Q4 2021 Valens Semiconductor Ltd Earnings Call
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Thank you.
[music].
Good morning, My name is yoni Schottenstein, and I will be your conference operator today at this time I would like to welcome everyone to Valens Semiconductor's fourth quarter and full year 2021 earnings conference call and webcast.
That's.
All participant lines have been placed in a listen only mode.
Opening remarks by <unk> management will be followed by a question and answer session.
I will now turn the call over to Dominic Oldham, Vice President of Investor Relations for villains.
Go ahead.
Thank you and welcome everyone to the lens Semiconductor's fourth quarter and full year 2021 earnings call.
With me today are Gideon <unk>, Chief Executive Officer, Andrew All held in Berg Chief Financial Officer.
Earlier today, we issued a press release that is available on the Investor Relations section of our website under investors that fill in stock comp.
As a reminder, today's earnings call May include forward, looking statements and projections, which do not guarantee future events or performance.
These statements are subject to the Safe Harbor language in today's press release.
Please refer to our annual report on form 20-F filed today with the SEC for a discussion of the factors that could cause actual results to differ materially from those expressed or implied.
We do not undertake any duty to revise or update such statements to reflect new information subsequent events or changes in strategy.
We will be discussing certain non-GAAP measures on this call, which we believe are relevant in assessing the financial performance of the business and you can find reconciliations of these metrics within our earnings release.
Dror and I will be on the West Coast and in New York City later this month for IR meeting.
Those interested in booking a one on one slot. Please feel free to email me at investors at <unk> Dot com.
With that I will now turn the call over to Gideon.
Thanks, Donna and thank you everyone for joining our call today Q4 was a strong finish to 2020 . One we achieved solid results in both of our audio video and automotive segments.
Revenue and gross margin topped the high end of our guidance.
We exited the year with a record backlog and a robust balance sheet that will support our continued growth.
In the fourth quarter, we reported <unk>.
Record quarterly total revenues of $27 million.
47% compared with Q4 'twenty 'twenty.
On your video revenues increased 40% from Q4 last year, our automotive revenues increased by more than 40% from Q4 last year crossing the $10 million quarterly revenue Mark for the first time for the full year 2021, we achieved record revenues of 70.
$70 million, an increase of 24% from 2020.
Oh your video revenues increased to $62 8 million.
Up 15% from 'twenty to 'twenty.
Our automotive revenues approached 8 million almost four times greater than in 2020, reflecting the first full year of mass production.
A 6000 chipsets and expansion of our product into additional car models.
Through all of the year, we made or the demand from our customers in a severely supply constrained environment. We anticipate the strong demand for our products to continue in 2022 and have taken proactive measures to ensure we will again be able to fulfill our customers' needs.
As our customers as the audio video markets already know wolinsky as the industry leader for advanced high speed connectivity solutions, we are well on our way to replicating the success in the much larger and faster growing automotive market.
This leaves me to offer a most recent achievements in automotive in December 2021 we shipped the first in the industry, maybe eight five compliant chips at our 7000th family to select customers and partners.
This secured our first mover advantage.
We shipped engineering stoppage of our next generation of V. A 7000 chipset family for more than 25 automotive customers and partners. These include four leading automotive Oems and more than 10 tier one potential customers who are in the process of evaluating these chipsets for integration into their platforms.
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They need a place to conduct which is based on finance technology has the bandwidth and performance specifications that today's and Tomorrow's vehicles require and its current analog based legacy technologies can no longer support. In addition, the automotive market is moving away from proprietary legacy solutions.
Blowing.
These products such as maybe a fight.
Last month, we demonstrated the unique capabilities of pardon me, if I compliance keeps us firmly to Hollywood representatives from leading automotive companies in the U S Europe and Asia Pacific.
We showed how the PT 7000 provide some best in class of bandwidth and distance or simply notebook wiring harness we spent two and safety.
He supports a wide variety of central types and provides robust electromagnetic compatibility performance no E M C.
Because of simple architecture design.
The oem's and tier one cost optimization.
It is evident that enhancing passenger safety remains a top priority for Oems and is driving an increasing number of advanced driver assistance systems.
