Exceeds first quarter revenue guidance and
raises second quarter guidance in anticipation of improved customer
demand
HOD
HASHARON, Israel,
May 8,
2024 /PRNewswire/ -- Valens Semiconductor Ltd. (NYSE:
VLN), a leader in high-performance connectivity, today reported
financial results for the first quarter ended March 31, 2024.
"We were pleased to report some upside relative to our first
quarter revenue guidance even though our business, like most in our
industry, also continued to be impacted by macroeconomic headwinds
and ongoing slow inventory digestion in the audio-video and
automotive markets." said Gideon
Ben-Zvi, CEO of Valens Semiconductor. "Nonetheless, we made
good progress this quarter in expanding our collaborations and
partnerships across the diverse verticals we serve as well as
advancing our industry-leading high-performance connectivity
solutions and bolstering the visibility of our superior
technology.
"This quarter, we saw significant interest ramping up for our
high-performance USB 3.0 extension solution, the VS6320. Since its
launch in Q4 of last year, the chip has been designed into more
than 30 products, and we anticipate multiple announcements and
product launches as early as the InfoComm International trade show
in June. We are excited to see the initial backlog and we expect
sales to further ramp up during the second half of 2024.
"Our ongoing investment in expanding our presence within
multiple verticals of the audio-video market enables us to
capitalize on positive long-term trends, thanks to the latest
additions to our portfolio, namely the VS6320 and the VA7000
chipsets. We believe that these verticals, which include video
conferencing, industrial, and machine vision, combined may
represent a total addressable market of approximately $1 billion per annum. Additionally, we continue
to identify growth areas within multiple sectors of the automotive
industry, and believe these opportunities, coupled with our
technological innovations, may represent a total addressable market
of $4.5 billion per annum by
2029.
"With our unparalleled innovative connectivity solutions and
highly sophisticated chipsets, we believe Valens Semiconductor is
strategically positioned to capture future opportunities that will
continue to make a meaningful impact across a diverse set of
growing industries. Finally, our strong balance sheet provides us
with flexibility to continue to invest and innovate in pursuit of
our long-term growth objectives," concluded Ben-Zvi.
Key Financial Highlights
- First quarter 2024 revenues reached $11.6 million, compared to $23.9 million in the first quarter of 2023
- GAAP gross margin was 59.0% for the first quarter 2024 (non-GAAP
gross margin was 62.0%). This compared to GAAP gross margin 66.1%
for the first quarter 2023 (and non-GAAP gross margin of 67.2%).
The year-over-year change was due to lower total revenues, which
resulted in lower fixed cost absorption, evaluation of certain cost
of inventory and a larger share of automotive revenues compared to
audio-video, which has much higher gross margin
- GAAP Net Loss was $(10.0) million
in the first quarter 2024, compared to a GAAP Net Loss of
$(5.4) million in the first quarter
2023
- Adjusted EBITDA Loss in the first quarter 2024 was $(7.1) million, compared to Adjusted EBITDA loss
of $(2.9) million in in the first
quarter 2023
- Robust balance sheet of $139.8
million in cash, cash equivalents and short-term deposits,
and no debt, as of March 31, 2024,
compared to $142.0 at the end of
December 2023
- Inventory balance of $12.5
million on March 31, 2024,
down from $13.8 million on
December 31, 2023
Financial Outlook
Disclaimer: Valens Semiconductor does not
provide GAAP net profit (loss) guidance as 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. 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.
"The macroeconomic landscape continues to be challenging with
ongoing short lead times, causing uncertain order activity and
inventory consumption by our customers," said Guy Nathanzon, CFO of
Valens Semiconductor. "Due to slightly improved customer demand,
second quarter revenues are now expected to range between
$12.5 million and $13.0 million, higher than the initial
expectations we provided last quarter. Gross margin is expected to
range between 52.0% and 52.5%, and adjusted EBITDA loss is expected
to be in the range of $(8.3) million
and $(8.0) million.
"When the semiconductor industry improves, we will be prepared
to advance our growth strategy with an even wider range of
solutions and we remain optimistic about Valens Semiconductor's
medium- and longer-term growth potential," concluded Nathanzon.
