Press Releases

Valens Semiconductor Reports Second Quarter 2022 Results

Delivers Record Quarterly Revenues and Strong Gross Margin for Q2

Improves 2022 Guidance, Adjusted EBITDA Breakeven Expected Exiting 2023

HOD HASHARON, Israel, Aug. 10, 2022 /PRNewswire/ — 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 second quarter ended June 30, 2022.

 

Valens Logo

 

“In Q2 2022, Valens Semiconductor reported its highest ever quarterly revenues of $22.5 million, up 28.4% from Q2 2021, as we continued to meet the growing demand from customers in our audio-video and automotive markets,” said Gideon Ben-Zvi, CEO of Valens Semiconductor. “In audio video, the main trends we are seeing are the transition to higher resolutions and growing demand for high bandwidth video connectivity and camera imaging extensions, as organizations aim to enhance and optimize content transmission. It is clear that our audio-video distribution technology will continue to play an important role in fields such as work, education, medical, government and others. In our automotive business, revenues from our VA6000 from Mercedes Benz cars continue to ramp. We made strides advancing our rear-view camera for trucks project with Stoneridge, who will incorporate our VA6000 chipsets into a safety connectivity solution. With a sizable number of potential automotive customers and partners looking to integrate our VA7000 chipsets to support Advanced Driver-Assistance Systems (ADAS) into their platforms, we believe that we are on track to attain design wins by mid-year 2023.

“Considering our better than anticipated first half of the year and visibility into the second half of 2022, we are increasing our full year revenues, gross margin and adjusted EBITDA guidance. Through our ongoing conversations with prospective customers and partners, we are learning more about their priorities, plans and timing for use of our current and next generation solutions. To match their roadmaps, we recently realigned and optimized our automotive R&D efforts for the next two years, which we believe will also contribute to us reaching adjusted EBITDA breakeven towards the end of 2023. Now more than ever, Valens Semiconductor is well-positioned to create long-term value for our stakeholders.”

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:

    – 2022 automotive revenues on track to double from 2021

    – 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

Financial Outlook[1]

“Q2 2022 came in above the top end of our guidance, marking a strong first half for the year, and positioning us for a better than originally anticipated full year 2022,” said Dror Heldenberg, CFO of Valens Semiconductor.

“For the third quarter of 2022, revenues are expected to range between $22.5 million and $22.8 million. Gross margin is expected to range between 65.4% and 66.1%, and Adjusted EBITDA loss is expected to be in the range of $(6.2) million to $(5.6) million.

“We are also raising our revenue, gross margin and Adjusted EBITDA guidance for the full year 2022.  The company now expects revenues to range between $89.1 million and $89.8 million, up from the prior range of between $86.5 million and $88.0 million. Most of this increase is attributed to audio-video, while also essentially doubling the automotive revenue from the full year 2021. Gross margin is expected to range between 68.0% and 68.5%, up from the prior range of 66.0% and 67.3%. Adjusted EBITDA loss is expected to be in the range of $(25.7) million to $(24.3) million, substantially better than our previous guidance of $(37.2) million to $(35.5) million, due to the greater than expected revenues and improved gross margin.  In addition, we expect to continue to see a benefit from a strong USD on our Israeli shekel-based expenses. Finally, we refined our automotive R&D focus for the next two years to products supporting sensor to ECU connectivity. This will allow us to slow the pace of hiring and reduce our investment in automotive R&D without impacting revenue opportunities or changing our longer-term technology roadmap. 

“We are expecting to reach adjusted EBITDA breakeven by the end of next year, as the modest increase in 2023 R&D expenses from the lowered 2022 level will be offset by anticipated year-over-year revenue growth,” 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, August 10, 2022, at 8:30 a.m. Eastern Time (ET) to discuss its second 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.

Forward-Looking Statements

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 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 changes in domestic and foreign business, market, financial, political and legal conditions; failure to realize the anticipated benefits of the business combination; future global, regional or local economic and market conditions; the development, effects and enforcement of laws and regulations; Valens’ ability to manage future growth; Valens’ ability to develop new products and solutions, bring them to market in a timely manner, and make enhancements to them; the effects of competition on Valens’ future business; the outcome of any potential litigation, government and regulatory proceedings, investigations and inquiries; the effects of health epidemics, such as the recent global COVID-19 pandemic, have had and could in the future have on Valens’ revenue, its employees and results of operations; the cyclicality of the semiconductor industry; Valens’ ability to adjust its supply chain volume due to changing market conditions or failure to estimate its customers’ demand, including during any downturn in the automotive or audio-video markets; disruptions in relationships with any one of Valens’ key customers; difficulty selling products if customers do not design Valens products into their product offerings; Valens’ dependence on winning selection processes and ability to generate timely or sufficient net sales or margins from those wins; political conditions in Israel; and those factors discussed in Valens’ annual report on 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 new industry standard for high-speed in-vehicle connectivity. For more information, visit https://www.valens.com/.

 

 

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 Capital[2]

168,283

56,133

168,283

56,133

Cash, cash equivalents and short-term deposits[3]

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 Margin[4]

71.0 %

71.1 %

71.5 %

71.4 %

Adjusted EBITDA[5]

(4,469)

(2,116)

(8,555)

(6,419)

 

Non-GAAP Loss per share[6]  (in U.S. Dollars)

$(0.08)

$(0.16)

$(0.13)

$(0.57)

 

 

 

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 SHARE[7] 

(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

 

 

 

 

 

VALENS SEMICONDUCTOR LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. Dollars in thousands)

(Unaudited)

 

ASSETS


June 30, 2022


December 31, 2021

 

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) assets[8]



4,408



    Other assets



638



828

TOTAL LONG-TERM ASSETS



7,617



3,569

 

TOTAL ASSETS



196,228



202,600








 

LIABILITIES AND EQUITY

 

CURRENT LIABILITIES[9]



20,328



15,699

 

LONG-TERM LIABILITIES:







     Forfeiture shares



516



4,658

     Non-current operating leases liabilities [10]



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








 

 

 

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



 

 

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.


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.



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)

 

 

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 Share[11]

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

 

 

1. 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.

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

3. As of the last day of the period.

4. 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.

5. 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 press release for a reconciliation to the most directly comparable measure in accordance with GAAP.

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

7. See note 6.

8. 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.

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

10. See footnote 8.

11. 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.

Logo – https://mma.prnewswire.com/media/1517334/Valens_Logo.jpg

For more information, please contact:

Daphna Golden

VP Investor Relations

Valens Semiconductor Ltd.

investors@valens.com

Moriah Shilton

Financial Profiles, Inc.

valens@finprofiles.com

Cision View original content:https://www.prnewswire.com/news-releases/valens-semiconductor-reports-second-quarter-2022-results-301603262.html

SOURCE Valens Semiconductor

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