No one is either in each vehicle.
Another top priority for automotive OEM is preventing recalls we have seen a number of frequency recently due to harness related challenges.
The growing number of agencies that is leading to more N V. You can sensors all of these sensors will require long reach high speed connectivity and more importantly, zero latency to detect and active safety.
Safety events within micro seconds. They also require new zero error rates to mitigate the growing electromagnetic influence and this is where our chipset acceptance.
Our high speed connectivity solutions are uniquely agnostic to the types of cancels common raws lidar or radar being deployed in cars and will provide a automobile Oems with better and faster connectivity for the Adas systems.
We see growing interest in the middle East I stopped us from companies across the automotive supply chain and be prepared for the eighth resolution.
We are already engaged with several sensor Soc companies, such as mobile life, Sony and Sony optical.
Pluto embedded eight weeks of dosing we view their product offerings. We are also working with leading industry players such as active data so jasper.
In all states and Sumitomo electric.
The occasional show me story, let's take for example, we are collaborating to mix their wiring harness technology with me Pete if I requirements. So we don't control that more than 30% market share in wire harness manufacturing and assembly.
Having their older shows cadence with meeting a fight childhood requirements.
To further accelerate the deployment of connectivity solutions in vehicles.
2021 was the first full year of mass production of our first generation automotive people at Disney a 6000 in selected Mercedes Benz car modems, we expect it to be a 6000 will be added to additional Mercedes Benz cardholders in the very near to them.
This is the only multi gigabit connectivity solution available on the market that can work with honestly, we didnt wiring in today's cars and support multiple interfaces for infotainment and telematics systems now being required by customers.
<unk> 6000 chipsets are also a good fit for trucking industry in late 2020, we engage we stoneridge, a leading designer and manufacturer of highly engineered electrical and electronic vehicle systems for the trucking industry in 2020 . One we continued to make progress in developing connectivity sooner.
Related to vision systems to address critical safety issues of truck drivers. The solution will also reduce fleet operation cost. We expect initial revenues from the stoneridge partnerships towards the end of 2022 and to increase in 'twenty to 'twenty three and onwards.
Towards the end of 'twenty to 'twenty, one we taped out the V. A 6003 and derivative product offered at a 6000. The V 6000, or three provides a significant power reduction and very efficient cost performance. It is designed to fit the both advanced infotainment used cases.
And the next generation of Telematics units also known as smart antennas, which require low power and resilient connectivity.
It also supports the vision of zonal architecture resilience connectivity between used to using Eva we estimate the initial revenues from these new products in stock in the second half of 2024.
The V a $6 three alongside the VA 7000 is part of our strategy to become the one stop shop for all invade cause I speak symmetrical oximetry things. We expect continued revenue growth from our first generation of automotive chipset and its derivatives.
Longer term, we are highly focused on achieving design wins for our next generation chips at the V. A 7000, which we believe will drive a significant increase in revenue.
You may notice a nephew process into digital automotive industry is very extensive and needs to author growing regulatory demands and streak of Starbucks as a result.
One of our chips are designed and by automotive Oems.
Sticking with a long production lifecycle that generate a steady revenue stream for Williams.
In addition to just the motive use cases, the VA 7000 chipset family.
Got it sorted for applications in markets served by our audio video business unit, such as medical and machine vision and other industrial applications.
Turning to our audio video business.
We are the market leader in language audio video connectivity our products are used today by most of the leading manufacturers in this industry such as Christian Epsilon extra Hollomon, LG electronics, Logitech, and you see Panasonic, Samsung and Sony and many more.
Okay video products power millions of videoconferencing application, such as signage home entertainment as well as command and control.
In the beginning of 2021 we started seeing growing demand for high speed connectivity audio video products in multiple regions, most notably in eight bucks an email.
That has been negatively impacted by COVID-19 in 2020 towards the end of 'twenty 'twenty. One. We also started seeing a positive recovery in North America. Furthermore.
Our distributors are telling us that they are currently holding lean inventory levels.
All of these themes, which are reflected in our current backlog are driving our audio video revenue growth in 2022.