Conference Call Information
Valens Semiconductor will host a conference call
today, Wednesday, May 8, 2024, at
8:30 a.m. Eastern Time (ET) to
discuss its first quarter 2024 financial results and business
outlook. To access this call, dial (at least 10 minutes before the
scheduled time) +1 (888) 281-1167 (U.S.), 0 (808) 101-2717 (UK), 03
918 0610 (Israel) or +972 3 918
0610 (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 Semiconductor's
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, currency exchange rates, 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 the cyclicality of the
semiconductor industry; the effect of inflation and a rising
interest rate environment on our customers and industry; the
ability of our customers to absorb inventory; the impact of the
global pandemic caused by COVID-19 on our customers' budgets and on
economic conditions generally, as well as the length, severity of
and pace of recovery following the pandemic; competition in the
semiconductor industry, and the failure to introduce new
technologies and products in a timely manner to compete
successfully against competitors; if Valens fails to adjust its
supply chain volume due to changing market conditions or fails to
estimate its customers' demand; disruptions in relationships with
any one of Valens' key customers; any difficulty selling Valens'
products if customers do not design its products into their product
offerings; Valens' dependence on winning selection processes; even
if Valens succeeds in winning selection processes for its products,
Valens may not generate timely or sufficient net sales or margins
from those wins; sustained yield problems or other delays or
quality events in the manufacturing process of products; our
ability to effectively manage, invest in, grow, and retain our
sales force, research and development capabilities, marketing team
and other key personnel; our ability to timely adjust product
prices to customers following price increase by the supply chain;
our ability to adjust our inventory level due to reduction in
demand due to inventory buffers accrued by customers; our
expectations regarding the outcome of any future litigation in
which we are named as a party; our ability to adequately protect
and defend our intellectual property and other proprietary rights;
the market price and trading volume of the Valens ordinary shares
may be volatile and could decline significantly; political,
economic, governmental and tax consequences associated with our
incorporation and location in Israel; and those factors discussed in Valens'
Form 20-F filed with the SEC on February 28,
2024 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 is a leader in
high-performance connectivity, enabling customers to transform the
digital experiences of people worldwide. Valens' chipsets are
integrated into countless devices from leading customers, powering
state-of-the-art audio-video installations, next-generation
videoconferencing, and enabling the evolution of ADAS and
autonomous driving. Pushing the boundaries of connectivity, Valens
sets the standard everywhere it operates, and its technology forms
the basis for the leading industry standards such as HDBaseT® and
MIPI A-PHY. For more information, visit
https://www.valens.com/.
VALENS SEMICONDUCTOR
LTD.
|
SUMMARY OF FINANCIAL
RESULTS
|
(U.S. Dollars in
thousands, except per share amounts)
|
|
|
Three Months Ended
March 31,
|
|
2024
|
2023
|
Revenues
|
11,559
|
23,880
|
Gross Profit
|
6,815
|
15,793
|
Gross Margin
|
59.0 %
|
66.1 %
|
Net Loss
|
(10,042)
|
(5,377)
|
Working
Capital[1]
|
153,272
|
161,371
|
Cash, Cash Equivalents
and Short-Term Deposits[2]
|
139,787
|
139,703
|
Net Cash Used in
Operating Activities
|
(1,390)
|
(8,669)
|
Non-GAAP Financial Data
|
|
|
Non-GAAP Gross
Margin[3]
|
62.0 %
|
67.2 %
|
Adjusted EBITDA
Loss[4]
|
(7,069)
|
(2,858)
|
Non-GAAP Loss Per
Share[5] (in U.S. Dollars)
|
$(0.06)
|
$(0.03)
|
|
|
|
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. Non-GAAP Gross Margin is defined
as: GAAP Gross Profit excluding share-based compensation and
depreciation expenses, divided by revenue. For the three
months ended March 31, 2024, and 2023, share-based compensation and
depreciation expenses were $347 thousand and $245 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
press release for a reconciliation to the most directly comparable
measure in accordance with GAAP.
