VLN - Earnings call transcript Q1 2024 | Valens Semiconductor Ltd.

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Operator

Good morning. My name is Jone, and I will be your conference operator today. At this time, I would like to welcome everyone to Valens Semiconductor's First Quarter 2024 Earnings Conference Call and Webcast. [Operator Instructions] Opening remarks by Valens Semiconductor management will be followed by a question-and-answer session. I will now turn the call over to Lisa Fortuna, Investor Relations for Valens Semiconductor. ahead. go Please

Lisa Fortuna

today, welcome, of earnings and Chief Valens first the Officer. Semiconductor's Officer; that press Thank available website is With everyone, under me XXXX on Earlier Financial Chief call. Guy Relations Ben-Zvi, issued today quarter a and release section you, Investor Nathanzon, to we our are Executive Gideon investors.valens.com.

or measures we update in financial reflect be changes safe call XX-F to future harbor these the and projections, differ undertake XXth to assessing revise you subject of in the could in will not Aviv, filed guarantee cause discussing events performance on implied. As release. reconciliations Annual be information, Israel. performance.These this from Growth release. or Xth to statements events the of on to business February new subsequent such are Form that in Please discussion relevant a any which our statements and duty language forward-looking to the results or certain reminder, today's call, non-GAAP press strategy.We with our the the within not materially believe XX, weeks, Conference we find can will Annual In a XXXX, the do may attending for include today's and are actual factors Conference those or earnings statements refer on do Emerging the of expressed SEC Annual We Oppenheimer earnings Report Israeli Oppenheimer coming metrics Tel which

to now interested that, please turn call If Gideon. e-mail over in you us I'll us, with investors@valens.com.With are the meeting at

Gideon Ben-Zvi

environment On earnings in the we that discussed impact expectations. macroeconomic last the operating Valens Hello, was business Semiconductor's everyone, joining call, in you line and our first our and with quarter our quarter would first headwinds XXXX XXXX thank call. for

audio-video market inventory our this expanding regard relative impact continued the the across interest and to guidance, the fueled landscape. high and inflation be to Automotive segment.Additionally, this at our the level. quarter. and Semiconductor pleased diverse ongoing While by slow upside during environment, Later we some remains in we the report first collaborations now, verticals digestion business Guy previously persistently Valens serve, this details. impacted were good to performance made reported rates to will progress dive creeping Valens in continued we by high in quarter's I in determined to to we for call, But want Despite a into cover partnerships our

revenue for our our the million.GAAP loss guidance quarter $XXX.X in We range. are adjusted pursue than million, gross our we EBITDA balance of $X.X and of us at came XX% $XX.X are that cash to to top looking to end and pleased and allows innovations was at exceeded sheet million margin report equivalents the Valens better first opportunities cash continue Semiconductor's robust investing these growth long-term weather guided with in headwinds.

to months. market expanding markets opportunities our per presented multiyear modified which billion market the opportunity thanks vision audio-video; verticals, total VAXXXX audio-video strategic include and let addressable which of in these in $X approximately to product enables turn discussed trends, last annum.We to could particular, are in currently to a process of We that a the serve.Starting industrial expect multiple in latest ongoing our in the our to communicate as plan, VSXXXX we of represent and estimate on outlining the our coming machine videoconferencing, additions the chipsets. performance Now this to and quarter, we the presence long-term positive market we are our we seeing the the in by with investment capitalize trends portfolio, within verticals the me us

market is device states multi-camera greater experience. vertical, that Frost shifts. is global accessories innovation videoconferencing with will targeted rooms.There years, by from to enhances undergoing Despite XX essential that recent drivers rapid current key attach growth of have is that rooms and the report higher communication leader conditions, Sullivan & all market point, hybrid conference conference becoming sense camera this This $X meeting of perfect customer [indiscernible] settings, makes this if it out video are for a enormous. and our recently He look agree office is and heard video-enabled. in market Within room say videoconferencing over new assessment. who customers with creating fundamental that billion the modernization rates the videoconferencing technology market also the customers one CEO the is stated market said, the work adoption.To of you of with additional of Valens growing rooms of We meeting obviously demand be in this AI we consistent what Logitech,