What is positioned to capitalize on some new opportunities in the audio video market following the pandemic.
<unk>.
The list of countries believers in Hawk and seamless user experience and he is key to a successful hybrid environment. While also reducing total cost of ownership. There are many hybrid modern use cases.
Incorporation.
How have the rooms, which are small private meeting area with audio and video conferencing equipment and other work from home applications.
Each of our market segments.
Adopting hybrid models, including medical and education you.
You need location for example, we see educational institutions blending to use government budgets to upgrade their classrooms, we believe classrooms will undergo.
We've got good connectivity infrastructure upgrades to also enable remote learning.
By required requiring multiple high quality displays camaraderie and audio products.
As the World continues to adopt a hybrid model, we expect the demand for audio would be just a little sense to continue to grow significantly.
Second we continue to see solid demand in both the industrial and medical equipment markets from leasing equipment rentals. For example, our extended the BDO technology is deployed in the larger medical diagnostic equipment, such as Mris and X Ray machines.
I mean, that's sort of for example, or a redo extension technology is used in machinery and computer vision system for line inspection.
Sure.
Other arguably the girl Terrier, which accelerated recently include government due to the growing number of command and control rooms, and they are seeking new ways to convey public safety information.
Signage is institute municipalities Federal and state governments increased military public announcements finally, while we continue to win new designs with our earlier generation of all you'll be just solutions our focus to date.
Securing design wins and ramping production.
Our newest generation display those three.
3000, it is the first and only solution on the market as opposed to language transformation of uncompressed. Four case 60 is what an HDMI 2.0, and you used to be 2.0 over a single cable the Stella is already embedded in designs of more than 100 different products from leading.
Manufacturers shipments started in 2021 and we expect to see revenue ramp in 2022.
Oh, sorry is Valero has a very strong year in 2021, we successfully became a public company on September 30 achieved a robust about four months and record revenue.
We ended the year on a strong note with record backlog.
Growing customer demand and the strong balance sheet to support our future growth.
But the coverages, we created have matured into industry started off in both market we address.
Our leadership enables us to leverage our first mover advantage expand over a foothold and secure increasing demand.
To cement our leadership position, we continue to invest in expanding our innovative product portfolio.
We're extremely proud to provide offerings that are essential for me and more advanced and safer future of connectivity as we build upon our leadership position in the audio video market and are gaining share in the largest and fastest growing automotive markets.
Valero success and plans gives me great confidence as I look forward to the rest of 2022 and beyond.
I'll now turn it over to draw has been Burke our CFO .
To review, our fourth quarter and full year 2021 financial results and provide our financial outlook for 2022.
Thank you Peter I'll start with our fourth quarter and full year results and then provide our outlook for the third quarter and full years 'twenty to 'twenty two.
All comparisons are year over year, unless otherwise noted.
As Peter stated, our Q4 and full year results demonstrated the substantial progress we are making in our audio video and that's where most of your businesses, especially in a constrained supply environment.
Beginning with the fourth quarter of 2021 results, we achieved record total revenues of $27 million.
Which represents an increase of 46, 8% from the fourth quarter of 2020.
Breaking it into our two business segments.
Video revenue increased 44% to $18 $6 million and used to merchant revenue reached $2 2 million a remarkable 141, 2% increase compared to the last quarter two last year.
Q4, 2021 gross profit grew to $14 8 million from $10 3 million an.
An increase of 43, 5%.
Fourth quarter of 2021 gross margin was 71, 2% compared to last year 72, 8%.
non-GAAP gross margin was 71, 5% compared to 73, 4% in Q4 2020.
The difference in gross margin was primarily due to a higher revenue contributions from our automotive business.
Operating expenses in Q4 were $23 4 million up $6 $7 million from Q4 last year.
The increase was mainly due to an increase of $4 1 million in research and development expenses as we invested in growing the headcount to accelerate the execution of projects to address business opportunities in most of our other figure into two motor businesses, including the <unk> 6003 tape out.
The remainder was the mix of sales and marketing expenses related to promotion of our new OUP joined US military products. It's women G&A expenses increased primarily due to a listing as a public company.
