"We delivered solid third quarter results, reflecting the growth in the demand for our high-performance connectivity solutions," said Gideon Ben-Zvi, CEO of Valens Semiconductor. "We surpassed the top end of our guidance on all metrics this quarter, driven by the growing demand for our technology from customers adopting our chipsets to create cutting-edge products.
"We are especially excited about our three new automotive design wins from leading European OEMs this quarter. We expect our VA7000 chipsets to be integrated into certain vehicle models starting in 2026 with accelerated adoption in 2027 and 2028. Additionally, now that leading OEMs have validated our technology, we are poised to expand our opportunity set with other OEMS and Tier-1 automotive suppliers looking to adopt the MIPI A-PHY standard.
"In our audio-video market, we are excited to see a high rate of adoption of our VS6320 chips with more than 50 customers now developing new products using them. We believe this reflects growing market demand for reliable, streamlined, and affordable connectivity and validates our groundbreaking technology. We expect the VS6320 to power a record number of customer products and are planning a robust lineup of new product launches over the next 12 months. We anticipate initial sales from the VS6320 before the end of the year with a continued ramp towards the end of 2025.
"We are seeing new opportunities for both our VA7000 and VS6320 technology in the dynamic machine vision vertical where growth is being driven by factory and warehouse automation, as well as more demanding inspection regulations. In this vertical, several camera module manufacturers are already integrating our chipsets into their cutting-edge products. We also received outstanding feedback from prospective customers on our technology at the recent VISION tradeshow.
"We are pleased with our progress in the third quarter and the momentum we are seeing in our business. Given the continued validation of our industry-leading technology and our fortress balance sheet, we are well positioned to capitalize on exciting growth opportunities in both existing industries and new ones," concluded Ben-Zvi.
Recent Business Highlights
- Achieved three design wins with European automotive OEMs for the VA7000 MIPI A-PHY compliant chipset, validating Valens' position as a key supplier of ADAS connectivity solutions.
- Progressed with the integration of Acroname, expanding Valens' position in the industrial market with a holistic USB-focused offering.
- Showcased VA7000 and VA6320 chipsets at VISION trade show and engaged with leading camera module manufacturers (Teledyne e2v, FRAMOS, Leopard Imaging, and others) in industrial machine vision.
- Unveiled the breakthrough USB3 and industrial grade extender solution which eliminates the need for multiple cables and accelerates time to market for industrial vendors.
- More than 50 customers are developing VS6320 based products for the audio-video market.
Key Financial Highlights
- Third quarter 2024 revenues reached $16.0 million, exceeding our guidance of between $14.7 million dollars to $15.4 million dollars. This compared to $13.6 million in the second quarter of 2024 and compared to $14.2 million in the third quarter of 2023.
- Audio-video revenues accounted for approximately 60% of total revenues at $9.4 million compared to $8.1 million dollars in the second quarter of 2024 and compared to $9.7 million in the third quarter of 2023.
- Acroname contributed revenues of $1.6 million in its first full quarter following the acquisition in May, exceeding the guidance of $1.2-1.4 million. Acroname's results are included in the Audio-Video segment results.
- Automotive revenues accounted for approximately 40% of total revenues at $6.6 million, compared to $5.5 million dollars in the second quarter of 2024 and compared to $4.5 million in the third quarter of 2023. - GAAP gross margin was 56.4% for the third quarter of 2024, above guidance of between 52% and 53% (non-GAAP gross margin was 60.7%). This compared to GAAP gross margin of 61.4% in the second quarter of 2024 (non-GAAP gross margin of 64.5%) and 58.9% for the third quarter of 2023 (non-GAAP gross margin of 61.1%).
- On a segment basis, audio-video gross margin was 70.2% and automotive gross margin was 37.0% compared to 75.4% and 40.9%, respectively, in the second quarter of 2024 and compared to 75.8% and 21.6%, respectively, in the third quarter of 2023. The increase in automotive gross margin compared to the third quarter of 2023 was due to improvement in our chip costs. The decrease in Audio Video gross margin was due to product mix shift and lower fixed cost absorption. - GAAP net loss was $(10.4) million in the third quarter of 2024, compared to a GAAP net loss of $(8.9) million in the second quarter of 2024 and compared to $(12.5) million in the third quarter of 2023.
- Adjusted EBITDA loss in the third quarter of 2024 was $(5.1) million, beating the guidance range of a loss between $(6.8) million and $(6.3) million. This compared to Adjusted EBITDA loss of $(5.2) million in the second quarter of 2024 and compared to $(8.8) million in the third quarter of 2023.
- Strong balance sheet of $133.1 million in cash, cash equivalents and short-term deposits, and no debt, as of September 30, 2024, compared to $130.6 million on June 30, 2024, and $142.0 million on Dec 31, 2023.
- Inventory balance of $11.7 million on September 30, 2024, down compared to $14.1 million on June 30, 2024, and $13.8 million as of Dec 31, 2023.
Financial Outlook
"Looking ahead, we remain confident in our growth potential for the medium and long term," said Guy Nathanzon, CFO of Valens Semiconductor. "We are committed to pushing the boundaries of connectivity with our advanced chipsets that empower customers to bring disruptive products to both established and emerging markets."
"Our fourth quarter 2024 revenues are expected to range between $16.0 million and $16.3 million . Gross margin is expected to range between 58.0% and 62.0%, and adjusted EBITDA loss is expected to range between $(4.9) million and $(4.0) million . For the full year 2024, we expect revenues to be in the range of $57.2 million and $57.5 million . Gross margin is expected to range between 58.0% and 60.0%, and adjusted EBITDA loss is expected to range between $(22.3) million and $(21.4) million . We ended the third quarter with a strong cash position and look forward to investing in innovation and strategic acquisitions that support long-term growth," concluded Nathanzon.