and Valens multi-camera require Of for rooms. extension, plug-and-play of delivering high-performance course, seamless many are Pro-AV Solution user experience these devices ideal environment a hybrid for

multi-gig X.X USB extension, use in new so global cases. continues the extension game solutions. how and is our solution.The robust high-performance is plan VSXXXX for grow, the a market, global for market the value market the a videoconferencing lower of the that will device connectivity technologies of solving USB need VSXXXX, a combination problems changer example with increasing videoconferencing kind, capturing its As our we An to on first current bandwidth exist enabling of connectivity of

and The are beyond the the expect Trade as the during chipset powering June.We sales begin to VSXXXX anticipate chipset. proud to into videoconferencing, innovation ramp XX for it products to further XXXX. and designed and International to applications we up very product customers XXXX. And also to have member see backlog chief multiple excited then, already the expect Show see announcement half great introduced We and are InfoComm since and our expectations to from interest additional launches this this over We multiple was build the and in this welcomed family. second of early in has QX initial from We above continues new as VSXXXX markets.

no the there rise on; aware, a in all is you of doubt Moving use across AI are industries. as

high-performance decision-making multiple especially across pivotal example technology, their with solution Connectivity adoption many the company, applications, in is connectivity industries. real-time often of is have role aims those AI facilitating a and With markets. Valens surround to videoconferencing a aggregated enhanced VAXXXX and connectivity monitoring video VAXXXX potential robust, the for intelligence introduce chipset SoC which using and vision For on industry collaboration image bandwidth, An the of requiring play a required.Valens the artificial data view system processing enabling AI high-resolution, multi-camera further to and cameras, solutions of based chipsets, multiple Taiwan-based different versatility this iCatch our underscores a applications the technology VAXXXX launch is solution impact required for zero our infrastructure based for Automotive high-performing A-PHY machine sectors. to high for multichannel processing also enable we our plans AI-enhanced that to-date.ICatch video real-time latency our across which an and

Automotive; is Moving our stable. business to overall, automotive

from collaboration that and sensor mature EMC to link. compatible top As is full models.Between XXXX you know, completed asymmetric supplier Sony of image Solution prepare our in in milestone VAXXXX chip.In earlier Corporation, ADAS Valens module in our developing XXXX, are of multi-vendor between this automotive a Ideally, range one the Sony we telematics Mercedes-Benz jointly that we to our business the a year three automotive various in digestions. innovative processes. in selling a lead market. first-generation month, VAXXXX collaboration the will to of in and our Semiconductor XXXX the make continue VAXXXX Last and first including we Sony, sensor evaluation revenues X-megapixel of the due chipsets, our that A-PHY with A-PHY strong broad coming interoperability our encouraging our using announced addition chipsets deserializer in months. automotive first significant camera of system year, we as reduction Infotainment integrated continue deepening a fourth of saw world MIPI and [indiscernible] testing With the progress A-PHY into systems. was interest this EV their inventory we see we of an quarter to quarter the will model, A-PHY based the with a [indiscernible] are Mercedes-Benz to announced technology

resulted and which at quarter, on the following demonstrations During the opportunities, in show. new we up invested our from interesting

this our competing solutions.Our was XXx VAXXXX more than noise where A-PHY extension chipsets was shootout apparent more proprietary outperformed our EMC competition. withstand around than Nowhere to in chipset able

of the connectivity standard globe. Technologies computing decided automotive see vehicle intelligent around Sesame is resilient connectivity Black This MIPI is Black VAXXXX performance and Sesame this into crucial autonomous the the industry with A-PHY interest pushing chipset.Black will partnership for forward ADAS and grade leveraging integration resolutions Technologies As the and provider. customers. implementations evolving and Black camera link A-PHY OEMs later platform bandwidth the increased for the platform, computing of a by to of with to Co-Founder to within and automotive significant Tier enable the Technologies are was and MIPI move guaranteeing the fragility both at sensors driving to President, China its the cross-domain passenger A-PHY with these our SoC Sesame high-performance is OEM a and X into SoC strengthened and for solution between safety. quarter their A-PHY further leading ecosystem SoC-based According Keeping and the integrate connectivity. higher the Sesame the support links require because offer they connectivity, requirements, an more