Fourth quarter, adjusted EBITA was a loss of $7 million compared to the $4 $6 million in the fourth quarter of 2020.
Sure for Q4, 2021 was eight.
92, 1% lower than Q4 of 2020, which was 90%.
Q4, 2021 calculation and the loss of $8 million divided by $97 1 million shows Q4, 2020 is calculated as a loss of $9 $7 million divot.
Divided by $10 7 million shows the increase in the number of ship is derived from the conversion of our preferred shares into ordinary shares and the shares issued as part of the transaction related to all these things.
Looking at the full year 2021, total revenues increased to a record of $70 7 million up 24, 2% from 2020 exceeding the high end of our guidance audio video revenues reached $62 8 million up 14.
5% from 2020.
In 2021 the growth in audio video revenues was primarily driven by a rebound in multiple regions that are slowly exited the pandemic restrictions and by notably iron customer demand for hybrid applications.
It requires the unique capabilities that our solutions provide.
So most of revenues was $7 9 million up 281% compared to 2020, driven by the first full year of mass production of our V. A 6000 chipsets.
And the expansion of our solution into additional car models.
Due to the global semiconductor chip shortage during 2021 of our supply chain vendors raise prices, leading us to increase our prices to our customers we implemented those price increases towards the end of the year.
Despite the very challenging supply environment and the capacity constraints, we faced in 2020 . One we successfully supported our customers' needs and we're able to fulfill all the orders received in a timely manner for the full year.
What is the impact of the price increases to our customers on 2020 . One revenues was the mine or we will see the full impact of the price increases on our revenues in 2022.
Gross profit in 2021 reached $56 million up 16.
16, 3% from 2020.
Gross margin was 71, 6% compared to 76, 4% last year and 2021 non-GAAP gross margin was 71, 8% compared to 76, 9% last year.
The difference in margins was mainly due to the much higher revenue contribution from our automotive business. We achieved strong bookings in 2021, which translated into look 2 billion ratio substantially greater than one and reported a robust year end backlog of more than 70.
$8 million supporting our growth projections for 2022.
Operating expenses were $77 $6 million.
Compared to $66 3 million in 2020, primarily due to one time, New York stock exchange issuance cost of $5 $6 million.
Of which $3 4 million.
Expenses related to stock options acceleration triggered by the listing as a public company.
We also reported an increase of $2 2 million in research and development expenses as we invested in enhancing our product offering given the business opportunities we see ahead.
Most of our employees are based in Israel and doing payroll is paid in the Israeli currency. The shekel the devaluation of the U S dollar compared to the shekel was three 3% in 2021, and Ed and others impact on our operating expenses.
With respect to adjusted EBITDA, We reported a loss of $16 $1 million in 2021, compared with $16 4 million recorded in 2020 loss per share for the year 2021 was $1 $15, 65%.
Lower than the $3 $25 in 2020, the 2021 figure is calculated as the loss of $37 9 million.
Which is a total of a net loss of $26 5 million rollout and the 2021 theoretical accrued dividend related to preferred shares in the total amount of $11 $3 million divided by 33 million shares. This.
The 'twenty 'twenty figure is calculated as the net loss of $34 million, which is the total net loss of $19 $6 million and the 2020 dividend related to preferred shares of $14 $3 million divided by $10 4 million shows for them.
The listing as a public company or preferred shares were converted into ordinary shares. So going forward, we anticipate a simple calculation of our income or loss per share.
Turning to our balance sheet.
We ended the year with a strong balance sheet with cash cash equivalents and short term deposits of $174 4 million and no debt. The net proceeds from the transactions related to our listing in September 2021.
<unk> totaled approximately $132 million, we intend to use our strong balance sheet to fund the development and commercialization of <unk> next generation products. So.
So a new product this time from design initiation and manufacturing until we generate revenue can be lengthy typically within three years in the video market and up to five years in due to merger space. However, we believe our strong balance sheet and projected revenue growth will follow.
Our business through breakeven.
During 2021, we placed longer term purchase soldiers for raw materials and manufacturing services to ensure sufficient and timely supply to support our customers and our anticipated 2022 revenue growth.
