228		202,600

⁷ As of January 1, 2022, the company has implemented the FASB ASU No. 2016-02, Leases (ASC 842), on the recognition, measurement, presentation, and disclosure of leases.

⁸ As of June 30, 2022, includes $1,814 thousand of current maturities of operating leases liabilities (none as of December 31, 2021); see footnote 7.

⁹ See footnote 7.

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VALENS SEMICONDUCTOR LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. Dollars in thousands)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
CASH FLOW FROM OPERATING ACTIVITIES
Net loss for the period		(9,995	)		(3,698	)		(15,045	)		(10,074	)
Adjustments to reconcile net loss to net cash used in operating activities:
Income and expense items not involving cash flows:
Depreciation		347			266			667			522
Stock-based compensation		3,117			1,695			5,908			3,290
Exchange rate differences		4,501			(545	)		4,972			(231	)
Interest from short-term deposits		(132	)		37			(295	)		219
Change in fair value of forfeiture shares		(1,538	)		—			(4,142	)		—
Reduction in the carrying amount of ROU assets		424			—			844			—
Changes in operating assets and liabilities:
Trade accounts receivable		166			(2,475	)		(2,952	)		767
Prepaid expenses and other current assets		3,245			(458	)		3,763			(1,588	)
Inventories		(4,852	)		(1,752	)		(7,996	)		(2,541	)
Other assets		86			(26	)		190			(31	)
Current Liabilities		1,189			513			2,742			23
Change in operating lease liabilities		(811	)		—			(1,312	)		—
Other long-term liabilities		2			—			2			(7	)
Net cash used in operating activities		(4,251	)		(6,443	)		(12,654	)		(9,651	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in short-term deposits		(13,088	)		(4,520	)		(31,340	)		(4,520	)
Maturities of short-term deposits		21,900			12,500			37,400			29,500
Purchase of property and equipment		(244	)		(127	)		(424	)		(505	)
Net cash provided by investing activities		8,568			7,853			5,636			24,475
CASH FLOWS FROM FINANCING ACTIVITIES:
Deferred issuance costs		—			(218	)		—			(218	)
Exercise of options		96			589			150			665
Net cash provided by financing activities		96			371			150			447
Effect of exchange rate changes on cash and cash equivalents		(2,830	)		531			(3,346	)		217
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		1,583			2,312			(10,214	)		15,488
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD		44,994			39,492			56,791			26,316
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD		46,577			41,804			46,577			41,804
SUPPLEMENT DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for taxes		65			147			121			224
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Trade accounts payable on account of property and equipment		—			—			73			—
Unpaid issuance costs		—			2,722			—			2,722
Operating lease liabilities arising from obtaining operating right-of-use assets		104			—			350			—

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VALENS SEMICONDUCTOR LTD.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(U.S. Dollars in thousands)

(Unaudited)

The following table provides a reconciliation of Net loss to Adjusted EBITDA, a non-GAAP measure. Adjusted EBITDA is defined as Net profit (loss) before financial income (expense), net, income taxes, equity in earnings of investee and depreciation and amortization, further adjusted to exclude share-based compensation and change in fair value of Forfeiture Shares, which may vary from period-to-period. We caution investors that amounts presented in accordance with our definition of Adjusted EBITDA may not be comparable to similar measures disclosed by other issuers, because not all issuers calculate Adjusted EBITDA in the same manner. Adjusted EBITDA should not be considered as an alternative to Net loss or any other performance measures derived in accordance with GAAP or as an alternative to cash flows from operating activities as a measure of our liquidity.

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Net loss		(9,995	)		(3,698	)		(15,045	)		(10,074	)
Adjusted to exclude the following:
Change in fair value of Forfeiture Shares		(1,538	)		—			(4,142	)		—
Financial expense (income), net		3,560			(503	)		3,675			(336	)
Income taxes		43			124			389			179
Equity in earnings of investee		(3	)		—			(7	)		—
Depreciation		347			266			667			522
Stock-based compensation expenses		3,117			1,695			5,908			3,290
Adjusted EBITDA		(4,469	)		(2,116	)		(8,555	)		(6,419	)

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VALENS SEMICONDUCTOR LTD.

RECONCILIATION OF GAAP TO NON-GAAP Tables

(U.S. Dollars in thousands)

(Unaudited)

The following tables provide a calculation of the GAAP Loss per share and reconciliation to Non-GAAP Loss per share.

	Three Months Ended June 30,						Six Months Ended June 30,
GAAP Loss per Share	2022			2021			2022			2021
GAAP Net Loss		(9,995	)		(3,698	)		(15,045	)		(10,074	)
Adjusted to include the following:
Accrued dividend related to Preferred Shares		—			(3,788	)		—			(7,478	)
Total Loss used for computing Loss per Share		(9,995	)		(7,486	)		(15,045	)		(17,552	)
Earnings Per Share Data:
GAAP Loss per Share (in U.S. Dollars)	$	(0.10	)	$	(0.68	)	$	(0.15	)	$	(1.61	)
Weighted average number of shares used in calculation of net loss per share		97,442,359			11,020,299			97,296,206			10,927,357
	Three Months Ended June 30,						Six Months Ended June 30,
Non-GAAP Loss per Share10	2022			2021			2022			2021
GAAP Net loss		(9,995	)		(3,698	)		(15,045	)		(10,074	)
Adjusted to exclude the following:
Stock based compensation		3,117			1,695			5,908			3,290
Depreciation		347			266			667			522
Change in fair value of Forfeiture Shares		(1,538	)		—			(4,142	)		—
Total Loss used for computing Loss per Share		(8,069	)		(1,737	)		(12,612	)		(6,262	)
Earnings Per Share Data:
Non-GAAP Loss per Share (in U.S. Dollars)	$	(0.08	)	$	(0.16	)	$	(0.13	)	$	(0.57	)
Weighted average number of shares used in calculation of net loss per share		97,442,359			11,020,299			97,296,206			10,927,357

¹⁰ The company calculates its non-GAAP Loss per Share as GAAP Net Loss adjusted to exclude the following: Stock based compensation, depreciation, and the change in fair value of Forfeiture Share (the change in fair value of Forfeiture Shares totaled at $1,538 thousand and $2,604 thousand for the second and first quarters of 2022, respectively) divided by the weighted average number of shares used in calculation of net loss per share.

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