Of proud the industry. chipset our innovators of also the earlier collaboration closely in compliant be Intel next continue course, and A-PHY Foundry with in to the of announced partnering we Automotive to on for are with most with the Services our one work strategic generation quarter the IFS important first developing sector.We

the faced also as to VAXXXR navigating offers X engineered chipset including trucking and to empowering automotive of groundbreaking critical future OEMs serve rearview challenging to VAXXXR advancements both During the conditions, lane combination assist VAXXXR the quarter, of the in by The significantly surround a connectivity bandwidth can address This drivers suppliers tests the innovations. infrastructure latest view truckers visibility.Our a we our industry and solution in visibility on innovation, announced Tier stage for era new distances, challenges first enhancing chipsets visibility. forge and compromised highways. fundamental

of capabilities annum our a our tracking could it robust to market reach enhanced.We this identify take ability position chipsets, $X.X XXXX. safety with believe us technological combined our per to efficiency by advantage in of be innovation, to about within segment, the particular opportunities automotive addressable that total could operational industry billion With and significantly the stands

to turn in discuss I to our the we solution a market call process, financial that, While market.With technology the the light the in slower suffer macroeconomic environment, of our automotive leading connectivity performance play to of detail. will in-vehicle in Guy the ability decision-making confident from in continues to role remain more

Guy Nathanzon

outlook the our Starting provide guidance start Thank you, will the of compared quarter quarter we first quarterly results; high XXXX with end our results then the XXXX $XX.X I first of second achieved million above first in for XXXX. quarter. Gideon. to of the million quarter our and revenue range $XX.X with

gross XXXX. First to was compared $XX.X quarter XXXX $X.X million million in QX profit

XXXX. QX QX audio-video, was share XXXX. XXXX QX million in to higher the $X.X Research in in compared or operating lower lower revenue XXXX.The XXXX and which reflects First million total to to reached to coming XX.X% XX% in compared revenue, and compared in QX million XX% quarter fixed cost last of of the million compared expenses Non-GAAP QX of XX.X% $XX.X XXXX margin expenses Operating expenses compared cost $X.X absorption, certain gross change QX expenses $XX.X the much margin accounted for evaluation resulted million margin. of year XX.X% QX QX million XXXX.SG&A gross is to larger $XX.X XXXX. at in totaled to were expenses XX.X% compared operating QX in inventory automotive $XX.X development of to in of compared gross XXXX which

non-GAAP XXXX. net adjusted million in QX in to compensation compared QX was QX $X.XX and sheet and and GAAP cash share $X.X due Turning XXXX loss GAAP XXXX. loss compared $X.X was share balance the This recorded $XX.X to loss loss $X.XX year. $X.XX per stock-based of QX The sheet; a loss to XXXX. million to versus XXXX a million XXXX adjusted a loss a loss GAAP in XXXX loss and $XXX.X with million million strong XXXX equivalents of net for EBITDA. depreciation.Turning share of was net towards short-term QX QX million in in with XXXX and EBITDA $X.X last main balance $X.XX QX we Non-GAAP QX between deposits compares and cash, was $XXX.X totaling to per per QX no to at debt. was for QX end ended difference compared

quarter to capital end at QX million the of $XXX.X the compared at working was end XXXX. Our of million $XXX.X

at million, versus of as of $XX.X XXXX, the inventory March Our was million end down QX XX, XXXX. $XX.X

guided quarter. our revenue we would We manage we relatively over the XXXX second improved for results would that original to the continue in be guidance currently second have to expect like to quarter. the be quarter year to customer four compared second them demand the first and at February, reported $XX provide range $XX.X carefully of flat we to forecast, effectively When last reduced inventories our revenue slightly our to to quarter quarters.Now I Due the end the million. million compared of full

million. range the EBITDA $X second quarter negative time. to in so providing the the We continues the QX loss is limited, be second million be gross margins $X.X we at expect aren't to to this XX.X% to Visibility of guidance in XX.X%.Adjusted quarter expected to in of be beyond range

the our designed be for remain our to we confident penetrate potential However, growth to even and and growth execute to an ready longer term, continue medium broader strategy portfolio in Q&A. recovers.I'll with his closing applications markets evolution for when the the industry before opening to and for of and untapped call now remarks enable back the verticals Gideon turn the AI-based call we'll

Gideon Ben-Zvi

you, Thank Guy.