This group our inventory by $6 2 million at the end of 2021 as compared to 2020, we believe this inventory will be consumed during 2022.
Now I would like to provide our guidance for the first quarter of 2022, we expect revenues in the range of $26 million to $21 million gross margin to be in the range of 66, 5% to 67% adjusted EBITDA.
To be a loss in there in the range of 10.7 to $9 $7 million.
For modeling purposes. Please note that as of today, we have 97 1 million outstanding shares excluding approximately 1 million shares that are subject to full feature.
For the full year of 2022, we expect revenues to be in the range between 83 and $85 million as we anticipate most emotive revenues in 2022 compared to 2021 at about 20% of our total annual revenues, we expect gross margin to be the range of <unk>.
Five 5% to 67, 2%, we will continue to invest in enhancing our current product offering and developing and commercializing <unk> next generation products in Poznan.
The increasing demand in audio video and the continued expansion of the automotive revenues give us confidence in meeting our 2022 projections and adjusted EBITDA is expected to be a loss in the range of $38 four to $37 8 million.
In summary, 2021 was another good year for the lands going forward, we remain focused on delivering value to all of our stakeholders by increasing revenues, you'll have several year optimizing margins and diligently managing our operations.
Its goal is to achieve and then continue to amplify our profitability.
I'll turn the call back to get them the best for his closing remarks before opening the call for Q&A.
Thank you Dror.
All other heard we're off to a strong start in 2022, and we are well positioned to create long term shareholder value.
We operate in two large and fast growing markets audio video and automotive we have a clear go to market strategy, we set industry standards for high speed connectivity and therefore have a significant first mover advantage.
We have a compelling financial model strong revenue visibility and a solid balance sheet their support of our investments in our product offering this will further expand our business.
Finally, I would like to take this opportunity to think of our amazing team of 300 employees around the world where core cause you to the company's success their execution talent dedication and continued flexibility may 2021 and another great year for billings.
Operator, I would now like to open the call for questions.
Thank you ladies and gentlemen at this time, we will begin the question and answer session. You will have a question. Please press star one if you wish to cancel your request. Please press star two.
You are using speaker equipment kind of lift the handset before pressing the numbers.
Questions will be pulled in the order they are received.
Please standby, while we poll for your questions.
The first question is from <unk> Silva of Roth Capital. Please go ahead.
Gideon Hi, Dror congratulations on the strong finish to 'twenty, one and the strong outlook as well I had a question first on the supply chain you talked about proactive measures to ensure you can meet your backlog in place you can you elaborate on what some of those measures might've been if any balance sheet capital.
It was used for that et cetera.
Sure.
Thank you for the question so.
I'd like to start by saying that I'm proud of the fact that we met all our customer commitments and deliveries despite the global.
<unk> issued during 2021.
As we see strong demand for our products continuing this year as you said, we have taken proactive measures to ensure that we will be able to timely fulfill our customer needs, which means for us that we increased the level of inventory and you can see that.
Balance sheet, we reported an increase of $6 2 million dogs in our inventory level compared to the same balance as of last year at this point that I would like to mention a few things.
One is that the lenses not exceptional basically we acted like the rest of the industry and we sold several issues related to the supply.
So the supply chain. The first one is that we sold extended lead times that are as I mentioned, it's required for lenses to increase its inventory, but also it forced us to increase the lead time to our customers. The second thing is that the supply chain vendor expect where.
Expected to see and us to secure capacity by placing long term binding orders and again. These again explains the increase in the level of inventory and and finally, the fact that and we mentioned it in the previous session that we saw some price increases from <unk>.
Our supply chain vendors.
Later on I assume that Youre going to also to ask about what we did with it.
Customers, but this increase in the prices also contributed to the increase in our inventory levels.
Right got it I did hear that you guys passing along some of those places and the gross margins right and I think that was that was the takeaway there okay, great and then I'm curious on the trucking market.
Can you update the timing of the revenue contribution obviously, because Mercedes is playing well.
You know how soon can that.
The Oh, I guess auto revenue segments.