5. See reconciliation of GAAP to non-GAAP
financial measures.
|
VALENS SEMICONDUCTOR
LTD.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(U.S. Dollars in
thousands, except share and per share amounts)
|
|
|
Three Months
Ended
March 31,
|
|
2024
|
|
2023
|
|
|
|
|
REVENUES
|
11,559
|
|
23,880
|
COST OF REVENUES
|
(4,744)
|
|
(8,087)
|
GROSS PROFIT
|
6,815
|
|
15,793
|
OPERATING EXPENSES:
|
|
|
|
Research and development expenses
|
(10,145)
|
|
(13,960)
|
Sales and marketing expenses
|
(4,388)
|
|
(5,060)
|
General and
administrative expenses
|
(3,571)
|
|
(3,832)
|
TOTAL OPERATING EXPENSES
|
(18,104)
|
|
(22,852)
|
OPERATING LOSS
|
(11,289)
|
|
(7,059)
|
Change in fair value of
Forfeiture Shares
|
25
|
|
1,507
|
Financial income,
net
|
1,234
|
|
191
|
LOSS BEFORE INCOME TAXES
|
(10,030)
|
|
(5,361)
|
INCOME TAXES
|
(17)
|
|
(19)
|
LOSS AFTER INCOME TAXES
|
(10,047)
|
|
(5,380)
|
Equity in earnings of
investee
|
5
|
|
3
|
NET LOSS
|
(10,042)
|
|
(5,377)
|
EARNINGS PER SHARE DATA:
BASIC AND DILUTED NET LOSS PER ORDINARY
SHARE[6] (in U.S. Dollars)
|
$(0.10)
|
|
$(0.05)
|
WEIGHTED AVERAGE NUMBER OF SHARES
USED
IN CALCULATION OF NET LOSS PER ORDINARY
SHARE
|
104,047,426
|
|
101,076,390
|
|
|
|
|
|
|
6. See footnote 5.
|
VALENS SEMICONDUCTOR
LTD.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(U.S. Dollars in
thousands)
|
ASSETS
|
|
March 31, 2024
|
|
December 31, 2023
|
CURRENT ASSETS
Cash and cash
equivalents
|
|
|
35,100
|
|
|
17,261
|
Short-term deposits
|
|
|
104,687
|
|
|
124,759
|
Trade accounts receivable
|
|
|
9,907
|
|
|
14,642
|
Inventories
|
|
|
12,489
|
|
|
13,836
|
Prepaid expenses and other current assets
|
|
|
3,982
|
|
|
4,196
|
TOTAL CURRENT ASSETS
|
|
|
166,165
|
|
|
174,694
|
LONG-TERM ASSETS:
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
2,740
|
|
|
2,954
|
Operating lease right-of-use assets
|
|
|
1,749
|
|
|
2,202
|
Other assets
|
|
|
623
|
|
|
708
|
TOTAL LONG-TERM ASSETS
|
|
|
5,112
|
|
|
5,864
|
TOTAL ASSETS
|
|
|
171,277
|
|
|
180,558
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
CURRENT LIABILITIES
|
|
|
12,893
|
|
|
15,931
|
LONG-TERM LIABILITIES
|
|
|
|
|
|
|
Forfeiture Shares
|
|
|
13
|
|
|
38
|
Operating leases
liabilities
|
|
|
140
|
|
|
190
|
Other long-term liabilities
|
|
|
79
|
|
|
95
|
TOTAL LONG-TERM LIABILITIES
|
|
|
232
|
|
|
323
|
TOTAL LIABILITIES
|
|
|
13,125
|
|
|
16,254
|
|
|
|
|
|
|
|
TOTAL SHAREHOLDERS' EQUITY
|
|
|
158,152
|
|
|
164,304
|
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY
|
|
|
171,277
|
|
|
180,558
|
|
|
|
|
|
|
|
VALENS SEMICONDUCTOR
LTD.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(U.S. Dollars in
thousands)
|
|
|
|
Three Months Ended
March 31,
|
|
|
2024
|
2023
|
CASH FLOW FROM OPERATING
ACTIVITIES
|
|
|
|
Net loss for the
period
|
|
(10,042)
|
(5,377)
|
Adjustments to reconcile net loss
to net cash used in operating activities:
|
|
|
|
Income and expense items not involving cash
flows:
|
|
|
|
Depreciation
|
|
456
|
379
|
Stock-based
compensation
|
|
3,764
|
3,822
|
Exchange rate
differences
|
|
525
|
1,252
|
Interest on short-term
deposits
|
|
275
|
(566)
|
Change in fair value
of forfeiture shares
|
|
(25)
|
(1,507)
|
Reduction in the
carrying amount of ROU assets
|
|
484
|
464
|
Equity in earnings of
investee, net of dividend received
|
|
5
|
3
|
Changes in operating assets
and liabilities:
|
|
|
|
Trade accounts
receivable
|
|
4,735
|
(1,399)
|
Prepaid expenses and
other current assets
|
|
207
|
(639)
|
Inventories
|
|
1,347
|