As Semiconductor promising strategy executing and to Valens markets. the look will committed at of remain our capitalizing XXXX, the opportunities target on our within we balance

strong impact dynamic sheet chipsets and provides and opportunities continue innovate a of that continue set Our with balance to innovative invest to a connectivity make growing solutions diverse navigate industries.Our conditions. the and to position meaningful capture us flexibility will us highly future to importantly, to sophisticated across market

exceptional that, for now Operator? work and call I the are whose the our to questions. call will team opening Before Semiconductor.With for I want questions, Valens my express dedication driving hard force to the gratitude your open behind

Operator

question ROTH first is from The Capital. of Desilva Instructions] [Operator Suji

Sujeeva De Silva

some question you for the I'm signs market Gideon, early on the penetrated. very is this market maybe First of know, don't AV wondering I traction -- see large conferencing. into opportunity, know what might conferences

key coming get to so a I know some line wanted might this of I multiyear this we or how you up, along customer ideas. understand but have Something programs just sort can track? plan

Gideon Ben-Zvi

want Thank you, you? or the first Suji. me And ask you that said, now second to me do want you to me question then answer

Sujeeva De Silva

versus with market. from differs It's sure. how Black whether -- automotive, market the China that on global My the second Sesame market opportunity question, a dynamics

Gideon Ben-Zvi

Okay, great.

question. are from I call for let price which open thank I call automotive, would the to members I everyone very from -- playing more. market in, our Pablo a in have I very a taken And you me enthusiastic stewardship were you thank quarterly we family, said, the room the of And a in -- the USB AV to So both I'll [ the -- to elaborate market, two start welcome in front ] conference them. we as a for room going are extension our of the market. the the say, and Think lot us many big be and back questions. about playing a of a we the our they being meeting, we're The with there. lot the the members years, it on which bigger. high were is that be two and be X.X which which television your lake.And in new and And end ] VAXXXX, was [ first VSXXXX, king

called huddle TV. in camera XXX want about this and to world a come to And you you a is still solution. join we're is And friend the are what's another speak two, camera is if the sometimes and speaking the room. three million sometimes on other waiting friends, rooms the that the And laptop, on to for

most our a solution.It's the have and have a solution technological we're really like of unique a chips solution unique to proud bring We one -- the it's market. barrier here on not only to that the a ability high it's

artificial we screen, to a what to doesn't them have bother because you more VAXXXX, arm back come at what be ] camera have room with you the and opportunity and you glory voice and this the call this one at bandwidth, is remote. today of -- you no and end better compression, the cameras. room the And or when conference Teams to than high big with conference cameras the latency having see of rate. go because with to at home tendency as done all is the every intelligence by home, frame and work.You all using to conference independently, of forth.It people that they And synchronize faces the not so the it we and stay exactly wanted by are the high-end cannot the whether one see this you with day, multiple happens As home. And of because have done is on efficient see multiple the in [ smallest who no very our to them to need And latency is do those be room between kind where democratization is.

a That's it's happy okay. the we to can from are is very one? actually, be and niche, for but the we market we If us, in a market ocean really first which are move a to second excited Tell which blue very going question. we about So it. me a are to if

Sujeeva De Silva

Yes, that's good.