So I would say.
That with respect to automotive revenues in general are as of today. There are two main drivers for this revenue growth. The first one obviously the projects that we have with most of the expense.
And we just mentioned that 2021 was the first full year of mass production and that explains the increase the significant increase that we've seen in the revenue to merchant revenues in our P&L with respect to the stoneridge projects I can say that everything is progressing according to the plan.
And we assumed that it will get into mass production at the beginning in early 2023, which means for us that we will start to see some initial revenues towards the end of 2022.
And I would say that in terms of the new product that we just introduced to the market <unk>. A 7000, that's the <unk> compliant chipset. So we continued to ship, we see some traction with lots of trucks in the market we continued to ship.
Evaluation samples engineering samples to our customers, but we believe that this will ramp up to mass production around 'twenty five 'twenty six.
Okay, Great and two quick follow ups on the trucking are there multiple customers. If you could clarify how many might be coming in from the stoneridge partnership that'd be helpful. So it disappoints, we only work with stoneridge. That's the only project that is in advanced stage, but I can tell you that in PON and we have started some initial discussion with <unk>.
Other trucking companies that are watching the progress of this development project.
Got it and then one last question on the VA 7000, you're sampling with 25 customers did any of those questions and I'm curious also samples of the 86000 and choose to wait for them BPA by standard or are they all new to the <unk>.
<unk> technology.
Well Hi. This is good answer. Thank you for the question and I'm happy to hear your guys' game. So the B 7000 is that the revolutionary.
Product of the lands and definitely this is the flagship of the next generation and people were looking for the VA seven thousands looked for a very particular answer for a future need which is the robustness the electromagnetic.
Being a standout in sole source, while the vs 6000.
So it's it's a generation where we put the <unk> first time in vehicles and the and the derivatives of these they are very much complementary because if you look at the one stop shop solution, which is actually what we want to provide we will have a symmetric which are the 7000 in the future generation.
The symmetric could be the 6000 or 6003. So this is.
A comprehensive one stop shop solution that is built by different generations of the company.
But definitely with differs between the very futuristic or sorry, very revolutionary which is the 7000.
And the 6000, which is actually a derivative of existing technology.
I appreciate the clarification, yet the bums or full portfolio. Thanks, I'll pass it along congratulations again.
Thank you.
The next question is from <unk> ARIA.
Think of America. Please go ahead.
Hi, This is Kurt as reach over here just standing in for a visit.
Thanks for taking my question my.
My first question is just in relation to your full year guidance.
Roughly $84 million at the midpoint, it kind of implies relatively flattish revenue cadence.
Roughly of about $21 million per quarter give or take so I was wondering if you could talk a little bit about the extent to which supply chain issues, perhaps driving this relatively flat cadence.
And the extent to which.
There could be some upside to these numbers as we go forth throughout the year.
So let's start with the Q1 2022, our revenue guidance.
I've mentioned, so you know.
First of all with respect to Q1, it's typically.
<unk> by the Chinese new year, and this year, specifically Q1 was also suffered a bit.
From the outbreak of the army crime in General I would say that we expect Q1.
Year over year revenue growth to be more than 30% in terms of the overall revenue for 2022, I would say that Ah you know deep.
The current backlog that we have is definitely give us confidence that we are going to support or to meet the revenue guidance that we've provided.
Boston and you know.
Let's not forget we're adjusting the first quarter of the year and let's see how things develop.
Okay, great. Thanks, and then just for my follow up just a very general sort of industry question.
So as you look across the industry, we're seeing record revenue growth.
From many sort of.
Semi chip vendors.
And at the same time many of these vendors are struggling to rebuild inventory, particularly in that channel. So if you could just take a very high level view, where do you sort of see chip inventory levels currently in the automotive space and when do you sort of expect the situation to normalize.
Okay. So I'll split my answer to the audio video and two to most of them I know that you just asked about the automotive but in terms of the <unk> video I must admit that we don't hear from our customers that they have lots of inventory more than that we hear from our distributors that.
Lean level of inventories and this is very encouraging very encouraging sign for us that.
