Valens Semiconductor Ltd. Q4 FY2024 earnings call

• 2024 highlights: Announced 3 automotive design wins for ADAS platforms, completed acquisition of Acronyms, released VS6320 chipset, and defined focus on industrial machine vision.
• Five-year plan: Cross-industry business unit (CIB) includes ProAV (bulk of revenues, video conferencing opportunity $350M by 2029), industrial machine vision ($460M by 2029), and medical vertical (long-term potential). Automotive industry TAM $4.5B by 2029, with VA7000 chipset and 3 design wins in 2024.
• Acquisition of AkerLane: Synergies enabling expansion in ProAV and industrial markets, with new product based on VS6320 launched.

In the fourth quarter of 2024, Valens Semiconductor Ltd. reported revenues of $16.7 million. The cross-industry business unit (CIB) contributed $11.7 million (approximately 70% of total revenue), with a gross margin of 64.7%. The automotive segment generated $5 million (approximately 30% of total revenue), with a gross margin of 50.5%. For the full year 2024, total revenue was $57.9 million. The CIB contributed $36.3 million (including $3.4 million from the acquired AkerLane), and the automotive segment contributed $21.6 million. The CIB's full-year gross margin was 71%, while the automotive segment's was 39.5%.

• First quarter 2025: Revenue expected $16.3M - $16.6M, gross margin 60.8% - 61.3%, adjusted EBITDA loss $4.5M - $4.2M.
• Full year 2025: Revenue expected $71M - $76M (23%-31% y-o-y growth).
• Five-year plan: Target 2029 revenue $220M - $300M, gross margin 50% - 60%, EBITDA margin 15% - 20%.

Q: Could you expand on emerging from the bottom of the cycle and customer demand?

A: Sources of optimism include customers sharing recovery optimism and new product roadmap (VS6320) enabling penetration into new market segments like collaboration with Sennheiser.

Q: Thoughts on auto M&A and A-PHY's competitive position?

A: Confident A-PHY is best solution for high bandwidth, unshielded cables; not concerned by competitor M&A as A-PHY's unique capabilities are unbeatable in knockout testing.

Q: Timing of auto design wins commercialization?

A: Expected to start shipping and embedding chips in cars within 2026, though automotive timelines are subject to component and production delays.

Q: Cadence of 2025 guidance?

A: Overall guidance for 2025 is $71M - $76M, first quarter guidance provided, with expected ramp in second half of the year due to maturing 6320 designs.