Gideon Ben-Zvi

resolution -- need. is the because in of only we're just line Sesame. the that try companies entry the of one because companies resolution And the quality the one We're in a independence always more big of will like Sesame, to aggregate distortions information some is forth. all lot not the fragile is And but the of second lot is and aware more the is have companies through of in a and dependency you you ADAS. -- just the from same will connection when see might Chinese with the a for solution time.And the who of pixel this a not X is far are. towards have are very to in not the distance it full fragility. it more agility. more trade the don't -- I starting link, modern who we you the a and light, very This Sesame solution data. they is accident. part Thank to higher resolution, And -- create that camera.The pixel you Black you and the It them a try see foot so And red data kind for like answered is it, Black aware be dependor compromise.And a a they that camera Chinese a radars bits understand you depends X second great need the a potential cameras It's fuse have fuse a cases higher, because the same and and ADAS cars and coming it's it's with from gigabit, technical, come per is and X a And with on what are a them all you a the bit more where will megapixel And of fog will see can tried of child stable X point different gigabit than about to a market you. the camera. very, the And XX the last And It's data this electromagnetic and double I camera, lot one, advanced Black very move to difference -- megapixel this level war, of is when little bits [indiscernible] those companies at little of of a who I'll has system. [indiscernible] can companies the in year bandwidth come technical. are small you this are modern. they from these those This of -- linear, they see see start they recognize, just with have fragile. a of bit pixel. with the require now will number of What Suji? fragile both, per understand have sensor and of bits again small between they be X -- the direct and see per with easily you green to more lot a is Hope

Operator

question is Brian of The Chardan Markets. next Capital Dobson from

Brian Dobson

wanted received the to you in groups I made districts? on follow inroads school important from of guess large you Has you? education some off, up call it, with kind of to up I Florida? have of just to lead this market And large opened the more educational feedback other, any

Gideon Ben-Zvi

Yeah.

has go of I but First, Brian, what a and this and this your we nice right of tendency active market for Education is also to will in which and have, of -- government BXG, side, pours.So or this the decisions thank takes beginning, again, government. education market than and we the hybrid lot is is called do, this -- some and Business on slower markets, education important it in stay the actually for faster into have growing of you believe, are rains we other to but that market, slower world and and in see anticipated are it very in partner installation But the the here the has we more a the we depends for stay market us market. in when to market, -- things sales is question. predicted. kind sometimes what's government the in you sometimes business in to this depends of tendency actually of we more

The here but government, to would in believer is we in it and ability which will VAXXXX way, in market very, the our something, upside potential resolution VSXXXX have in the to we the So a is market And ability is see VSXXXX. in stay, a are the to the depth difference I but VAXXXX, great the it that a the we we and color. started add and be the to the and to market.And pixel yes, the in BXG, important with this is move. very not see strong camera, business zoom by of it's with

also [ I the us in it's boot which this of I when that a So the increase it computer installed ] we believe market the it calculates will in is -- distance -- camera a that give in quality significant from think enable is the what it is.

Brian Dobson

And could Yeah, trucking in think you're do then with it, some call very in good. stakeholders you from, vision you hearing regard provide backup feedback industry your us key technology. the to

Gideon Ben-Zvi

Okay. are this industry, for several answers. About the trucking Thanks there question.

this it We it this going connects is give more camera.In drivers is the opportunities reverse where there and answer in this But could need about in blind even to get, believe in will happy. solution the market, blind future, and test, the to we market. us spot interesting the a blind is our more will for now of areas of vehicle in more market track -- are it's has when today, us be And driver about spots give the full far are that we there more deeper and the what it very the he what's a feedback because taking I believe of this the dollars angle believe be market. we forward the several First, driver an next the all and on-field is spots, able in trailer that on have think and we today, view. we might truck very turns to step big speaking big we're the that per and answer will solution surround

also the try would geological to automotive. automotive say, the that like do It some the in industry. is will yield industry I has speed this future. the, market We of movement in result Truck

Operator

no further concluding at questions There to Ben-Zvi, make like this would [Operator statement? Instructions] time. are Mr. you your

Gideon Ben-Zvi

all you today and to support our in next in to for for you very continued I hope I Yes, and us everyone. QX you soon. like call would call our thank Valens And much, XXXX joining Semiconductor and Thank earnings will. see for interest

Operator

Thank results Semiconductor quarter call. XXXX Thank for conference you. your participation. Valens first concludes This the you

You disconnect. go and may ahead

Valens Semiconductor (VLN) 8 May 242024 Q1 Earnings call transcript