There will continue to consume and we are not going to see a reduction in revenue in this business line with respect to automotive you know we work not directly with time that with most of this business as the OEM, but we work directly with the different tier ones that serve <unk> and according to what we eat.
From these guys and they will come down.
Oliver reorganized and we hear from them, we get on a monthly basis Theyre rolling forecast. So we get the indication that the level of inventory that they keep of our products.
Very minimal and they don't they don't stop they don't have lots of inventory in their premises.
Okay, great. Thank you thanks for answering my question.
The next question is from Rick Schafer of Oppenheimer. Please go ahead.
Hi, This is the way Marc on the call for <unk>, Congrats on the clarity of results and positive outlook.
So in regards to my first question. It looks like you guys are guiding <unk> revenues flat to slightly up which is better than its down seasonal quarter. So I was wondering if you can comment on what are some of the factors that you're seeing that's driving this upside.
So if we look if we look on D <unk>.
Revenue growth for 2022, I would say that basically we're going to see the impact of two.
Two parameters the first one we mentioned in the call.
Our supply chain vendors increase their prices and.
We add to pass portion of the price increases from our supply chain to our vendors and.
That was the first reason that we see some increase in revenue not that dramatic the main trigger for the increasing revenue is mainly <unk>.
Triggered by.
The increase in the unit volume that we see for 2022.
Great. Thank you on that my second question is on the recent truck partnership with Stoneridge. So I was wondering how should we think about like the average dollar content and a truck compared to a passenger vehicle.
So in the case of Stoneridge.
The revenue per truck is going to be richer compared to the revenue per car that we have today from the Oems that we work with.
You know I think that it's fair to say, if we say today that with respect to two Mercedes Benz, where we deploy today in average between three to four chips in every call and the revenue. The average revenue per car is north to $25 I would say that in the case of the truck it will be fair to say.
Say that you can double this.
This revenue per this revenue and this is a representative number for the for the trucking.
And May I ask.
One thing here in the truck industry is Keystone and thanks again for the.
For a for being with us and therefore the question the truck industry has also escaped up.
Because it's first there is a potential in the same truck. There is there is a significant after market and there are more.
Future applications, which can be embedded in trucks. So it's the comparison is quite not apples to apples.
But it's definitely a market, which will look at the potential of growth.
Great. Thank you wanted to ask for my last question I wanted to ask about your first generation V. A 6000 families chipsets. It looks like you expanded into the six.
<unk> thousand three.
So I was wondering what are some of the some of the features in this product and does that tap into a specific area or application.
In passenger vehicles and what does this mean for your Tam.
The Cisco and then three is a subset of the 6000 and and.
In developments of chips I guess, that's because you know that better than me.
Once you have cheap it is successful and performing the fault of different applications can be higher and subset.
Any other derivative the 6003 features.
Significantly smarter little power and size.
And give us.
More robustness and more.
Confidence in our future user feed for many years.
Of course, there like the 6003 its benefits from the UTP the actually the capability, which is very important and feature in many in the industry or so it's really complementary for a revision of one.
One stop shop.
That will complement the <unk>.
7000, if you look at it.
Some of the drawings and some of the thoughts of.
Tier ones in regards to zonal architecture and many other.
You'll see that there is.
A lot of them.
Correspondence between the symmetrical asymmetric links and 6003 plays a very important role to complete the whole picture.
And this is the reason we stopped it is good to have this chip as well.
Great. Thank you congrats again.
The next question is from <unk>.
My leg of Citi. Please go ahead.
Thank you for taking my questions. The first one for you you talked about 25.
And with any type of October customers.
Can you give us some color how many of them are the Chinese because China seems to be getting basket.
Some of the areas that you can provide some color on how.
How many Chinese customers Youre working with.
You for the question. Unfortunately, I cannot give you information about future customers and geographic diversification.
We have.
A lot of the tier ones a lot of Oems actually.
And a lot of us.
The collaboration.
At this moment that can just say that the four Oems and growing our India in the least.
But we cannot supply more information than that I'm sure you can understand and have empathy to do my answer.
So I'm, sorry, silicon, but they're definitely thanks for the question.