250
|
Long-term
assets
|
|
74
|
42
|
Current
Liabilities
|
|
(2,761)
|
(5,058)
|
Change in operating
lease liabilities
|
|
(418)
|
(402)
|
Other long-term
liabilities
|
|
(16)
|
67
|
Net cash used in operating
activities
|
|
(1,390)
|
(8,669)
|
CASH FLOWS FROM INVESTING
ACTIVITIES:
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES:
|
|
|
|
Investment in short-term deposits
|
|
(37,840)
|
(40,725)
|
Maturities of short-term deposits
|
|
56,979
|
44,144
|
Purchase of property and equipment
|
|
(30)
|
(142)
|
Net cash provided by investing
activities
|
|
19,109
|
3,277
|
CASH FLOWS FROM FINANCING
ACTIVITIES:
|
|
|
|
Exercise of stock options
|
|
126
|
928
|
Net cash provided by financing
activities
|
|
126
|
928
|
|
|
|
|
Effect of exchange rate changes on
cash and cash equivalents
|
|
(5)
|
(71)
|
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
|
|
17,839
|
(4,535)
|
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
PERIOD
|
|
17,261
|
20,024
|
CASH AND CASH EQUIVALENTS AT THE END OF THE
PERIOD
|
|
35,100
|
15,489
|
|
|
|
|
SUPPLEMENT DISCLOSURE OF CASH FLOW
INFORMATION
|
|
|
|
Cash
paid for taxes
|
|
35
|
56
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES
|
|
|
|
Trade accounts payable
on account of property and equipment
|
|
212
|
460
|
Operating lease
liabilities arising from obtaining operating right-of-use
assets
|
|
31
|
278
|
VALENS SEMICONDUCTOR
LTD.
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
|
(U.S. Dollars in
thousands)
|
|
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
March 31,
|
|
2024
|
|
2023
|
|
|
|
|
Net Loss
|
(10,042)
|
|
(5,377)
|
Adjusted to exclude the
following:
|
|
|
|
|
Change in fair value of
Forfeiture Shares
|
(25)
|
|
(1,507)
|
|
Financial income,
net
|
(1,234)
|
|
(191)
|
|
Income taxes
|
17
|
|
19
|
|
Equity in earnings of
investee
|
(5)
|
|
(3)
|
|
Depreciation
|
456
|
|
379
|
|
Stock-based
compensation expenses
|
3,764
|
|
3,822
|
Adjusted EBITDA Loss
|
(7,069)
|
|
(2,858)
|
VALENS SEMICONDUCTOR
LTD.
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
|
(U.S. Dollars in
thousands, except per share amounts)
|
|
The following tables
provide a calculation of the GAAP Loss per share and reconciliation
to Non-GAAP Loss per share.
|
|
|
Three Months Ended
March 31,
|
GAAP Loss per Share
|
2024
|
2023
|
|
|
|
GAAP Net Loss used for computing Loss per
Share
|
(10,042)
|
(5,377)
|
Earnings Per Share Data:
|
|
|
GAAP Loss per Share (in U.S.
Dollars)
|
$(0.10)
|
$(0.05)
|
Weighted average number of shares used in calculation
of net loss per share
|
104,047,426
|
101,076,390
|
|
Three Months Ended
March 31,
|
Non-GAAP Loss per
Share[7]
|
2024
|
2023
|
|
|
|
GAAP Net
Loss
|
(10,042)
|
(5,377)
|
Adjusted to exclude the
following:
|
|
|
Stock based
compensation
|
3,764
|
3,822
|
Depreciation
|
456
|
379
|
Change in fair value of
Forfeiture Shares
|
(25)
|
(1,507)
|
Total Non-GAAP Loss used for computing Loss per
Share
|
(5,847)
|
(2,683)
|
Earnings Per Share Data:
|
|
|
Non-GAAP Loss per Share (in U.S.
Dollars)
|
$(0.06)
|
$(0.03)
|
Weighted average number of shares used in calculation
of net loss per share
|
104,047,426
|
101,076,390
|
|
|
|
|
|
|
7. 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 divided by the weighted average number of shares
used in calculation of net loss per share.
|
For more information, please contact:
Lisa Fortuna
Financial Profiles, Inc.
Valens@finprofiles.com
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SOURCE Valens Semiconductor