Okay, and then I have a follow up for Dror just to be clear.
On the gross margin outlook for this year.
In the half to 67 declined from last year predominantly driven by the increasing mix of autos and the price increases.
Doing well.
The cost of that.
Increases that you saw.
That is a wash is that.
Those are the puts and takes in your gross margin outlook.
So yes, absolutely I think that your analysis is correct. The main reason I would say the main reason for the us.
A small decline that we see in the gross margin in 2022 compared to 2021 is it driven by the different mix of revenue and the fact that next year, we expect to have an IRA contribution from our automotive to deliver of about 20% of the total revenues of 2022.
Our revenues for the company and as you probably remember the audio video we have higher margins than motive. So the more we increase the portion of the contribution but the motive obviously the weighted average gross margin declined a bit.
Okay and the last one on the 20 <unk> and revenues per acre this year any comment on the mix of the 6000 workers.
7000.
Is it mostly be 6000 for this year.
So as I explained before.
In the next two to three years.
The main or the only.
<unk> product in automotive that will generate revenue for the company and mass production will be the 6000 and later on we are going to see some revenue contribution from the <unk> 6003, but the seven Townsend.
We started to ship samples.
Towards the end of December of 2021, we continue by the way to ship.
Two additional customers.
Prospect customers evaluation kits and samples.
D series as well, but as you know we are dealing with the automotive industry, which is very conservative the decision making process can be quite lengthy.
We believe that it will be somewhere between one and one and a half year and so we do not expect any significant revenue at least not in mass production of the 7000 in the next two to three years, we expect that that said that we do believe that by mid 2023, we will ask to design win.
<unk> of VA, seven 7000, with two leading Oems.
Thank you.
Yeah.
The next question is from Brian Dobson Sheridan capital markets. Please go ahead.
Yes.
Sure.
Hi, good morning.
So you held them event last month, highlighting your VA 7000 ships series have you received any feedback from your customers.
Two the samples that you sent out or to that to that event day in and if so could you maybe share with us.
Thank you for the question and nice to have you on board.
The 7000 was just shipped a.
They have to go the time it takes for a customer to learn to adopt.
Actually I would say to play with a cheap is is quite long we are in the auto and chip industry industry. That's together with call. It creates a geological speed.
And it.
It's not as though things that you can download from the Internet and play its chips and it takes the time to evaluate.
And understand however, I can share with you that we demonstrated on.
<unk>.
Real time that we showed some of our customers.
By filming.
10000 performance and people were literally astonished by the performance by and especially by what we demonstrated in.
Electromagnetic capability.
Which is why don't I think the increasing concerns of the industry how to deal with all these electromagnetic that's influenced the.
Safety of the car and so the answer is.
We are in the process it looks good that the outflows are positive.
And but I was thinking about the <unk> the mass production is there.
Two years ahead.
And we're in the stage of.
First evaluation and this at this stage.
Great. Thank you very much and in terms of the backlog that you reference to year end can you give us a little bit more color on the composition of that backlog.
Perhaps the percentage between audio video and automotive chips.
Okay. Thanks for the question.
We do not provide.
The composition of the backlog.
For the two segments that we're running the company.
I can just say that.
The backlog.
<unk> supports the growth that we see in both segments and we feel very confident that we will be able to meet the revenue the ambitious revenue target that we have in both business lines.
The only rate beyond maybe just the last comment on this one is that only really small portion of the backlog is scheduled to be shipped after December 2022, most of it the lion's share of this backlog is scheduled for shipment delivery in during 2022.
Great. Thank you very much for that color.
Yes.
There are no further questions at this time, Mr. Bernstein would you like to make your concluding statement.
First I want to thank everyone for joining for asking questions and.
We are very pleased to be with you and hope that actually is going to be again, and again and all the other.
Here in the coming report I would like to thank you for joining today for our Q4 and full year productivity one call and for your continued support and interest in <unk> and let's keep in touch and thank you very much.
Thank you. This concludes the Valens semiconductor fourth quarter 2021, and full year results conference call. Thank you for your participation you May go ahead and disconnect.